EXHIBIT 4
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MORGAN STANLEY ABS CAPITAL I INC.,
Depositor,
COUNTRYWIDE HOME LOANS SERVICING LP,
Servicer,
WMC MORTGAGE CORP.,
Responsible Party,
WELLS FARGO BANK, NATIONAL ASSOCIATION,
Custodian
and
DEUTSCHE BANK NATIONAL TRUST COMPANY,
Trustee
------------------------------------------
POOLING AND SERVICING AGREEMENT
Dated as of February 1, 2005
------------------------------------------
MORGAN STANLEY ABS CAPITAL I INC. TRUST 2005-WMC1
MORTGAGE PASS-THROUGH CERTIFICATES,
SERIES 2005-WMC1
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
REPRESENTATIONS AND WARRANTIES
Section 2.01 Conveyance of Mortgage
Loans.................................
Section 2.02 Acceptance by the Trustee of the
Mortgage Loans..............
Section 2.03 Representations and Warranties;
Remedies for Breaches of
Representations and Warranties with Respect to the
Mortgage Loans..............................................
Section 2.04 Execution and Delivery of
Certificates.......................
Section 2.05 REMIC
Matters................................................
Section 2.06 Representations and Warranties of
the Depositor..............
ARTICLE III
ADMINISTRATION AND SERVICING
OF MORTGAGE LOANS
Section 3.01 Servicer to Service Mortgage
Loans...........................
Section 3.02 Subservicing Agreements between
the Servicer and
Subservicers................................................
Section 3.03 Successor
Subservicers.......................................
Section 3.04 Liability of the
Servicer....................................
Section 3.05 No Contractual Relationship
between Subservicers and the
Trustee.....................................................
Section 3.06 Assumption or Termination of
Subservicing Agreements by
Trustee.....................................................
Section 3.07 Collection of Certain Mortgage
Loan Payments.................
Section 3.08 Subservicing
Accounts........................................
Section 3.09 Collection of Taxes, Assessments
and Similar Items;
Escrow Accounts.............................................
Section 3.10 Collection
Account...........................................
Section 3.11 Withdrawals from the Collection
Account......................
Section 3.12 Investment of Funds in the
Collection Account and the
Distribution Account........................................
Section 3.13 Maintenance of Hazard Insurance
and Errors and Omissions
and Fidelity Coverage.......................................
Section 3.14 Enforcement of Due-On-Sale
Clauses; Assumption Agreements....
Section 3.15 Realization upon Defaulted
Mortgage Loans....................
Section 3.16 Release of Mortgage
Files....................................
Section 3.17 Title, Conservation and
Disposition of REO Property..........
Section 3.18 Notification of
Adjustments..................................
Section 3.19 Access to Certain Documentation
and Information Regarding
the Mortgage Loans..........................................
Section 3.20 Documents, Records and Funds in
Possession of the
Servicer to Be Held for the Trustee.........................
Section 3.21 Servicing
Compensation.......................................
Section 3.22 Annual Statement as to
Compliance............................
Section 3.23 Annual Independent Public
Accountants' Servicing
Statement; Financial Statements.............................
Section 3.24 Trustee to Act as
Servicer...................................
Section 3.25 Compensating
Interest........................................
Section 3.26 Credit Reporting;
Gramm-Leach-Bliley Act.....................
ARTICLE IV
DISTRIBUTIONS AND
ADVANCES BY THE SERVICER
Section 4.01
Advances.....................................................
Section 4.02 Priorities of
Distribution...................................
Section 4.03 Monthly Statements to
Certificateholders.....................
Section 4.04 Certain Matters Relating to the
Determination of LIBOR.......
Section 4.05 Allocation of Applied Realized
Loss Amounts..................
ARTICLE V
THE CERTIFICATES
Section 5.01 The
Certificates.............................................
Section 5.02 Certificate Register; Registration
of Transfer and
Exchange of Certificates....................................
Section 5.03 Mutilated, Destroyed, Lost or
Stolen Certificates............
Section 5.04 Persons Deemed
Owners........................................
Section 5.05 Access to List of
Certificateholders' Names and Addresses....
Section 5.06 Maintenance of Office or
Agency..............................
ARTICLE VI
THE DEPOSITOR AND THE SERVICER
Section 6.01 Respective Liabilities of the
Depositor and the Servicer.....
Section 6.02 Merger or Consolidation of the
Depositor or the Servicer.....
Section 6.03 Limitation on Liability of the
Depositor, the Servicer
and Others..................................................
Section 6.04 Limitation on Resignation of the
Servicer....................
Section 6.05 Additional Indemnification by the
Servicer; Third Party
Claims......................................................
ARTICLE VII
DEFAULT
Section 7.01 Events of
Default............................................
Section 7.02 Trustee to Act; Appointment of
Successor.....................
Section 7.03 Notification to
Certificateholders...........................
ARTICLE VIII
CONCERNING THE TRUSTEE
Section 8.01 Duties of the
Trustee........................................
Section 8.02 Certain Matters Affecting the
Trustee and the Custodian......
Section 8.03 Trustee Not Liable for
Certificates or Mortgage Loans........
Section 8.04 Trustee May Own
Certificates.................................
Section 8.05 Trustee's Fees and
Expenses..................................
Section 8.06 Eligibility Requirements for the
Trustee.....................
Section 8.07 Resignation and Removal of the
Trustee.......................
Section 8.08 Successor
Trustee............................................
Section 8.09 Merger or Consolidation of the
Trustee.......................
Section 8.10 Appointment of Co-Trustee or
Separate Trustee................
Section 8.11 Tax
Matters..................................................
Section 8.12 Periodic
Filings.............................................
Section 8.13 Tax Classification of the Excess
Reserve Fund Account and
the Interest Rate Cap Agreements............................
Section 8.14 Custodial
Responsibilities...................................
ARTICLE IX
TERMINATION
Section 9.01 Termination upon Liquidation or
Purchase of the Mortgage
Loans.......................................................
Section 9.02 Final Distribution on the
Certificates.......................
Section 9.03 Additional Termination
Requirements..........................
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.01
Amendment....................................................
Section 10.02 Recordation of Agreement;
Counterparts.......................
Section 10.03 Governing
Law................................................
Section 10.04 Intention of
Parties.........................................
Section 10.05
Notices......................................................
Section 10.06 Severability of
Provisions...................................
Section 10.07 Assignment; Sales; Advance
Facilities........................
Section 10.08 Limitation on Rights of
Certificateholders...................
Section 10.09 Inspection and Audit
Rights..................................
Section 10.10 Certificates Nonassessable
and Fully Paid....................
Section 10.11 Rule of
Construction.........................................
Section 10.12 Waiver of Jury
Trial.........................................
Section 10.13 Opinions of Internal Counsel
of the Responsible Party........
SCHEDULES
Schedule I
Mortgage Loan Schedule
Schedule II
Representations and Warranties of the Servicer
Schedule III
Representations and Warranties of the Responsible Party as to
the Mortgage Loans
Schedule IV
Representations and Warranties of the Responsible Party as to
the Responsible Party
Schedule V
Representations and Warranties of the Depositor as to the
Mortgage Loans
Schedule VI
Representations and Warranties of the Custodian
EXHIBITS
Exhibit A
Form of Class A, Class M and Class B Certificate
Exhibit B
Form of Class P Certificate
Exhibit C
Form of Class R Certificate
Exhibit D
Form of Class X Certificate
Exhibit E
Form of Initial Certification of Trustee and Custodian
Exhibit F
Form of Document Certification and Exception Report of Trustee
and Custodian
Exhibit G
Form of Residual Transfer Affidavit
Exhibit H
Form of Transferor Certificate
Exhibit I
Form of Rule 144A Letter
Exhibit J
Form of Request for Release
Exhibit K
Form of Contents for Each Mortgage File
Exhibit L
Form of Certification to be provided with Form 10-K
Exhibit M
Form of Certification of the Trustee to be provided to
Depositor
Exhibit N
Form of Certification
of the Servicer to be provided to
Depositor
Exhibit O
Servicer Power of Attorney
Exhibit P
Purchase Agreement
<PAGE>
THIS POOLING AND SERVICING AGREEMENT, dated as of February 1,
2005,
among MORGAN STANLEY ABS CAPITAL I INC., a
Delaware corporation, as depositor
(the "Depositor"), COUNTRYWIDE HOME LOANS
SERVICING LP, a Texas limited
partnership, as servicer (the "Servicer"),
WMC MORTGAGE CORP., a California
corporation, as responsible party (the
"Responsible Party"), WELLS FARGO BANK,
NATIONAL ASSOCIATION, a national banking
association, as custodian (the
"Custodian"), and DEUTSCHE BANK NATIONAL
TRUST COMPANY, a national banking
association, as trustee (the
"Trustee"),
W I T N E S S E T H:
In consideration of the mutual agreements herein contained, the
parties hereto agree as follows:
PRELIMINARY STATEMENT
The Trustee shall elect that two segregated asset pools within
the
Trust Fund be treated for federal income
tax purposes as comprising two REMICs
(each, a "REMIC" or, in the alternative,
the Lower Tier REMIC and the Upper Tier
REMIC, respectively). Each Class of
Certificates (other than the Class P and
Class R Certificates), other than the right
of each Class of LIBOR Certificates
to receive Basis Risk CarryForward Amounts
and the right of the Class X
Certificates to receive payments from the
Interest Rate Cap Agreements,
represents ownership of a regular interest
in the Upper Tier REMIC for purposes
of the REMIC Provisions. The Class R
Certificate represents ownership of the
sole class of residual interest in each of
the Lower Tier REMIC and the Upper
Tier REMIC for purposes of the REMIC
Provisions. The Startup Day for each REMIC
described herein is the Closing Date. The
latest possible maturity date for each
Certificate is the latest date referenced
in Section 2.05. The Upper Tier REMIC
shall hold as assets the several classes of
uncertificated Lower Tier Regular
Interests, set out below. Each such Lower
Tier Regular Interest is hereby
designated as a regular interest in the
Lower Tier REMIC. The Class LT-A-1ss,
Class LT-A-1mz, Class LT-A-2a, Class
LT-A-2b, Class LT-A-2c, Class LT-M-1, Class
LT-M-2, Class LT-M-3, Class LT-M-4, Class
LT-M-5, Class LT-M-6, Class LT-B-1,
Class LT-B-2 and Class LT-B-3 Interests are
hereby designated the LT Accretion
Directed Classes (the "LT Accretion
Directed Classes"). The Class P Certificates
represent beneficial ownership of the
Prepayment Charges, each Class of LIBOR
Certificates represents beneficial
ownership of a regular interest in the Upper
Tier REMIC and the right to receive Basis
Risk CarryForward Amounts and the
Class X Certificates represent beneficial
ownership of a regular interest in the
Upper Tier REMIC, the Excess Reserve Fund
Account and the Interest Rate Cap
Agreements, which portions of the Trust
Fund shall be treated as a grantor
trust.
Lower
Tier
Corresponding
Lower Tier
Interest
Initial Lower Tier
Upper Tier
Class Designation Rate
Principal Amount
REMIC Class
----------------- ----------
-------------------------- ---------------
Class LT-A-1ss
(1) 1/2
initial Corresponding
A-1ss
Upper Tier REMIC Class
initial Class Certificate
Balance
Class LT-A-1mz
(1) 1/2
initial Corresponding
A-1mz
Upper Tier REMIC Class
initial Class Certificate
Balance
Class LT-A-2a
(1) 1/2
initial Corresponding
A-2a
Upper Tier REMIC Class
initial Class Certificate
Balance
Class LT-A-2b
(1) 1/2
initial Corresponding
A-2b
Upper Tier REMIC Class
initial Class Certificate
Balance
Class LT-A-2c
(1) 1/2
initial Corresponding
A-2c
Upper Tier REMIC Class
initial Class Certificate
Balance
Class LT-M-1
(1) 1/2
initial Corresponding
M-1
Upper Tier REMIC Class
initial Class Certificate
Balance
Class LT-M-2
(1) 1/2
initial Corresponding
M-2
Upper Tier REMIC Class
initial Class Certificate
Balance
Class LT-M-3
(1) 1/2
initial Corresponding
M-3
Upper Tier REMIC Class
initial Class Certificate
Balance
Class LT-M-4
(1) 1/2
initial Corresponding
M-4
Upper Tier REMIC Class
initial Class Certificate
Balance
Class LT-M-5
(1) 1/2
initial Corresponding
M-5
Upper Tier REMIC Class
initial Class Certificate
Balance
Class LT-M-6
(1) 1/2
initial Corresponding
M-6
Upper Tier REMIC Class
initial
Class Certificate
Balance
Class LT-B-1
(1) 1/2
initial Corresponding
B-1
Upper Tier REMIC Class
initial Class Certificate
Balance
Class LT-B-2
(1) 1/2
initial Corresponding
B-2
Upper Tier REMIC Class
initial Class Certificate
Balance
Class LT-B-3
(1) 1/2
initial Corresponding
B-3
Upper Tier REMIC Class
initial Class Certificate
Balance
Class LT-Accrual
(1) 1/2
Pool Stated Principal
Balance plus 1/2
Subordinated Amount, less
aggregate initial Lower-
Tier Principal Amount of
Class LT-Group I and Class
LT-Group II
Class LT-Group I
(2)
0.001% aggregate Stated
Principal
Balance of
Group I Mortgage Loans (4)
Class LT-Group II
(3)
0.001% aggregate Stated
Principal Balance of Group
II Mortgage Loans (4)
Class LT-R
(5)
(5)
------------
(1) The interest rate with respect to any Distribution Date for these
interests
is a per annum variable rate equal to the WAC Cap.
(2) The interest rate with
respect to any Distribution Date for the Class
LT-Group I
Interest is a per annum variable rate (expressed as a
percentage
rounded to eight decimal places) equal to the Loan Group I Cap.
(3) The interest rate with
respect to any Distribution Date for the Class
LT-Group
II Interest is a per annum variable rate (expressed as a
percentage
rounded to eight decimal places) equal to the Loan Group II
Cap.
(4) For all Distribution Dates,
the Lower Tier Principal Amount of these Lower
Tier
Regular Interests shall be rounded to eight decimal places.
(5) The Class LT-R Interest is
the sole class of residual interest in the
Lower Tier
REMIC and it does not have a principal amount or an interest
rate.
The Lower Tier REMIC shall hold as assets all of the assets
included in the Trust Fund other than
Prepayment
Charges, the Interest Rate
Cap Agreements, the Excess Reserve Fund Account,
and the Lower Tier
Regular
Interests.
On each Distribution Date, 50% of the increase in the
Subordinated
Amount will be payable as a reduction of
the Lower Tier Principal Amounts of the
LT Accretion Directed Classes (each such
Class will be reduced by an amount
equal to 50% of any increase in the
Subordinated Amount that is attributable to
a reduction in the Class Certificate
Balance of its Corresponding Class) and
will be accrued and added to the Lower Tier
Principal Amount of the Class
LT-Accrual Interest. On each Distribution
Date, the increase in the Lower Tier
Principal Amount of the Class LT-Accrual
Interest may not exceed interest
accruals for such Distribution Date for the
Class LT-Accrual Interest. In the
event that: (i) 50% of the increase in the
Subordinated Amount exceeds (ii)
interest accruals on the Class LT-Accrual
Interest for such Distribution Date,
the excess for such Distribution Date
(accumulated with all such excesses for
all prior Distribution Dates) will be added
to any increase in the Subordinated
Amount for purposes of determining the
amount of interest accrual on the Class
LT-Accrual Interest payable as principal on
the LT Accretion Directed Classes on
the next Distribution Date pursuant to the
first sentence of this paragraph. All
payments of scheduled principal and
prepayments of principal generated by the
Mortgage Loans shall be allocated (i) 50%
to the Class LT-Accrual Interest, the
Class LT-Group I Interest and the Class
LT-Group II Interest (and further
allocated among these Lower Tier Regular
Interests in the manner described
below) and (ii) 50% to the LT Accretion
Directed Classes (principal payments
shall be allocated among such LT Accretion
Directed Classes in an amount equal
to 50% of the principal amounts allocated
to their respective Corresponding
Classes), until paid in full.
Notwithstanding the above, principal payments
allocated to the Class X Certificates that
result in the reduction in the
Subordinated Amount shall be allocated to
the Class LT-Accrual Interest (until
paid in full). Realized Losses shall be
applied so that after all distributions
have been made on each Distribution Date
(i) the Lower Tier Principal Amount of
each LT Accretion Directed Class is equal
to 50% of the Class Certificate
Balance of its Corresponding Class, and
(ii) the Class LT-Accrual Interest, the
Class LT-Group I Interest and the Class
LT-Group II Interest (and further
allocated among these Lower Tier Regular
Interests in the manner described
below) is equal to 50% of the aggregate
Stated Principal Balance of the Mortgage
Loans plus 50% of the Subordinated Amount.
As among the Class LT-Accrual
Interest, the Class LT-Group I Interest and
the Class LT-Group II Interest, all
payments of scheduled principal and
prepayments of principal generated by the
Mortgage Loans, and all Realized Losses,
allocable to such Lower Tier Regular
Interests shall be allocated (i) to the
Class LT-Group I Interest and the Class
LT-Group II Interest, each from the related
Loan Group so that their respective
Lower-Tier Principal Amounts (computed to
at least eight decimal places) are
equal to 0.001% of the aggregate Stated
Principal Balance of the Mortgage Loans
in the related Loan Group and (ii) the
remainder to the Class LT-Accrual
Interest.
The Upper Tier REMIC shall issue the following classes of Upper
Tier
Regular Interests and each such interest,
other than the Class UT-R Interest, is
hereby designated as a regular interest in
the Upper Tier REMIC.
Upper Tier
Interest Rate Initial Upper
Tier
and
Principal Amount
Corresponding and
Corresponding
Corresponding
Upper Tier
Class
Class Certificate
Class of
Class Designation Pass-Through Rate
Balance
Certificates
------------------- -----------------
----------------- -----------------
Class A-1ss
(1)
$425,115,000
Class A-1ss(9)
Class A-1mz
(2)
$106,279,000
Class A-1mz(9)
Class A-2a
(3)
$166,533,000
Class A-2a(9)
Class A-2b
(4)
$185,000,000
Class A-2b(9)
Class A-2c
(5)
$37,000,000
Class A-2c(9)
Class M-1
(6)
$39,024,000
Class M-1(9)
Class M-2
(6)
$35,006,000
Class M-2(9)
Class M-3
(6)
$22,382,000
Class M-3(9)
Class M-4
(6)
$20,085,000
Class M-4(9)
Class M-5
(6)
$18,364,000
Class M-5(9)
Class M-6
(6)
$17,217,000
Class M-6(9)
Class B-1
(6)
$16,069,000
Class
B-1(9)
Class B-2
(6)
$12,625,000
Class B-2(9)
Class B-3
(6)
$12,625,000
Class B-3(9)
Class X
(7)
$0 (7) Class X(7)
Class UT-R
(8)
$0 (8) Class R
------------
(1) The Class A-1ss Interest
will bear interest during each Interest Accrual
Period at
a per annum rate equal to (a) on or prior to the Optional
Termination Date, the least of (i) LIBOR plus 0.4225%, (ii) the
Loan Group
I Cap and
(iii) the WAC Cap or (b) after the Optional Termination Date,
the least
of (i) LIBOR plus 0.8450%, (ii) the Loan Group I Cap and (iii)
the WAC
Cap.
(2) The Class A-1mz Interest
will bear interest during each Interest Accrual
Period at
a per annum rate equal to (a) on or prior to the Optional
Termination Date, the least of (i) LIBOR plus 0.2900%, (ii) the
Loan Group
I Cap and
(iii) the WAC Cap or (b) after the Optional Termination Date,
the least
of (i) LIBOR plus 0.5800%, (ii) the Loan Group I Cap and (iii)
the WAC
Cap.
(3) The Class A-2a Interest will
bear interest during each Interest Accrual
Period at
a per annum rate equal to (a) on or prior to the Optional
Termination Date, the least of (i) LIBOR plus 0.1000%, (ii) the
Loan Group
II Cap and
(iii) the WAC Cap or (b) after the Optional Termination Date,
the least
of (i) LIBOR plus 0.2000%, (ii) the Loan
Group II
Cap and (iii) the WAC Cap.
(4) The Class A-2b Interest will
bear interest during each Interest Accrual
Period at
a per annum rate equal to (a) on or prior to the Optional
Termination Date, the least of (i) LIBOR plus 0.2200%, (ii) the
Loan Group
II Cap and
(iii) the WAC Cap or (b) after the Optional Termination Date,
the least
of (i) LIBOR plus 0.4400%, (ii) the Loan Group II Cap and (iii)
the WAC
Cap.
(5) The Class A-2c Interest will
bear interest during each Interest Accrual
Period at
a per annum rate equal to (a) on or prior to the Optional
Termination Date, the least of (i) LIBOR plus 0.3500%, (ii) the
Loan Group
II Cap and
(iii) the WAC Cap or (b) after the Optional Termination Date,
the least
of (i) LIBOR plus 0.7000%, (ii) the Loan Group II Cap and (iii)
the WAC
Cap.
(6) The Class M-1, Class M-2,
Class M-3, Class M-4, Class M-5, Class M-6,
Class B-1,
Class B-2 and Class B-3 Interests will bear interest during
each
Interest Accrual Period at a per annum rate equal to (a) on or
prior
to the
Optional Termination Date, the lesser of (i) LIBOR plus
0.4700%,
0.4900%,
0.5200%, 0.6900%, 0.7300%, 0.8000%, 1.2200%, 1.3000% and
2.1500%,
respectively, and (ii) the WAC Cap or (b) after the Optional
Termination
Date, the
lesser of (i) LIBOR plus 0.7050%, 0.7350%, 0.7800%, 1.0350%,
1.0950%,
1.2000%, 1.8300%, 1.9500% and 3.2250%, respectively, and (ii)
the
WAC
Cap.
(7) The Class X Interest has an
initial principal balance of $34,433,233, but
it will
not accrue interest on such balance but will accrue interest on
a
notional
principal balance. As of any Distribution Date, the Class X
Interest
shall have a notional principal balance equal to the aggregate
of
the
principal balances of the Lower Tier Regular Interests as of the
first
day of the
related Interest Accrual Period. With respect to any Interest
Accrual
Period, the Class X Interest shall bear interest at a rate
equal
to the
excess, if any, of the WAC Cap over the product of (i) 2 and
(ii)
the
weighted average Lower Tier Interest Rates of the Lower Tier
Regular
Interests,
where the Lower Tier Interest Rates on each of the Class
LT-Accrual
Interest, Class LT-Group I Interest and Class LT-Group II
Interest
is subject to a cap equal to zero and each LT Accretion
Directed
Class is
subject to a cap equal to the Pass-Through Rate on its
Corresponding Class. With respect to any Distribution Date,
interest that
so accrues
on the notional principal balance of the Class X Interest shall
be
deferred in an amount equal to any increase in the Subordinated
Amount
on such
Distribution Date. Such deferred interest shall not itself bear
interest.
The Class X Certificates will represent beneficial ownership of
the Class
X Interest, the Interest Rate Cap Agreements, and amounts in
the
Excess
Reserve Fund Account, subject to the obligation to make
payments
from the
Excess Reserve Fund Account in respect of Basis Risk
CarryForward
Amounts.
For federal income tax purposes, the Trustee will treat a Class
X
Certificateholder's obligation to make payments from the Excess
Reserve
Fund
Account as payments made pursuant to an interest rate cap
contract
written by
the Class X Certificateholders in favor of each Class of LIBOR
Certificates. Such rights of the Class X Certificateholders and
LIBOR
Certificateholders shall be treated as held in a portion of the
Trust Fund
that is
treated as a grantor trust under subpart E, Part I of subchapter
J
of the
Code.
(8) The Class UT-R Interest is
the sole class of residual interest in the
Upper Tier
REMIC. The Class UT-R Interest does not have an interest rate.
(9) Each of these Certificates
will represent not only the ownership of the
Corresponding Class of Upper Tier Regular Interest but also the
right to
receive
payments from the Excess Reserve Fund Account in respect of any
Basis Risk
CarryForward Amounts. For federal income tax purposes, the
Trustee
will treat a Certificateholder's right to receive payments from
the Excess
Reserve Fund Account as payments made pursuant to an interest
rate cap
contract written by the Class X Certificateholders.
The minimum denomination for each Class of Certificates, other
than
the Class P, Class R and the Class X
Certificates, will be $25,000 with integral
multiples of $1 in excess thereof. The
minimum denomination for the Class P and
the Class X Certificates will each be a 1%
Percentage Interest in such Class.
The Class R Certificate will represent a
100% Percentage Interest in such Class.
It is expected that
each Class of
Certificates will
receive its
final distribution of principal and interest on or prior to the Final
Scheduled Distribution Date.
Set forth below are designations of Classes of Certificates to
the
categories used herein:
Book-Entry Certificates...... All Classes
of Certificates other than the
Physical Certificates.
Class A Certificates......... Class A-1ss,
Class A-1mz, Class A-2a, Class A-2b
and Class A-2c Certificates.
Delay Certificates........... None.
ERISA-Restricted
Certificates............... Class
R Certificates, Class P Certificates and
Class X Certificates; any certificate with a
rating below the lowest applicable permitted
rating under the Underwriters' Exemption.
LIBOR Certificates........... Class A and
Subordinated Certificates.
Non-Delay Certificates....... Class A,
Class X and Subordinated Certificates.
Offered Certificates......... All Classes
of Certificates other than the Private
Certificates.
Physical Certificates........ Class P,
Class X and Class R Certificates.
Private Certificates......... Class A-1ss,
Class P, Class X and Class R
Certificates.
Rating Agencies.............. Moody's,
Fitch and Standard & Poor's.
Regular Certificates......... All Classes
of Certificates other than the Class P
and Class R Certificates.
Residual Certificates........ Class R
Certificates.
Subordinated Certificates.... Class M-1,
Class M-2, Class M-3, Class M-4, Class
M-5, Class M-6, Class B-1, Class B-2 and Class B-3
Certificates.
<PAGE>
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and
phrases,
unless the context otherwise requires,
shall have the following meanings:
Accepted Servicing Practices: With respect to any Mortgage
Loan,
those mortgage servicing practices set
forth in Section 3.01(a) of this
Agreement.
Account: Any of the Collection Account, the Distribution
Account,
any Escrow Account or the Excess Reserve
Fund Account. Each Account shall be an
Eligible Account.
Accrued Certificate Interest Distribution Amount: With respect
to
any Distribution Date for each Class of
LIBOR Certificates, the amount of
interest accrued during the related
Interest Accrual Period at the applicable
Pass-Through Rate on the related Class
Certificate Balance immediately prior to
such Distribution Date, as reduced by such
Class's share of Net Prepayment
Interest Shortfalls and Relief Act Interest
Shortfalls for such Distribution
Date allocated to such Class pursuant to
Section 4.02.
Adjustable Rate Mortgage Loan: An adjustable rate Mortgage
Loan.
Adjusted Net Mortgage Rate: As to each Mortgage Loan and at any
time, the per annum rate equal to the
Mortgage Rate less the Expense Fee Rate.
Adjustment Date: As to any Adjustable Rate Mortgage Loan, the
first
Due Date on which the related Mortgage Rate
adjusts as set forth in the related
Mortgage Note and each Due Date thereafter
on which the Mortgage Rate adjusts as
set forth in the related Mortgage Note.
Advance: Any P&I Advance or Servicing Advance.
Advance Facility: A financing or other facility as described in
Section 10.07.
Advancing Person: The Person to whom the Servicer's rights
under
this Agreement to be reimbursed for any
P&I Advances or Servicing Advances have
been assigned pursuant to Section
10.07.
Affiliate: With respect to any Person, any other Person
controlling,
controlled by or under common control with
such first Person. For the purposes
of this definition, "control" means the
power to direct the management and
policies of such Person, directly or
indirectly, whether through the ownership
of voting securities, by contract or
otherwise; and the terms "controlling" and
"controlled" have meanings correlative to
the foregoing.
Agreement: This Pooling and Servicing Agreement and all
amendments
or supplements hereto.
Amount Held for Future Distribution: As to the Certificates on
any
Distribution Date, the aggregate amount
held in the Collection Account at the
close of business on the related
Determination Date on account of (i) Principal
Prepayments, Insurance Proceeds,
Condemnation Proceeds and Liquidation Proceeds
on the Mortgage Loans received after the
end of the related Prepayment Period
and (ii) all Scheduled Payments on the
Mortgage Loans due after the end of the
related Due Period.
Applied Realized Loss Amount: With respect to any Distribution
Date,
the amount, if any, by which the aggregate
Class Certificate Balance of the
LIBOR Certificates after distributions of
principal on such Distribution Date
exceeds the aggregate Stated Principal
Balance of the Mortgage Loans for such
Distribution Date.
Appraised Value: The value set forth in an appraisal made in
connection with the origination of the
related Mortgage Loan as the value of the
Mortgaged Property.
Assignment of Mortgage: An assignment of the Mortgage, notice
of
transfer or equivalent instrument in
recordable form (other than the assignee's
name and recording information not yet
returned from the recording office),
reflecting the sale of the Mortgage to the
Trustee.
Available Funds: With respect to any Distribution Date and the
Mortgage Loans to the extent received by
the Trustee (x) the sum of (i) all
scheduled installments of interest (net of
the related Expense Fees) and
principal due on the Due Date on such
Mortgage Loans in the related Due Period
and received by the Servicer on or prior to
the related Determination Date,
together with any P&I Advances in
respect thereof; (ii) all Condemnation
Proceeds, Insurance Proceeds and
Liquidation Proceeds received by the Servicer
during the related Prepayment Period (in
each case, net of unreimbursed expenses
incurred in connection with a liquidation
or foreclosure and unreimbursed
Advances, if any); (iii) all partial or
full prepayments on the Mortgage Loans
received by the Servicer during the related
Prepayment Period together with all
Compensating Interest, if applicable,
thereon (excluding any Prepayment
Charges); (iv) all Substitution Adjustment
Amounts with respect to the
substitutions of Mortgage Loans that occur
during the month in which such
Distribution Date occurs; (v) amounts
received with respect to such Distribution
Date as the Repurchase Price in respect of
a Mortgage Loan repurchased by the
Depositor or the Responsible Party, as
applicable, as of such Distribution Date;
(vi) the proceeds received with respect to
the termination of the Trust Fund
pursuant to clause (a) of Section 9.01; and
(vii) the Closing Date Deposit
Amount; reduced by (y) amounts in
reimbursement for Advances previously made
with respect to the Mortgage Loans and
other amounts as to which the Servicer,
the Depositor, the Custodian or the Trustee
are entitled to be paid or
reimbursed pursuant to this Agreement.
Balloon Loan: Any Mortgage Loan that requires only payments of
interest until the stated maturity date of
the Mortgage Loan or Scheduled
Payments of principal which (not including
the payment due on its stated
maturity date) are based on an amortization
schedule that would be insufficient
to fully amortize the principal thereof by
the stated maturity date of the
Mortgage Loan.
Basic Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the
Principal Remittance Amount for such
Distribution Date over (ii) the Excess
Subordinated Amount, if any, for such
Distribution Date.
Basis Risk CarryForward Amount: With respect to each Class of
LIBOR
Certificates, as of any Distribution Date,
the sum of (A) if on such
Distribution Date the Pass-Through Rate for
any Class of LIBOR Certificates is
based upon a Loan Group Cap or the WAC Cap,
the excess of (i) the amount of
interest such Class of Certificates would
otherwise be entitled to receive on
such Distribution Date had such rate been
calculated as the sum of LIBOR and the
applicable Pass-Through Margin on such
Class of Certificates for such
Distribution Date, over (ii) the amount of
interest payable on such Class of
Certificates at, with respect to each Class
of Group I Class A Certificates, the
lesser of the Loan Group I Cap or the WAC
Cap, with respect to each Class of
Group II Class A Certificates, the lesser
of the Loan Group II Cap or the WAC
Cap, and with respect to each other Class
of LIBOR Certificates, the WAC Cap, as
applicable, for such Distribution Date and
(B) the Basis Risk CarryForward
Amount for such Class of Certificates for
all previous Distribution Dates not
previously paid, together with interest
thereon at a rate equal to the sum of
LIBOR and the applicable Pass-Through
Margin for such Class of Certificates for
such Distribution Date.
Basis Risk Payment: For any Distribution Date, an amount equal
to
the lesser of (i) the aggregate of the
Basis Risk CarryForward Amounts for such
Distribution Date and (ii) the Class X
Distributable Amount (prior to any
reduction for Basis Risk Payments).
Best's: Best's Key Rating Guide, as the same shall be amended
from
time to time.
Book-Entry Certificates: As specified in the Preliminary
Statement.
Business Day: Any day other than (i) Saturday or Sunday, or (ii)
a
day on which banking and savings and loan
institutions, in (a) the States of New
York, California, Texas or Delaware, (b)
the State in which the Servicer's
servicing operations are located, or (c)
the State in which the Trustee's
operations are located, are authorized or
obligated by law or executive order to
be closed.
Cap Provider: Morgan Stanley Capital Services, Inc., a Delaware
corporation, and its successors in
interest.
Certificate: Any one of the Certificates executed by the Trustee
in
substantially the forms attached hereto as
exhibits.
Certificate Balance: With respect to any Class of Certificates,
other than the Class X, Class P or Class R
Certificates, at any date, the
maximum dollar amount of principal to which
the Holder thereof is then entitled
hereunder, such amount being equal to the
Denomination thereof minus all
distributions of principal previously made
with respect thereto and in the case
of any Certificates, reduced by any Applied
Realized Loss Amounts allocated to
such Class of Certificates pursuant to
Section 4.05; provided, however, that
immediately following the Distribution Date
on which a Subsequent Recovery is
distributed, the Class Certificate Balances
of any Class or Classes of
Certificates that have been previously
reduced by Applied Realized Loss Amounts
will be increased, in order of seniority,
by the amount of the Subsequent
Recovery distributed on such Distribution
Date (up to the amount of the Unpaid
Realized Loss Amount for such Class or
Classes for such Distribution Date). The
Class P, Class X and Class R Certificates
have no Certificate Balance.
Certificate Owner: With respect to a Book-Entry Certificate,
the
Person who is the beneficial owner of such
Book-Entry Certificate.
Certificate Register: The register maintained pursuant to
Section
5.02.
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 any affiliate
of the Depositor shall be deemed not
to be Outstanding and the Percentage
Interest evidenced thereby shall not be
taken into account in determining whether
the requisite amount of Percentage
Interests necessary to effect such consent
has been obtained; provided, however,
that if any such Person (including the
Depositor) owns 100% of the Percentage
Interests evidenced by a Class of
Certificates, such Certificates shall be
deemed to be Outstanding for purposes of
any provision hereof that requires the
consent of the Holders of Certificates of a
particular Class as a condition to
the taking of any action hereunder. The
Trustee 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.
Certification: As defined in Section 8.12.
Class: All Certificates bearing the same class designation as
set
forth in the Preliminary Statement.
Class A Certificate Group: The Group I Class A Certificates or
the
Group II Class A Certificates, as
applicable.
Class A Certificates: The Class A-1ss, Class A-1mz, Class A-2a,
Class A-2b and Class A-2c Certificates.
Class A Principal Allocation Percentage: With respect to any
Distribution Date, the percentage
equivalent of a fraction, determined as
follows: (A) with respect to the Group I
Class A Certificates, a fraction, the
numerator of which is (x) the portion of
the Principal Remittance Amount for
such Distribution Date that is attributable
to the principal received or
advanced on the Group I Mortgage Loans and
the denominator of which is (y) the
Principal Remittance Amount for such
Distribution Date; and (B) with respect to
the Group II Class A Certificates, a
fraction, the numerator of which is (x) the
portion of the Principal Remittance Amount
for such Distribution Date that is
attributable to the principal received or
advanced on the Group II Mortgage
Loans and the denominator of which is (y)
the Principal Remittance Amount for
such Distribution Date.
Class A Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the
aggregate Class Certificate Balances of
the Class A Certificates immediately prior
to such Distribution Date over (ii)
the lesser of (A) 60.30% of the aggregate
Stated Principal Balance of the
Mortgage Loans for such Distribution Date
and (B) the excess, if any, of the
aggregate Stated Principal Balance of the
Mortgage Loans for such Distribution
Date over $5,738,786.
Class A-1mz Certificates: All Certificates bearing the class
designation of "Class A-1mz".
Class A-1ss Certificates: All Certificates bearing the class
designation of "Class A-1ss".
Class A-2a Certificates: All Certificates bearing the class
designation of "Class A-2a".
Class A-2b Certificates: All Certificates bearing the class
designation of "Class A-2b".
Class A-2c Certificates: All Certificates bearing the class
designation of "Class A-2c".
Class B Cap Agreement: The interest rate cap agreement, dated
February 24, 2005, between Morgan Stanley
Capital Services Inc. and the Trustee,
relating to the Class B Certificates.
Class B Certificates: The Class B-1, Class B-2 and Class B-3
Certificates.
Class B-1 Certificates: All Certificates bearing the class
designation of "Class B-1".
Class B-1 Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the
sum of (A) the aggregate Class
Certificate Balances of the Class A
Certificates (after taking into account the
distribution of the Class A Principal
Distribution Amount for such Distribution
Date), (B) the Class Certificate Balance of
the Class M-1 Certificates (after
taking into account the distribution of the
Class M-1 Principal Distribution
Amount for such Distribution Date), (C) the
Class Certificate Balance of the
Class M-2 Certificates (after taking into
account the distribution of the Class
M-2 Principal Distribution Amount for such
Distribution Date), (D) the Class
Certificate Balance of the Class M-3
Certificates (after taking into account the
distribution of the Class M-3 Principal
Distribution Amount for such
Distribution Date), (E) the Class
Certificate Balance of the Class M-4
Certificates (after taking into account the
distribution of the Class M-4
Principal Distribution Amount for such
Distribution Date), (F) the Class
Certificate Balance of the Class M-5
Certificates (after taking into account the
distribution of the Class M-5 Principal
Distribution Amount for such
Distribution Date), (G) the Class
Certificate Balance of the Class M-6
Certificates (after taking into account the
distribution of the Class M-6
Principal Distribution Amount for such
Distribution Date) and (H) the Class
Certificate Balance of the Class B-1
Certificates immediately prior to such
Distribution Date over (ii) the lesser of
(A) 89.60% of the aggregate Stated
Principal Balance of the Mortgage Loans for
such Distribution Date and (B) the
excess, if any, of the aggregate Stated
Principal Balance of the Mortgage Loans
for such Distribution Date over
$5,738,786.
Class B-2 Certificates: All Certificates bearing the class
designation of "Class B-2".
Class B-2 Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the
sum of (A) the aggregate Class
Certificate Balances of the Class A
Certificates (after taking into account the
distribution of the Class A Principal
Distribution Amount for such Distribution
Date), (B) the Class Certificate Balance of
the Class M-1 Certificates (after
taking into account the distribution of the
Class M-1 Principal Distribution
Amount for such Distribution Date), (C) the
Class Certificate Balance of the
Class M-2 Certificates (after taking into
account the distribution of the Class
M-2 Principal Distribution Amount for such
Distribution Date), (D) the Class
Certificate Balance of the Class M-3
Certificates (after taking into account the
distribution of the Class M-3 Principal
Distribution Amount for such
Distribution Date), (E) the Class
Certificate Balance of the Class M-4
Certificates (after taking into account the
distribution of the Class M-4
Principal Distribution Amount for such
Distribution Date), (F) the Class
Certificate Balance of the Class M-5
Certificates (after taking into account the
distribution of the Class M-5 Principal
Distribution Amount for such
Distribution Date), (G) the Class
Certificate Balance of the Class M-6
Certificates (after taking into account the
distribution of the Class M-6
Principal Distribution Amount for such
Distribution Date), (H) the Class
Certificate Balance of the Class B-1
Certificates (after taking into account the
distribution of the Class B-1 Principal
Distribution Amount for such
Distribution Date) and (I) the Class
Certificate Balance of the Class B-2
Certificates immediately prior to such
Distribution Date over (ii) the lesser of
(A) 91.80% of the aggregate Stated
Principal Balance of the Mortgage Loans for
such Distribution Date and (B) the excess,
if any, of the aggregate Stated
Principal Balance of the Mortgage Loans for
such Distribution Date over
$5,738,786.
Class B-3 Certificates: All Certificates bearing the class
designation of "Class B-3".
Class B-3 Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the
sum of (A) the aggregate Class
Certificate Balances of the Class A
Certificates (after taking into account the
distribution of the Class A Principal
Distribution Amount for such Distribution
Date), (B) the Class Certificate Balance of
the Class M-1 Certificates (after
taking into account the distribution of the
Class M-1 Principal Distribution
Amount for such Distribution Date), (C) the
Class Certificate Balance of the
Class M-2 Certificates (after taking into
account the distribution of the Class
M-2 Principal Distribution Amount for such
Distribution Date), (D) the Class
Certificate Balance of the Class M-3
Certificates (after taking into account the
distribution of the Class M-3 Principal
Distribution Amount for such
Distribution Date), (E) the Class
Certificate Balance of the Class M-4
Certificates (after taking into account the
distribution of the Class M-4
Principal Distribution Amount for such
Distribution Date), (F) the Class
Certificate Balance of the Class M-5
Certificates (after taking into account the
distribution of the Class M-5 Principal
Distribution Amount for such
Distribution Date), (G) the Class
Certificate Balance of the Class M-6
Certificates (after taking into account the
distribution of the Class M-6
Principal Distribution Amount for such
Distribution Date), (H) the Class
Certificate Balance of the Class B-1
Certificates (after taking into account the
distribution of the Class B-1 Principal
Distribution Amount for such
Distribution Date), (I) the Class
Certificate Balance of the Class B-2
Certificates (after taking into account the
distribution of the Class B-2
Principal Distribution Amount for such
Distribution Date) and (J) the Class
Certificate Balance of the Class B-3
Certificates immediately prior to such
Distribution Date over (ii) the lesser of
(A) 94.00% of the aggregate Stated
Principal Balance of the Mortgage Loans for
such Distribution Date and (B) the
excess, if any, of the aggregate Stated
Principal Balance of the Mortgage Loans
for such Distribution Date over
$5,738,786.
Class Certificate Balance: With respect to any Class and as to
any
date of determination, the aggregate of the
Certificate Balances of all
Certificates of such Class as of such
date.
Class M
Cap Agreement: The interest rate cap agreement, dated
February 24, 2005, between Morgan Stanley
Capital Services Inc. and the Trustee,
relating to the Class M Certificates.
Class M Certificates: The Class M-1, Class M-2 and Class M-3
Certificates.
Class M-1 Certificates: All Certificates bearing the class
designation of "Class M-1".
Class M-1 Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the
sum of (A) the aggregate Class
Certificate Balances of the Class A
Certificates (after taking into account the
distribution of the Class A Principal
Distribution Amount for such Distribution
Date), and (B) the Class Certificate
Balance of the Class M-1 Certificates
immediately prior to such Distribution Date
over (ii) the lesser of (A) 67.10%
of the aggregate Stated Principal Balance
of the Mortgage Loans for such
Distribution Date and (B) the excess, if
any, of the aggregate Stated Principal
Balance of the Mortgage Loans for such
Distribution Date over $5,738,786.
Class M-2 Certificates: All Certificates bearing the class
designation of "Class M-2".
Class M-2 Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the
sum of (A) the aggregate Class
Certificate Balances of the Class A
Certificates (after taking into account the
distribution of the Class A Principal
Distribution Amount for such Distribution
Date), (B) the Class Certificate Balance of
the Class M-1 Certificates (after
taking into account the distribution of the
Class M-1 Principal Distribution
Amount for such Distribution Date) and (C)
the Class Certificate Balance of the
Class M-2 Certificates immediately prior to
such Distribution Date over (ii) the
lesser of (A) 73.20% of the aggregate
Stated Principal Balance of the Mortgage
Loans for such Distribution Date and (B)
the excess, if any, of the aggregate
Stated Principal Balance of the Mortgage
Loans for such Distribution Date over
$5,738,786.
Class M-3 Certificates: All Certificates bearing the class
designation of "Class M-3".
Class M-3 Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the
sum of (A) the aggregate Class
Certificate Balances of the Class A
Certificates (after taking into account the
distribution of the Class A Principal
Distribution Amount for such Distribution
Date), (B) the Class Certificate Balance of
the Class M-1 Certificates (after
taking into account the distribution of the
Class M-1 Principal Distribution
Amount for such Distribution Date), (C) the
Class Certificate Balance of the
Class M-2 Certificates (after taking into
account the distribution of the Class
M-2 Principal Distribution Amount for such
Distribution Date) and (D) the Class
Certificate Balance of the Class M-3
Certificates immediately prior to such
Distribution Date over (ii) the lesser of
(A) 77.10% of the aggregate Stated
Principal Balance of the Mortgage Loans for
such Distribution Date and (B) the
excess, if any, of the aggregate Stated
Principal Balance of the Mortgage Loans
for such Distribution Date over
$5,738,786.
Class M-4 Certificates: All Certificates bearing the class
designation of "Class M-4".
Class M-4 Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the
sum of (A) the aggregate Class
Certificate Balances of the Class A
Certificates (after taking into account the
distribution of the Class A Principal
Distribution Amount for such Distribution
Date), (B) the Class Certificate Balance of
the Class M-1 Certificates (after
taking into account the distribution of the
Class M-1 Principal Distribution
Amount for such Distribution Date), (C) the
Class Certificate Balance of the
Class M-2 Certificates (after taking into
account the distribution of the Class
M-2 Principal Distribution Amount for such
Distribution Date), (D) the Class
Certificate Balance of the Class M-3
Certificates (after taking into account the
distribution of the Class M-3 Principal
Distribution Amount for such
Distribution Date) and (E) the Class
Certificate Balance of the Class M-4
Certificates immediately prior to such
Distribution Date over (ii) the lesser of
(A) 80.60% of the aggregate Stated
Principal Balance of the Mortgage Loans for
such Distribution Date and (B) the excess,
if any, of the aggregate Stated
Principal Balance of the Mortgage Loans for
such Distribution Date over
$5,738,786.
Class M-5 Certificates: All Certificates bearing the class
designation of "Class M-5".
Class M-5 Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the
sum of (A) the aggregate Class
Certificate Balances of the Class A
Certificates (after taking into account the
distribution of the Class A Principal
Distribution Amount for such Distribution
Date), (B) the Class Certificate Balance of
the Class M-1 Certificates (after
taking into account the distribution of the
Class M-1 Principal Distribution
Amount for such Distribution Date), (C) the
Class Certificate Balance of the
Class M-2 Certificates (after taking into
account the distribution of the Class
M-2 Principal Distribution Amount for such
Distribution Date), (D) the Class
Certificate Balance of the Class M-3
Certificates (after taking into account the
distribution of the Class M-3 Principal
Distribution Amount for such
Distribution Date), (E) the Class
Certificate Balance of the Class M-4
Certificates (after taking into account the
distribution of the Class M-4
Principal Distribution Amount for such
Distribution Date) and (F) the Class
Certificate Balance of the Class M-5
Certificates immediately prior to such
Distribution Date over (ii) the lesser of
(A) 83.80% of the aggregate Stated
Principal Balance of the Mortgage Loans for
such Distribution Date and (B) the
excess, if any, of the aggregate Stated
Principal Balance of the Mortgage Loans
for such Distribution Date over
$5,738,786.
Class M-6 Certificates: All Certificates bearing the class
designation of "Class M-6".
Class M-6 Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the
sum of (A) the aggregate Class
Certificate Balances of the Class A
Certificates (after taking into account the
distribution of the Class A Principal
Distribution Amount for such Distribution
Date), (B) the Class Certificate Balance of
the Class M-1 Certificates (after
taking into account the distribution of the
Class M-1 Principal Distribution
Amount for such Distribution Date), (C) the
Class Certificate Balance of the
Class M-2 Certificates (after taking into
account the distribution of the Class
M-2 Principal Distribution Amount for such
Distribution Date), (D) the Class
Certificate Balance of the Class M-3
Certificates (after taking into account the
distribution of the Class M-3 Principal
Distribution Amount for such
Distribution Date), (E) the Class
Certificate Balance of the Class M-4
Certificates (after taking into account the
distribution of the Class M-4
Principal Distribution Amount for such
Distribution Date), (F) the Class
Certificate Balance of the Class M-5
Certificates (after taking into account the
distribution of the Class M-5 Principal
Distribution Amount for such
Distribution Date) and (G) the Class
Certificate Balance of the Class M-6
Certificates immediately prior to such
Distribution Date over (ii) the lesser of
(A) approximately 86.80% of the aggregate
Stated Principal Balance of the
Mortgage Loans for such Distribution Date
and (B) the excess, if any, of the
aggregate Stated Principal Balance of the
Mortgage Loans for such Distribution
Date over $5,738,786.
Class P Certificates: All Certificates bearing the class
designation
of "Class P".
Class R Certificates: All Certificates bearing the class
designation
of "Class R".
Class X Certificates: All Certificates bearing the class
designation
of "Class X".
Class X Distributable Amount: On any Distribution Date, the sum
of
(i) as a distribution in respect of
interest, the amount of interest that has
accrued on the Class X Interest and not
applied as an Extra Principal
Distribution Amount on such Distribution
Date, plus any such accrued interest
remaining undistributed from prior
Distribution Dates, plus, without duplication
(ii) as a distribution in respect of
principal, any portion of the principal
balance of the Class X Interest which is
distributable as a Subordination
Reduction Amount, minus (iii) any amounts
paid as a Basis Risk Payment.
Class X Interest: The Upper Tier Regular Interest represented by
the
Class X Certificates as specified and
described in the Preliminary Statement and
the related footnote thereto.
Closing Date: February 24, 2005.
Closing Date Deposit Amount: $326.77 (all of which is allocable
to
principal) deposited by the Depositor into
the Distribution Account on the
Closing Date. $22.01 of the Closing Date
Deposit Amount shall be attributable to
the Group I Mortgage Loans, and $304.76 of
the Closing Date Deposit Amount shall
be attributable to the Group II Mortgage
Loans.
Code: The Internal Revenue Code of 1986, including any successor
or
amendatory provisions.
Collection Account: As defined in Section 3.10(a).
Combined Loan-to-Value Ratio or CLTV: As of any date and as to
any
Second Lien Mortgage Loan, the ratio,
expressed as a percentage, of the (a) sum
of (i) the outstanding principal balance of
the Second Lien Mortgage Loan and
(ii) the outstanding principal balance as
of such date of any mortgage loan or
mortgage loans that are senior or equal in
priority to the Second Lien Mortgage
Loan and which are secured by the same
Mortgaged Property to (b) the Appraised
Value as determined pursuant to the
Underwriting Guidelines of the related
Mortgaged Property as of the origination of
the Second Lien Mortgage Loan.
Compensating Interest: For any Distribution Date, the lesser of
(a)
the Prepayment Interest Shortfall, if any,
for such Distribution Date, with
respect to voluntary Principal Prepayments
in Full (excluding any payments made
upon liquidation of any Mortgage Loan) and
(b) the amount of the Servicing Fee
payable to the Servicer for such
Distribution Date.
Condemnation Proceeds: All awards of settlements in respect of
a
Mortgaged Property, whether permanent or
temporary, partial or entire, by
exercise of the power of eminent domain or
condemnation.
Convertible Mortgage Loan: Any individual Adjustable Rate
Mortgage
Loan which contains a provision whereby the
Mortgagor is permitted to convert
the Adjustable Rate Mortgage Loan to a
Fixed Rate Mortgage Loan in accordance
with the terms of the related Mortgage
Note.
Corporate Trust Office: The designated office of the Trustee in
the
State of California at which at any
particular time its corporate trust business
with respect to this Agreement is
administered, which office at the date of the
execution of this Agreement is located at
1761 East St. Andrew Place, Santa Ana,
California 92705, Attn: Trust
Administration-MS05W1, facsimile no. (714)
247-6329, and which is the address to which
notices to and correspondence with
the Trustee should be directed.
Corresponding Class: The class of interests in any REMIC
created
under this Agreement that corresponds to
the class of interests in another such
REMIC or to a Class of Certificates in the
manner set out below:
Corresponding
Corresponding Lower Tier
Upper Tier
Corresponding Class of
Class Designation
Regular Interest
Certificates
-------------------------- ---------------- ----------------------
Class LT-A-1ss
Class A-1ss
Class A-1ss
Class LT-A-1mz
Class A-1mz
Class A-1mz
Class LT-A-2a
Class A-2a
Class A-2a
Class LT-A-2b
Class A-2b
Class A-2b
Class LT-A-2c
Class A-2c
Class A-2c
Class LT-M-1
Class M-1
Class M-1
Class LT-M-2
Class M-2
Class M-2
Class LT-M-3
Class M-3
Class M-3
Class LT-M-4
Class M-4
Class M-4
Class LT-M-5
Class M-5
Class M-5
Class LT-M-6
Class M-6
Class M-6
Class LT-B-1
Class B-1
Class B-1
Class LT-B-2
Class B-2
Class B-2
Class LT-B-3
Class B-3
Class B-3
N/A
Class X
Class X
Cumulative Loss Percentage: With respect to any Distribution
Date,
the percentage equivalent of a fraction,
the numerator of which is the aggregate
amount of Realized Losses incurred from the
Cut-off Date to the last day of the
calendar month preceding the month in which
such Distribution Date occurs and
the denominator of which is the Cut-off
Date Pool Principal Balance of the
Mortgage Loans.
Cumulative Loss Trigger Event: With respect to any Distribution
Date, a Cumulative Loss Trigger Event
exists if the quotient (expressed as a
percentage) of (x) the aggregate amount of
Realized Losses incurred since the
Cut-off Date through the last day of the
related Prepayment Period, divided by
(y) the Cut-off Date Pool Principal
Balance, exceeds the applicable cumulative
loss percentages set forth below with
respect to such Distribution Date:
Distribution Date Occurring In
Cumulative Loss Percentage
------------------------------
--------------------------
March 2008 through February 2009
3.000% for the first
month, plus an
additional 1/12th of
1.750% for each
month thereafter
(e.g., 3.875% in
September 2008)
March 2009 through February 2010
4.750% for the first
month, plus an
additional 1/12th of
1.500% for each
month thereafter
(e.g., 5.500% in
September 2009)
March 2010 through February 2011
6.250% for the first
month, plus an
additional 1/12th of
0.750% for each
month thereafter
(e.g., 6.625% in
September 2010)
March 2011 and thereafter
7.000%
Custodial File: With respect to each Mortgage Loan, the file
retained by the Trustee or Custodian, as
applicable, consisting of items (a)-(h)
as listed on Exhibit K hereto.
Custodian: Wells Fargo Bank, National Association, a national
banking association, and its successors in
interest.
Custodian Fee: With respect to each Distribution Date, the
aggregate
amount of fees and expenses that the
Custodian is entitled to receive, pursuant
to the fee schedule related to the Wells
Fargo Mortgage Loans to which the
Depositor and the Custodian have previously
agreed, for custodial services
rendered with respect to the Wells Fargo
Mortgage Loans during the related Due
Period. The Custodian shall inform the
Servicer and the Trustee of the Custodian
Fee on or prior to the related
Determination Date.
Custodian Fee Rate: As to any Distribution Date, the Custodian
Fee
for such Distribution Date, converted to a
per annum rate on (i) the aggregate
Stated Principal Balance of the Mortgage
Loans as of the first day of the
related Interest Accrual Period and (ii)
with respect to the Determination Date
in March 2005 only, the portion of the
Closing Date Deposit Amount allocable to
principal (calculated on an actual/360
basis).
Cut-off Date: February 1, 2005.
Cut-off Date Pool Principal Balance: The aggregate Stated
Principal
Balances of all Mortgage Loans as of the
Cut-off Date plus the portion of the
Closing Date Deposit Amount allocable to
principal.
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 (after
giving effect to payments of principal due
on that date, whether or not
received).
Data Tape Information: The information provided by the
Responsible
Party as of the Cut-off Date to the
Depositor or the Purchaser setting forth the
following information with respect to each
Mortgage Loan: (1) the Mortgagor's
name; (2) as to each Mortgage Loan, the
Scheduled Principal Balance as of the
Cut-off Date; (3) the Mortgage Rate Cap;
(4) the Index; (5) a code indicating
whether the Mortgaged Property is
owner-occupied; (6) the type of Mortgaged
Property; (7) the first date on which the
Scheduled Payment was due on the
Mortgage Loan and, if such date is not
consistent with the Due Date currently in
effect, such Due Date; (8) the "paid
through date" based on payments received
from the related Mortgagor; (9) the
original principal amount of the Mortgage
Loan; (10) with respect to Adjustable Rate
Mortgage Loans, the Maximum Mortgage
Rate; (11) the type of Mortgage Loan (i.e.,
Fixed Rate or Adjustable Rate
Mortgage Loan, First Lien Mortgage Loan or
Second Lien Mortgage Loan); (12) a
code indicating the purpose of the loan
(i.e., purchase, rate and term
refinance, equity take-out refinance); (13)
a code indicating the documentation
style (i.e., full, asset verification,
income verification and no
documentation); (14) the credit risk score
(FICO score); (15) the loan credit
grade classification (as described in the
underwriting guidelines); (16) with
respect to each Adjustable Rate Mortgage
Loan, the Minimum Mortgage Rate; (17)
the Mortgage Rate at origination; (18) with
respect to each Adjustable Rate
Mortgage Loan, the first Adjustment Date
immediately following the Cut-off Date;
(19) the value of the Mortgaged Property;
(20) a code indicating the type, term
and amount of Prepayment Charges applicable
to such Mortgage Loan, if any; (21)
with respect to each Adjustable Rate
Mortgage Loan, the Periodic Mortgage Rate
Cap; (22) with respect to each First Lien
Mortgage Loan, the Loan-to-Value Ratio
at origination, and with respect to each
Second Lien Mortgage Loan, the Combined
Loan-to-Value Ratio at origination; and
(23) if such Mortgage Loan is covered by
a primary mortgage insurance policy or a
lender-paid primary mortgage insurance
policy, the primary mortgage insurance
rate. With respect to the Mortgage Loans
in the aggregate, the Data Tape Information
shall set forth the following
information, as of the Cut-off Date: (1)
the number of Mortgage Loans; (2) the
current aggregate outstanding principal
balance of the Mortgage Loans; (3) the
weighted average Mortgage Rate of the
Mortgage Loans; and (4) the weighted
average maturity of the Mortgage Loans.
Debt Service Reduction: With respect to any Mortgage Loan, a
reduction by a court of competent
jurisdiction in a proceeding under the United
States 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.
Deficient Valuation: With respect to any Mortgage Loan, a
valuation
of the related Mortgaged Property by a
court of competent jurisdiction in an
amount less than the then outstanding
principal balance of the Mortgage Loan,
which valuation results from a proceeding
initiated under the United States
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 5.02(e).
Delay Certificates: As specified in the Preliminary Statement.
Deleted Mortgage Loan: As defined in Section 2.03.
Delinquency Trigger Event: With respect to any Distribution Date,
a
Delinquency Trigger Event exists if the
quotient (expressed as a percentage) of
(x) the rolling three month average of the
Stated Principal Balances of 60+ Day
Delinquent Mortgage Loans for such
Distribution Date, divided by (y) the
aggregate Stated Principal Balance of the
Mortgage Loans for such Distribution
Date, equals or exceeds 40% of the prior
period's Senior Enhancement Percentage.
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: Morgan Stanley ABS Capital I Inc., a Delaware
corporation, and its successors 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 Institution: Any depository institution or trust
company,
including the Trustee, that (a) is
incorporated under the laws of the United
States of America or any State thereof, (b)
is subject to supervision and
examination by federal or state banking
authorities and (c) has outstanding
unsecured commercial paper or other
short-term unsecured debt obligations that
are rated "P-1" by Moody's, "F1+" by Fitch
and "A-1" by Standard & Poor's.
Depository Participant: A broker, dealer, bank or other
financial
institution or other Person for whom from
time to time a Depository effects
book-entry transfers and pledges of
securities deposited with the Depository.
Determination Date: With respect to each Distribution Date, the
18th
day (or if such day is not a Business Day,
the immediately preceding Business
Day) in the calendar month in which such
Distribution Date occurs.
Distribution Account: The separate Eligible Account created and
maintained by the Trustee pursuant to
Section 3.07(d) in the name of the Trustee
for the benefit of the Certificateholders
and designated "Deutsche Bank National
Trust Company in trust for registered
holders of Morgan Stanley ABS Capital I
Inc. Trust 2005-WMC1 Mortgage Pass-Through
Certificates, Series 2005-WMC1".
Funds in the Distribution Account shall be
held in trust for the
Certificateholders for the uses and
purposes set forth in this Agreement.
Distribution Account Deposit Date: As to any Distribution Date,
12:00 noon New York City time on the third
Business Day immediately preceding
such Distribution Date.
Distribution Date: The 25th day of each calendar month, or if
such
day is not a Business Day, the next
succeeding Business Day, commencing in March
2005.
Document Certification and Exception Report: The report attached
to
Exhibit F hereto.
Due Date: The day of the month on which the Scheduled Payment is
due
on a Mortgage Loan, exclusive of any days
of grace.
Due Period: With respect to any Distribution Date, the period
commencing on the second day of the
calendar month preceding the month in which
such Distribution Date occurs and ending on
the first day of the calendar month
in which such Distribution Date occurs.
Eligible Account: Either (i) an account 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 a subsidiary of a holding
company, the short-term unsecured debt
obligations of such holding company) are
rated "A-1+" by Standard & Poor's,
"F-1" by Fitch and "P-1" by Moody's (or a
comparable rating if another Rating
Agency is specified by the Depositor by
written notice to the Servicer) at the
time any amounts are held on deposit
therein, (ii) an account or accounts the
deposits in which are fully insured by the
FDIC, (iii) a trust account or
accounts maintained with a federal or state
chartered depository institution or
trust company acting in its fiduciary
capacity or (iv) any other account
acceptable to each Rating Agency as
specified in writing. 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: A best efforts or firm
commitment
underwriting or private placement that
meets the requirements of Prohibited
Transaction Exemption ("PTE") 2002-41, 67
Fed. Reg. 54487 (2002) (or any
successor thereto), or any substantially
similar administrative exemption
granted by the U.S. Department of
Labor.
ERISA-Restricted
Certificate: As
specified in the Preliminary
Statement.
Escrow Account: The Eligible Account or Accounts established
and
maintained pursuant to Section 3.09(b).
Escrow Payments: As defined in Section 3.09(b).
Event of Default: As defined in Section 7.01.
Excess Reserve Fund Account: The separate Eligible Account
created
and maintained by the Trustee pursuant to
Sections 3.07(b) and 3.07(c) in the
name of the Trustee for the benefit of the
Regular Certificateholders and
designated "Deutsche Bank National Trust
Company in trust for registered holders
of Morgan Stanley ABS Capital I Inc. Trust
2005-WMC1, Mortgage Pass-Through
Certificates, Series 2005-WMC1". Funds in
the Excess Reserve Fund Account shall
be held in trust for the Regular
Certificateholders for the uses and purposes
set forth in this Agreement. Amounts on
deposit in the Excess Reserve Fund
Account shall not be invested.
Excess Subordinated Amount: With respect to any Distribution
Date,
the excess, if any, of (a) the Subordinated
Amount on such Distribution Date
over (b) the Specified Subordinated Amount
for such Distribution Date.
Exchange Act: As defined in Section 8.12(a).
Expense Fee Rate: As to each Mortgage Loan, a per annum rate
equal
to the sum of the Servicing Fee Rate, the
Trustee Fee Rate, the Custodian Fee
Rate and any lender-paid primary mortgage
insurance fee rate, if applicable.
Expense Fees: As to each Mortgage Loan, the sum of the
Servicing
Fee, the Trustee Fee, the Custodian Fee and
any lender-paid primary mortgage
insurance fee, if applicable.
Extra Principal Distribution Amount: As of any Distribution
Date,
the lesser of (x) the related Total Monthly
Excess Spread for such Distribution
Date and (y) the related Subordination
Deficiency for such Distribution Date.
Fannie Mae: The Federal National Mortgage Association, or any
successor thereto.
Fannie Mae Guides: The Fannie Mae Sellers' Guide and the Fannie
Mae
Servicers' Guide and all amendments or
additions thereto.
FDIC: The Federal Deposit Insurance Corporation, or any
successor
thereto.
Final Recovery Determination: With respect to any defaulted
Mortgage
Loan or any REO Property (other than any
Mortgage Loan or REO Property purchased
by the Responsible Party or the Depositor
as contemplated by this Agreement), a
determination made by the Servicer that all
Insurance Proceeds, Condemnation
Proceeds, Liquidation Proceeds and other
payments or recoveries which the
Servicer, in its reasonable good faith
judgment, expects to be finally
recoverable in respect thereof have been so
recovered. The Servicer shall
maintain records, prepared by a Servicing
Officer, of each Final Recovery
Determination made thereby.
Final Scheduled Distribution Date: The Final Scheduled
Distribution
Date for each Class of Certificates is the
Distribution Date in each of the
following months:
Month of
Final Scheduled
Distribution Date
---------------------
Class A-1ss
Certificates................................... January 2035
Class A-1mz
Certificates................................... January 2035
Class A-2a
Certificates.................................... January 2035
Class A-2b
Certificates.................................... January 2035
Class A-2c
Certificates.................................... January 2035
Class M-1
Certificates..................................... January 2035
Class M-2
Certificates..................................... January 2035
Class M-3
Certificates..................................... January 2035
Class M-4
Certificates..................................... January 2035
Class M-5
Certificates..................................... January 2035
Class M-6
Certificates..................................... January 2035
Class B-1
Certificates..................................... January 2035
Class B-2
Certificates..................................... January 2035
Class B-3
Certificates..................................... January 2035
Class X
Certificates....................................... January 2035
Class P
Certificates....................................... January 2035
Class R
Certificates....................................... January 2035
First Lien Mortgage Loan: A Mortgage Loan secured by a first
lien
Mortgage on the related Mortgaged
Property.
Fitch: Fitch, Inc., and its successors in interest. If Fitch is
designated as a Rating Agency in the
Preliminary Statement, for purposes of
Section 10.05(b) the address for notices to
Fitch shall be Fitch, Inc., One
State Street Plaza, New York, New York
10004, Attention: MBS Monitoring - Morgan
Stanley ABS Capital I Inc. Trust 2005-WMC1,
or such other address as Fitch may
hereafter furnish to the Depositor, the
Trustee and the Servicer.
Fixed Rate Mortgage Loan: A fixed rate Mortgage Loan.
Freddie Mac: 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.
Gross Margin: With respect to each Adjustable Rate Mortgage
Loan,
the fixed percentage amount set forth in
the related Mortgage Note to be added
to the applicable Index to determine the
Mortgage Rate.
Group I Class A Cap Agreement: The interest rate cap agreement,
dated February 24, 2005, between Morgan
Stanley Capital Services Inc. and the
Trustee, relating to the Group I Class A
Certificates.
Group I Class A Certificates: The Class A-1ss and Class A-1mz
Certificates, collectively.
Group I Mortgage Loans: The Mortgage Loans identified on the
Mortgage Loan Schedule as Group I Mortgage
Loans.
Group I Sequential Trigger Event: (a) With respect to any
Distribution Date occurring before March
2008, the circumstances in which the
aggregate amount of Realized Losses
incurred since the Cut-off Date through the
last day of the related Prepayment Period
divided by the aggregate Stated
Principal Balance of the Mortgage Loans as
of the Cut-off Date equals or exceeds
3.00% and (b) with respect to any
Distribution Date occurring in or after March
2008, a Trigger Event.
Group II Class A Cap Agreement: The interest rate cap
agreement,
dated February 24, 2005, between Morgan
Stanley Capital Services Inc. and the
Trustee, relating to the Group II Class A
Certificates.
Group II Class A Certificates: The Class A-2a Certificates, the
Class A-2b Certificates and the Class A-2c
Certificates, collectively.
Group II Mortgage Loans: The Mortgage Loans identified on the
Mortgage Loan Schedule as Group II Mortgage
Loans.
Index: As to each Adjustable Rate Mortgage Loan, the index from
time
to time in effect for the adjustment of the
Mortgage Rate set forth as such on
the related Mortgage Note.
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: With respect to each Mortgage Loan, proceeds
of
insurance policies insuring the Mortgage
Loan or the related Mortgaged Property.
Interest Accrual Period: With respect to each Class of
Non-Delay
Certificates and the Corresponding Class of
Lower Tier Regular Interests and any
Distribution Date, the period commencing on
the Distribution Date occurring in
the month preceding the month in which the
current Distribution Date occurs and
ending on the day immediately preceding the
current Distribution Date (or, in
the case of the first Distribution Date,
the period from and including the
Closing Date to but excluding such first
Distribution Date). For purposes of
computing interest accruals on each Class
of Non-Delay Certificates, each
Interest Accrual Period has the actual
number of days in such month and each
year is assumed to have 360 days.
Interest Rate Adjustment Date: With respect to each Adjustable
Rate
Mortgage Loan, the date, specified in the
related Mortgage Note and the Mortgage
Loan Schedule, on which the Mortgage Rate
is adjusted.
Interest Rate Cap Agreements: The Group I Class A Cap Agreement,
the
Group II Class A Cap Agreement, the Class M
Cap Agreement and the Class B Cap
Agreement.
Interest Rate Cap Payment: (a) With respect to the Group I Class
A
Certificates and the first 33 Distribution
Dates, the amount, if any, equal to
the product, determined on an "actual/360"
basis, of (i) the excess, if any, of
the lesser of (A) the one-month LIBOR rate
as of the related reset date under
the Group I Class A Cap Agreement and (B)
the applicable cap ceiling rate set
forth on Schedule A to such Interest Rate
Cap Agreement for such Distribution
Date over the applicable cap strike rate
set forth on Schedule A to such
Interest Rate Cap Agreement for such
Distribution Date, (ii) the applicable
Group I Class A notional amount set forth
on Schedule A to the Group I Class A
Cap Agreement for such Distribution Date
and (iii) the multiplier set forth on
Schedule A to such Interest Rate Cap
Agreement; (b) with respect to the Group II
Class A Certificates and the first 33
Distribution Dates, the amount, if any,
equal to the product, determined on an
"actual/360" basis, of (i) the excess, if
any, of the lesser of (A) the one-month
LIBOR rate as of the related reset date
under the Group II Class A Cap Agreement
and (B) the applicable cap ceiling rate
set forth on Schedule A to such Interest
Rate Cap Agreement for such
Distribution Date over the applicable cap
strike rate set forth on Schedule A to
such Interest Rate Cap Agreement for such
Distribution Date, (ii) the applicable
Group II Class A notional amount set forth
on Schedule A to the Group II Class A
Cap Agreement for such Distribution Date
and (iii) the multiplier set forth on
Schedule A to such Interest Rate Cap
Agreement; (c) with respect to the Class M
Certificates and the first 45 Distribution
Dates, the amount, if any, equal to
the product, determined on an "actual/360"
basis, of (i) the excess, if any, of
the lesser of (A) the one-month LIBOR rate
as of the related reset date under
the Class M Cap Agreement and (B) the
applicable cap ceiling rate set forth on
Schedule A to such Interest Rate Cap
Agreement for such Distribution Date over
the applicable cap strike rate set forth on
Schedule A to such Interest Rate Cap
Agreement for such Distribution Date, (ii)
the applicable Class M notional
amount set forth on Schedule A to the Class
M Cap Agreement for such
Distribution Date and (iii) the multiplier
set forth on Schedule A to such
Interest Rate Cap Agreement; and (d) with
respect to the Class B Certificates
and the first 45 Distribution Dates, the
amount, if any, equal to the product,
determined on an "actual/360" basis, of (i)
the excess, if any, of the lesser of
(A) the one-month LIBOR rate as of the
related reset date under the Class B Cap
Agreement and (B) the applicable cap
ceiling rate set forth on Schedule A to
such Interest Rate Cap Agreement for such
Distribution Date over the applicable
cap strike rate set forth on Schedule A to
such Interest Rate Cap Agreement for
such Distribution Date, (ii) the applicable
Class B notional amount set forth on
Schedule A to the Class B Cap Agreement for
such Distribution Date and (iii) the
multiplier set forth on Schedule A to such
Interest Rate Cap Agreement.
Interest Remittance Amount: With respect to any Distribution
Date
and the Mortgage Loans in a Loan Group,
that portion of Available Funds
attributable to interest relating to
Mortgage Loans in that Loan Group.
Investment Account: As defined in Section 3.12(a).
Late Collections: With respect to any Mortgage Loan and any Due
Period, all amounts received after the
Determination Date immediately following
such Due Period, whether as late payments
of Scheduled Payments or as Insurance
Proceeds, Condemnation Proceeds,
Liquidation Proceeds or otherwise, which
represent late payments or collections of
principal and/or interest due (without
regard to any acceleration of payments
under the related Mortgage and Mortgage
Note) but delinquent for such Due Period
and not previously recovered.
LIBOR: With respect to any Interest Accrual Period for the
LIBOR
Certificates, the rate determined by the
Trustee on the related LIBOR
Determination Date on the basis of the
offered rate for one-month U.S. dollar
deposits as such rate appears on Telerate
Page 3750 as of 11:00 a.m. (London
time) on such date; provided, that if such
rate does not appear on Telerate Page
3750, the rate for such date will be
determined on the basis of the rates at
which one-month U.S. dollar deposits are
offered by the Reference Banks at
approximately 11:00 a.m. (London time) on
such date to prime banks in the London
interbank market. In such event, the
Trustee shall request the principal London
office of each of the Reference Banks to
provide a quotation of its rate. If at
least two such quotations are provided, the
rate for that date will be the
arithmetic mean of the quotations (rounded
upwards if necessary to the nearest
whole multiple of 1/16%). If fewer than two
quotations are provided as
requested, the rate for that date will be
the arithmetic mean of the rates
quoted by major banks in New York City,
selected by the Trustee (after
consultation with the Depositor), at
approximately 11:00 a.m. (New York City
time) on such date for one-month U.S.
dollar loans to leading European banks.
LIBOR Certificates: As specified in the Preliminary Statement.
LIBOR Determination Date: With respect to any Interest Accrual
Period for the LIBOR Certificates, the
second London Business Day preceding the
commencement of such Interest Accrual
Period.
Liquidated Mortgage Loan: With respect to any Distribution Date,
a
defaulted Mortgage Loan (including any REO
Property) which either (a) was
liquidated in the calendar month preceding
the month of such Distribution Date
and as to which the Servicer has certified
to the Trustee 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, or (b) is a
Second Lien Mortgage Loan (1) that is
delinquent 180 days or longer, (2) for
which the related first lien mortgage loan
is not a Mortgage Loan, and (3) as to
which the Servicer has certified to the
Trustee that it does not believe there
is a reasonable likelihood that any further
net proceeds will be received or
recovered with respect to such Second Lien
Mortgage Loan.
Liquidation Proceeds: Cash received in connection with the
liquidation of a Liquidated Mortgage Loan,
whether through a trustee's sale,
foreclosure sale or otherwise, including
any Subsequent Recoveries.
Loan Group: The Group I Mortgage Loans or the Group II Mortgage
Loans, as applicable.
Loan Group Cap: The Loan Group I Cap or the Loan Group II Cap,
as
applicable.
Loan Group I Cap: With respect to the Group I Mortgage Loans as
of
any Distribution Date, the weighted average
of the Adjusted Net Mortgage Rates
then in effect on the beginning of the
related Due Period on the Group I
Mortgage Loans, adjusted in each case to
accrue on the basis of a 360-day year
and the actual number of days in the
related Interest Accrual Period.
Loan Group II Cap: With respect to the Group II Mortgage Loans as
of
any Distribution Date, the weighted average
of the Adjusted Net Mortgage Rates
then in effect on the beginning of the
related Due Period on the Group II
Mortgage Loans, adjusted in each case to
accrue on the basis of a 360-day year
and the actual number of days in the
related Interest Accrual Period.
Loan-to-Value Ratio or LTV: With respect to any First Lien
Mortgage
Loan, the ratio (expressed as a percentage)
of the original outstanding
principal amount of the First Lien Mortgage
Loan as of the Cut-off Date (unless
otherwise indicated), to the lesser of (a)
the Appraised Value of the Mortgaged
Property at origination, and (b) if the
First Lien Mortgage Loan was made to
finance the acquisition of the related
Mortgaged Property, the purchase price of
the Mortgaged Property.
London Business Day: Any day on which dealings in deposits of
United
States dollars are transacted in the London
interbank market.
Lower Tier Interest Rate: As described in the Preliminary
Statement.
Lower Tier Principal Amount: As described in the Preliminary
Statement.
Lower Tier Regular Interest: Each of the Class LT-A-1ss, Class
LT-A-1mz, Class LT-A-2a, Class LT-A-2b,
Class LT-A-2c, Class LT-M-1, Class
LT-M-2, Class LT-M-3, Class LT-M-4, Class
LT-M-5, Class LT-M-6, Class LT-B-1,
Class LT-B-2, Class LT-B-3, Class LT-Group
I, Class LT-Group II and Class
LT-Accrual Interests as described in the
Preliminary Statement.
Lower Tier REMIC: As described in the Preliminary Statement.
Maximum Mortgage Rate: With respect to each Adjustable Rate
Mortgage
Loan, a rate that (i) is set forth on the
Data Tape Information and in the
related Mortgage Note and (ii) is the
maximum interest rate to which the
Mortgage Rate on such Adjustable Rate
Mortgage Loan may be increased during the
lifetime of such Adjustable Rate Mortgage
Loan.
MERS: Mortgage Electronic Registration Systems, Inc., a
Delaware
corporation, and its successors in
interest.
MERS Custodian: With respect to each MERS Designated Mortgage
Loan,
the Person named on the MERS System as the
custodian pursuant to the MERS
Procedures Manual.
MERS Designated Mortgage Loan: Mortgage Loans for which (a) the
Servicer on behalf of the Trust has
designated or will designate MERS as, and
has taken or will take such action as is
necessary to cause MERS to be, the
mortgagee of record, as nominee for the
Trust, in accordance with MERS Procedure
Manual, (b) the Servicer has designated or
will designate the Trust as the MERS
Investor on the MERS System, and (c) the
Servicer has designated or will
designate the Trustee as the MERS Custodian
on the MERS System.
MERS Interim Funder: With respect to each MERS Designated
Mortgage
Loan, the Person named on the MERS System
as the interim funder pursuant to the
MERS Procedures Manual.
MERS Investor: With respect to each MERS Designated Mortgage
Loan,
the Person named on the MERS System as the
investor pursuant to the MERS
Procedures Manual.
MERS Procedure Manual: The MERS Procedures Manual, as it may be
amended, supplemented or otherwise modified
from time to time.
MERS System: MERS mortgage electronic registry system, as more
particularly described in the MERS
Procedures Manual.
Minimum Mortgage Rate: With respect to each Adjustable Rate
Mortgage
Loan, a rate that (i) is set forth on the
Data Tape Information and in the
related Mortgage Note and (ii) is the
minimum interest rate to which the
Mortgage Rate on such Adjustable Rate
Mortgage Loan may be decreased during the
lifetime of such Adjustable Rate Mortgage
Loan.
Monthly Statement: The statement delivered to the
Certificateholders
pursuant to Section 4.03.
Moody's: Moody's Investors Service, Inc., and its successors in
interest. If Moody's is designated as a
Rating Agency in the Preliminary
Statement, for purposes of Section 10.05(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 Mortgage
Pass-Through Group, or such other address
as Moody's may hereafter furnish to the
Depositor, the Trustee and the Servicer.
Mortgage: The mortgage, deed of trust or other instrument
identified
on the Mortgage Loan Schedule as securing a
Mortgage Note.
Mortgage File: The items pertaining to a particular Mortgage
Loan
contained in either the Servicing File or
Custodial File.
Mortgage Loan: An individual Mortgage Loan which is the subject
of
this Agreement, each Mortgage Loan
originally sold and subject to this Agreement
being identified on the Mortgage Loan
Schedule, which Mortgage Loan includes,
without limitation, the Mortgage File, the
Scheduled Payments, Principal
Prepayments, Liquidation Proceeds,
Condemnation Proceeds, Insurance Proceeds,
REO Disposition proceeds, Prepayment
Charges, and all other rights, benefits,
proceeds and obligations arising from or in
connection with such Mortgage Loan,
excluding replaced or repurchased Mortgage
Loans.
Mortgage Loan Schedule: A schedule of Mortgage Loans annexed
hereto
as Schedule I, such schedule setting forth
the following information with
respect to each Mortgage Loan: (1) the
Mortgage Loan number; (2) the city, state
and zip code of the Mortgaged Property; (3)
the number and type of residential
units constituting the Mortgaged Property;
(4) the current Mortgage Rate; (5)
the current net Mortgage Rate; (6) the
current Scheduled Payment; (7) with
respect to each Adjustable Rate Mortgage
Loan, the Gross Margin; (8) the
original term to maturity; (9) the
scheduled maturity date; (10) the principal
balance of the Mortgage Loan as of the
Cut-off Date after deduction of payments
of principal due on or before the Cut-off
Date whether or not collected; (11)
with respect to each First Lien Mortgage
Loan, the Loan-to-Value Ratio at
origination, and with respect to each
Second Lien Mortgage Loan, the Combined
Loan-to-Value Ratio at origination; (12)
with respect to each Adjustable Rate
Mortgage Loan, the next Interest Rate
Adjustment Date; (13) with respect to each
Adjustable Rate Mortgage Loan, the lifetime
Mortgage Rate Cap; (14) whether the
Mortgage Loan is convertible or not; (15)
the Servicing Fee; (16) whether such
Mortgage Loan is a Group I Mortgage Loan or
a Group II Mortgage Loan; (17) the
date such Mortgage Loan was sold by the
Responsible Party to the Purchaser; (18)
whether such Mortgage Loan provides for a
Prepayment Charge as well as the term
and amount of such Prepayment Charge, if
any; and (19) whether Wells Fargo Bank,
National Association will be acting as
Custodian with respect to such Mortgage
Loan.
Mortgage Note: The note or other evidence of the indebtedness of
a
Mortgagor under a Mortgage Loan.
Mortgage Rate: The annual rate of interest borne on a Mortgage
Note,
which shall be adjusted from time to time
in the case of an Adjustable Rate
Mortgage Loan.
Mortgage Rate Caps: With respect to an Adjustable Rate Mortgage
Loan, the Periodic Mortgage Rate Cap, the
Maximum Mortgage Rate, and the Minimum
Mortgage Rate for such Mortgage Loan.
Mortgaged Property: With respect to each Mortgage Loan, the
real
property (or leasehold estate, if
applicable) identified on the Mortgage Loan
Schedule as securing repayment of the debt
evidenced by the related Mortgage
Note.
Mortgagor: The obligor(s) on a Mortgage Note.
Net Monthly Excess Cash Flow: For any Distribution Date, the
amount
remaining for distribution pursuant to
subsection 4.02(a)(iii) (before giving
effect to distributions pursuant to such
subsection).
Net Prepayment Interest Shortfall: For any Distribution Date,
the
amount by which the sum of the Prepayment
Interest Shortfalls for such
Distribution Date exceeds Compensating
Interest payments made with respect to
such Distribution Date.
NIM Issuer: The entity established as the issuer of the NIM
Securities.
NIM Securities: Any debt securities secured or otherwise backed
by
some or all of the Class X and Class P
Certificates that are rated by one or
more Rating Agencies.
NIM Trustee: The
trustee for the NIM Securities.
Non-Delay Certificates: As specified in the Preliminary
Statement.
Non-Permitted Transferee: A Person other than a Permitted
Transferee.
Nonrecoverable P&I Advance: Any P&I Advance previously made
or
proposed to be made in respect of a
Mortgage Loan or REO Property that, in the
good faith business judgment of the
Servicer, will not or, in the case of a
proposed P&I Advance, would not be
ultimately recoverable from related late
payments, Insurance Proceeds, Condemnation
Proceeds, or Liquidation Proceeds on
such Mortgage Loan or REO Property as
provided herein.
Nonrecoverable Servicing Advance: Any Servicing Advances
previously
made or proposed to be made in respect of a
Mortgage Loan or REO Property,
which, in accordance with Accepted
Servicing Practices, will not or, in the case
of a proposed Servicing Advance, would not
be ultimately recoverable from
related Insurance Proceeds, Condemnation
Proceeds, Liquidation Proceeds or
otherwise. The determination by the
Servicer that it has made a Nonrecoverable
Servicing Advance or that any proposed
Servicing Advances, if made, would
constitute a Nonrecoverable Servicing
Advance, shall be evidenced by an
Officer's Certificate delivered to the
Trustee.
Notice of Final Distribution: The notice to be provided pursuant
to
Section 9.02 to the effect that final
distribution on any of the Certificates
shall be made only upon presentation and
surrender thereof.
Offered Certificates: As specified in the Preliminary
Statement.
Officer's Certificate: A certificate signed by an officer of
the
Servicer with responsibility for the
servicing of the Mortgage Loans and listed
on a list delivered to the Trustee pursuant
to this Agreement.
Opinion of Counsel: A written opinion of counsel, who may be
in-house counsel for the Servicer or the
Subservicer, reasonably acceptable to
the Trustee; provided, that any Opinion of
Counsel relating to (a) qualification
of either the Lower Tier REMIC or Upper
Tier REMIC or (b) compliance with the
REMIC Provisions, must be (unless otherwise
stated in such Opinion of Counsel)
an opinion of counsel who (i) is in fact
independent of the Servicer of the
Mortgage Loans, (ii) does not have any
material direct or indirect financial
interest in the Servicer of the Mortgage
Loans or in an affiliate of either and
(iii) is not connected with the Servicer of
the Mortgage Loans as an officer,
employee, director or person performing
similar functions.
Optional Termination Date: The Distribution Date on which the
aggregate Stated Principal Balance of the
Mortgage Loans, as of the last day of
the related Due Period, is equal to 10% or
less of the Cut-off Date Pool
Principal Balance.
OTS: Office of Thrift Supervision, and any successor thereto.
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
(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.
P&I Advance: As to any Mortgage Loan or REO Property, any
advance
made by the Servicer in respect of any
Remittance Date representing the
aggregate of all payments of principal and
interest, net of the Servicing Fee,
that were due during the related Due Period
on the Mortgage Loans and that were
delinquent on the related Determination
Date, plus certain amounts representing
assumed payments not covered by any current
net income on the Mortgaged
Properties acquired by foreclosure or deed
in lieu of foreclosure as determined
pursuant to Section 4.01.
Pass-Through Margin: With respect to each Class of Regular
Certificates, the following percentages:
Class A-1ss Certificates, 0.4225%;
Class A-1mz Certificates, 0.2900%; Class
A-2a Certificates, 0.1000%; Class A-2b
Certificates, 0.2200%; Class A-2c
Certificates, 0.3500%; Class M-1 Certificates,
0.4700%; Class M-2 Certificates, 0.4900%;
Class M-3 Certificates, 0.5200%; Class
M-4 Certificates, 0.6900%; Class M-5
Certificates, 0.7300%; Class M-6
Certificates, 0.8000%; Class B-1
Certificates, 1.2200%; Class B-2 Certificates,
1.3000%; and Class B-3 Certificates,
2.1500%. On the first Distribution Date
after the Optional Termination Date, the
Pass-Through Margins shall increase to:
Class A-1ss Certificates, 0.8450%; Class
A-1mz Certificates, 0.5800%; Class A-2a
Certificates, 0.2000%; Class A-2b
Certificates, 0.4400%; Class A-2c
Certificates, 0.7000%; Class M-1
Certificates, 0.7050%; Class M-2 Certificates,
0.7350%; Class M-3 Certificates, 0.7800%;
Class M-4 Certificates, 1.0350%; Class
M-5 Certificates, 1.0950%; Class M-6
Certificates, 1.2000%; Class B-1
Certificates, 1.8300%; Class B-2
Certificates, 1.9500%; and Class B-3
Certificates, 3.2250%.
Pass-Through Rate: For each Class of Certificates and each
Lower
Tier Regular Interest, 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.
Periodic Mortgage Rate Cap: With respect to an Adjustable Rate
Mortgage Loan, the periodic limit on each
Mortgage Rate adjustment as set forth
in the related Mortgage Note.
Permitted Investments: Any one or more of the following
obligations
or securities acquired at a purchase price
of not greater than par, regardless
of whether issued by the Servicer, the
Trustee or any of their respective
Affiliates:
(i) direct obligations of, or obligations fully guaranteed as
to
timely
payment of principal and interest by, the United States or any
agency or
instrumentality thereof, provided such obligations are backed
by
the full
faith and credit of the United States;
(ii) demand and time deposits in, certificates of deposit of,
or
bankers'
acceptances (which shall each have an original maturity of not
more than
90 days and, in the case of bankers' acceptances, shall in no
event have
an original maturity of more than 365 days or a remaining
maturity
of more than 30 days) denominated in United States dollars and
issued by,
any Depository Institution and rated "F1+" by Fitch, "A-1+" by
Standard
& Poor's and "P-1" by Moody's (to the extent they are
Rating
Agencies
hereunder);
(iii) repurchase obligations with respect to any security
described
in clause
(i) above entered into with a Depository Institution (acting as
principal);
(iv) securities bearing interest or sold at a discount that are
issued by
any corporation incorporated under the laws of the United
States
of America
or any State thereof and that are rated by each Rating Agency
that rates
such securities in its highest long-term unsecured rating
categories
at the time of such investment or contractual commitment
providing
for such investment;
(v) commercial paper (including both non-interest-bearing
discount
obligations and interest-bearing obligations payable on demand or
on a
specified
date not more than 30 days after the date of acquisition
thereof)
that is rated by each Rating Agency that rates such securities
in
its
highest short-term unsecured debt rating available at the time of
such
investment;
(vi) units of money market funds, including money market funds
managed or
advised by the Depositor, the Trustee or an Affiliate thereof,
that have
been rated "Aaa" by Moody's, "AAAm" by Standard & Poor's and,
if
rated by
Fitch, at least "AA" by Fitch (to the extent they are Rating
Agencies
hereunder); and
(vii) if previously confirmed in writing to the Trustee, any
other
demand,
money market or time deposit, or any other obligation, security
or
investment, as may be acceptable to the Rating Agencies as a
permitted
investment
of funds backing "Aaa" or "AAA" rated securities;
provided, however, that no instrument
described hereunder shall evidence either
the right to receive (a) only interest with
respect to the obligations
underlying such instrument or (b) both
principal and interest payments derived
from obligations underlying such instrument
and the interest and principal
payments with respect to such instrument
provide a yield to maturity at par
greater than 120% of the yield to maturity
at par of the underlying obligations.
Permitted Transferee: Any 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)(1) 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) a Person that is not a U.S.
Person or a U.S. Person with respect to
whom income from a Residual Certificate
is attributable to a foreign permanent
establishment or fixed base, within the
meaning of an applicable income tax treaty,
of such Person or any other U.S.
Person, (vi) an "electing large
partnership" within the meaning of Section 775
of the Code 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 either
the Lower Tier REMIC or the Upper
Tier REMIC to fail to qualify as a REMIC at
any time that the Certificates are
outstanding. 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
Freddie Mac, a majority of its board of
directors is not selected by such
government unit.
Person: Any individual, corporation, partnership, joint
venture,
association, limited liability company,
joint-stock company, trust,
unincorporated organization or government,
or any agency or political
subdivision thereof.
Physical Certificates: As specified in the Preliminary
Statement.
Pool Stated Principal Balance: As to any Distribution Date, the
aggregate of the Stated Principal Balances
of the Mortgage Loans for such
Distribution Date that were Outstanding
Mortgage Loans on the Due Date in the
related Due Period.
Prepayment Charge: Any prepayment premium, penalty or charge
collected by the Servicer with respect to a
Mortgage Loan from a Mortgagor in
connection with any voluntary Principal
Prepayment in Full pursuant to the terms
of the related Mortgage Note.
Prepayment Interest Shortfall: With respect to any Distribution
Date
and each Mortgage Loan that was, during the
related Prepayment Period, the
subject of a Principal Prepayment which is
not accompanied by an amount equal to
one month of interest that would have been
due on such Mortgage Loan on the Due
Date in the following month and which was
applied by the Servicer to reduce the
outstanding principal balance of such
Mortgage Loan on a date preceding such Due
Date, an amount equal to the product of (a)
the Mortgage Rate net of the
Servicing Fee Rate for such Mortgage Loan,
(b) the amount of the Principal
Prepayment for such Mortgage Loan, (c)
1/360 and (d) the number of days
commencing on the date on which such
Principal Prepayment was applied and ending
on the last day of the calendar month in
which the related Prepayment Period
begins.
Prepayment Period: With respect to any Distribution Date, the
calendar month preceding the calendar month
in which such Distribution Date
occurs.
Principal Distribution Amount: For any Distribution Date, the sum
of
(i) the Basic Principal Distribution Amount
for such Distribution Date and (ii)
the Extra Principal Distribution Amount for
such Distribution Date.
Principal Prepayment: Any full or partial payment or other
recovery
of principal on a Mortgage Loan (including
upon liquidation of a Mortgage Loan)
which is received in advance of its
scheduled Due Date, excluding any Prepayment
Charge thereon.
Principal Prepayment in Full: Any Principal Prepayment made by
a
Mortgagor of the entire principal balance
of a Mortgage Loan.
Principal Remittance Amount: With respect to any Distribution
Date,
the amount equal to the sum of the
following amounts (without duplication) with
respect to the related Due Period: (i) each
scheduled payment of principal on a
Mortgage Loan due during such Due Period
and received by the Servicer on or
prior to the related Determination Date or
advanced by the Servicer for the
related Remittance Date, and all Principal
Prepayments received during the
related Prepayment Period; (ii) all
Liquidation Proceeds, Condemnation Proceeds
and Insurance Proceeds on the Mortgage
Loans allocable to principal actually
collected by the Servicer during the
related Prepayment Period; (iii) the
portion of the Repurchase Price allocable
to principal with respect to each
Mortgage Loan repurchased during the
related Prepayment Period; (iv) all
Substitution Adjustment Amounts allocable
to principal with respect to the
substitutions of Mortgage Loans that occur
during the calendar month in which
such Distribution Date occurs; (v) with
respect to the Distribution Date in
March 2005 only, the portion of the Closing
Date Deposit Amount allocable to
principal; and (vi) the allocable portion
of the proceeds received with respect
to the termination of the Trust Fund
pursuant to clause (a) of Section 9.01 (to
the extent such proceeds relate to
principal).
Private Certificates: As specified in the Preliminary
Statement.
Prospectus Supplement: The Prospectus Supplement, dated February
18,
2005, relating to the Offered
Certificates.
PTCE 95-60: As
defined in Section 5.02(b).
Purchase Agreement: The Mortgage Loan Purchase and Warranties
Agreement, dated as of April 1, 2004, as
amended by Amendment No. 1, dated as of
October 29, 2004, each by and between the
Purchaser, as purchaser, and the
Responsible Party, as seller (a copy of
which is attached hereto as Exhibit P).
Purchaser: Morgan Stanley Mortgage Capital Inc., a New York
corporation, and its successors in
interest, as purchaser of the Mortgage Loans
under the Purchase Agreement.
Rating Agency: Each of the Rating Agencies specified in the
Preliminary Statement. If 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 or rating category
of a Rating Agency shall mean such
rating category without giving effect to
any modifiers. For purposes of Section
10.05(b), the addresses for notices to each
Rating Agency shall be the address
specified therefor in the definition
corresponding to the name of such Rating
Agency, or such other address as either
such Rating Agency may hereafter furnish
to the Depositor, the Trustee and the
Servicer.
Realized Losses: With respect to any date of determination and
any
Liquidated Mortgage Loan, the amount, if
any, by which (a) the unpaid principal
balance of such Liquidated Mortgage Loan
together with accrued and unpaid
interest thereon exceeds (b) the
Liquidation Proceeds with respect thereto net
of the expenses incurred by the Servicer in
connection with the liquidation of
such Liquidated Mortgage Loan and net of
the amount of unreimbursed Servicing
Advances with respect to such Liquidated
Mortgage Loan.
Record Date: With respect to any Distribution Date, the close
of
business on the Business Day immediately
preceding such Distribution Date;
provided, however, that, for any
Certificate issued in definitive form, the
Record Date shall be the close of business
on the last Business Day of the month
preceding the month in which such
applicable Distribution Date occurs.
Reference Bank: As defined in Section 4.04.
Regular Certificates: As specified in the Preliminary
Statement.
Relief Act Interest Shortfall: With respect to any Distribution
Date
and any Mortgage Loan, any reduction in the
amount of interest collectible on
such Mortgage Loan for the most recently
ended Due Period as a result of the
application of the Servicemembers Civil
Relief Act or any similar state
statutes.
REMIC: A "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code.
REMIC Provisions: Provisions of the federal income tax law
relating
to real estate mortgage investment
conduits, which appear at 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.
Remittance Date: With respect to any Distribution Date, the
second
Business Day immediately preceding such
Distribution Date.
REO Disposition: The final sale by the Servicer of any REO
Property.
REO Imputed Interest: As to any REO Property, for any period,
an
amount equivalent to interest (at the
Mortgage Rate net of the Servicing Fee
Rate that would have been applicable to the
related Mortgage Loan had it been
outstanding) on the unpaid principal
balance of the Mortgage Loan as of the date
of acquisition thereof (as such balance is
reduced pursuant to Section 3.17 by
any income from the REO Property treated as
a recovery of principal).
REO Mortgage Loan: A Mortgage Loan where title to the related
Mortgaged Property has been obtained by the
Servicer in the name of the Trustee
on behalf of the Certificateholders.
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.
Repurchase Price: With respect to any Mortgage Loan for which a
breach of a representation and warranty
made by the Depositor or the Responsible
Party hereunder exists, an amount equal to
the sum of (i) the unpaid principal
balance of such Mortgage Loan as of the
date of repurchase, (ii) interest on
such unpaid principal balance of such
Mortgage Loan at the Mortgage Rate from
the last date through which interest has
been paid and distributed to the
Trustee to the date of repurchase, (iii)
all unreimbursed Servicing Advances and
(iv) all costs and expenses incurred by the
Trustee arising out of or based upon
such breach, including without limitation,
costs and expenses relating to the
Trustee's enforcement of the repurchase
obligation of the Depositor or the
Responsible Party hereunder. In addition to
the Repurchase Price, the
Responsible Party is obligated to make
certain payments for material breaches of
representations and warranties as further
set forth in Section 2.03(k) in this
Agreement.
Request for Release: The Request for Release submitted by the
Servicer to the Trustee or Custodian, as
applicable, substantially in the form
of Exhibit J.
Residual Certificates: As specified in the Preliminary
Statement.
Responsible Officer: When used with respect to the Trustee, any
vice
president, any assistant vice president,
any assistant secretary, any assistant
treasurer, any associate, or any other
officer of the Trustee customarily
performing functions similar to those
performed by any of the above designated
officers who at such time shall be officers
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 and who shall have direct
responsibility for the administration of
this Agreement.
Responsible Party: WMC Mortgage Corp., a California corporation,
and
its successors in interest.
Rule 144A Letter: As defined in Section 5.02(b).
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.
Second Lien Mortgage Loan: A Mortgage Loan secured by a second
lien
Mortgage on the related Mortgaged
Property.
Securities Act: The Securities Act of 1933, as amended.
Senior Enhancement Percentage: With respect to any Distribution
Date, the percentage obtained by dividing
(x) the sum of (i) the aggregate Class
Certificate Balance of the Subordinated
Certificates and (ii) the Subordinated
Amount (in each case after taking into
account the distributions of the
Principal Distribution Amount for such
Distribution Date) by (y) the aggregate
Stated Principal Balance of the Mortgage
Loans for such Distribution Date.
Senior Specified Enhancement Percentage: As of any date of
determination, 39.70%.
Servicer: Countrywide Home Loans Servicing LP, a Texas limited
partnership, and its successors in
interest, and if a successor servicer is
appointed hereunder, such successor.
Servicer Remittance Report: As defined in Section 4.03(d).
Servicing Advances:
The reasonable "out-of-pocket" costs and
expenses (including legal fees) incurred by
the Servicer in the performance of
its servicing obligations in connection
with a default, delinquency or other
unanticipated event, including, but not
limited to, the cost of (i) the
preservation, restoration, inspection and
protection of a Mortgaged Property,
(ii) any enforcement, administrative or
judicial proceedings, including
foreclosures and litigation, in respect of
a particular Mortgage Loan, (iii) the
management (including reasonable fees in
connection therewith) and liquidation
of any REO Property and (iv) the
performance of its obligations under Sections
3.01, 3.09, 3.13 and 3.15. The Servicing
Advances shall also include any
reasonable "out-of-pocket" costs and
expenses (including legal fees) incurred by
the Servicer in connection with executing
and recording instruments of
satisfaction, deeds of reconveyance or
Assignments of Mortgage in connection
with any foreclosure in respect of any
Mortgage Loan to the extent not recovered
from the Mortgagor or otherwise payable
under this Agreement. The Servicer shall
not be required to make any Nonrecoverable
Servicing Advances.
Servicing Fee: With respect to each Mortgage Loan and for any
calendar month, an amount equal to one
month's interest (or in the event of any
payment of interest which accompanies a
Principal Prepayment in Full made by the
Mortgagor during such calendar month,
interest for the number of days covered by
such payment of interest) at the Servicing
Fee Rate on the applicable Stated
Principal Balance of such Mortgage Loan as
of the first day of such calendar
month. Such fee shall be payable monthly,
and shall be pro-rated for any portion
of a month during which the Mortgage Loan
is serviced by the Servicer under this
Agreement. The Servicing Fee is payable
solely from, the interest portion
(including recoveries with respect to
interest from Liquidation Proceeds,
Insurance Proceeds, Condemnation Proceeds
and proceeds received with respect to
REO Properties, to the extent permitted by
Section 3.11) of such Scheduled
Payment collected by the Servicer, or as
otherwise provided under Section 3.11.
Servicing Fee Rate: With respect to each Mortgage Loan, 0.50%
per
annum.
Servicing File: With respect to each Mortgage Loan, the file
retained by the Servicer consisting of
originals or copies of all documents in
the Mortgage File which are not delivered
to the Trustee in the Custodial File
and copies of the Mortgage Loan Documents
set forth in Exhibit K hereto.
Servicing Officer: Any officer of the Servicer involved in, or
responsible for, the administration and
servicing of the Mortgage Loans whose
name and facsimile signature appear on a
list of servicing officers furnished to
the Trustee by the Servicer on the Closing
Date pursuant to this Agreement, as
such list may from time to time be
amended.
Servicing Transfer Date: With respect to any Mortgage Loan, the
date
on which servicing of such Mortgage Loan
was transferred from the Responsible
Party to the Purchaser or its designee, as
set forth on the Mortgage Loan
Schedule.
Similar Law: As defined in Section 5.02(b).
60+ Day Delinquent Mortgage Loan: (i) Each Mortgage Loan with
respect to which any portion of a Scheduled
Payment is, as of the last day of
the prior Due Period, two months or more
past due (without giving effect to any
grace period), including, without
limitation, such Mortgage Loans that are
subject to bankruptcy proceedings, (ii)
each Mortgage Loan in foreclosure and
(iii) all REO Property.
Specified Subordinated Amount: Prior to the Stepdown Date, an
amount
equal to 3.00% of the Cut-off Date Pool
Principal Balance. On and after the
Stepdown Date, an amount equal to 6.00% of
the aggregate Stated Principal
Balance of the Mortgage Loans for such
Distribution Date, subject, until the
Class Certificate Balance of each Class of
LIBOR Certificates has been reduced
to zero, to a minimum amount equal to 0.50%
of the aggregate Stated Principal
Balance of the Mortgage Loans as of the
Cut-off Date; provided, however, that
if, on any Distribution Date, a Trigger
Event exists, the Specified Subordinated
Amount shall not be reduced to the
applicable percentage of the then current
aggregate Stated Principal Balance of the
Mortgage Loans until the Distribution
Date on which a Trigger Event no longer
exists. When the Class Certificate
Balance of each Class of LIBOR Certificates
has been reduced to zero, the
Specified Subordinated Amount will
thereafter equal zero.
Standard & Poor's: Standard & Poor's Ratings Services, a
division of
The McGraw-Hill Companies, Inc., and its
successors in interest. If Standard &
Poor's is designated as a Rating Agency in
the Preliminary Statement, for
purposes of Section 10.05(b) the address
for notices to Standard & Poor's shall
be Standard & Poor's, 55 Water Street,
New York, New York 10041, Attention:
Residential Mortgage Surveillance Group -
Morgan Stanley ABS Capital I Inc.
Trust 2005-WMC1, or such other address as
Standard & Poor's may hereafter
furnish to the Depositor, the Trustee and
the Servicer.
Standard & Poor's Glossary: The Standard & Poor's
LEVELS(R)
Glossary, as may be in effect from time to
time.
Startup Day: The Closing Date.
Stated Principal Balance: As to each Mortgage Loan and as of
any
date of determination, (i) the principal
balance of the Mortgage Loan at the
Cut-off Date after giving effect to
payments of principal due on or before such
date, minus (ii) all amounts previously
remitted to the Trustee with respect to
the related Mortgage Loan representing
payments or recoveries of principal
including advances in respect of scheduled
payments of principal. For purposes
of any Distribution Date, the Stated
Principal Balance of any Mortgage Loan will
give effect to any scheduled payments of
principal received by the Servicer on
or prior to the related Determination Date
or advanced by the Servicer for the
related Remittance Date and any unscheduled
principal payments and other
unscheduled principal collections received
during the related Prepayment Period,
and the Stated Principal Balance of any
Mortgage Loan that has prepaid in full
or has become a Liquidated Mortgage Loan
during the related Prepayment Period
shall be zero.
Stepdown Date: The later to occur of (i) the earlier to occur of
(a)
the Distribution Date in March 2008 and (b)
the Distribution Date following the
Distribution Date on which the aggregate
Class Certificate Balances of the Class
A Certificates have been reduced to zero
and (ii) the first Distribution Date on
which the Senior Enhancement Percentage
(calculated for this purpose only after
taking into account payments of principal
on the Mortgage Loans applied to
reduce the Stated Principal Balance of the
Mortgage Loans for the applicable
Distribution Date but prior to any
allocation of the Principal Distribution
Amount to the Certificates on such
Distribution Date) is greater than or equal
to the Senior Specified Enhancement
Percentage.
Subordinated Amount: As of any Distribution Date, the excess,
if
any, of (a) the aggregate Stated Principal
Balance of the Mortgage Loans for
such Distribution Date over (b) the
aggregate of the Class Certificate Balances
of the LIBOR Certificates as of such
Distribution Date (after giving effect to
the payment of the Principal Remittance
Amount on such Certificates on such
Distribution Date).
Subordinated Certificates: As specified in the Preliminary
Statement.
Subordination Deficiency: With respect to any Distribution Date,
the
excess, if any, of (a) the Specified
Subordinated Amount applicable to such
Distribution Date over (b) the Subordinated
Amount applicable to such
Distribution Date.
Subordination Reduction Amount: With respect to any
Distribution
Date, an amount equal to the lesser of (a)
the Excess Subordinated Amount and
(b) the Net Monthly Excess Cash Flow.
Subsequent Recovery: With respect to any Mortgage Loan or
related
Mortgaged Property that became a Liquidated
Mortgage Loan or was otherwise
disposed of, all amounts received in
respect of such Liquidated Mortgage Loan
after an Applied Realized Loss Amount
related to such Mortgage Loan or Mortgaged
Property is allocated to reduce the Class
Certificate Balance of any Class of
Subordinated Certificates. Any Subsequent
Recovery that is received during a
Prepayment Period will be treated as
Liquidation Proceeds and included as part
of the Principal Remittance Amount for the
related Distribution Date.
Subservicer: As defined in Section 3.02(a).
Subservicing Account: As defined in Section 3.08.
Subservicing Agreements: As defined in Section 3.02(a).
Substitute Mortgage Loan: A Mortgage Loan substituted by the
Depositor or the Responsible Party 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 J, (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) be accruing interest
at a rate no lower than and not more than
1% per annum higher than, that of the
Deleted Mortgage Loan; (iii) have a
Loan-to-Value Ratio or a Combined
Loan-to-Value Ratio, as applicable, no
higher than that of the Deleted Mortgage
Loan; (iv) have a remaining term to
maturity no greater than (and not more than
one year less than that of) the Deleted
Mortgage Loan; and (v) comply with each
representation and warranty relating to the
Mortgage Loans set forth in Section
2.03.
Substitution Adjustment Amount: As defined in Section 2.03.
Tax Service Contract: As defined in Section 3.09(a).
Telerate Page 3750: The display page currently so designated on
the
Bridge Telerate Service (or such other page
as may replace that page on that
service for displaying comparable rates or
prices).
Total Monthly Excess Spread: As to any Distribution Date, an
amount
equal to the excess if any, of (i) the
interest on the Mortgage Loans received
by the Servicer on or prior to the related
Determination Date or advanced by the
Servicer for the related Remittance Date
(net of Expense Fees) over (ii) the sum
of the amounts payable to the Certificates
pursuant to Section 4.02(a)(i) on
such Distribution Date.
Transfer: Any direct or indirect transfer or sale of any
Ownership
Interest in a Residual Certificate.
Transfer Affidavit: As defined in Section 5.02(c).
Transferor Certificate: As defined in Section 5.02(b).
Trigger
Event: Either a Cumulative Loss Trigger Event or a
Delinquency Trigger Event.
Trust: The express trust created hereunder in Section 2.01(c).
Trust Fund: The corpus of the trust created hereunder consisting
of
(i) the Mortgage Loans and all interest and
principal with respect thereto
received on or after the related Cut-off
Date, other than such amounts which
were due on the Mortgage Loans on or prior
to the related Cut-off Date; (ii) the
Collection Account, Excess Reserve Fund
Account, the Distribution Account, and
all amounts deposited therein pursuant to
the applicable provisions of this
Agreement; (iii) property that secured a
Mortgage Loan and has been acquired by
foreclosure, deed-in-lieu of foreclosure or
otherwise; (iv) the Interest Rate
Cap Agreements; (v) the Closing Date
Deposit Amount; and (vi) all proceeds of
the conversion, voluntary or involuntary,
of any of the foregoing.
Trustee: Deutsche Bank National Trust Company, a national
banking
association, and its successors in interest
and, if a successor trustee is
appointed hereunder, such successor.
Trustee Fee: As to any Distribution Date, an amount equal to
the
product of (a) one-twelfth of the Trustee
Fee Rate and (b) (i) the aggregate
Stated Principal Balance of the Mortgage
Loans as of the first day of the
related Interest Accrual Period and (ii)
with respect to the Distribution Date
in March 2005 only, the portion of the
Closing Date Deposit Amount allocable to
principal.
Trustee Fee Rate: With respect to each Mortgage Loan, 0.004%
per
annum.
Trustee Float Period: With respect to the Distribution Date and
the
related amounts in the Distribution
Account, the period commencing on the
Business Day immediately preceding such
Distribution Date and ending on such
Distribution Date.
Underwriters' Exemption: Any exemption listed under footnote 1
of,
and amended by, Prohibited Transaction
Exemption 2002-41, 67 Fed. Reg. 54487
(2002), or any successor exemption.
Underwriting Guidelines: The underwriting guidelines attached to
the
Purchase Agreement.
Unpaid Interest Amount: As of any Distribution Date and any Class
of
Certificates, the sum of (a) the portion of
the Accrued Certificate Interest
Distribution Amount from Distribution Dates
prior to the current Distribution
Date remaining unpaid immediately prior to
the current Distribution Date and (b)
interest on the amount in clause (a) above
at the applicable Pass-Through Rate
(to the extent permitted by applicable
law).
Unpaid Realized Loss Amount: With respect to any Class of
Subordinated Certificates and as to any
Distribution Date, is the excess of (i)
the Applied Realized Loss Amount with
respect to such Class over (ii) the sum of
(a) all distributions in reduction of such
Applied Realized Loss Amounts on all
previous Distribution Dates, and (b) the
amount by which the Class Certificate
Balance of such Class has been increased
due to the distribution of any
Subsequent Recoveries on all previous
Distribution Dates. Any amounts
distributed to a Class of Subordinated
Certificates in respect of any Unpaid
Realized Loss Amount will not be applied to
reduce the Class Certificate Balance
of such Class.
Upper Tier Regular Interest: As described in the Preliminary
Statement.
Upper Tier REMIC: As described in the Preliminary Statement.
U.S. Person: (i) A citizen or resident of the United States; (ii)
a
corporation (or entity treated as a
corporation for tax purposes) created or
organized in the United States or under the
laws of the United States or of any
State thereof, including, for this purpose,
the District of Columbia; (iii) a
partnership (or entity treated as a
partnership for tax purposes) organized in
the United States or under the laws of the
United States or of any State
thereof, including, for this purpose, the
District of Columbia (unless provided
otherwise by future Treasury regulations);
(iv) an estate whose income is
includible in gross income for United
States income tax purposes regardless of
its source; or (v) 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 U.S. Persons have authority to control
substantial decisions of the trust.
Notwithstanding the last clause of the
preceding sentence, to the extent
provided in Treasury regulations, certain
trusts in existence on August 20,
1996, and treated as U.S. Persons prior to
such date, may elect to continue to
be U.S. Persons.
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) 1% of all Voting Rights
shall be allocated to the Class X
Certificates, if any (such Voting Rights to
be allocated among the holders of
Certificates of each such Class in
accordance with their respective Percentage
Interests), (b) 1% of all Voting Rights
shall be allocated to the Class P
Certificates, if any, and (c) the remaining
Voting Rights shall be allocated
among Holders of the remaining Classes of
Certificates in proportion to the
Certificate Balances of their respective
Certificates on such date.
WAC Cap: With respect to the Mortgage Loans as of any
Distribution
Date, the weighted average of the Adjusted
Net Mortgage Rates then in effect on
the beginning of the related Due Period on
the Mortgage Loans, adjusted in each
case to accrue on the basis of a 360-day
year and the actual number of days in
the related Interest Accrual Period.
Wells Fargo Mortgage Loans: Mortgage Loans for which Wells
Fargo
Bank, National Association will be acting
as Custodian, as identified on the
Mortgage Loan Schedule.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
REPRESENTATIONS AND WARRANTIES
Section 2.01 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, and the
Trustee, on behalf of the Trust,
hereby accepts the Trust Fund.
(b) In connection with the transfer and assignment of each
Mortgage
Loan, the Depositor has delivered or caused
to be delivered to the Trustee with
respect to the Mortgage Loans other than
the Wells Fargo Mortgage Loans, and to
the Custodian with respect to the Wells
Fargo Mortgage Loans, for the benefit of
the Certificateholders the following
documents or instruments with respect to
each Mortgage Loan so assigned:
(i) the original Mortgage Note bearing all intervening
endorsements
showing a
complete chain of endorsement from the originator to the last
endorsee,
endorsed "Pay to the order of _____________, without recourse"
and signed
(which may be by facsimile signature) in the name of the last
endorsee
by an authorized officer. To the extent that there is no room
on
the face
of the Mortgage Note for endorsements, the endorsement may be
contained
on an allonge, unless the Trustee is advised in writing by the
Responsible Party that state law does not so allow;
(ii) the original of any guaranty executed in connection with
the
Mortgage
Note;
(iii) (A) with respect to the Mortgage Loans other than the
Wells
Fargo
Mortgage Loans, the original Mortgage with evidence of
recording
thereon or
a certified true copy of such Mortgage submitted for recording.
If, in
connection with any such Mortgage Loan, the original Mortgage
cannot be
delivered with evidence of recording thereon on or prior to the
Closing
Date because of a delay caused by the public recording office
where such
Mortgage has been delivered for recordation or because such
Mortgage
has been lost or because such public recording office retains
the
original
recorded Mortgage, the Responsible Party shall deliver or cause
to be
delivered to the Trustee a photocopy of such Mortgage, together
with
(i) in the
case of a delay caused by the public recording office, an
officer's
certificate of the Responsible Party or a certificate from an
escrow
company, a title company or closing attorney certifying that
such
Mortgage
has been dispatched to the appropriate public recording office
for
recordation and that the original recorded Mortgage or a copy of
such
Mortgage
certified by such public recording office to be a true and
complete
copy of the original recorded Mortgage will be promptly
delivered
to the
Trustee upon receipt thereof by the Responsible Party; or (ii)
in
the case
of a Mortgage 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, a copy of such
Mortgage
certified
by such public recording office to be a true and complete copy
of the
original recorded Mortgage; or (B) with respect to the Wells
Fargo
Mortgage
Loans, the original Mortgage with evidence of recording thereon
or a
certified true copy of such Mortgage submitted for recording. If,
in
connection
with any Wells Fargo Mortgage Loan, the original Mortgage
cannot be
delivered with evidence of recording thereon on or prior to the
Closing
Date because of a delay caused by the public recording office
where such
Mortgage has been delivered for recordation or because such
Mortgage
has been lost or because such public recording office retains
the
original
recorded Mortgage, the Responsible Party shall deliver or cause
to be
delivered to the Custodian a photocopy of such Mortgage certified
by
the
Responsible Party to be a true and complete copy of such Mortgage
and
shall
forward to the Custodian such original recorded Mortgage within
14
days
following the Responsible Party's receipt of such Mortgage from
the
applicable
public recording office; or in the case of a Mortgage 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, a
copy of such Mortgage certified by such public recording office
to be a
true and complete copy of the original recorded Mortgage;
(iv) the originals of all assumption, modification, consolidation
or
extension
agreements, with evidence of recording thereon;
(v) the original Assignment of Mortgage for each Mortgage Loan
endorsed
in blank (except with respect to MERS Designated Mortgage
Loans);
(vi) (A) with respect to the Mortgage Loans other than the
Wells
Fargo
Mortgage Loans, the originals of all intervening assignments of
Mortgage
(if any) evidencing a complete chain of assignment from the
applicable
originator (or MERS with respect to each MERS Designated
Mortgage
Loan) to the last endorsee with evidence of recording thereon,
or
if any
such intervening assignment has not been returned from the
applicable
recording office or has been lost or if such public recording
office
retains the original recorded assignments of Mortgage, the
Responsible Party shall deliver or cause to be delivered a
photocopy of
such
intervening assignment, together with (i) in the case of a
delay
caused by
the public recording office, an officer's certificate of the
Responsible Party or a certificate from an escrow company, a title
company
or a
closing attorney certifying that such intervening assignment of
Mortgage
has been dispatched to the appropriate public recording office
for
recordation and that such original recorded intervening assignment
of
Mortgage
or a copy of such intervening assignment of Mortgage certified
by
the
appropriate public recording office to be a true and complete copy
of
the
original recorded intervening assignment of Mortgage will be
promptly
delivered
to the Trustee upon receipt thereof by the Responsible Party;
or
(ii) in
the case of an intervening assignment where a public recording
office
retains the original recorded intervening assignment or in the
case
where an
intervening assignment is lost after recordation in a public
recording
office, a copy of such intervening assignment certified by such
public
recording office to be a true and complete copy of the original
recorded
intervening assignment; or (B) with respect to the Wells Fargo
Mortgage
Loans, the originals of all intervening assignments of Mortgage
(if any)
evidencing a complete chain of assignment from the applicable
originator
to the last endorsee with evidence of recording thereon or a
certified
true copy of such intervening assignments of Mortgage submitted
for
recording, or if any such intervening assignment has not been
returned
from the
applicable recording office or has been lost or if such public
recording
office retains the original recorded assignments of Mortgage,
the
Responsible Party shall deliver or cause to be delivered a
photocopy
of such
intervening assignment, certified by the Responsible Party to be
a
true and
complete copy of such intervening assignment and shall forward
to
the
Custodian such original recorded intervening assignment within 14
days
following
the Responsible Party's receipt of such from the applicable
public
recording office; or in the case of an intervening assignment
where
a public
recording office retains the original recorded intervening
assignment
or in the case where an intervening assignment is lost after
recordation in a public recording office, a copy of such
intervening
assignment
certified by such public recording office to be a true and
complete
copy of the original recorded intervening assignment;
(vii) the original mortgagee title insurance policy or, in the
event
such
original title policy is unavailable, a certified true copy of
the
related
policy binder or commitment for title certified to be true and
complete
by the title insurance company; and
(viii) the original of any security agreement, chattel mortgage
or
equivalent
document executed in connection with the Mortgage (if
provided).
The Responsible Party shall cause to be delivered to the Trustee
or
Custodian, as applicable, the applicable
recorded document promptly upon receipt
from the respective recording office but in
no event later than one year from
the date on which the Responsible Party
sold the related Mortgage Loan to the
Purchaser.
If any Mortgage has been recorded in the name of MERS or its
designee, no Assignment of Mortgage in
favor of the Trustee will be required to
be prepared or delivered and instead, the
Servicer shall take all reasonable
actions as are necessary to cause the Trust
to be shown as the owner of the
related Mortgage Loan on the records of
MERS for the purpose of the system of
recording transfers of beneficial ownership
of Mortgages maintained by MERS.
From time to time, the Depositor or the Servicer, as
applicable,
shall forward to the Trustee or Custodian,
as applicable, additional original
documents, additional documents evidencing
an assumption, modification,
consolidation or extension of a Mortgage
Loan, in accordance with the terms of
this Agreement upon receipt of such
documents. All such mortgage documents held
by the Trustee or Custodian, as applicable,
as to each Mortgage Loan shall
constitute the "Custodial File."
On or prior to the Closing Date, the Responsible Party shall
deliver
to the Trustee or the Custodian, as
applicable, Assignments of Mortgages, in
blank, for each Mortgage Loan. The
Responsible Party shall cause the Assignments
of Mortgages and complete recording
information to be provided to the Servicer
in a reasonably acceptable manner. No later
than thirty (30) Business Days
following the later of the Closing Date and
the date of receipt by the Servicer
of the complete recording information for a
Mortgage, the Servicer shall
promptly submit or cause to be submitted
for recording, at the expense of the
Responsible Party and at no expense to the
Trust Fund, the Trustee, the
Servicer, or the Depositor, in the
appropriate public office for real property
records, each Assignment of Mortgage
referred to in Section 2.01(b)(v).
Notwithstanding the foregoing, however, for
administrative convenience and
facilitation of servicing and to reduce
closing costs, the Assignments of
Mortgage shall not be required to be
completed and submitted for recording with
respect to any Mortgage Loan (i) if the
Trustee and each Rating Agency have
received an Opinion of Counsel,
satisfactory in form and substance to the
Trustee and each Rating Agency to the
effect that the recordation of such
Assignments of Mortgage in any specific
jurisdiction is not necessary to protect
the Trustee's interest in the related
Mortgage Note, (ii) if such Mortgage Loan
is a MERS Designated Mortgage Loan or (iii)
if the Rating Agencies have each
notified the Depositor in writing that not
recording any such Assignments of
Mortgage would not cause the initial
ratings on any LIBOR Certificates to be
downgraded or withdrawn; provided, however,
that the Servicer shall not be held
responsible or liable for any loss that
occurs because an Assignment of Mortgage
was not recorded, but only to the extent
that the Servicer does not have prior
knowledge of the act or omission that
causes such loss. However, with respect to
the Assignments of Mortgage referred to in
clauses (i), (ii) and (iii) above, if
foreclosure proceedings occur against a
Mortgaged Property, the Depositor shall
notify the Servicer and the Servicer shall
record such Assignment of Mortgage at
the expense of the Responsible Party. If
the Assignment of Mortgage is to be
recorded, the Mortgage shall be assigned to
"Deutsche Bank National Trust
Company, as trustee under the Pooling and
Servicing Agreement dated as of
February 1, 2005, Morgan Stanley ABS
Capital I Inc. Trust 2005-WMC1". In the
event that any such Assignment of Mortgage
is lost or returned unrecorded
because of a defect therein, the
Responsible Party shall promptly cause to be
delivered a substitute Assignment of
Mortgage to cure such defect and thereafter
cause each such assignment to be duly
recorded.
In the event that such original or copy of any document
submitted
for recordation to the appropriate public
recording office is not so delivered
to the Trustee or Custodian, as applicable,
within one year following the date
on which the Responsible Party sold the
related Mortgage Loan to the Purchaser,
and in the event that the Responsible Party
does not cure such failure within 30
days of discovery or receipt of written
notification of such failure from the
Depositor, the related Mortgage Loan shall,
upon the request of the Depositor,
be repurchased by the Responsible Party at
the price and in the manner specified
in Section 2.03. The foregoing repurchase
obligation shall not apply in the
event that the Responsible Party cannot
deliver such original or copy of any
document submitted for recordation to the
appropriate public recording office
within the specified period due to a delay
caused by the recording office in the
applicable jurisdiction; provided, that the
Responsible Party shall instead
deliver a recording receipt of such
recording office or, if such recording
receipt is not available, an officer's
certificate of an officer of the
Responsible Party, confirming that such
document has been accepted for
recording.
Notwithstanding anything to the contrary contained in this
Section
2.01, in those instances where the public
recording office retains or loses the
original Mortgage or assignment after it
has been recorded, the obligations of
the Responsible Party shall be deemed to
have been satisfied upon delivery by
the Responsible Party to the Trustee or the
Custodian, as applicable, prior to
the Closing Date of a copy of such Mortgage
or assignment, as the case may be,
certified (such certification to be an
original thereof) by the public recording
office to be a true and complete copy of
the recorded original thereof.
On or prior to the Closing Date, the Depositor shall deliver to
the
Trustee and the Custodian a copy of the
Data Tape Information in an electronic,
machine readable medium in a form mutually
acceptable to the Trustee or
Custodian, as applicable.
(c) The Depositor does hereby establish, pursuant to the
further
provisions of this Agreement and the laws
of the State of New York, an express
trust (the "Trust") to be known, for
convenience, as "MORGAN STANLEY ABS CAPITAL
I INC. TRUST 2005-WMC1" and Deutsche Bank
National Trust Company is hereby
appointed as Trustee in accordance with the
provisions of this Agreement. The
parties hereto acknowledge and agree that
it is the policy and intention of the
Trust to acquire only Mortgage Loans
meeting the requirements set forth in this
Agreement, including without limitation,
the representation and warranty set
forth in paragraph (43) of Schedule
III.
(d) The Trust shall have the capacity, power and authority, and
the
Trustee on behalf of the Trust is hereby
authorized, to accept the sale,
transfer, assignment, set over and
conveyance by the Depositor to the Trust of
all the right, title and interest of the
Depositor in and to the Trust Fund
(including, without limitation, the
Mortgage Loans) pursuant to Section 2.01(a).
The Trustee on behalf of the Trust is
hereby authorized to enter into the
Interest Rate Cap Agreements.
Section 2.02 Acceptance by the Trustee of the Mortgage Loans.
The
Trustee and the Custodian shall
acknowledge, on the Closing Date, receipt by the
Trustee or the Custodian, as applicable, of
the documents identified in the
Initial Certification in the form annexed
hereto as Exhibit E, and declares that
it holds and will hold such documents and
the other documents delivered to it
pursuant to Section 2.01, and that it 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 and the Custodian shall
maintain possession of the related Mortgage
Notes in the State of California
unless otherwise permitted by the Rating
Agencies.
In connection with the Closing Date, the Trustee and the
Custodian
shall be required to deliver via facsimile
(with original to follow the next
Business Day) to the Depositor and the
Servicer an Initial Certification prior
to the Closing Date, or, with the
Depositor's consent, on the Closing Date,
certifying receipt of a Mortgage Note and
Assignment of Mortgage for each
Mortgage Loan. Neither the Trustee nor the
Custodian shall be responsible for
verifying the validity, sufficiency or
genuineness of any document in any
Custodial File.
Within 90 days after the Closing Date, the Trustee and the
Custodian
shall ascertain that all documents
identified in the Document Certification and
Exception Report in the form attached
hereto as Exhibit F are in its possession,
and shall deliver to the Depositor, the
Servicer and the Trustee (if delivered
by the Custodian) a Document Certification
and Exception Report, in the form
annexed hereto as Exhibit F, to the effect
that, as to each Mortgage Loan listed
in the Mortgage Loan Schedule (other than
any Mortgage Loan paid in full or any
Mortgage Loan specifically identified in
such certification as an exception and
not covered by such certification): (i) all
documents identified in the Document
Certification and Exception Report and
required to be reviewed by it are in its
possession; (ii) such documents have been
reviewed by it and appear regular on
their face and relate to such Mortgage
Loan; (iii) based on its examination and
only as to the foregoing documents, the
information set forth in items (1), (2),
(7) and (9) of the Mortgage Loan Schedule
and items (1), (9) and (17) of the
Data Tape Information respecting such
Mortgage Loan is correct; and (iv) each
Mortgage Note has been endorsed as provided
in Section 2.01 of this Agreement.
Neither the Trustee nor the Custodian shall
be responsible for verifying the
validity, sufficiency or genuineness of any
document in any Custodial File.
The Trustee and the Custodian shall retain possession and custody
of
each Custodial File in accordance with and
subject to the terms and conditions
set forth herein. The Servicer shall
promptly deliver to the Trustee or to the
Custodian, as applicable, upon the
execution or receipt thereof, the originals
of such other documents or instruments
constituting the Custodial File as come
into the possession of the Servicer from
time to time.
The Responsible Party shall deliver to the Servicer copies of
all
trailing documents required to be included
in the Custodial File at the same
time the original or certified copies
thereof are delivered to the Trustee or to
the Custodian, including but not limited to
such documents as the title
insurance policy and any other Mortgage
Loan documents upon return from the
public recording office. The documents
shall be delivered by the Responsible
Party at the Responsible Party's expense to
the Servicer.
Section 2.03 Representations and Warranties; Remedies for
Breaches
of Representations and Warranties with
Respect to the Mortgage Loans. (a) The
Servicer hereby makes the representations
and warranties set forth in Schedule
II hereto to the Depositor and the Trustee,
as of the dates set forth in such
schedule.
(b) The Responsible Party hereby makes the representations and
warranties, set forth in Schedule III and
Schedule IV hereto, to the Depositor,
the Servicer and the Trustee as of the
dates set forth in such schedules.
(c) The Depositor hereby makes the representations and
warranties
set forth in Schedule V hereto to the
Trustee as of the date set forth in such
schedule.
(d) The Custodian hereby makes the representations and
warranties
set forth in Schedule VI hereto to the
Trustee as of the date set forth in such
schedule.
(e) It is understood and agreed by the parties hereto that the
representations and warranties set forth in
this Section 2.03 shall survive the
transfer of the Mortgage Loans by the
Depositor to the Trustee, and shall inure
to the benefit of the parties to whom the
representations and warranties were
made notwithstanding any restrictive or
qualified endorsement on any Mortgage
Note or Assignment of Mortgage or the
examination or failure to examine any
Mortgage File. Upon discovery by any of the
Responsible Party, the Depositor,
the Trustee or the Servicer of a breach of
any of the foregoing representations
and warranties that materially and
adversely affect the value of any Mortgage
Loan or the interest of the Trustee or the
Certificateholders therein, the party
discovering such breach shall give prompt
written notice to the other parties.
(f) Within 30 days of the earlier of either discovery by or
notice
to the Responsible Party that any Mortgage
Loan does not conform to the
requirements as determined in the Trustee's
or the Custodian's review of the
related Custodial File or within 60 days of
the earlier of either discovery by
or notice to the Responsible Party of any
breach of a representation or
warranty, set forth in Section 2.03(b),
that materially and adversely affects
the value of any Mortgage Loan or the
interest of the Trustee or the
Certificateholders therein, the Responsible
Party shall use commercially
reasonable efforts to cause to be remedied
a material defect in a document
constituting part of a Mortgage File or
promptly to cure such breach in all
material respects and, if such defect or
breach cannot be remedied, the
Responsible Party shall, at the Depositor's
option as specified in writing and
provided to the Responsible Party and the
Trustee, (i) if such 30 or 60 day
period, as applicable, 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 2.03; or (ii) repurchase
such Mortgage Loan at the Repurchase Price;
provided, however, that any such
substitution pursuant to clause (i) above
shall not be effected prior to the
delivery to the Trustee or the Custodian,
as applicable, of a Request for
Release substantially in the form of
Exhibit J, and the delivery of the Mortgage
File to the Trustee or the Custodian, as
applicable, for any such Substitute
Mortgage Loan. Notwithstanding the
foregoing, a breach (i) which causes a
Mortgage Loan not to constitute a
"qualified mortgage" within the meaning of
Section 860G(a)(3) of the Code or (ii) by
the Responsible Party of any of the
representations and warranties set forth in
clause (43), (44), (46), (48), (50),
(52), (53), (54), (55), (56), (57), (58),
(59) or (69) of Schedule III, in each
case, will be deemed automatically to
materially and adversely affect the value
of such Mortgage Loan and the interests of
the Trustee and Certificateholders in
such Mortgage Loan. In the event that the
Trustee receives notice of a breach by
the Responsible Party of any of the
representations and warranties set forth in
clause (43), (44), (46), (48), (50), (52),
(53), (54), (55), (56), (57), (58),
(59) or (69) of Schedule III, the Trustee
shall give notice of such breach to
the Responsible Party and request the
Responsible Party to repurchase the
Mortgage Loan at the Repurchase Price
within sixty (60) days of the Responsible
Party receipt of such notice. The
Responsible Party shall repurchase each such
Mortgage Loan within 60 days of the earlier
of discovery or receipt of notice
with respect to each such Mortgage Loan,
and in any case shall occur or shall be
deemed to occur on the last day of the
applicable Prepayment Period preceding
the Distribution Date on which the
Repurchase Price is to be distributed.
(g) Within 90 days of the earlier of either discovery by or
notice
to the Depositor of any breach of a
representation or warranty set forth on
Schedule V hereto, the Depositor shall use
its best efforts to promptly cure
such breach and, if such defect or breach
cannot be remedied, the Depositor
shall purchase such Mortgage Loan at the
Repurchase Price or substitute a
Substitute Mortgage Loan for such Mortgage
Loan.
(h) With respect to any Substitute Mortgage Loan or Loans
substituted by the Depositor or the
Responsible Party, the Depositor or the
Responsible Party, as applicable, shall
deliver to the Trustee or the Custodian,
as applicable, 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 2.01,
with the Mortgage Note endorsed and
the Mortgage assigned as required by
Section 2.01. 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 Due
Period of substitution shall not be part of
the Trust Fund and will be retained
by the Depositor or the Responsible Party,
as applicable, on the next succeeding
Distribution Date. For the Due Period of
substitution, distributions to
Certificateholders will include the
Scheduled Payment due on any Deleted
Mortgage Loan for such Due Period and
thereafter the Depositor or the
Responsible Party, as applicable, shall be
entitled to retain all amounts
received in respect of such Deleted
Mortgage Loan.
(i) The Servicer, based upon information provided by the
Depositor
or the Responsible Party, as applicable,
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 Servicer shall deliver the amended
Mortgage Loan Schedule to the Trustee or
the Custodian, as applicable. Upon such
substitution, the Substitute Mortgage
Loan or Loans shall be subject to the terms
of this Agreement in all respects.
If such substitution is made by the
Responsible Party, the Responsible Party
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 Section 2.03(b) with respect to
such Substitute Mortgage Loan or
Loans (and pursuant to Section 2.03(c) if
the related Deleted Mortgage Loan is a
Group I Mortgage Loan), and if such
substitution is made by the Depositor, the
Depositor 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 Sections
2.03(b) and (c) with respect to such
Substitute Mortgage Loan or Loans. Upon any
such substitution and the deposit to
the Collection Account of the amount
required to be deposited therein in
connection with such substitution as
described in the following paragraph, the
Trustee or the Custodian, as applicable,
shall release the Mortgage File held
for the benefit of the Certificateholders
relating to such Deleted Mortgage Loan
to the Depositor or the Responsible Party,
as applicable, and shall execute and
deliver at the direction of the Responsible
Party or the Depositor, as
applicable, such instruments of transfer or
assignment prepared by the Depositor
or the Responsible Party, as applicable, in
each case without recourse, as shall
be necessary to vest title in the Depositor
or the Responsible Party, as
applicable, of the Trustee's interest in
any Deleted Mortgage Loan substituted
for pursuant to this Section 2.03.
(j) For any month in which the Depositor or the Responsible
Party
substitutes one or more Substitute Mortgage
Loans for one or more Deleted
Mortgage Loans, the Servicer will determine
the amount (if any) by which the
aggregate unpaid principal balance of all
such Substitute Mortgage Loans as of
the date of substitution is less than the
aggregate unpaid principal balance of
all such Deleted Mortgage Loans. The amount
of such shortage, plus an amount
equal to the sum of (i) any accrued and
unpaid interest on the Deleted Mortgage
Loans and (ii) all unreimbursed Servicing
Advances with respect to such Deleted
Mortgage Loans (collectively, the
"Substitution Adjustment Amount") shall be
deposited into the Collection Account by
the Depositor or the Responsible Party,
as applicable, 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.
(k) In addition to such repurchase or substitution obligation,
the
Responsible Party shall indemnify the
Depositor and its Affiliates, the
Servicer, the Custodian, the Purchaser, the
Trustee and the Trust and hold such
parties harmless against any losses,
damages, penalties, fines, forfeitures,
reasonable and necessary legal fees and
related costs, judgments and other costs
and expenses resulting from any claim,
demand, defense or assertion based on or
grounded upon, or resulting from, a breach
by the Responsible Party of any of
its representations and warranties or
obligations contained in this Agreement.
(l) In the event that the Depositor or the Responsible Party
shall
have repurchased a Mortgage Loan, the
Repurchase Price therefor shall be
deposited by the Servicer into the
Collection Account pursuant to Section 3.10
on or before the Distribution Account
Deposit Date for the Distribution Date in
the month following the month during which
the Depositor or the Responsible
Party, as applicable, became obligated
hereunder to repurchase or replace such
Mortgage Loan and upon such deposit of the
Repurchase Price, and receipt of a
Request for Release in the form of Exhibit
J hereto, the Trustee or the
Custodian, as applicable, shall release the
related Custodial File held for the
benefit of the Certificateholders to such
Person as directed by the Servicer,
and the Trustee shall 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.
(m) Any Mortgage Loan repurchased pursuant to this Section 2.03
will
be removed from the Trust Fund. The
Servicer shall amend the Mortgage Loan
Schedule for the benefit of the
Certificateholders to reflect the removal of any
Mortgage Loan repurchased, and the Servicer
shall deliver the amended Mortgage
Loan Schedule to the Trustee and the
Custodian.
It is understood and agreed that the obligation of the Depositor
or
the Responsible Party under this Agreement
to cure, repurchase or substitute any
Mortgage Loan as to which a breach of a
representation and warranty has occurred
and is continuing, together with any
related indemnification obligations of the
Responsible Party set forth in Section
2.03(k), shall constitute the sole
remedies against such Person respecting
such breach available to
Certificateholders, the Depositor (if
applicable), the Servicer or the Trustee.
The provisions of this Section 2.03 shall survive delivery of
the
respective Custodial Files to the Trustee
or the Custodian, as the case may be,
for the benefit of the
Certificateholders.
Section 2.04 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.
Section 2.05 REMIC Matters. The Preliminary Statement sets forth
the
designations for federal income tax
purposes of all interests created hereby.
The "Startup Day" for purposes of the REMIC
Provisions shall be the Closing
Date. The "latest possible maturity date"
is the Distribution Date occurring in
January 2035, which is the Distribution
Date following the latest Mortgage Loan
maturity date.
Section 2.06 Representations and Warranties of the Depositor.
The
Depositor hereby represents, warrants and
covenants to the Trustee and the
Servicer that as of the date of this
Agreement or as of such date specifically
provided herein:
(a) The Depositor is a corporation duly organized, validly
existing
and in good standing under the laws of the
State of Delaware;
(b) The Depositor has the corporate power and authority to
convey
the Mortgage Loans and to execute, deliver
and perform, and to enter into and
consummate the transactions contemplated
by, this Agreement;
(c) This Agreement has been duly and validly authorized,
executed
and delivered by the Depositor, all
requisite corporate action having been
taken, and, assuming the due authorization,
execution and delivery hereof by the
other parties hereto, constitutes or will
constitute the legal, valid and
binding agreement of the Depositor,
enforceable against the Depositor in
accordance with its terms, except as such
enforcement may be limited by
bankruptcy, insolvency, reorganization,
moratorium or other similar laws
relating to or affecting the rights of
creditors generally, and by general
equity principles (regardless of whether
such enforcement is considered in a
proceeding in equity or at law);
(d) No consent, approval, authorization or order of or
registration
or filing with, or notice to, any
governmental authority or court is required
for the execution, delivery and performance
of or compliance by the Depositor
with this Agreement or the consummation by
the Depositor of any of the
transactions contemplated hereby, except as
have been made on or prior to the
Closing Date;
(e) None of the execution and delivery of this Agreement, the
consummation of the transactions
contemplated hereby or thereby, or the
fulfillment of or compliance with the terms
and conditions of this Agreement,
(i) conflicts or will conflict with or
results or will result in a breach of, or
constitutes or will constitute a default or
results or will result in an
acceleration under (A) the charter or
bylaws of the Depositor, or (B) of any
term, condition or provision of any
material indenture, deed of trust, contract
or other agreement or instrument to which
the Depositor or any of its
subsidiaries is a party or by which it or
any of its subsidiaries is bound; (ii)
results or will result in a violation of
any law, rule, regulation, order,
judgment or decree applicable to the
Depositor of any court or governmental
authority having jurisdiction over the
Depositor or its subsidiaries; or (iii)
results in the creation or imposition of
any lien, charge or encumbrance which
would have a material adverse effect upon
the Mortgage Loans or any documents or
instruments evidencing or securing the
Mortgage Loans;
(f) There are no actions, suits or proceedings before or against
or
investigations of, the Depositor pending,
or to the knowledge of the Depositor,
threatened, before any court,
administrative agency or other tribunal, and no
notice of any such action, which, in the
Depositor's reasonable judgment, might
materially and adversely affect the
performance by the Depositor of its
obligations under this Agreement, or the
validity or enforceability of this
Agreement;
(g) The Depositor is not in default with respect to any order
or
decree of any court or any order,
regulation or demand of any federal, state,
municipal or governmental agency that may
materially and adversely affect its
performance hereunder; and
(h) Immediately prior to the transfer and assignment by the
Depositor to the Trustee on the Closing
Date, the Depositor had good title to,
and was the sole owner of each Mortgage
Loan, free of any interest of any other
Person, and the Depositor has transferred
all right, title and interest in each
Mortgage Loan to the Trustee. The transfer
of the Mortgage Note and the Mortgage
as and in the manner contemplated by this
Agreement is sufficient either (i)
fully to transfer to the Trustee, for the
benefit of the Certificateholders, all
right, title, and interest of the Depositor
thereto as note holder and mortgagee
or (ii) to grant to the Trustee, for the
benefit of the Certificateholders, the
security interest referred to in Section
10.04.
It is understood and agreed that the representations, warranties
and
covenants set forth in this Section 2.06
shall survive delivery of the
respective Custodial Files to the Trustee
and shall inure to the benefit of the
Trustee.
ARTICLE III
ADMINISTRATION AND SERVICING
OF MORTGAGE LOANS
Section 3.01 Servicer to Service Mortgage Loans. (a) For and on
behalf of the Certificateholders, the
Servicer shall service and administer the
Mortgage Loans in accordance with the terms
of this Agreement and the respective
Mortgage Loans and, to the extent
consistent with such terms, in the same manner
in which it services and administers
similar mortgage loans for its own
portfolio, giving due consideration to
customary and usual standards of practice
of mortgage lenders and loan servicers
administering similar mortgage loans but
without regard to:
(i) any relationship that the Servicer, any Subservicer or any
Affiliate
of the Servicer or any Subservicer may have with the related
Mortgagor;
(ii) the ownership or non-ownership of any Certificate by the
Servicer
or any Affiliate of the Servicer;
(iii) the Servicer's obligation to make P&I Advances or
Servicing
Advances;
or
(iv) the Servicer's or any Subservicer's right to receive
compensation for its services hereunder or with respect to any
particular
transaction.
To the extent consistent with the foregoing, the Servicer shall
seek
to maximize the timely and complete
recovery of principal and interest on the
Mortgage Notes. Subject only to the
above-described servicing standards and the
terms of this Agreement and of the
respective Mortgage Loans, the Servicer shall
have full power and authority, acting alone
or through Subservicers as provided
in Section 3.02, to do or cause to be done
any and all things in connection with
such servicing and administration which it
may deem necessary or desirable.
Without limiting the generality of the
foregoing, the Servicer in its own name
or in the name of a Subservicer is hereby
authorized and empowered by the
Trustee when the Servicer believes it
appropriate in its best judgment in
accordance with Accepted Servicing
Practices, to execute and deliver any and all
instruments of satisfaction or
cancellation, or of partial or full release or
discharge, and all other comparable
instruments, with respect to the Mortgage
Loans and the Mortgaged Properties and to
institute foreclosure proceedings or
obtain a deed-in-lieu of foreclosure so as
to convert the ownership of such
properties, and to hold or cause to be held
title to such properties, on behalf
of the Trustee. The Servicer shall service
and administer the Mortgage Loans in
accordance with applicable state and
federal law and shall provide to the
Mortgagors any reports required to be
provided to them thereby. The Servicer
covenants that its computer and other
systems used in servicing the Mortgage
Loans operate in a manner such that the
Servicer can service the Mortgage Loans
in accordance with the terms of this
Pooling and Servicing Agreement. The
Servicer shall also comply in the
performance of this Agreement with all
reasonable rules and requirements of each
insurer under any standard hazard
insurance policy. Subject to Section 3.16,
the Trustee shall execute, at the
written request of the Servicer, and
furnish to the Servicer and any Subservicer
such documents provided to the Trustee as
are necessary or appropriate to enable
the Servicer or any Subservicer to carry
out their servicing and administrative
duties hereunder, and the Trustee hereby
grants to the Servicer, and this
Agreement shall constitute, a power of
attorney to carry out such duties
including a power of attorney in the form
of Exhibit O hereto to take title to
Mortgaged Properties after foreclosure on
behalf of the Trustee. The Trustee
shall execute a separate power of attorney
in favor of the Servicer for the
purposes described herein to the extent
necessary or desirable to enable the
Servicer to perform its duties hereunder.
The Trustee shall not be liable for
the actions of the Servicer or any
Subservicers under such powers of attorney.
Notwithstanding anything contained herein
to the contrary, neither the Servicer
nor any Subservicer shall without the
Trustee's consent: (i) initiate any
action, suit or proceeding solely under the
Trustee's name without indicating
the Servicer's or Subservicer's, as
applicable, representative capacity, or (ii)
take any action with the intent to, or
which actually does cause, the Trustee to
be registered to do business in any
state.
(b) Subject to Section 3.09(b), in accordance with the standards
of
the preceding paragraph, the Servicer shall
advance or cause to be advanced
funds as necessary for the purpose of
effecting the timely payment of taxes and
assessments on the Mortgaged Properties,
which advances shall be Servicing
Advances reimbursable in the first instance
from related collections from the
Mortgagors pursuant to Section 3.09(b), and
further as provided in Section 3.11.
Any cost incurred by the Servicer or by
Subservicers in effecting the timely
payment of taxes and assessments on a
Mortgaged Property shall not be added to
the unpaid principal balance of the related
Mortgage Loan, notwithstanding that
the terms of such Mortgage Loan so
permit.
(c) Notwithstanding anything in this Agreement to the contrary,
the
Servicer may not make any future advances
with respect to a Mortgage Loan
(except as provided in Section 4.01) and
the Servicer shall not (i) permit any
modification with respect to any Mortgage
Loan that would change the Mortgage
Rate, reduce or increase the principal
balance (except for reductions resulting
from actual payments of principal) or
change the final maturity date on such
Mortgage Loan (except for a reduction of
interest payments resulting from the
application of the Servicemembers Civil
Relief Act or any similar state
statutes) or (ii) permit any modification,
waiver or amendment of any term of
any Mortgage Loan that would both (A)
effect an exchange or reissuance of such
Mortgage Loan under Section 1001 of the
Code (or final, temporary or proposed
Treasury regulations promulgated
thereunder) and (B) cause either the Upper Tier
REMIC or the Lower Tier REMIC to fail to
qualify as a REMIC under the Code or
the imposition of any tax on "prohibited
transactions" or "contributions after
the startup date" under the REMIC
Provisions, or (iii) except as provided in
Section 3.07(a), waive any Prepayment
Charges.
(d) The Servicer may delegate its responsibilities under this
Agreement; provided, however, that no such
delegation shall release the Servicer
from the responsibilities or liabilities
arising under this Agreement.
(e) In the event that the Mortgage Loan Documents relating to
any
Mortgage Loan contain provisions requiring
the related Mortgagor to submit to
binding arbitration any disputes arising in
connection with such Mortgage Loan,
the Servicer shall be entitled to waive any
such provisions on behalf of the
Trust and to send written notice of such
waiver to the related Mortgagor,
although the Mortgagor may still require
arbitration of such disputes at its
option.
Section 3.02 Subservicing Agreements between the Servicer and
Subservicers.(a) The Servicer may enter
into subservicing agreements with
subservicers (each, a "Subservicer"), for
the servicing and administration of
the Mortgage Loans ("Subservicing
Agreements"). The Servicer shall, within a
reasonable period of time, give notice to
the Trustee of any such Subservicing
Agreement. The Trustee shall not be
required to review or consent to such
Subservicing Agreements and shall have no
liability in connection therewith.
(b) Each Subservicer shall be (i) authorized to transact business
in
the state or states in which the related
Mortgaged Properties it is to service
are situated, if and to the extent required
by applicable law to enable the
Subservicer to perform its obligations
hereunder and under the Subservicing
Agreement, (ii) an institution approved as
a mortgage loan originator by the
Federal Housing Administration or an
institution that has deposit accounts
insured by the FDIC and (iii) a Freddie Mac
or Fannie Mae approved mortgage
servicer. Each Subservicing Agreement must
impose on the Subservicer
requirements conforming to the provisions
set forth in Section 3.08 and provide
for servicing of the Mortgage Loans
consistent with the terms of this Agreement.
The Servicer will examine each Subservicing
Agreement and will be familiar with
the terms thereof. The terms of any
Subservicing Agreement will not be
inconsistent with any of the provisions of
this Agreement. The Servicer and the
Subservicers may enter into and make
amendments to the Subservicing Agreements
or enter into different forms of
Subservicing Agreements; provided, however,
that any such amendments or different forms
shall be consistent with and not
violate the provisions of this Agreement,
and that no such amendment or
different form shall be made or entered
into which could be reasonably expected
to be materially adverse to the interests
of the Trustee, without the consent of
the Trustee. Any variation without the
consent of the Trustee from the
provisions set forth in Section 3.08
relating to insurance or priority
requirements of Subservicing Accounts, or
credits and charges to the
Subservicing Accounts or the timing and
amount of remittances by the
Subservicers to the Servicer, are
conclusively deemed to be inconsistent with
this Agreement and therefore prohibited.
The Servicer shall deliver to the
Trustee and the Depositor copies of all
Subservicing Agreements, and any
amendments or modifications thereof,
promptly upon the Servicer's execution and
delivery of such instruments.
(c) As part of its servicing activities hereunder, the Servicer
(except as otherwise provided in the last
sentence of this paragraph), for the
benefit of the Trustee, shall enforce the
obligations of each Subservicer under
the related Subservicing Agreement,
including, without limitation, any
obligation to make advances in respect of
delinquent payments as required by a
Subservicing Agreement. Such enforcement,
including, without limitation, the
legal prosecution of claims, termination of
Subservicing Agreements, and the
pursuit of other appropriate remedies,
shall be in such form and carried out to
such an extent and at such time as the
Servicer, in its good faith business
judgment, would require were it the owner
of the related Mortgage Loans. The
Servicer shall pay the costs of such
enforcement at its own expense, and shall
be reimbursed therefor only (i) from a
general recovery resulting from such
enforcement, to the extent, if any, that
such recovery exceeds all amounts due
in respect of the related Mortgage Loans or
(ii) from a specific recovery of
costs, expenses or attorneys' fees against
the party against whom such
enforcement is directed.
Section 3.03 Successor Subservicers. The Servicer shall be
entitled
to terminate any Subservicing Agreement and
the rights and obligations of any
Subservicer pursuant to any Subservicing
Agreement in accordance with the terms
and conditions of such Subservicing
Agreement. In the event of termination of
any Subservicer, all servicing obligations
of such Subservicer shall be assumed
simultaneously by the Servicer without any
act or deed on the part of such
Subservicer or the Servicer, and the
Servicer either shall service directly the
related Mortgage Loans or shall enter into
a Subservicing Agreement with a
successor Subservicer which qualifies under
Section 3.02.
Any Subservicing Agreement shall include the provision that
such
agreement may be immediately terminated by
the Depositor or the Trustee without
fee, in accordance with the terms of this
Agreement, in the event that the
Servicer shall, for any reason, no longer
be the Servicer (including termination
due to an Event of Default).
Section 3.04 Liability of the Servicer. Notwithstanding any
Subservicing Agreement, any of the
provisions of this Agreement relating to
agreements or arrangements between the
Servicer and a Subservicer or reference
to actions taken through a Subservicer or
otherwise, the Servicer shall remain
obligated and primarily liable to the
Trustee for the servicing and
administering of the Mortgage Loans in
accordance with the provisions of Section
3.01 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 Servicer alone were servicing and
administering the Mortgage Loans. The
Servicer shall be entitled to enter into
any agreement with a Subservicer for
indemnification of the Servicer by such
Subservicer and nothing contained in
this Agreement shall be deemed to limit or
modify such indemnification.
Section 3.05 No Contractual Relationship between Subservicers
and
the Trustee. Any Subservicing Agreement
that may be entered into and any
transactions or services relating to the
Mortgage Loans involving a Subservicer
in its capacity as such shall be deemed to
be between the Subservicer and the
Servicer alone, and the Trustee (or any
successor Servicer) shall not be deemed
a party thereto and shall have no claims,
rights, obligations, duties or
liabilities with respect to the Subservicer
except as set forth in Section 3.06.
The Servicer shall be solely liable for all
fees owed by it to any Subservicer,
irrespective of whether the Servicer's
compensation pursuant to this Agreement
is sufficient to pay such fees.
Section 3.06 Assumption or Termination of Subservicing Agreements
by
Trustee. In the event the Servicer at any
time shall for any reason no longer be
the Servicer (including by reason of the
occurrence of an Event of Default), the
Trustee, or its designee or the successor
Servicer if the successor is not the
Trustee, shall thereupon assume all of the
rights and obligations of the
Servicer under each Subservicing Agreement
that the Servicer may have entered
into, with copies thereof provided to the
Trustee or the successor Servicer if
the successor is not the Trustee, prior to
the Trustee or the successor Servicer
if the successor is not the Trustee,
assuming such rights and obligations,
unless the Trustee elects to terminate any
Subservicing Agreement in accordance
with its terms as provided in Section
3.03.
Upon such assumption, the Trustee, its designee or the
successor
Servicer shall be deemed, subject to
Section 3.03, to have assumed all of the
Servicer's interest therein and to have
replaced the Servicer as a party to each
Subservicing Agreement to the same extent
as if each Subservicing Agreement had
been assigned to the assuming party, except
that (i) the Servicer shall not
thereby be relieved of any liability or
obligations under any Subservicing
Agreement that arose before it ceased to be
the Servicer and (ii) none of the
Depositor, the Trustee, their designees or
any successor Servicer shall be
deemed to have assumed any liability or
obligation of the Servicer that arose
before it ceased to be the Servicer.
The Servicer at its expense shall, upon request of the Trustee,
its
designee or the successor Servicer deliver
to the assuming party all documents
and records relating to each Subservicing
Agreement and the Mortgage Loans then
being serviced and an accounting of amounts
collected and held by or on behalf
of it, and otherwise use its best efforts
to effect the orderly and efficient
transfer of the Subservicing Agreements to
the assuming party.
Section 3.07 Collection of Certain Mortgage Loan Payments. (a)
The
Servicer shall make reasonable efforts to
collect all payments called for under
the terms and provisions of the Mortgage
Loans, and shall, to the extent such
procedures shall be consistent with this
Agreement and the terms and provisions
of any applicable Insurance Policies,
follow such collection procedures as it
would follow with respect to mortgage loans
comparable to the Mortgage Loans and
held for its own account. Consistent with
the foregoing and Accepted Servicing
Practices, the Servicer may (i) waive any
late payment charge or, if applicable,
any penalty interest, or (ii) extend the
due dates for the Scheduled Payments
due on a Mortgage Note for a period of not
greater than 180 days; provided, that
any extension pursuant to clause (ii) above
shall not affect the amortization
schedule of any Mortgage Loan for purposes
of any computation hereunder, except
as provided below. In the event of any such
arrangement pursuant to clause (ii)
above, the Servicer shall make timely
advances on such Mortgage Loan during such
extension pursuant to Section 4.01 and in
accordance with the amortization
schedule of such Mortgage Loan without
modification thereof by reason of such
arrangements, subject to Section 4.01(d)
pursuant to which the Servicer shall
not be required to make any such advances
that are Nonrecoverable P&I Advances.
Notwithstanding the foregoing, the Servicer
may waive, in whole or in part, a
Prepayment Charge only under the following
circumstances: (i) such waiver
relates to a default or a reasonably
foreseeable default and would, in the
reasonable judgment of the Servicer,
maximize recovery of total proceeds taking
into account the value of such Prepayment
Charge and the related Mortgage Loan,
(ii) such Prepayment Charge is not
permitted to be collected by applicable
federal, state or local law or regulation
or (iii) the collection of such
Prepayment Charge would be considered
"predatory" pursuant to written guidance
published or issued by any applicable
federal, state or local regulatory
authority acting in its official capacity
and having jurisdiction over such
matters. If a Prepayment Charge is waived
other than as permitted by the prior
sentence, then the Servicer is required to
pay the amount of such waived
Prepayment Charge, for the benefit of the
Holders of the Class P Certificates,
by depositing such amount into the
Collection Account together with and at the
time that the amount prepaid on the related
Mortgage Loan is required to be
deposited into the Collection Account;
provided, however, that the Servicer
shall not have an obligation to pay the
amount of any uncollected Prepayment
Charge if the failure to collect such
amount is the direct result of inaccurate
or incomplete information on the Mortgage
Loan Schedule in effect at such time.
(b) (i) The Trustee shall establish and maintain the Excess
Reserve
Fund Account, on behalf of the Class X
Certificateholders, to receive any Basis
Risk Payment and any Interest Rate Cap
Payment and to secure their limited
recourse obligation to pay to the LIBOR
Certificateholders Basis Risk
CarryForward Amounts.
(ii) On each Distribution Date, the Trustee shall deposit the
amount
of any
Basis Risk Payment and any Interest Rate Cap Payment for such
date
into the
Excess Reserve Fund Account.
(c) (i) On each Distribution Date on which there exists a Basis
Risk
CarryForward Amount on any Class of
Certificates, the Trustee shall (1) withdraw
from the Distribution Account and deposit
in the Excess Reserve Fund Account, as
set forth in Section 4.02(a)(iii)(S), the
lesser of (x) the Class X
Distributable Amount (without regard to the
reduction in the definition thereof
with respect to the Basis Risk Payment) (to
the extent remaining after the
distributions specified in Sections
4.02(a)(iii)(A)-(R)) and (y) the aggregate
Basis Risk CarryForward Amounts for such
Distribution Date and (2) withdraw from
the Excess Reserve Fund Account amounts
necessary to pay to such Class or
Classes of Certificates the Basis Risk
CarryForward Amount. Such payments shall
be allocated to those Classes on a pro rata
basis based upon the amount of Basis
Risk CarryForward Amount owed to each such
Class and shall be paid in the
priority set forth in Sections
4.02(a)(iii)(T)-(U).
(ii) The Trustee shall account for the Excess Reserve Fund
Account
as an
asset of a grantor trust under subpart E, Part I of the subchapter
J
of the
Code and not as an asset of any REMIC created pursuant to this
Agreement.
The beneficial owners of the Excess Reserve Fund Account are
the Class
X Certificateholders. For all federal tax purposes, amounts
transferred by the Upper Tier REMIC to the Excess Reserve Fund
Account
shall be
treated as distributions by the Trustee to the Class X
Certificateholders.
(iii) Any Basis Risk CarryForward Amounts paid by the Trustee to
the
LIBOR
Certificateholders shall be accounted for by the Trustee as
amounts
paid first
to the Holders of the Class X Certificates and then to the
respective
Class or Classes of LIBOR Certificates. In addition, the
Trustee
shall account for the LIBOR Certificateholders' rights to
receive
payments
of Basis Risk CarryForward Amounts as rights in a limited
recourse
interest rate cap contract written by the Class X
Certificateholders in favor of the LIBOR Certificateholders.
(iv) Notwithstanding any provision contained in this Agreement,
the
Trustee
shall not be required to make any payments from the Excess
Reserve
Fund
Account except as expressly set forth in this Section 3.07(c)
and
Sections
4.02(a)(iii)(T)-(V).
(d) The Trustee shall establish and maintain the Distribution
Account on behalf of the
Certificateholders. The Depositor shall cause to be
deposited into the Distribution Account on
the Closing Date the Closing Date
Deposit Amount. The Trustee shall, promptly
upon receipt, deposit in the
Distribution Account and retain therein the
following:
(i) the aggregate amount remitted by the Servicer to the
Trustee
pursuant
to Section 3.11;
(ii) any amount deposited by the Servicer pursuant to Section
3.12(b) 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 Servicer shall remit any amount not
required
to be remitted, it may at any time direct
the Trustee in writing to withdraw
such amount from the Distribution Account,
any provision herein to the contrary
notwithstanding. Such direction may be
accomplished by delivering notice 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 Certificateholders
until disbursed in accordance with
this Agreement or withdrawn in accordance
with Section 4.02.
(e) The Trustee may invest the funds in the Distribution Account,
in
one or more Permitted Investments, in
accordance with Section 3.12. The Servicer
shall direct the Trustee to withdraw from
the Distribution Account and to remit
to the Servicer no less than monthly, all
income and gain realized from the
investment of the portion of funds
deposited in the Distribution Account by the
Servicer (except during the Trustee Float
Period). The Trustee may withdraw from
the Distribution Account any income or gain
earned from the investment of funds
deposited therein during the Trustee Float
Period for its own benefit.
(f) The Servicer shall give notice to the Trustee, each Rating
Agency and the Depositor of any proposed
change of the location of the
Collection Account within a reasonable
period of time prior to any change
thereof.
(g) In order to comply with its duties under the USA Patriot Act
of
2001, the Trustee shall obtain and verify
certain information and documentation
from the other parties to this Agreement
including, but not limited to, each
such party's name, address, and other
identifying information.
(h) On or prior to the Determination Date, the Custodian shall
deliver an invoice to the Trustee, setting
forth the amount of the Custodian Fee
for the related Distribution Date. The
Trustee shall calculate the Custodian Fee
Rate for such Distribution Date, based upon
the Custodian Fee as set forth in
such invoice. On each Distribution Date,
the Trustee shall remit the Custodian
Fee to the Custodian from the Distribution
Account.
Section 3.08 Subservicing Accounts. In those cases where a
Subservicer is servicing a Mortgage Loan
pursuant to a Subservicing Agreement,
the Subservicer will be required to
establish and maintain one or more accounts
(collectively, the "Subservicing Account").
The Subservicing Account shall be an
Eligible Account and shall otherwise be
acceptable to the Servicer. The
Subservicer shall deposit in the clearing
account (which account must be an
Eligible Account) in which it customarily
deposits payments and collections on
mortgage loans in connection with its
mortgage loan servicing activities on a
daily basis, and in no event more than one
Business Day after the Subservicer's
receipt thereof, all proceeds of Mortgage
Loans received by the Subservicer less
its servicing compensation to the extent
permitted by the Subservicing
Agreement, and shall thereafter deposit
such amounts in the Subservicing
Account, in no event more than two Business
Days after the deposit of such funds
into the clearing account. The Subservicer
shall thereafter deposit such
proceeds in the Collection Account or remit
such proceeds to the Servicer for
deposit in the Collection Account not later
than two Business Days after the
deposit of such amounts in the Subservicing
Account. For purposes of this
Agreement, the Servicer shall be deemed to
have received payments on the
Mortgage Loans when the Subservicer
receives such payments.
Section 3.09 Collection of Taxes, Assessments and Similar
Items;
Escrow Accounts. (a) The Servicer shall
enforce the obligations under each
paid-in-full, life-of-the-loan tax service
contract in effect with respect to
each First Lien Mortgage Loan (each, a "Tax
Service Contract"). Each Tax Service
Contract shall be assigned to the Trustee,
or a successor Servicer at the
Servicer's expense in the event that the
Servicer is terminated as Servicer of
the related Mortgage Loan.
(b) To the extent that the services described in this paragraph
(b)
are not otherwise provided pursuant to the
Tax Service Contracts described in
paragraph (a) above, the Servicer
undertakes to perform such functions. To the
extent the related Mortgage provides for
Escrow Payments, the Servicer shall
establish and maintain, or cause to be
established and maintained, one or more
accounts (the "Escrow Accounts"), which
shall be Eligible Accounts. The Servicer
shall deposit in the clearing account
(which account must be an Eligible
Account) in which it customarily deposits
payments and collections on mortgage
loans in connection with its mortgage loan
servicing activities on a daily
basis, and in no event more than one
Business Day after the Servicer's receipt
thereof, all collections from the
Mortgagors (or related advances from
Subservicers) for the payment of taxes,
assessments, hazard insurance premiums
and comparable items for the account of the
Mortgagors ("Escrow Payments")
collected on account of the Mortgage Loans
and shall thereafter deposit such
Escrow Payments in the Escrow Accounts, in
no event more than two Business Days
after the deposit of such funds in the
clearing account, for the purpose of
effecting the payment of any such items as
required under the terms of this
Agreement. Withdrawals of amounts from an
Escrow Account may be made only to (i)
effect payment of taxes, assessments,
hazard insurance premiums, and comparable
items; (ii) reimburse the Servicer (or a
Subservicer to the extent provided in
the related Subservicing Agreement) out of
related collections for any advances
made pursuant to Section 3.01 (with respect
to taxes and assessments) and
Section 3.13 (with respect to hazard
insurance); (iii) refund to Mortgagors any
sums as may be determined to be overages;
(iv) pay interest, if required and as
described below, to Mortgagors on balances
in the Escrow Account; (v) clear and
terminate the Escrow Account at the
termination of the Servicer's obligations
and responsibilities in respect of the
Mortgage Loans under this Agreement; or
(vi) recover amounts deposited in error. As
part of its servicing duties, the
Servicer or Subservicers shall pay to the
Mortgagors interest on funds in Escrow
Accounts, to the extent required by law
and, to the extent that interest earned
on funds in the Escrow Accounts is
insufficient, to pay such interest from its
or their own funds, without any
reimbursement therefor. To the extent that a
Mortgage does not provide for Escrow
Payments, the Servicer shall determine
whether any such payments are made by the
Mortgagor in a manner and at a time
that avoids the loss of the Mortgaged
Property due to a tax sale or the
foreclosure of a tax lien. The Servicer
assumes full responsibility for the
payment of all such bills within such time
and shall effect payments of all such
bills irrespective of the Mortgagor's
faithful performance in the payment of
same or the making of the Escrow Payments
and shall make advances from its own
funds to effect such payments; provided,
however, that such advances are deemed
to be Servicing Advances.
Section 3.10 Collection Account. (a) On behalf of the Trustee,
the
Servicer shall establish and maintain, or
cause to be established and
maintained, one or more separate Eligible
Accounts (such account or accounts,
the "Collection Account"), held in trust
for the benefit of the Trustee on
behalf of the Certificateholders. On behalf
of the Trustee, the Servicer shall
deposit or cause to be deposited in the
clearing account (which account must be
an Eligible Account) in which it
customarily deposits payments and collections
on mortgage loans in connection with its
mortgage loan servicing activities on a
daily basis, and in no event more than one
Business Day after the Servicer's
receipt thereof, and shall thereafter
deposit in the Collection Account, in no
event more than two Business Days after the
deposit of such funds into the
clearing account, as and when received or
as otherwise required hereunder, the
following payments and collections received
or made by it subsequent to the
Cut-off Date (other than in respect of
principal or interest on the related
Mortgage Loans due on or before the Cut-off
Date), or payments (other than
Principal Prepayments) received by it on or
prior to the Cut-off Date but
allocable to a Due Period subsequent
thereto:
(i) all payments on account of principal, including Principal
Prepayments, on the Mortgage Loans;
(ii) all payments on account of interest (net of the related
Servicing
Fee) on each Mortgage Loan;
(iii) all Insurance Proceeds and Condemnation Proceeds to the
extent
such
Insurance Proceeds and Condemnation Proceeds are not to be applied
to
the
restoration of the related Mortgaged Property or released to
the
related
Mortgagor in accordance with the express requirements of law or
in
accordance
with Accepted Servicing Practices and Liquidation Proceeds;
(iv) any amounts required to be deposited pursuant to Section
3.12
in
connection with any losses realized on Permitted Investments
with
respect to
funds held in the Collection Account;
(v) any amounts required to be deposited by the Servicer pursuant
to
the second
paragraph of Section 3.13(a) in respect of any blanket policy
deductibles;
(vi) all proceeds of any Mortgage Loan repurchased or purchased
in
accordance
with this Agreement; and
(vii) all Prepayment Charges collected or paid (pursuant to
Section
3.07(a))
by the Servicer.
The foregoing requirements for deposit in the Collection
Account
shall be exclusive, it being understood and
agreed that, without limiting the
generality of the foregoing, payments in
the nature of late payment charges, NSF
fees, reconveyance fees, assumption fees
and other similar fees and charges need
not be deposited by the Servicer in the
Collection Account and shall, upon
collection, belong to the Servicer as
additional compensation for its servicing
activities. In the event the Servicer shall
deposit in the Collection Account
any amount not required to be deposited
therein, it may at any time withdraw
such amount from the Collection Account,
any provision herein to the contrary
notwithstanding.
(b) Funds in the Collection Account may be invested in
Permitted
Investments in accordance with the
provisions set forth in Section 3.12. The
Servicer shall give notice to the Trustee
and the Depositor of the location of
the Collection Account maintained by it
when established and prior to any change
thereof in accordance with Section
3.07(f).
Section 3.11 Withdrawals from the Collection Account. (a) The
Servicer shall, from time to time, make
withdrawals from the Collection Account
for any of the following purposes or as
described in Section 4.01:
(i) on or prior to each Remittance Date, to remit to the Trustee
(A)
the
Trustee Fee with respect to such Distribution Date and (B) all
Available
Funds in respect of the related Distribution Date together with
all
amounts representing Prepayment Charges from the Mortgage Loans
received
during the related Prepayment Period;
(ii) to reimburse the Servicer for P&I Advances, but only to
the
extent of
amounts received which represent Late Collections (net of the
related
Servicing Fees) of Scheduled Payments on Mortgage Loans with
respect to
which such P&I Advances were made in accordance with the
provisions
of Section 4.01 (the Servicer's right for recovery or
reimbursement has priority over the Trust as stated in the
definition of
"Available
Funds");
(iii) to pay the Servicer or any Subservicer (a) any unpaid
Servicing
Fees or (b) any unreimbursed Servicing Advances with respect to
each
Mortgage Loan serviced by the Servicer or Subservicer, but only
to
the extent
of any Late Collections, Liquidation Proceeds, Condemnation
Proceeds,
Insurance Proceeds or other amounts as may be collected by the
Servicer from a Mortgagor,
or otherwise received with respect to such
Mortgage
Loan (or the related REO Property) (the Servicer's right for
recovery
or reimbursement has priority over the Trust as stated in the
definition
of "Available Funds");
(iv) to pay to the Servicer as servicing compensation (in
addition
to the
Servicing Fee) on each Remittance Date any interest or
investment
income
earned on funds deposited in the Collection Account;
(v) to pay to the Responsible Party or the Depositor, as
applicable,
with
respect to each Mortgage Loan that has previously been repurchased
or
replaced
pursuant to this Agreement, all amounts received thereon
subsequent
to the date of purchase or substitution, as further described
herein;
(vi) to reimburse the Servicer for (A) any P&I Advance or
Servicing
Advance
previously made which the Servicer has determined to be a
Nonrecoverable P&I Advance or Nonrecoverable Servicing Advance
in
accordance
with the provisions of Section 4.01 and (B) any unpaid
Servicing
Fees related to any Second Lien Mortgage Loan to the extent not
recoverable from Liquidation Proceeds, Insurance Proceeds or other
amounts
received with respect to the
related Second Lien Mortgage Loan under
Section
3.11(a)(iii) (the Servicer's right for recovery or
reimbursement
has
priority over the Trust as stated in the definition of
"Available
Funds");
(vii) to pay, or to reimburse the Servicer for advances in
respect
of,
expenses incurred in connection with any Mortgage Loan serviced by
the
Servicer
pursuant to Section 3.15 (the Servicer's right for recovery or
reimbursement has priority over the Trust as stated in the
definition of
"Available
Funds");
(viii) to reimburse the Servicer or the Depositor for expenses
incurred
by or reimbursable to the Servicer or the Depositor, as the
case
may be,
pursuant to Section 6.03 (the Servicer's right for recovery or
reimbursement has priority over the Trust as stated in the
definition of
"Available
Funds");
(ix) to reimburse the Servicer or the Trustee, as the case may
be,
for
expenses reasonably incurred in respect of the breach or defect
giving
rise to
the repurchase obligation of the Responsible Party or the
Depositor,
as applicable, that were included in the Repurchase Price of
the
Mortgage Loan, including any expenses arising out of the
enforcement
of the
repurchase obligation, to the extent not otherwise paid pursuant
to
the terms
hereof (the Servicer's right for recovery or reimbursement has
priority
over the Trust as stated in the definition of "Available
Funds");
(x) to withdraw any amounts deposited in the Collection Account
in
error;
(xi) to withdraw any amounts held in the Collection Account and
not
required
to be remitted to the Trustee on the Remittance Date occurring
in
the month
in which such amounts are deposited into the Collection
Account,
to
reimburse the Servicer for unreimbursed P&I Advances;
(xii) to invest funds in Permitted Investments in accordance
with
Section
3.12; and
(xiii) to clear and terminate the Collection Account upon
termination of this Agreement.
(b) The Servicer shall keep and maintain separate accounting, on
a
Mortgage Loan by Mortgage Loan basis, for
the purpose of justifying any
withdrawal from the Collection Account, to
the extent held by or on behalf of
it, pursuant to subclauses (a)(ii), (iii),
(v), (vi), (vii), (viii) and (ix)
above. The Servicer shall provide written
notification (as set forth in Section
4.01(d)) to the Trustee, on or prior to the
next succeeding Remittance Date,
upon making any withdrawals from the
Collection Account pursuant to subclause
(a)(vi) above.
Section 3.12 Investment of Funds in the Collection Account and
the
Distribution Account. (a) The Servicer may
invest the funds in the Collection
Account in one or more Permitted
Investments bearing interest or sold at a
discount, and maturing, unless payable on
demand, no later than the Business Day
immediately preceding the date on which
such funds are required to be withdrawn
from such account pursuant to this
Agreement. The Trustee may (but is not
obligated to) invest funds in the
Distribution Account during the Trustee Float
Period, and, with respect to the portion of
funds in the Distribution Account
deposited by the Servicer, shall (except
during the Trustee Float Period) invest
such funds in the Distribution Account at
the direction of the Servicer (for
purposes of this Section 3.12, such
Accounts are referred to as an "Investment
Account"), in one or more Permitted
Investments bearing interest or sold at a
discount, and maturing, unless payable on
demand, no later than the Business Day
immediately preceding the date on which
such funds are required to be withdrawn
from such account pursuant to this
Agreement; provided, however, that the
Trustee shall have no obligation to invest
funds deposited into the Distribution
Account by the Servicer on the Remittance
Date later than 10:00 a.m. (Pacific
Standard Time). If no investment
instruction is given in a timely manner, the
Trustee shall hold the funds in the
Distribution Account uninvested. All such
Permitted Investments shall be held to
maturity, unless payable on demand. Any
investment of funds in an Investment
Account (other than investments made during
the Trustee Float Period) shall be made in
the name of the Servicer. The
Servicer shall be entitled to sole
possession (except with respect to investment
direction of funds and any income and gain
realized on any investment in the
Distribution Account during the Trustee
Float Period) over each such investment,
and any certificate or other instrument
evidencing any such investment shall be
delivered directly to the Servicer, or with
respect to investments during the
Trustee Float Period, the Trustee or its
agent (with a copy to the Trustee or
its agent if related to investment of funds
in the Distribution Account not
during the Trustee Float Period), together
with any document of transfer
necessary to transfer title to such
investment to the Servicer, or with respect
to investments during the Trustee Float
Period, the Trustee or its agent. In the
event amounts on deposit in an Investment
Account are at any time invested in a
Permitted Investment payable on demand, the
Servicer, or with respect to
investments during the Trustee Float
Period, the Trustee may:
(x) consistent
with any notice required to be given thereunder,
demand that payment thereon be made on the last day such
Permitted Investment may otherwise mature hereunder in an
amount equal to the lesser of (1) all amounts then payable
thereunder and (2) the amount required to be withdrawn on such
date; and
(y) demand
payment of all amounts due thereunder that such
Permitted Investment would not constitute a Permitted
Investment in respect of funds thereafter on deposit in an
Investment Account.
(b) All income and gain realized from the investment of funds
deposited in the Collection Account, held
by or on behalf of the Servicer, shall
be for the benefit of the Servicer and
shall be subject to its withdrawal in the
manner set forth in Section 3.11. The
Servicer shall deposit in the Collection
Account the amount of any loss of principal
incurred in respect of any such
Permitted Investment made with funds in
such accounts immediately upon
realization of such loss.
(c) All income and gain realized from the investment of the
portion
of funds deposited in the Distribution
Account by the Servicer and held by the
Trustee, shall be for the benefit of the
Servicer (except for any income or gain
realized from the investment of funds on
deposit in the Distribution Account
during the Trustee Float Period, which
shall be for the benefit of the Trustee)
and shall be subject to the Trustee's
withdrawal in the manner set forth in
Section 3.07(e). The Servicer shall deposit
in the Distribution Account (except
with respect to losses incurred during the
Trustee Float Period) the amount of
any loss of principal incurred in respect
of any such Permitted Investment made
with funds in such accounts immediately
upon realization of such loss.
(d) Except as otherwise expressly provided in this Agreement, if
any
default occurs in the making of a payment
due under any Permitted Investment, or
if a default occurs in any other
performance required under any Permitted
Investment, the Trustee shall take such
action as may be appropriate to enforce
such payment or performance, including the
institution and prosecution of
appropriate proceedings.
(e) The Trustee shall not be liable for the amount of any loss
incurred with respect of any investment or
lack of investment of funds held in
any Investment Account or the Distribution
Account (except that if any such
losses are incurred during the Trustee
Float Period, the Trustee shall be
responsible for reimbursing the Trust for
such loss immediately upon realization
of such loss) if made in accordance with
this Section 3.12.
(f) The Trustee or its Affiliates are permitted to receive
additional compensation that could be
deemed to be in the Trustee's economic
self-interest for (i) serving as investment
adviser, administrator, shareholder,
servicing agent, custodian or sub-custodian
with respect to certain of the
Permitted Investments, (ii) using
Affiliates to effect transactions in certain
Permitted Investments and (iii) effecting
transactions in certain Permitted
Investments. Such compensation shall not be
considered an amount that is
reimbursable or payable pursuant to this
Agreement.
Section 3.13 Maintenance of Hazard Insurance and Errors and
Omissions and Fidelity Coverage. (a) The
Servicer shall cause to be maintained
for each Mortgage Loan fire insurance with
extended coverage on the related
Mortgaged Property in an amount which is at
least equal to the least of (i) the
outstanding principal balance of such
Mortgage Loan, (ii) the amount necessary
to fully compensate for any damage or loss
to the improvements that are a part
of such property on a replacement cost
basis and (iii) the maximum insurable
value of the improvements which are a part
of such Mortgaged Property, in each
case in an amount not less than such amount
as is necessary to avoid the
application of any coinsurance clause
contained in the related hazard insurance
policy. The Servicer shall also cause to be
maintained fire insurance with
extended coverage on each REO Property in
an amount which is at least equal to
the lesser of (i) the maximum insurable
value of the improvements which are a
part of such property and (ii) the
outstanding principal balance of the related
Mortgage Loan at the time it became an REO
Property, plus accrued interest at
the Mortgage Rate and related Servicing
Advances. The Servicer will comply in
the performance of this Agreement with all
reasonable rules and requirements of
each insurer under any such hazard
policies. Any amounts to be collected by the
Servicer under any such policies (other
than amounts to be applied to the
restoration or repair of the property
subject to the related Mortgage or amounts
to be released to the Mortgagor in
accordance with the procedures that the
Servicer would follow in servicing loans
held for its own account, subject to
the terms and conditions of the related
Mortgage and Mortgage Note) shall be
deposited in the Collection Account,
subject to withdrawal pursuant to Section
3.11. Any cost incurred by the Servicer in
maintaining any such insurance shall
not, for the purpose of calculating
distributions to the Trustee, be added to
the unpaid principal balance of the related
Mortgage Loan, notwithstanding that
the terms of such Mortgage Loan so permit.
It is understood and agreed that no
earthquake or other additional insurance is
to be required of any Mortgagor
other than pursuant to such applicable laws
and regulations as shall at any time
be in force and as shall require such
additional insurance. If the Mortgaged
Property or REO Property is at any time in
an area identified in the Federal
Register by the Federal Emergency
Management Agency as having special flood
hazards and flood insurance has been made
available, the Servicer will cause to
be maintained a flood insurance policy in
respect thereof. Such flood insurance
shall be in an amount equal to the lesser
of (i) the unpaid principal balance of
the related Mortgage Loan and (ii) the
maximum amount of such insurance
available for the related Mortgaged
Property under the national flood insurance
program (assuming that the area in which
such Mortgaged Property is located is
participating in such program).
In the event that the Servicer shall obtain and maintain a
blanket
policy with an insurer either (i)
acceptable to Fannie Mae or Freddie Mac or
(ii) having a General Policy Rating of A:X
or better from Best's (or such other
rating that is comparable to such rating)
insuring against hazard losses on all
of the Mortgage Loans, it shall
conclusively be deemed to have satisfied its
obligations as set forth in the first two
sentences of this Section 3.13, it
being understood and agreed that such
policy may contain a deductible clause, in
which case the Servicer shall, in the event
that there shall not have been
maintained on the related Mortgaged
Property or REO Property a policy complying
with the first two sentences of this
Section 3.13, and there shall have been one
or more losses which would have been
covered by such policy, deposit to the
Collection Account from its own funds the
amount not otherwise payable under the
blanket policy because of such deductible
clause. In connection with its
activities as administrator and servicer of
the Mortgage Loans, the Servicer
agrees to prepare and present, on behalf of
itself and the Trustee claims under
any such blanket policy in a timely fashion
in accordance with the terms of such
policy.
(b) The Servicer shall keep in force during the term of this
Agreement a policy or policies of insurance
covering errors and omissions for
failure in the performance of the
Servicer's obligations under this Agreement,
which policy or policies shall be in such
form and amount that would meet the
requirements of Fannie Mae or Freddie Mac
if it were the purchaser of the
Mortgage Loans, unless the Servicer has
obtained a waiver of such requirements
from Fannie Mae or Freddie Mac. The
Servicer shall also maintain a fidelity bond
in the form and amount that would meet the
requirements of Fannie Mae or Freddie
Mac, unless the Servicer has obtained a
waiver of such requirements from Fannie
Mae or Freddie Mac. The Servicer shall
provide the Trustee upon request with
copies of any such insurance policies and
fidelity bond. The Servicer shall be
deemed to have complied with this provision
if an Affiliate of the Servicer has
such errors and omissions and fidelity bond
coverage and, by the terms of such
insurance policy or fidelity bond, the
coverage afforded thereunder extends to
the Servicer. Any such errors and omissions
policy and fidelity bond shall by
its terms not be cancelable without thirty
days' prior written notice to the
Trustee. The Servicer shall also cause each
Subservicer to maintain a policy of
insurance covering errors and omissions and
a fidelity bond which would meet
such requirements.
Section 3.14 Enforcement of Due-On-Sale Clauses; Assumption
Agreements. The Servicer will, to the
extent it has knowledge of any conveyance
or prospective conveyance of any Mortgaged
Property by any Mortgagor (whether by
absolute conveyance or by contract of sale,
and whether or not the Mortgagor
remains or is to remain liable under the
Mortgage Note and/or the Mortgage),
exercise its rights to accelerate the
maturity of such Mortgage Loan under the
"due-on-sale" clause, if any, applicable
thereto; provided, however, that the
Servicer shall not be required to take such
action if, in its sole business
judgment, the Servicer believes it is not
in the best interests of the Trust
Fund and shall not exercise any such rights
if prohibited by law from doing so.
If the Servicer reasonably believes it is
unable under applicable law to enforce
such "due-on-sale" clause or if any of the
other conditions set forth in the
proviso to the preceding sentence apply,
the Servicer shall enter into either
(i) an assumption and modification
agreement from or with the person to whom
such property has been conveyed or is
proposed to be conveyed, pursuant to which
such person becomes liable under the
Mortgage Note and, to the extent permitted
by applicable state law, the Mortgagor
remains liable thereon or (ii) a
substitution agreement as provided in the
succeeding sentence. The Servicer is
also authorized to enter into a
substitution of liability agreement with such
person, pursuant to which the original
Mortgagor is released from liability and
such person is substituted as the Mortgagor
and becomes liable under the
Mortgage Note, provided, that no such
substitution shall be effective unless
such person satisfies the underwriting
criteria of the Servicer and such
substitution is in the best interest of the
Certificateholders as determined by
the Servicer. In connection with any
assumption, modification or substitution,
the Servicer shall apply such underwriting
standards and follow such practices
and procedures as shall be normal and usual
in its general mortgage servicing
activities and as it applies to other
mortgage loans owned solely by it. The
Servicer shall not take or enter into any
assumption and modification agreement,
however, unless (to the extent practicable
in the circumstances) it shall have
received confirmation, in writing, of the
continued effectiveness of any
applicable hazard insurance policy, or a
new policy meeting the requirements of
this Section is obtained. Any fee collected
by the Servicer in respect of an
assumption or substitution of liability
agreement will be retained by the
Servicer as additional servicing
compensation. In connection with any such
assumption, no material term of the
Mortgage Note (including but not limited to
the related Mortgage Rate and the amount of
the Scheduled Payment) may be
amended or modified, except as otherwise
required pursuant to the terms thereof.
The Servicer shall notify the Trustee that
any such substitution, modification
or assumption agreement has been completed
by forwarding to the Trustee or the
Custodian, as applicable, the executed
original of such substitution or
assumption agreement, which document shall
be added to the related Custodial
File and shall, for all purposes, be
considered a part of such Custodial File to
the same extent as all other documents and
instruments constituting a part
thereof.
Notwithstanding the foregoing paragraph or any other provision
of
this Agreement, the Servicer shall not be
deemed to be in default, breach or any
other violation of its obligations
hereunder by reason of any assumption of a
Mortgage Loan by operation of law or by the
terms of the Mortgage Note or any
assumption which the Servicer may be
restricted by law from preventing, for any
reason whatsoever. For purposes of this
Section 3.14, the term "assumption" is
deemed to also include a sale (of the
Mortgaged Property) subject to the
Mortgage that is not accompanied by an
assumption or substitution of liability
agreement.
Section 3.15 Realization upon Defaulted Mortgage Loans. The
Servicer
shall use its best efforts, consistent with
Accepted Servicing Practices, to
foreclose upon or otherwise comparably
convert (which may include an acquisition
of REO Property) the ownership of
properties securing such of the Mortgage Loans
as come into and continue in default and as
to which no satisfactory
arrangements can be made for collection of
delinquent payments pursuant to
Section 3.07, and which are not released
from this Agreement pursuant to any
other provision hereof. The Servicer shall
use reasonable efforts to realize
upon such defaulted Mortgage Loans in such
manner as will maximize the receipt
of principal and interest by the Trustee,
taking into account, among other
things, the timing of foreclosure
proceedings; provided, however, with respect
to any Second Lien Mortgage Loan for which
the related first lien mortgage loan
is not included in the Trust Fund, if,
after such Mortgage Loan becomes 180 days
or more delinquent, the Servicer determines
that a significant net recovery is
not possible through foreclosure, such
Mortgage Loan may be charged off and the
Mortgage Loan will be treated as a
Liquidated Mortgage Loan giving rise to a
Realized Loss. The foregoing is subject to
the provisions that, in any case in
which Mortgaged Property shall have
suffered damage from an uninsured cause, the
Servicer shall not be required to expend
its own funds toward the restoration of
such property unless it shall determine in
its sole discretion (i) that such
restoration will increase the net proceeds
of liquidation of the related
Mortgage Loan to the Trustee, after
reimbursement to itself for such expenses,
and (ii) that such expenses will be
recoverable by the Servicer through
Insurance Proceeds, Condemnation Proceeds
or Liquidation Proceeds from the
related Mortgaged Property, as contemplated
in Section 3.11. The Servicer shall
be responsible for all other costs and
expenses incurred by it in any such
proceedings; provided, however, that it
shall be entitled to reimbursement
thereof from the related property, as
contemplated in Section 3.11.
The proceeds of any liquidation or REO Disposition, as well as
any
recovery resulting from a partial
collection of Insurance Proceeds, Condemnation
Proceeds or Liquidation Proceeds or any
income from an REO Property, will be
applied in the following order of priority:
first, to reimburse the Servicer or
any Subservicer for any related
unreimbursed Servicing Advances, pursuant to
Section 3.11 or 3.17; second, to reimburse
the Servicer for any related
unreimbursed P&I Advances, pursuant to
Section 3.11; third, to accrued and
unpaid interest on the Mortgage Loan or REO
Imputed Interest, at the Mortgage
Rate, to the date of the liquidation or REO
Disposition, or to the Due Date
prior to the Remittance Date on which such
amounts are to be distributed if not
in connection with a liquidation or REO
Disposition; and fourth, as a recovery
of principal of the Mortgage Loan. If the
amount of the recovery so allocated to
interest is less than a full recovery
thereof, that amount will be allocated as
follows: first, to unpaid Servicing Fees;
and second, as interest at the
Mortgage Rate (net of the Servicing Fee
Rate). The portion of the recovery so
allocated to unpaid Servicing Fees shall be
reimbursed to the Servicer or any
Subservicer pursuant to Section 3.11 or
3.17. The portions of the recovery so
allocated to interest at the Mortgage Rate
(net of the Servicing Fee Rate) and
to principal of the Mortgage Loan shall be
applied as follows: first, to
reimburse the Servicer or any Subservicer
for any related unreimbursed Servicing
Advances in accordance with Section 3.11 or
3.17, and second, to the Trustee in
accordance with the provisions of Section
4.02, subject to the last paragraph of
Section 3.17 with respect to certain excess
recoveries from an REO Disposition.
Notwithstanding anything to the contrary contained herein, in
connection with a foreclosure or acceptance
of a deed in lieu of foreclosure, in
the event the Servicer has received actual
notice of, or has actual knowledge of
the presence of, hazardous or toxic
substances or wastes on the related
Mortgaged Property, or if the Trustee
otherwise requests, the Servicer shall
cause an environmental inspection or review
of such Mortgaged Property to be
conducted by a qualified inspector. Upon
completion of the inspection, the
Servicer shall promptly provide the Trustee
and the Depositor with a written
report of the environmental inspection.
After reviewing the environmental inspection report, the
Depositor
shall determine how the Servicer shall
proceed with respect to the Mortgaged
Property. In the event (a) the
environmental inspection report indicates that
the Mortgaged Property is contaminated by
hazardous or toxic substances or
wastes and (b) the Depositor directs the
Servicer to proceed with foreclosure or
acceptance of a deed in lieu of
foreclosure, the Servicer shall be reimbursed
for all reasonable costs associated with
such foreclosure or acceptance of a
deed in lieu of foreclosure and any related
environmental clean-up costs, as
applicable, from the related Liquidation
Proceeds, or if the Liquidation
Proceeds are insufficient to fully
reimburse the Servicer, the Servicer shall be
entitled to be reimbursed from amounts in
the Collection Account pursuant to
Section 3.11. In the event the Depositor
directs the Servicer not to proceed
with foreclosure or acceptance of a deed in
lieu of foreclosure, the Servicer
shall be reimbursed from general
collections for all Servicing Advances made
with respect to the related Mortgaged
Property from the Collection Account
pursuant to Section 3.11.
In the event the Servicer elects to charge-off a Second Lien
Mortgage Loan 180 days or more delinquent
pursuant to this Section 3.15, no
Second Lien Mortgage Loan shall be
characterized as a Liquidated Mortgage Loan
unless the Depositor consents in writing to
such characterization after the
Servicer has provided the Depositor with a
combined equity analysis of such
Second Lien Mortgage Loan and the related
first lien mortgage loan; provided,
that if the Depositor has failed to notify
the Servicer within 3 Business Days
of receipt of such combined equity
analysis, then the Depositor shall be deemed
to have consented to such
characterization.
Section 3.16 Release of Mortgage Files. (a) Upon the payment in
full
of any Mortgage Loan, or the receipt by the
Servicer of a notification that
payment in full shall be escrowed in a
manner customary for such purposes, the
Servicer will, on or before the last day of
the month in which such payment in
full occurs, notify the Trustee or the
Custodian, as applicable, by a
certification (which certification shall
include a statement to the effect that
all amounts received or to be received in
connection with such payment which are
required to be deposited in the Collection
Account pursuant to Section 3.10 have
been or will be so deposited) of a
Servicing Officer and shall request delivery
to it of the Custodial File by submitting a
Request for Release to the Trustee
or the Custodian, as applicable. Upon
receipt of such certification and Request
for Release (which may be in an electronic
format acceptable to the Trustee or
the Custodian, as applicable), the Trustee
or the Custodian, as applicable,
shall promptly release the related
Custodial File to the Servicer within five
(5) Business Days. No expenses incurred in
connection with any instrument of
satisfaction or deed of reconveyance shall
be chargeable to the Collection
Account.
(b) From time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan,
including, for this purpose, collection under
any Insurance Policy relating to the
Mortgage Loans, the Trustee or the
Custodian, as applicable, shall, upon
request of the Servicer and delivery to
the Trustee or the Custodian, as
applicable, of a Request for Release, release
the related Custodial File to the Servicer,
and the Trustee or the Custodian, as
applicable, shall, at the direction of the
Servicer, execute such documents as
shall be necessary to the prosecution of
any such proceedings and the Servicer
shall retain the Mortgage File in trust for
the benefit of the Trustee. Such
Request for Release shall obligate the
Servicer to return each and every
document previously requested from the
Custodial File to the Trustee or the
Custodian, as applicable, when the need
therefor by the Servicer no longer
exists, unless the Mortgage Loan has been
charged-off or liquidated and the
Liquidation Proceeds relating to the
Mortgage Loan have been deposited in the
Collection Account or the Mortgage File or
such document has been delivered to
an attorney, or to a public trustee or
other public official as required by law,
for purposes of initiating or pursuing
legal action or other proceedings for the
foreclosure of the Mortgaged Property
either judicially or non-judicially, and
the Servicer has delivered to the Trustee
or the Custodian, as applicable, a
certificate of a Servicing Officer
certifying as to the name and address of the
Person to which such Mortgage File or such
document was delivered and the
purpose or purposes of such delivery. Upon
receipt of a certificate of a
Servicing Officer stating that such
Mortgage Loan was charged-off or liquidated
and that all amounts received or to be
received in connection with such
liquidation that are required to be
deposited into the Collection Account have
been so deposited, or that such Mortgage
Loan has become an REO Property, a copy
of the Request for Release shall be
released by the Trustee or the Custodian, as
applicable, to the Servicer or its designee
upon request therefor. Upon receipt
of a Request for Release under this Section
3.16, the Trustee or the Custodian,
as applicable, shall deliver the related
Custodial File to the Servicer by
overnight courier (which delivery shall be
at the Servicer's expense); provided,
however, that in the event the Servicer has
not previously received copies of
the relevant Mortgage Loan Documents
necessary to service the related Mortgage
Loan in accordance with Accepted Servicing
Practices, the Responsible Party
shall reimburse the Servicer for any
overnight courier charges incurred for the
requested Custodial Files.
Upon written certification of a Servicing Officer, the Trustee
shall
execute and deliver to the Servicer copies
of any court pleadings, requests for
trustee's sale or other documents
reasonably necessary to the foreclosure or
trustee's sale in respect of a Mortgaged
Property or to any legal action brought
to obtain judgment against any Mortgagor on
the Mortgage Note or Mortgage or to
obtain a deficiency judgment, or to enforce
any other remedies or rights
provided by the Mortgage Note or Mortgage
or otherwise available at law or in
equity, or shall exercise and deliver to
the Servicer a power of attorney
sufficient to authorize the Servicer to
execute such documents on its behalf.
Each such certification shall include a
request that such pleadings or documents
be executed by the Trustee and a statement
as to the reason such documents or
pleadings are required and that the
execution and delivery thereof by the
Trustee will not invalidate or otherwise
affect the lien of the Mortgage, except
for the termination of such a lien upon
completion of the foreclosure or
trustee's sale.
Section 3.17 Title, Conservation and Disposition of REO
Property.
(a) This Section shall apply only to REO
Properties acquired for the account of
the Trustee and shall not apply to any REO
Property relating to a Mortgage Loan
which was purchased or repurchased from the
Trustee pursuant to any provision
hereof. In the event that title to any such
REO Property is acquired, the
Servicer shall cause the deed or
certificate of sale to be issued in the name of
the Trustee, on behalf of the
Certificateholders. Upon written request by the
Servicer, the Trustee shall provide the
Servicer with a power of attorney
prepared by the Servicer with respect to
such REO Property in the form of
Exhibit O and shall deliver such power of
attorney by overnight courier at the
Servicer's expense.
(b) The Servicer shall manage, conserve, protect and operate
each
REO Property for the Trustee solely for the
purpose of its prompt disposition
and sale. The Servicer, either itself or
through an agent selected by the
Servicer, shall manage, conserve, protect
and operate the REO Property in the
same manner that it manages, conserves,
protects and operates other foreclosed
property for its own account, and in the
same manner that similar property in
the same locality as the REO Property is
managed. The Servicer shall attempt to
sell the same (and may temporarily rent the
same for a period not greater than
one year, except as otherwise provided
below) on such terms and conditions as
the Servicer deems to be in the best
interest of the Trustee. The Trustee shall
have no obligations with respect to any REO
Dispositions.
(c) The Servicer shall segregate and hold all funds collected
and
received in connection with the operation
of any REO Property separate and apart
from its own funds and general assets and
shall deposit such funds in the
Collection Account.
(d) The Servicer shall deposit net of reimbursement to the
Servicer
for any related outstanding Servicing
Advances and unpaid Servicing Fees
provided in Section 3.11, or cause to be
deposited, on a daily basis in the
Collection Account all revenues received
with respect to the related REO
Property and shall withdraw therefrom funds
necessary for the proper operation,
management and maintenance of the REO
Property.
(e) The Servicer, upon an REO Disposition, shall be entitled to
reimbursement for any related unreimbursed
Servicing Advances as well as any
unpaid Servicing Fees from proceeds
received in connection with the REO
Disposition, as further provided in Section
3.11.
(f) Any net proceeds from an REO Disposition which are in excess
of
the unpaid principal balance of the related
Mortgage Loan plus all unpaid REO
Imputed Interest thereon through the date
of the REO Disposition shall be
retained by the Servicer as additional
servicing compensation.
(g) The Servicer shall use its reasonable best efforts to sell,
or
cause the Subservicer to sell, in
accordance with Accepted Servicing Practices,
any REO Property as soon as possible, but
in no event later than the conclusion
of the third calendar year beginning after
the year of its acquisition by the
Lower Tier REMIC unless (i) the Servicer
applies for an extension of such period
from the Internal Revenue Service pursuant
to the REMIC Provisions and Code
Section 856(e)(3), in which event such REO
Property shall be sold within the
applicable extension period, or (ii) the
Servicer obtains for the Trustee an
Opinion of Counsel, addressed to the
Depositor, the Trustee and the Servicer, to
the effect that the holding by the Lower
Tier REMIC of such REO Property
subsequent to such period will not result
in the imposition of taxes on
"prohibited transactions" as defined in
Section 860F of the Code or cause the
Lower Tier REMIC or Upper Tier REMIC to
fail to qualify as a REMIC under the
REMIC Provisions or comparable provisions
of relevant state laws at any time.
The Servicer shall manage, conserve,
protect and operate each REO Property for
the Trustee solely for the purpose of its
prompt disposition and sale in a
manner which does not cause such REO
Property to fail to qualify as "foreclosure
property" within the meaning of Section
860G(a)(8) or result in the receipt by
the Lower Tier REMIC of any "income from
non-permitted assets" within the
meaning of Section 860F(a)(2)(B) of the
Code or any "net income from foreclosure
property" which is subject to taxation
under Section 860G(a)(1) of the Code.
Pursuant to its efforts to sell such REO
Property, the Servicer shall either
itself or through an agent selected by the
Servicer protect and conserve such
REO Property in the same manner and to such
extent as is customary in the
locality where such REO Property is located
and may, incident to its
conservation and protection of the
interests of the Trustee on behalf of the
Certificateholders, rent the same, or any
part thereof, as the Servicer deems to
be in the best interest of the Trustee on
behalf of the Certificateholders for
the period prior to the sale of such REO
Property; provided, however, that any
rent received or accrued with respect to
such REO Property qualifies as "rents
from real property" as defined in Section
856(d) of the Code.
Section 3.18 Notification of Adjustments. With respect to each
Adjustable Rate Mortgage Loan, the Servicer
shall adjust the Mortgage Rate on
the related Adjustment Date and shall
adjust the Scheduled Payment on the
related mortgage payment adjustment date,
if applicable, in compliance with the
requirements of applicable law and the
related Mortgage and Mortgage Note. In
the event that an Index becomes unavailable
or otherwise unpublished, the
Servicer shall select a comparable
alternative index over which it has no direct
control and which is readily verifiable.
The Servicer shall execute and deliver
any and all necessary notices required
under applicable law and the terms of the
related Mortgage Note and Mortgage
regarding the Mortgage Rate and Scheduled
Payment adjustments. The Servicer shall
promptly, upon written request therefor,
deliver to the Trustee such notifications
and any additional applicable data
regarding such adjustments and the methods
used to calculate and implement such
adjustments. Upon the discovery by the
Servicer or the receipt of notice from
the Trustee that the Servicer has failed to
adjust a Mortgage Rate or Scheduled
Pay
