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EXHIBIT 4
Pooling and Servicing Agreement
<PAGE>
MORGAN STANLEY ABS CAPITAL I INC.,
Depositor,
COUNTRYWIDE HOME LOANS SERVICING LP,
Servicer,
WMC MORTGAGE CORP.,
Responsible Party,
WELLS FARGO BANK, NATIONAL ASSOCIATION,
Trustee
and
DEUTSCHE BANK NATIONAL TRUST COMPANY
Custodian
-----------------------------------------------------------
POOLING AND SERVICING AGREEMENT
Dated as of March 1, 2005
-----------------------------------------------------------
MORGAN STANLEY ABS CAPITAL I INC. TRUST 2005-WMC2
MORTGAGE PASS-THROUGH CERTIFICATES,
SERIES 2005-WMC2
<PAGE>
TABLE OF CONTENTS
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 March 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 trustee
(the
"Trustee"), and DEUTSCHE BANK NATIONAL TRUST COMPANY, a national
banking
association, as custodian (the "Custodian"),
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.
Initial Upper
Upper Tier Tier Principal
Interest Rate and Amount and
Corresponding Corresponding Corresponding
Upper Tier Class Pass- Class Certificate Class of
Class Designation Through Rate Balance Certificates
----------------- ----------------- -----------------
-------------
Class A-1ss (1) $ 384,485,000 Class A-1ss(9)
Class A-1mz (2) $ 42,721,000 Class A-1mz(9)
Class A-2a (3) $ 370,000,000 Class A-2a(9)
Class A-2b (4) $ 123,211,000 Class A-2b(9)
Class A-2c (5) $ 105,000,000 Class A-2c(9)
Class M-1 (6) $ 42,378,000 Class M-1(9)
Class M-2 (6) $ 40,452,000 Class M-2(9)
Class M-3 (6) $ 24,399,000 Class M-3(9)
Class M-4 (6) $ 21,189,000 Class M-4(9)
Class M-5 (6) $ 21,831,000 Class M-5(9)
Class M-6 (6) $ 19,263,000 Class M-6(9)
Class B-1 (6) $ 17,337,000 Class B-1(9)
Class B-2 (6) $ 14,768,000 Class B-2(9)
Class B-3 (6) $ 14,126,000 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 0.4050%, (ii) the
Loan Group
I Cap and (iii) the WAC Cap or (b) after the Optional
Termination Date,
the least of (i) LIBOR plus 0.8100%, (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 0.2500%, (ii) the
Loan Group
I Cap and (iii) the WAC Cap or (b) after the Optional
Termination Date,
the least of (i) LIBOR plus 0.5000%, (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 0.0800%, (ii) the
Loan Group
II Cap and (iii) the WAC Cap or (b) after the Optional
Termination Date,
the least of (i) LIBOR plus 0.1600%, (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 0.1800%, (ii) the
Loan Group
II Cap and (iii) the WAC Cap or (b) after the Optional
Termination Date,
the least of (i) LIBOR plus 0.3600%, (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 0.3000%, (ii) the
Loan Group
II Cap and (iii) the WAC Cap or (b) after the Optional
Termination Date,
the least of (i) LIBOR plus 0.6000%, (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
0.3900%,
0.4300%, 0.4700%, 0.6200%, 0.6500%, 0.6900%, 1.1700%, 1.3000%
and 1.8000%,
respectively, and (ii) the WAC Cap or (b) after the Optional
Termination
Date, the lesser of (i) LIBOR plus 0.5850%, 0.6450%, 0.7050%,
0.9300%,
0.9750%, 1.0350%, 1.7550%, 1.9500% and 2.7000%, respectively,
and (ii) the
WAC Cap.
(7) The Class X Interest has an initial principal balance of
$43,020,092, 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, Standard &
Poor's and DBRS.
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.
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) 59.70% 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 $6,420,900.
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
March
30, 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) 88.80% 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 $6,420,900.
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) 91.10% 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
$6,420,900.
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) 93.30% 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 $6,420,900.
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
March
30, 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) 66.30%
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
$6,420,900.
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) 72.60% 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
$6,420,900.
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) 76.40% 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 $6,420,900.
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) 79.70% 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
$6,420,900.
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) 83.10% 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 $6,420,900.
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 86.10% 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 $6,420,900.
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: March 30, 2005.
Closing Date Deposit Amount: $5,111.04 (all of which is
allocable to
principal) deposited by the Depositor into the Distribution
Account on the
Closing Date. $812.81 of the Closing Date Deposit Amount shall
be attributable
to the Group I Mortgage Loans, and $4,298.23 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 Maryland 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 (i) for purposes of
Certificate
transfers, at Wells Fargo Center, Sixth Street and Marquette
Avenue,
Minneapolis, Minnesota 55479 and (ii) for all other purposes, at
9062 Old
Annapolis Road, Columbia, Maryland 21045, Attention: Client
Manager--MSAC
2005-WMC2, facsimile no. (410) 715- 2380, 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
Corresponding Lower Upper Tier Class of
Tier 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
------------------------------ --------------------------
April 2008 through March 2009 3.000% for the first month, plus
an
additional 1/12th of 1.750% for each month
thereafter (e.g., 3.875% in October 2008)
April 2009 through March 2010 4.750% for the first month, plus
an
additional 1/12th of 1.250% for each month
thereafter (e.g., 5.375% in October 2009)
April 2010 through March 2011 6.000% for the first month, plus
an
additional 1/12th of 0.750% for each month
thereafter (e.g., 6.375% in October 2010)
April 2011 and thereafter 6.750%
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: Deutsche Bank National Trust Company, a national
banking
association, and its successors in interest, with respect to the
Deutsche Bank
Mortgage Loans.
Custodian Fee: As to any Distribution Date, an amount equal to
the
product of (a) one-twelfth of the Custodian 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 April 2005 only, the portion of the Closing Date Deposit
Amount allocable to
principal.
Custodian Fee Rate: With respect to each Mortgage Loan, 0.00025%
per
annum.
Cut-off Date: March 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.
DBRS: Dominion Bond Rating Service, Inc., and its successors
in
interest. If DBRS is designated as a Rating Agency in the
Preliminary Statement,
for purposes of Section 10.05(f) the address for notices to DBRS
shall be
Dominion Bond Rating Service, Inc., 55 Broadway, 15th Floor, New
York, New York
10006, Attention: RMBS Group, or such other address as DBRS may
hereafter
furnish to the Depositor, the Trustee and the Servicer.
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 39.7% 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, "A-1" by Standard
& Poor's and "R-1"
by DBRS.
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.
Deutsche Bank Mortgage Loans: Mortgage Loans for which Deutsche
Bank
National Trust Company will be acting as Custodian, as
identified on the
Mortgage Loan Schedule.
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 "Wells
Fargo Bank,
National Association in trust for registered holders of Morgan
Stanley ABS
Capital I Inc. Trust 2005-WMC2 Mortgage Pass-Through
Certificates, Series
2005-WMC2". 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 April
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, "P-1" by Moody's and "R-1" by DBRS (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 "Wells Fargo Bank, National Association in trust for
registered
holders of Morgan Stanley ABS Capital I Inc. Trust 2005-WMC2,
Mortgage
Pass-Through Certificates, Series 2005-WMC2". 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 ...................................
February 2035
Class A-1mz Certificates ...................................
February 2035
Class A-2a Certificates ....................................
February 2035
Class A-2b Certificates ....................................
February 2035
Class A-2c Certificates ....................................
February 2035
Class M-1 Certificates .....................................
February 2035
Class M-2 Certificates .....................................
February 2035
Class M-3 Certificates .....................................
February 2035
Class M-4 Certificates .....................................
February 2035
Class M-5 Certificates .....................................
February 2035
Class M-6 Certificates .....................................
February 2035
Class B-1 Certificates .....................................
February 2035
Class B-2 Certificates .....................................
February 2035
Class B-3 Certificates .....................................
February 2035
Class X Certificates .......................................
February 2035
Class P Certificates .......................................
February 2035
Class R Certificates .......................................
February 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(f) 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-WMC2, 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 March 30, 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 April 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 April
2008, a Trigger Event.
Group II Class A Cap Agreement: The interest rate cap
agreement,
dated March 30, 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(f) 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; (19) whether the
Custodian will be
acting as Custodian with respect to such Mortgage Loan; and (20)
whether the
Mortgage Loan is a MERS Designated 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.
Original Purchase Date: With respect to the Deutsche Bank
Mortgage
Loans, December 20, 2004, and with respect to the Mortgage Loans
(other than the
Deutsche Bank Mortgage Loans), January 27, 2005.
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, 0.4050%;
Class A-1mz Certificates, 0.2500%; Class A-2a Certificates,
0.0800%; Class A-2b
Certificates, 0.1800%; Class A-2c Certificates, 0.3000%; Class
M-1 Certificates,
0.3900%; Class M-2 Certificates, 0.4300%; Class M-3
Certificates, 0.4700%; Class
M-4 Certificates, 0.6200%; Class M-5 Certificates, 0.6500%;
Class M-6
Certificates, 0.6900%; Class B-1 Certificates, 1.1700%; Class
B-2 Certificates,
1.3000%; and Class B-3 Certificates, 1.8000%. On the first
Distribution Date
after the Optional Termination Date, the Pass-Through Margins
shall increase to:
Class A-1ss Certificates, 0.8100%; Class A-1mz Certificates,
0.5000%; Class A-2a
Certificates, 0.1600%; Class A-2b Certificates, 0.3600%; Class
A-2c
Certificates, 0.6000%; Class M-1 Certificates, 0.5850%; Class
M-2 Certificates,
0.6450%; Class M-3 Certificates, 0.7050%; Class M-4
Certificates, 0.9300%; Class
M-5 Certificates, 0.9750%; Class M-6 Certificates, 1.0350%;
Class B-1
Certificates, 1.7550%; Class B-2 Certificates, 1.9500%; and
Class B-3
Certificates, 2.7000%.
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, "P-1" by Moody's and "R-1" by DBRS (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
April 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 March
24,
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, and Amendment No. 2, dated as of February 28,
2005, 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, 40.30%.
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 3.35% of the Cut-off Date Pool Principal Balance. On
and after the
Stepdown Date, an amount equal to 6.70% 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(f) 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-WMC2, 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 April 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 Matters Person: The Holder of the Class R Certificates
designated as "tax matters persons" of the Lower Tier REMIC and
the Upper Tier
REMIC, respectively, in the manner provided under Treasury
Regulations Section
1.860F-4(d) and Treasury Regulations Section
301.6231(a)(7)-1.
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: Wells Fargo Bank, National Association, 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 April 2005 only, the portion of the Closing Date Deposit
Amount allocable to
principal.
Trustee Fee Rate: With respect to each Mortgage Loan, 0.0045%
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.
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 Deutsche Bank
Mortgage Loans, and
to the Custodian with respect to the Deutsche Bank 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 Deutsche Bank 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 Custodian 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
Custodian
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 Mortgage Loans (other than
the
Deutsche Bank 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 Mortgage Loan (other than
the
Deutsche Bank Mortgage Loans), 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 certified by the
Responsible
Party to be a true and complete copy of such Mortgage and shall
forward to
the Trustee 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 Deutsche Bank Mortgage Loans
(except
with respect to MERS Designated 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 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 Custodian 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
Mortgage Loans
(other than the Deutsche Bank 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
Trustee 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 Original Purchase Date.
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 "Wells Fargo Bank,
National
Association, as trustee under the Pooling and Servicing
Agreement dated as of
March 1, 2005, Morgan Stanley ABS Capital I Inc. Trust
2005-WMC2". 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
Original Purchase Date, 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-WMC2" and Wells Fargo Bank, National
Association 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 directed 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 Minnesota,
Utah or 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 certification
by the Servicer to the Trustee and the Custodian, as applicable,
that 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 the Trustee
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.
This indemnity shall survive the termination of 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 certification that such deposit of the
Repurchase Price
has been made to the Collection Account, 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
February 2035, which is the Distribution Date in the month
following the month
in which the latest maturity date of any Mortgage Loan
occurs.
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
and shall be indemnified by the Servicer for any losses or
expenses arising from
the Servicer's use of the power 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 and the Custodian 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 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.
(c) The Servicer shall be responsible for reviewing and
reconciling
all Collection Accounts in accordance with Accepted Servicing
Practices. The
Servicer shall act promptly to resolve any discrepancies. The
Servicer shall be
responsible for all expenses and consequences for failure to
reconcile such
Collection Accounts.
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, which
shall be for the
sole benefit of the Trustee) 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
Servicer
shall determine, consistent with Accepted Servicing Practices,
how to 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 Servicer
determines,
consistent with Accepted Servicing Practices, 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 Servicer determines 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 the Servicer and the
Trustee 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
and the Trustee 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 two copies of a
Request for Release in
written or electronic form 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, two copies of a
Request for Release
in written or electronic form, release the related Custodial
File to the
Servicer, and the Trustee 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
Payment in accordance with the terms of the related Mortgage
Note, the Servicer
shall deposit in the Collection Account from its own funds the
amount of any
interest loss caused as such interest loss occurs.
Section 3.19 Access to Certain Documentation and Information
Regarding the Mortgage Loans. The Servicer shall provide, or
cause the
Subservicer to provide, to the Depositor, the Trustee, the OTS
or the FDIC and
the examiners and supervisory agents thereof, access to the
documentation
regarding the Mortgage Loans in its possession required by
applicable
regulations of the OTS. Such access shall be afforded without
charge, but only
upon five Business Days written request and during normal
business hours at the
offices of the Servicer, the Depositor, the Trustee or any
Subservicer. Nothing
in this Section shall derogate from the obligation of any such
party to observe
any applicable law prohibiting disclosure of information
regarding the
Mortgagors and the failure of any such party to provide access
as provided in
this Section as a result of such obligation shall not constitute
a breach of
this Section.
Section 3.20 Documents, Records and Funds in Possession of
the
Servicer to Be Held for the Trustee. The Servicer shall account
fully to the
Trustee for any funds received by the Servicer or which
otherwise are collected
by the Servicer as Liquidation Proceeds, Condemnation Proceeds
or Insurance
Proceeds in respect of any Mortgage Loan. All Mortgage Files and
funds collected
or held by, or under the control of, the Servicer in respect of
any Mortgage
Loans, whether from the collection of principal and interest
payments or from
Liquidation Proceeds, including, but not limited to, any funds
on deposit in the
Collection Account, shall be held by the Servicer for and on
behalf of the
Trustee and shall be and remain the sole and exclusive property
of the Trustee,
subject to the applicable provisions of this Agreement. The
Servicer also agrees
that it shall not create, incur or subject any Mortgage File or
any funds that
are deposited in the Collection Account, the Distribution
Account or any Escrow
Account, or any funds that otherwise are or may become due or
payable to the
Trustee for the benefit of the Certificateholders, to any claim,
lien, security
interest, judgment, levy, writ of attachment or other
encumbrance, or assert by
legal action or otherwise any claim or right of setoff against
any Mortgage File
or any funds collected on, or in connection with, a Mortgage
Loan, except,
however, that the Servicer shall be entitled to set off against
and deduct from
any such funds any amounts that are properly due and payable to
the Servicer
under this Agreement.
Section 3.21 Servicing Compensation. (a) As compensation for
its
activities hereunder, the Servicer shall, with respect to each
Mortgage Loan, be
entitled to retain from deposits to the Collection Account and
from Liquidation
Proceeds, Condemnation Proceeds, Insurance Proceeds and REO
Proceeds related to
such Mortgage Loan, the Servicing Fee with respect to each
Mortgage Loan (less
any portion of such amounts retained by any Subservicer). In
addition, the
Servicer shall be entitled to recover unpaid Servicing Fees out
of related late
collections to the extent permitted under Section 3.11. The
right to receive the
Servicing Fee may not be transferred in whole or in part except
in connection
with the transfer of all of the Servicer's responsibilities and
obligations
under this Agreement; provided, however, that the Servicer may
pay from the
Servicing Fee any amounts due to a Subservicer pursuant to a
Subservicing
Agreement entered into under Section 3.02.
(b) Additional servicing compensation in the form of assumption
or
modification fees, late payment charges, NSF fees, reconveyance
fees and other
similar fees and charges (other than Prepayment Charges) shall
be retained by
the Servicer only to the extent such fees or charges are
received by the
Servicer. The Servicer shall also be entitled pursuant to
Section 3.11(a)(iv) to
withdraw from the Collection Account, and pursuant to Section
3.07(e), to direct
the Trustee to withdraw from the Distribution Account and remit
to the Servicer
(except for monies invested during the Trustee Float Period), as
additional
servicing compensation, interest or other income earned on the
related portions
of deposits therein.
(c) The Servicer shall be required to pay all expenses incurred
by
it in connection with its servicing activities hereunder
(including payment of
premiums for any blanket policy insuring against hazard losses
pursuant to
Section 3.13, servicing compensation of the Subservicer to the
extent not
retained by it and the fees and expenses of independent
accountants and any
agents appointed by the Servicer), and shall not be entitled to
reimbursement
therefor from the Trust Fund except as specifically provided in
Section 3.11.
Section 3.22 Annual Statement as to Compliance. The Servicer
will
deliver or cause to be delivered to the Depositor, the Rating
Agencies and the
Trustee on or before March 15th of each calendar year,
commencing in 2006, an
Officer's Certificate stating, as to each signatory thereof,
that (i) a review
of the activities of the Servicer during the preceding calendar
year and of
performance under this Agreement or a similar agreement has been
made under such
officers' supervision, and (ii) to the best of such officers'
knowledge, based
on such review, the Servicer has fulfilled all of its
obligations under this
Agreement throughout such year, or, if there has been a default
in the
fulfillment of any such obligation, specifying each such default
known to such
officers and the nature and status thereof. Promptly after
receipt of such
Officer's Certificate, the Depositor shall review such Officer's
Certificate
and, if applicable, consult with the Servicer as to the nature
of any defaults
by the Servicer in the fulfillment of any of the Servicer's
obligations. The
obligations of the Servicer under this Section apply to the
Servicer that
serviced during the applicable period, whether or not such
Servicer is acting as
a Servicer at the time such Officer's Certificate is required to
be delivered.
Section 3.23 Annual Independent Public Accountants'
Servicing
Statement; Financial Statements. Not later than March 15th of
each calendar year
commencing in 2006, the Servicer, at its expense, shall cause a
nationally
recognized firm of independent certified public accountants to
furnish to the
Depositor, the Servicer, the Rating Agencies and the Trustee a
report stating
that (i) it has obtained a letter of representation regarding
certain matters
from the management of the Servicer which includes an assertion
that the
Servicer has complied with certain minimum residential mortgage
loan servicing
standards, identified in the Uniform Single Attestation Program
for Mortgage
Bankers established by the Mortgage Bankers Association of
America, with respect
to the servicing of residential mortgage loans during the most
recently
completed calendar year and (ii) on the basis of an examination
conducted by
such firm in accordance with standards established by the
American Institute of
Certified Public Accountants, such representation is fairly
stated in all
material respects, subject to such exceptions and other
qualifications that may
be appropriate. In rendering its report such firm may rely, as
to matters
relating to the direct servicing of residential mortgage loans
by Subservicers,
upon comparable reports of firms of independent certified public
accountants
rendered on the basis of examinations conducted in accordance
with the same
standards (rendered within one year of such report) with respect
to those
Subservicers. Promptly after receipt of such report, the
Depositor shall review
such report and, if applicable, consult with the Servicer as to
the nature of
any defaults by the Servicer in the fulfillment of any of the
Servicer's
obligations. The obligations of the Servicer under this Section
apply to the
Servicer that serviced during the applicable period, whether or
not such
Servicer is acting as a Servicer at the time such report is
required to be
delivered.
Section 3.24 Trustee to Act as Servicer. (a) Subject to
Section
7.02, in the event that the Servicer shall for any reason no
longer be the
Servicer hereunder (including by reason of an Event of Default),
the Trustee or
its successor shall thereupon assume all of the rights and
obligations of the
Servicer hereunder arising thereafter (except that the Trustee
shall not be (i)
liable for losses of the predecessor Servicer pursuant to
Section 3.10 or any
acts or omissions of the predecessor Servicer hereunder), (ii)
obligated to
effectuate repurchases or substitutions of Mortgage Loans
hereunder, including
but not limited to repurchases or substitutions pursuant to
Section 2.03, (iii)
responsible for expenses of the predecessor Servicer pursuant to
Section 2.03 or
(iv) deemed to have made any representations and warranties of
the Servicer
hereunder. Any such assumption shall be subject to Section
7.02.
(b) Every Subservicing Agreement entered into by the Servicer
shall
contain a provision giving the successor Servicer the option to
terminate such
agreement in the event a successor Servicer is appointed.
(c) If the Servicer shall for any reason no longer be the
Servicer
(including by reason of any Event of Default), the Trustee (or
any other
successor Servicer) may, at its option, succeed to any rights
and obligations of
the Servicer under any Subservicing Agreement in accordance with
the terms
thereof; provided, that the Trustee (or any other successor
Servicer) shall not
incur any liability or have any obligations in its capacity as
successor
Servicer under a Subservicing Agreement arising prior to the
date of such
succession unless it expressly elects to succeed to the rights
and obligations
of the Servicer thereunder; and the Servicer shall not thereby
be relieved of
any liability or obligations under the Subservicing Agreement
arising prior to
the date of such succession.
(d) The Servicer shall, upon request of the Trustee, but at
the
expense of the Servicer, deliver to the assuming party all
documents and records
relating to each Subservicing Agreement (if any) and the
Mortgage Loans then
being serviced thereunder and an accounting of amounts collected
and held by it
and otherwise use its best efforts to effect the orderly and
efficient transfer
of the Subservicing Agreement to the assuming party.
Section 3.25 Compensating Interest. The Servicer shall remit to
the
Trustee on each Remittance Date an amount from its own funds
equal to the
Compensating Interest payable by the Servicer for the related
Distribution Date.
Section 3.26 Credit Reporting; Gramm-Leach-Bliley Act. (a)
With
respect to each Mortgage Loan, the Servicer agrees to fully
furnish, in
accordance with the Fair Credit Reporting Act and its
implementing regulations,
accurate and complete information (e.g., favorable and
unfavorable) on its
borrower credit files to Equifax, Experian and TransUnion Credit
Information
Company (three of the credit repositories) on a monthly
basis.
(b) The Servicer shall comply with Title V of the
Gramm-Leach-Bliley
Act of 1999 and all applicable regulations promulgated
thereunder, relating to
the Mortgage Loans and the related borrowers and shall provide
all required
notices thereunder.
ARTICLE IV
DISTRIBUTIONS AND
ADVANCES BY THE SERVICER
Section 4.01 Advances. (a) The amount of P&I Advances to be
made by
the Servicer for any Remittance Date shall equal, subject to
Section 4.01(c),
the sum of (i) the aggregate amount of Scheduled Payments (with
each interest
portion thereof net of the related Servicing Fee), due during
the Due Period
immediately preceding such Remittance Date in respect of the
Mortgage Loans,
which Scheduled Payments were not received as of the close of
business on the
related Determination Date (provided, however, that with respect
to any Balloon
Loan that is delinquent on its maturity date, the Servicer will
not be required
to advance the principal portion of the related balloon payment
but will be
required to continue to make P&I Advances in accordance with
this Section
4.01(a) with respect to such Balloon Loan in an amount equal to
the assumed
scheduled interest that would otherwise be due based on the
original
amortization schedule for such Balloon Loan (with interest at
the Adjusted Net
Mortgage Rate)), plus (ii) with respect to each REO Property,
which REO Property
was acquired during or prior to the related Prepayment Period
and as to which
such REO Property an REO Disposition did not occur during the
related Prepayment
Period, an amount equal to the excess, if any, of the Scheduled
Payments (with
each interest portion thereof net of the related Servicing Fee)
that would have
been due on the related Due Date in respect of the related
Mortgage Loans, over
the net income from such REO Property transferred to the
Collection Account for
distribution on such Remittance Date.
(b) On each Remittance Date, the Servicer shall remit in
immediately
available funds to the Trustee an amount equal to the aggregate
amount of P&I
Advances, if any, to be made in respect of the Mortgage Loans
and REO Properties
for the related Remittance Date either (i) from its own funds or
(ii) from the
Collection Account, to the extent of funds held therein for
future distribution
(in which case, it will cause to be made an appropriate entry in
the records of
Collection Account that Amounts Held for Future Distribution
have been, as
permitted by this Section 4.01, used by the Servicer in
discharge of any such
P&I Advance) or (iii) in the form of any combination of (i)
and (ii) aggregating
the total amount of P&I Advances to be made by the Servicer
with respect to the
Mortgage Loans and REO Properties. Any Amounts Held for Future
Distribution and
so used shall be appropriately reflected in the Servicer's
records and replaced
by the Servicer by deposit in the Collection Account on or
before any future
Remittance Date to the extent required.
(c) The obligation of the Servicer to make such P&I Advances
is
mandatory, notwithstanding any other provision of this Agreement
but subject to
paragraph (d) below and, with respect to Balloon Loans, (a)
above, and, with
respect to any Mortgage Loan or REO Property, shall continue
until a Final
Recovery Determination in connection therewith or the removal
thereof from
coverage under this Agreement, except as otherwise provided in
this Section.
(d) Notwithstanding anything herein to the contrary, no P&I
Advance
or Servicing Advance shall be required to be made hereunder by
the Servicer if
such P&I Advance or Servicing Advance would, if made,
constitute a
Nonrecoverable P&I Advance or Nonrecoverable Servicing
Advance. The
determination by the Servicer that it has made a Nonrecoverable
P&I Advance or a
Nonrecoverable Servicing Advance or that any proposed P&I
Advance or Servicing
Advance, if made, would constitute a Nonrecoverable P&I
Advance or a
Nonrecoverable Servicing Advance, respectively, shall be
evidenced by an
Officer's Certificate of the Servicer delivered to the
Trustee.
(e) Except as otherwise provided herein, the Servicer shall
be
entitled to reimbursement pursuant to Section 3.11 for Servicing
Advances from
recoveries from the related Mortgagor or from all Liquidation
Proceeds and other
payments or recoveries (including Insurance Proceeds and
Condemnation Proceeds)
with respect to the related Mortgage Loan.
Section 4.02 Priorities of Distribution. (a) On each
Distribution
Date, the Trustee shall allocate from amounts then on deposit in
the
Distribution Account in the following order of priority and to
the extent of the
Available Funds remaining and, on such Distribution Date, shall
make
distributions on the Certificates in accordance with such
allocation:
(i) to the holders of each Class of LIBOR Certificates in
the
following order of priority:
(A) to the Class A Certificates, the related Accrued
Certificate Interest Distribution Amounts and any related
Unpaid
Interest Amounts for such Distribution Date, pursuant to the
allocation set forth in clauses (iv) and (v) of this Section
4.02(a);
(B) from any remaining Interest Remittance Amounts, to the
Class M-1 Certificates, the Accrued Certificate Interest
Distribution Amount for such Class on such Distribution
Date;
(C) from any remaining Interest Remittance Amounts, to the
Class M-2 Certificates, the Accrued Certificate Interest
Distribution Amount for such Class on such Distribution
Date;
(D) from any remaining Interest Remittance Amounts, to the
Class M-3 Certificates, the Accrued Certificate Interest
Distribution Amount for such Class on such Distribution
Date;
(E) from any remaining Interest Remittance Amounts, to the
Class M-4 Certificates, the Accrued Certificate Interest
Distribution Amount for such Class on such Distribution
Date;
(F) from any remaining Interest Remittance Amounts, to the
Class M-5 Certificates, the Accrued Certificate Interest
Distribution Amount for such Class on such Distribution
Date;
(G) from any remaining Interest Remittance Amounts, to the
Class M-6 Certificates, the Accrued Certificate Interest
Distribution Amount for such Class on such Distribution
Date;
(H) from any remaining Interest Remittance Amounts, to the
Class B-1 Certificates, the Accrued Certificate Interest
Distribution Amount for such Class on such Distribution
Date;
(I) from any remaining Interest Remittance Amounts, to the
Class B-2 Certificates, the Accrued Certificate Interest
Distribution Amount for such Class on such Distribution Date;
and
(J) from any remaining Interest Remittance Amounts, to the
Class B-3 Certificates, the Accrued Certificate Interest
Distribution Amount for such Class on such Distribution
Date;
(ii) (A) on each Distribution Date (1) before the Stepdown Date
or
(2) with respect to which a Trigger Event is in effect, to the
holders of
the related Class or Classes of LIBOR Certificates then entitled
to
distributions of principal as set forth below, from amounts
remaining on
deposit in the Distribution Account after making distributions
pursuant to
clause (i) above, an amount equal to the Principal Distribution
Amount in
the following order of priority:
(a) to the Class A Certificates, allocated as described in
Section 4.02(c), until the respective Class Certificate
Balances
thereof are reduced to zero; and
(b) sequentially to 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
Certificates, in that order, until the respective Class
Certificate
Balances are reduced to zero;
(B) on each Distribution Date (1) on and after the Stepdown Date
and
(2) as long as a Trigger Event is not in effect, to the holders
of the
related Class or Classes of LIBOR Certificates then entitled
to
distribution of principal, from amounts remaining on deposit in
the
Distribution Account after making distributions pursuant to
clause (i)
above, an amount equal to, in the aggregate, the Principal
Distribution
Amount in the following amounts and order of priority:
(a) to the Class A Certificates, the lesser of (x) the
Principal Distribution Amount and (y) the Class A Principal
Distribution Amount, allocated as described in Section
4.02(c),
until the respective Class Certificate Balances thereof are
reduced
to zero;
(b) to the Class M-1 Certificates, the lesser of (x) the
excess of (i) the Principal Distribution Amount over (ii) the
amount
distributed to the Class A Certificateholders in clause
(ii)(B)(a)
above and (y) the Class M-1 Principal Distribution Amount, until
the
Class Certificate Balance thereof has been reduced to zero;
(c) to the Class M-2 Certificates, the lesser of (x) the
excess of (i) the Principal Distribution Amount over (ii) the
amount
distributed to the Class A Certificateholders in clause
(ii)(B)(a)
above and to the Class M-1 Certificates in clause (ii)(B)(b)
above
and (y) the Class M-2 Principal Distribution Amount, until the
Class
Certificate Balance thereof has been reduced to zero;
(d) to the Class M-3 Certificates, the lesser of (x) the
excess of (i) the Principal Distribution Amount over (ii) the
amount
distributed to the Class A Certificateholders in clause
(ii)(B)(a)
above, to the Class M-1 Certificates in clause (ii)(B)(b) above
and
to the Class M-2 Certificates in clause (ii)(B)(c) above and (y)
the
Class M-3 Principal Distribution Amount, until the Class
Certificate
Balance thereof has been reduced to zero;
(e) to the Class M-4 Certificates, the lesser of (x) the
excess of (i) the Principal Distribution Amount over (ii) the
amount
distributed to the Class A Certificateholders in clause
(ii)(B)(a)
above, to the Class M-1 Certificates in clause (ii)(B)(b) above,
to
the Class M-2 Certificates in clause (ii)(B)(c) above and to
the
Class M-3 Certificates in clause (ii)(B)(d) above and (y) the
Class
M-4 Principal Distribution Amount, until the Class
Certificate
Balance thereof has been reduced to zero;
(f) to the Class M-5 Certificates, the lesser of (x) the
excess of (i) the Principal Distribution Amount over (ii) the
amount
distributed to the Class A Certificateholders in clause
(ii)(B)(a)
above, to the Class M-1 Certificates in clause (ii)(B)(b) above,
to
the Class M-2 Certificates in clause (ii)(B)(c) above, to the
Class
M-3 Certificates in clause (ii)(B)(d) above and to the Class
M-4
Certificates in clause (ii)(B)(e) above and (y) the Class
M-5
Principal Distribution Amount, until the Class Certificate
Balance
thereof has been reduced to zero;
(g) to the Class M-6 Certificates, the lesser of (x) the
excess of (i) the Principal Distribution Amount over (ii) the
amount
distributed to the Class A Certificateholders in clause
(ii)(B)(a)
above, to the Class M-1 Certificates in clause (ii)(B)(b) above,
to
the Class M-2 Certificates in clause (ii)(B)(c) above, to the
Class
M-3 Certificates in clause (ii)(B)(d) above, to the Class
M-4
Certificates in clause (ii)(B)(e) above and to the Class M-5
Certificates in clause (ii)(B)(f) above and (y) the Class
M-6
Principal Distribution Amount, until the Class Certificate
Balance
thereof has been reduced to zero;
(h) to the Class B-1 Certificates, the lesser of (x) the
excess of (i) the Principal Distribution Amount over (ii) the
amount
distributed to the Class A Certificateholders in clause
(ii)(B)(a)
above, to the Class M-1 Certificates in clause (ii)(B)(b) above,
to
the Class M-2 Certificates in clause (ii)(B)(c) above, to the
Class
M-3 Certificates in clause (ii)(B)(d) above, to the Class
M-4
Certificates in clause (ii)(B)(e) above, to the Class M-5
Certificates in clause (ii)(B)(f) above and to the Class M-6
Certificates in clause (ii)(B)(g) above and (y) the Class
B-1
Principal Distribution Amount, until the Class Certificate
Balance
thereof has been reduced to zero;
(i) to the Class B-2 Certificates, the lesser of (x) the
excess of (i) the Principal Distribution Amount over (ii) the
amount
distributed to the Class A Certificateholders in clause
(ii)(B)(a)
above, to the Class M-1 Certificates in clause (ii)(B)(b) above,
to
the Class M-2 Certificates in clause (ii)(B)(c) above, to the
Class
M-3 Certificates in clause (ii)(B)(d) above, to the Class
M-4
Certificates in clause (ii)(B)(e) above, to the Class M-5
Certificates in clause (ii)(B)(f) above, to the Class M-6
Certificates in clause (ii)(B)(g) above and to the Class B-1
Certificates in clause (ii)(B)(h) above and (y) the Class
B-2
Principal Distribution Amount, until the Class Certificate
Balance
thereof has been reduced to zero; and
(j) to the Class B-3 Certificates, the lesser of (x) the
excess of (i) the Principal Distribution Amount over (ii) the
amount
distributed to the Class A Certificateholders in clause
(ii)(B)(a)
above, to the Class M-1 Certificates in clause (ii)(B)(b) above,
to
the Class M-2 Certificates in clause (ii)(B)(c) above, to the
Class
M-3 Certificates in clause (ii)(B)(d) above, to the Class
M-4
Certificates in clause (ii)(B)(e) above, to the Class M-5
Certificates in clause (ii)(B)(f) above, to the Class M-6
Certificates in clause (ii)(B)(g) above, to the Class B-1
Certificates in clause (ii)(B)(h) above and to the Class B-2
Certificates in clause (ii)(B)(i) above and (y) the Class
B-3
Principal Distribution Amount, until the Class Certificate
Balance
thereof has been reduced to zero;
(iii) any amount remaining after the distributions in clauses
(i)
and (ii) above, plus as specifically indicated below, from
amounts on
deposit in the Excess Reserve Fund Account, shall be distributed
in the
following order of priority:
(A) to the holders of the Class M-1 Certificates, any Unpaid
Interest Amount for such Class;
(B) to the holders of the Class M-1 Certificates, any Unpaid
Realized Loss Amount for such Class;
(C) to the holders of the Class M-2 Certificates, any Unpaid
Interest Amount for such Class;
(D) to the holders of the Class M-2 Certificates, any Unpaid
Realized Loss Amount for such Class;
(E) to the holders of the Class M-3 Certificates, any Unpaid
Interest Amount for such Class;
(F) to the holders of the Class M-3 Certificates, any Unpaid
Realized Loss Amount for such Class;
(G) to the holders of the Class M-4 Certificates, any Unpaid
Interest Amount for such Class;
(H) to the holders of the Class M-4 Certificates, any Unpaid
Realized Loss Amount for such Class;
(I) to the holders of the Class M-5 Certificates, any Unpaid
Interest Amount for such Class;
(J) to the holders of the Class M-5 Certificates, any Unpaid
Realized Loss Amount for such Class;
(K) to the holders of the Class M-6 Certificates, any Unpaid
Interest Amount for such Class;
(L) to the holders of the Class M-6 Certificates, any Unpaid
Realized Loss Amount for such Class;
(M) to the holders of the Class B-1 Certificates, any Unpaid
Interest Amount for such Class;
(N) to the holders of the Class B-1 Certificates, any Unpaid
Realized Loss Amount for such Class;
(O) to the holders of the Class B-2 Certificates, any Unpaid
Interest Amount for such Class;
(P) to the holders of the Class B-2 Certificates, any Unpaid
Realized Loss Amount for such Class;
(Q) to the holders of the Class B-3 Certificates, any Unpaid
Interest Amount for such Class;
(R) to the holders of the Class B-3 Certificates, any Unpaid
Realized Loss Amount for such Class;
(S) to the Excess Reserve Fund Account, the amount of any
Basis Risk Payment for such Distribution Date;
(T) concurrently, (i) from any Interest Rate Cap Payments
with
respect to the Group I Class A Cap Agreement on deposit in
the
Excess Reserve Fund Account with respect to such Distribution
Date,
an amount equal to any unpaid Basis Risk CarryForward Amount
with
respect to the Class A-1ss and Class A-1mz Certificates,
allocated
(a) first, between the Class A-1ss and Class A-1mz Certificates,
pro
rata, based upon their respective Class Certificate Balances and
(b)
second, any remaining amounts to the Class A-1ss and Class
A-1mz
Certificates, pro rata, based on any Basis Risk CarryForward
Amount
remaining unpaid, in order to reimburse such unpaid amounts,
(ii)
from any Interest Rate Cap Payments with respect to the Group
II
Class A Cap Agreement on deposit in the Excess Reserve Fund
Account
with respect to such Distribution Date, an amount equal to
any
unpaid Basis Risk CarryForward Amount with respect to the
Class
A-2a, Class A-2b and Class A-2c Certificates, allocated (a)
first,
among the Class A-2a, Class A-2b and Class A-2c Certificates,
pro
rata, based upon their respective Class Certificate Balances and
(b)
second, any remaining amounts to the Class A-2a, Class A-2b
and
Class A-2c Certificates, pro rata, based on any Basis Risk
CarryForward Amounts remaining unpaid, in order to reimburse
such
unpaid amounts, (iii) from any Interest Rate Cap Payments
with
respect to the Class M Cap Agreement on deposit in the
Excess
Reserve Fund Account with respect to such Distribution Date,
an
amount equal to any unpaid Basis Risk CarryForward Amount
with
respect to the Class M Certificates, allocated (a) first, among
the
Class M-1, Class M-2, Class M-3, Class M-4, Class M-5 and Class
M-6
Certificates, pro rata, based upon their respective Class
Certificate Balances and (b) second, any remaining amounts to
the
Class M-1, Class M-2, Class M-3, Class M-4, Class M-5 and Class
M-6
Certificates, pro rata, based on any Basis Risk CarryForward
Amounts
remaining unpaid, in order to reimburse such unpaid amounts,
(iv)
from any Interest Rate Cap Payments with respect to the Class B
Cap
Agreement on deposit in the Excess Reserve Fund Account with
respect
to such Distribution Date, an amount equal to any unpaid Basis
Risk
CarryForward Amount with respect to the Class B
Certificates,
allocated (a) first, among the Class B-1, Class B-2 and Class
B-3
Certificates, pro rata, based upon their respective Class
Certificate Balances and (b) second, any remaining amounts to
the
Class B-1, Class B-2 and Class B-3 Certificates, pro rata, based
on
any Basis Risk CarryForward Amounts remaining unpaid, in order
to
reimburse such unpaid amounts, and (v) any remaining Interest
Rate
Cap Payments, to the holders of the Class X Certificates
pursuant to
Section 4.02(a)(iii)(V);
(U) from funds on deposit in the Excess Reserve Fund Account
(not including any Interest Rate Cap Payments included in
such
account) with respect to such Distribution Date, an amount equal
to
any remaining Basis Risk CarryForward Amount with respect to
the
LIBOR Certificates for such Distribution Date, allocated to
the
LIBOR Certificates in the same order and priority in which
the
Accrued Certificate Interest Distribution Amount is allocated
among
such Classes of Certificates, with the allocation to the Class
A
Certificates being (a) first, among the Class A Certificates,
pro
rata, based on their respective Class Certificate Balances and
(b)
second, any remaining amounts to the Class A Certificates, pro
rata,
based on any Basis Risk CarryForward Amounts remaining unpaid,
in
order to reimburse such unpaid amounts;
(V) to the holders of the Class X Certificates, the
remainder
of the Class X Distributable Amount and any remaining Interest
Rate
Cap Payments not distributed pursuant to Sections
4.02(a)(iii)(A)-(U); and
(W) to the holders of the Class R Certificates, any
remaining
amount;
(iv) Solely for purposes of interest allocation calculations,
the
Interest Remittance Amount attributable to Group I Mortgage
Loans will be
allocated:
(a) first, concurrently, to the Class A-1ss and Class A-1mz
Certificates, pro rata (based on the amounts distributable
or
payable under Section 4.02(a)(i)(A) to such Classes of
Certificates), the Accrued Certificate Interest Distribution
Amount
and any Unpaid Interest Amount for the Class A-1ss and Class
A-1mz
Certificates, respectively; and
(b) second, concurrently, to the Class A-2a, Class A-2b and
Class A-2c Certificates, pro rata (based on the amounts
distributable or payable under Section 4.02(a)(i)(A) to such
Classes
of Certificates), the Accrued Certificate Interest
Distribution
Amount and any Unpaid Interest Amount for the Class A-2a, Class
A-2b
and Class A-2c Certificates, respectively, to the extent not
otherwise previously paid from the Interest Remittance
Amount
attributable to Group II Mortgage Loans; and
(v) Solely for purposes of interest allocation calculations,
the
Interest Remittance Amount attributable to Group II Mortgage
Loans will be
allocated:
(a) first, concurrently, to the Class A-2a, Class A-2b and
Class A-2c Certificates, pro rata (based on the amounts
distributable or payable under Section 4.02(a)(i)(A) to such
Classes
of Certificates), the Accrued Certificate Interest
Distribution
Amount and any Unpaid Interest Amount for the Class A-2a, Class
A-2b
and Class A-2c Certificates, respectively; and
(b) second, to the Class A-1ss and Class A-1mz Certificates,
pro rata (based on the amounts distributable or payable
under
Section 4.02(a)(i)(A) to such Classes of Certificates), the
Accrued
Certificate Interest Distribution Amount and any Unpaid
Interest
Amount for the Class A-1ss and Class A-1mz Certificates,
respectively, to the extent not otherwise previously paid from
the
Interest Remittance Amount attributable to Group I Mortgage
Loans.
If on any Distribution Date, as a result of the foregoing
allocation
rules, any Class of Class A Certificates does not receive in
full the related
Accrued Certificate Interest Distribution Amount or the related
Unpaid Interest
Amount, if any, then such shortfall will be allocated to the
Holders of such
Class, with interest thereon, on future Distribution Dates, as
an Unpaid
Interest Amount, subject to the priorities described above.
(b) On each Distribution Date, prior to any distributions on
any
other Class of Certificates, all amounts representing Prepayment
Charges from
the Mortgage Loans received during the related Prepayment Period
shall be
distributed by the Trustee to the holders of the Class P
Certificates.
(c) All principal distributions to the Holders of the Class
A
Certificates on any Distribution Date shall be allocated
concurrently, between
the Group I Class A Certificates, on the one hand, and the Group
II Class A
Certificates, on the other hand, on a pro rata basis, based on
the Class A
Principal Allocation Percentage for the Group I Class A
Certificates and the
Group II Class A Certificates, as applicable, for such
Distribution Date;
provided, however, that if the Class Certificate Balances of the
Class A
Certificates in either Class A Certificate Group are reduced to
zero, then the
remaining amount of principal distributions distributable to the
Class A
Certificates on such Distribution Date, and the amount of such
principal
distributions distributable on all subsequent Distribution
Dates, shall be
distributed to the holders of the Class A Certificates in the
other Class A
Certificate Group remaining outstanding, in accordance with the
principal
distribution allocations described in this Section 4.02(c),
until their
respective Class Certificate Balances have been reduced to zero.
Any
distributions of principal to the Group I Class A Certificates
shall be made
first from Available Funds relating to the Group I Mortgage
Loans, and any
distributions of principal to the Group II Class A Certificates
shall be made
first from Available Funds relating to the Group II Mortgage
Loans.
Any principal distributions allocated to the Group I Class A
Certificates shall be allocated pro rata between the Class A-1ss
Certificates
and the Class A-1mz Certificates, based on their respective
Class Certificate
Balances, until their respective Class Certificate Balances have
been reduced to
zero; provided, however, that if a Group I Sequential Trigger
Event is in
effect, principal distributions to the Group I Class A
Certificates shall be
made first to the Class A-1ss Certificates, until their Class
Certificate
Balance has been reduced to zero, and then to the Class A-1mz
Certificates,
until their Class Certificate Balance has been reduced to
zero.
Any principal distributions allocated to the Group II Class
A
Certificates shall be allocated first to the Class A-2a
Certificates, until
their Class Certificate Balance has been reduced to zero, then
to the Class A-2b
Certificates, until their Class Certificate Balance has been
reduced to zero,
and then to the Class A-2c Certificates, until their Class
Certificate Balance
has been reduced to zero. Notwithstanding the foregoing, on and
after the
Distribution Date on which the aggregate Class Certificate
Balances of the
Subordinated Certificates and the principal balance of the Class
X Certificates
have been reduced to zero, any principal distributions allocated
to the Group II
Class A Certificates shall be allocated pro rata among the
Classes of Group II
Class A Certificates, based on their respective Class
Certificate Balances,
until their respective Class Certificate Balances have been
reduced to zero.
(d) On any Distribution Date, any Relief Act Shortfalls and
Net
Prepayment Interest Shortfalls for such Distribution Date shall
be allocated by
the Trustee as a reduction in the following order:
(1) First, to the amount of interest payable to the Class X
Certificates; and
(2) Second, pro rata, as a reduction of the Accrued
Certificate
Interest Distribution Amount for the Class A, Class M and
Class B Certificates, based on the amount of interest to
which
such Classes would otherwise be entitled.
Section 4.03 Monthly Statements to Certificateholders. (a) Not
later
than each Distribution Date, the Trustee shall make available to
each
Certificateholder, the Servicer, the Depositor and each Rating
Agency a
statement (based solely on information derived from or contained
in the Servicer
Remittance Reports and monthly information reports provided by
the Servicer
pursuant to Section 4.03(d) below) setting forth with respect to
the related
distribution:
(i) the amount thereof allocable to principal, separately
identifying the aggregate amount of any Principal Prepayments
and
Liquidation Proceeds included therein;
(ii) the amount thereof allocable to interest, any Unpaid
Interest
Amounts included in such distribution and any remaining Unpaid
Interest
Amounts after giving effect to such distribution, any Basis
Risk
CarryForward Amount for such Distribution Date and the amount of
all Basis
Risk CarryForward Amount covered by withdrawals from the Excess
Reserve
Fund Account on such Distribution Date;
(iii) if the distribution to the Holders of such Class of
Certificates is less than the full amount that would be
distributable to
such Holders if there were sufficient funds available therefor,
the amount
of the shortfall and the allocation thereof as between principal
and
interest, including any Basis Risk CarryForward Amount not
covered by
amounts in the Excess Reserve Fund Account;
(iv) the Class Certificate Balance of each Class of
Certificates
after giving effect to the distribution of principal on such
Distribution
Date;
(v) the Pool Stated Principal Balance for the following
Distribution
Date;
(vi) the amount of the Expense Fees paid to or retained by
the
Servicer, the Custodian or Trustee (stated separately and in
the
aggregate) with respect to such Distribution Date;
(vii) the Pass-Through Rate for each such Class of Certificates
with
respect to such Distribution Date;
(viii) the amount of P&I Advances included in the
distribution on
such Distribution Date and the aggregate amount of P&I
Advances reported
by the Servicer as outstanding as of the close of business on
such
Distribution Date;
(ix) the number and aggregate outstanding principal balances
of
Mortgage Loans (1) as to which the Scheduled Payment is
delinquent 31 to
60 days, 61 to 90 days and 91 or more days, (2) that have become
REO
Property, (3) that are in foreclosure and (4) that are in
bankruptcy, in
each case as of the close of business on the last Business Day
of the
immediately preceding month;
(x) for each of the preceding 12 calendar months, or all
calendar
months since the related Cut-off Date, whichever is less, the
aggregate
dollar amount of the Scheduled Payments (A) due on all
Outstanding
Mortgage Loans on each of the Due Dates in each such month and
(B)
delinquent 60 days or more on each of the Due Dates in each such
month;
(xi) with respect to any Mortgage Loan that became an REO
Property
during the preceding calendar month, the loan number and Stated
Principal
Balance of such Mortgage Loan as of the close of business on
the
Determination Date preceding such Distribution Date and the date
of
acquisition thereof;
(xii) the total number and aggregate principal balance of any
REO
Properties (and market value, if available) as of the close of
business on
the Determination Date preceding such Distribution Date;
(xiii) whether a Trigger Event has occurred and is
continuing
(including the calculation of thereof and the aggregate
outstanding
balance of all 60+ Day Delinquent Mortgage Loans);
(xiv) whether a Group I Sequential Trigger Event has occurred
and is
continuing;
(xv) the amount on deposit in the Excess Reserve Fund Account
(after
giving effect to distributions on such Distribution Date);
(xvi) in the aggregate and for each Class of Certificates,
the
aggregate amount of Applied Realized Loss Amounts incurred
during the
preceding calendar month and aggregate Applied Realized Loss
Amounts
through such Distribution Date;
(xvii) the amount of any Net Monthly Excess Cash Flow on
such
Distribution Date and the allocation thereof to the
Certificateholders
with respect to Applied Realized Loss Amounts and Unpaid
Interest Amounts;
(xviii) the Subordinated Amount and Specified Subordinated
Amount;
(xix) Prepayment Charges collected or paid (pursuant to
Section
3.07(a)) by the Servicer;
(xx) the Interest Rate Cap Payments (stated separately), if any,
for
such Distribution Date; and
(xxi) the Cumulative Loss Percentage.
(b) The Trustee's responsibility for providing the above
statement
to the Certificateholders, each Rating Agency, the Servicer and
the Depositor is
limited to the availability, timeliness and accuracy of the
information derived
from the Servicer. The Trustee will provide the above statement
via the
Trustee's internet website. The Trustee's website will initially
be located at
http:\\www.ctslink.com and assistance in using the website can
be obtained by
calling the Trustee's customer service desk at (301) 815-6600.
Parties that are
unable to use the website are entitled to have a paper copy
mailed to them via
first class mail by calling the customer service desk and
indicating such. The
Trustee may change the way the monthly statements to
Certificateholders are
distributed in order to make such distribution more convenient
and/or more
accessible to the above parties and the Trustee shall provide
timely and
adequate notification to all above parties regarding any such
changes. As a
condition to access the Trustee's internet website, the Trustee
may require
registration and the acceptance of a disclaimer. The Trustee
will not be liable
for the dissemination of information in accordance with this
Agreement.
The Trustee will also be entitled to rely on but shall not
be
responsible for the content or accuracy of any information
provided by third
parties for purposes of preparing the monthly statement to
Certificateholders
and may affix thereto any disclaimer it deems appropriate in its
reasonable
discretion (without suggesting liability on the part of any
other party hereto).
(c) Within a reasonable period of time after the end of each
calendar year, the Trustee shall cause to be furnished to each
Person who at any
time during the calendar year was a Certificateholder, a
statement containing
the information set forth in clauses (a)(i) and (a)(ii) of this
Section 4.03
aggregated for such calendar year or applicable portion thereof
during which
such Person was a Certificateholder. Such obligation of the
Trustee shall be
deemed to have been satisfied to the extent that substantially
comparable
information shall be provided by the Trustee pursuant to any
requirements of the
Code as from time to time in effect.
(d) Not later than the Determination Date, the Servicer
shall
furnish to the Trustee and the Depositor a monthly remittance
advice statement
(in a format mutually agreed upon by the Servicer and the
Trustee) containing
such information as shall be reasonably requested by the Trustee
(including,
without limitation, the Custodian Fee) to enable the Trustee to
provide the
reports required by Section 4.03(a) as to the accompanying
remittance and the
period ending on the close of business on the last day of the
related Prepayment
Period (the "Servicer Remittance Report").
The Servicer shall furnish to the Trustee monthly
information
reports on a loan level, as of the related Determination Date,
to document
Mortgage Loan payment activity on an individual Mortgage Loan
basis. With
respect to each month, the corresponding monthly information
reports on a loan
level (in electronic format) shall be received by the Trustee no
later than the
related Determination Date, which reports shall contain the
following:
(i) with respect to each Scheduled Payment, the amount of
such
remittance allocable to principal (including a separate
breakdown of any
Principal Prepayment, including the date of such prepayment, and
any
Prepayment Charges, along with a detailed report of interest on
principal
prepayment amounts remitted in accordance with Section
3.25);
(ii) with respect to each Scheduled Payment, the amount of
such
remittance allocable to interest;
(iii) the amount of servicing compensation received by the
Servicer
during the prior distribution period;
(iv) the individual and aggregate Stated Principal Balance of
the
Mortgage Loans;
(v) the aggregate expenses reimbursed to the Servicer during
the
prior distribution period pursuant to Section 3.11; and
(vi) the number and aggregate outstanding principal balances
of
Mortgage Loans (a) delinquent (1) 31 to 60 days, (2) 61 to 90
days, (3) 91
days or more; (b) as to which foreclosure has commenced; and (c)
as to
which REO Property has been acquired.
Section 4.04 Certain Matters Relating to the Determination of
LIBOR.
LIBOR shall be calculated by the Trustee in accordance with the
definition of
"LIBOR." Until all of the LIBOR Certificates are paid in full,
the Trustee will
at all times retain at least four Reference Banks for the
purpose of determining
LIBOR with respect to each LIBOR Determination Date. The Trustee
initially shall
designate the Reference Banks (after consultation with the
Depositor). Each
"Reference Bank" shall be a leading bank engaged in transactions
in Eurodollar
deposits in the international Eurocurrency market, shall not
control, be
controlled by, or be under common control with, the Trustee and
shall have an
established place of business in London. If any such Reference
Bank should be
unwilling or unable to act as such or if the Trustee should
terminate its
appointment as Reference Bank, the Trustee shall promptly
appoint or cause to be
appointed another Reference Bank (after consultation with the
Depositor). The
Trustee shall have no liability or responsibility to any Person
for (i) the
selection of any Reference Bank for purposes of determining
LIBOR or (ii) any
inability to retain at least four Reference Banks which is
caused by
circumstances beyond its reasonable control.
(i) The Pass-Through Rate for each Class of LIBOR Certificates
for
each Interest Accrual Period shall be determined by the Trustee
on each
LIBOR Determination Date so long as the LIBOR Certificates are
outstanding
on the basis of LIBOR and the respective formulae appearing in
footnotes
corresponding to the LIBOR Certificates in the table relating to
the
Certificates in the Preliminary Statement. The Trustee shall not
have any
liability or responsibility to any Person for its inability,
following a
good-faith reasonable effort, to obtain quotations from the
Reference
Banks or to determine the arithmetic mean referred to in the
definition of
LIBOR, all as provided for in this Section 4.04 and the
definition of
LIBOR. The establishment of LIBOR and each Pass-Through Rate for
the LIBOR
Certificates by the Trustee shall (in the absence of manifest
error) be
final, conclusive and binding upon each Holder of a Certificate
and the
Trustee.
Section 4.05 Allocation of Applied Realized Loss Amounts.
Any
Applied Realized Loss Amounts shall be allocated by the Trustee
to the most
junior Class of Subordinated Certificates then outstanding in
reduction of the
Class Certificate Balance thereof.
ARTICLE V
THE CERTIFICATES
Section 5.01 The Certificates. The Certificates shall be
substantially in the forms attached hereto as exhibits. The
Certificates shall
be issuable in registered form, in the minimum denominations,
integral multiples
in excess thereof (except that one Certificate in each Class may
be issued in a
different amount) and aggregate denominations per Class set
forth in the
Preliminary Statement.
The Depositor hereby directs the Trustee to register the Class X
and
Class P Certificates in the name of the Depositor or its
designee. On a date as
to which the Depositor notifies the Trustee, the Trustee shall
transfer the
Class X and Class P Certificates in the name of the NIM Trustee,
or such other
name or names as the Depositor shall request, and to deliver the
Class X and
Class P Certificates to the NIM Trustee or to such other Person
or Persons as
the Depositor shall request.
Subject to Section 9.02 respecting the final distribution on
the
Certificates, on each Distribution Date the Trustee shall make
distributions to
each Certificateholder of record on the preceding Record Date
either (x) by wire
transfer in immediately available funds to the account of such
holder at a bank
or other entity having appropriate facilities therefor, if such
Holder has so
notified the Trustee at least five Business Days prior to the
related Record
Date or (y) by check mailed by first class mail to such
Certificateholder at the
address of such holder appearing in the Certificate
Register.
The Certificates shall be executed by manual or facsimile
signature
on behalf of the Trustee by an authorized officer. Certificates
bearing the
manual or facsimile signatures of individuals who were, at the
time such
signatures were affixed, authorized to sign on behalf of the
Trustee shall bind
the Trustee, notwithstanding that such individuals or any of
them have ceased to
be so authorized prior to the authentication and delivery of any
such
Certificates or did not hold such offices at the date of such
Certificate. No
Certificate shall be entitled to any benefit under this
Agreement, or be valid
for any purpose, unless authenticated by the Trustee by manual
signature, and
such authentication upon any Certificate shall be conclusive
evidence, and the
only evidence, that such Certificate has been duly executed and
delivered
hereunder. All Certificates shall be dated the date of their
authentication. On
the Closing Date, the Trustee shall authenticate the
Certificates to be issued
at the direction of the Depositor, or any affiliate thereof.
Section 5.02 Certificate Register; Registration of Transfer
and
Exchange of Certificates. (a) The Trustee shall maintain, or
cause to be
maintained in accordance with the provisions of Section 5.06, a
Certificate
Register for the Trust Fund in which, subject to the provisions
of subsections
(b) and (c) below and to such reasonable regulations as it may
prescribe, the
Trustee shall provide for the registration of Certificates and
of transfers and
exchanges of Certificates as herein provided. Upon surrender for
registration of
transfer of any Certificate, the Trustee shall execute and
deliver, in the name
of the designated transferee or transferees, one or more new
Certificates of the
same Class and aggregate Percentage Interest.
At the option of a Certificateholder, Certificates may be
exchanged
for other Certificates of the same Class in authorized
denominations and
evidencing the same aggregate Percentage Interest upon surrender
of the
Certificates to be exchanged at the office or agency of the
Trustee. Whenever
any Certificates are so surrendered for exchange, the Trustee
shall execute,
authenticate, and deliver the Certificates which the
Certificateholder making
the exchange is entitled to receive. Every Certificate presented
or surrendered
for registration of transfer or exchange shall be accompanied by
a written
instrument of transfer in form satisfactory to the Trustee duly
executed by the
holder thereof or his attorney duly authorized in writing.
No service charge to the Certificateholders shall be made for
any
registration of transfer or exchange of Certificates, but
payment of a sum
sufficient to cover any tax or governmental charge that may be
imposed in
connection with any transfer or exchange of Certificates may be
required.
All Certificates surrendered for registration of transfer or
exchange shall be cancelled and subsequently destroyed by the
Trustee in
accordance with the Trustee's customary procedures.
(b) No transfer of a Private Certificate shall be made unless
such
transfer is made pursuant to an effective registration statement
under the
Securities Act and any applicable state securities laws or is
exempt from the
registration requirements under said Act and such state
securities laws. In
determining whether a transfer is being made pursuant to an
effective
registration statement, the Trustee shall be entitled to rely
solely upon a
written notice to such effect from the Depositor. Except with
respect to (i) the
transfer of the Class X, Class P or Class R Certificates to the
Depositor or an
Affiliate of the Depositor, (ii) the transfer of the Class X or
Class P
Certificates to the NIM Issuer or the NIM Trustee, or (iii) a
transfer of the
Class X or Class P Certificates from the NIM Issuer or the NIM
Trustee to the
Depositor or an Affiliate of the Depositor, in the event that a
transfer of a
Private Certificate which is a Physical Certificate is to be
made in reliance
upon an exemption from the Securities Act and such laws, in
order to assure
compliance with the Securities Act and such laws, the
Certificateholder desiring
to effect such transfer shall certify to the Trustee in writing
the facts
surrounding the transfer in substantially the form set forth in
Exhibit H (the
"Transferor Certificate") and either (i) there shall be
delivered to the Trustee
a letter in substantially the form of Exhibit I (the "Rule 144A
Letter") or (ii)
there shall be delivered to the Trustee at the expense of the
transferor an
Opinion of Counsel that such transfer may be made without
registration under the
Securities Act. In the event that a transfer of a Private
Certificate which is a
Book-Entry Certificate is to be made in reliance upon an
exemption from the
Securities Act and such laws, in order to assure compliance with
the Securities
Act and such laws, the Certificateholder desiring to effect such
transfer will
be deemed to have made as of the transfer date each of the
certifications set
forth in the Transferor Certificate in respect of such
Certificate and the
transferee will be deemed to have made as of the transfer date
each of the
certifications set forth in the Rule 144A Letter in respect of
such Certificate,
in each case as if such Certificate were evidenced by a Physical
Certificate.
The Depositor shall provide to any Holder of a Private
Certificate and any
prospective transferee designated by any such Holder,
information regarding the
related Certificates and the Mortgage Loans and such other
information as shall
be necessary to satisfy the condition to eligibility set forth
in Rule
144A(d)(4) for transfer of any such Certificate without
registration thereof
under the Securities Act pursuant to the registration exemption
provided by Rule
144A. The Trustee and the Servicer shall cooperate with the
Depositor in
providing the Rule 144A information referenced in the preceding
sentence,
including providing to the Depositor such information regarding
the
Certificates, the Mortgage Loans and other matters regarding the
Trust Fund as
the Depositor shall reasonably request to meet its obligation
under the
preceding sentence. Each Holder of a Private Certificate
desiring to effect such
transfer shall, and does hereby agree to, indemnify the Trustee,
the Depositor
and the Servicer against any liability that may result if the
transfer is not so
exempt or is not made in accordance with such federal and state
laws.
Except with respect to (i) the transfer of the Class X, Class P
or
Class R Certificates to the Depositor or an Affiliate of the
Depositor, (ii) the
transfer of the Class X or Class P Certificates to the NIM
Issuer or the NIM
Trustee, or (iii) a transfer of the Class X or Class P
Certificates from the NIM
Issuer or the NIM Trustee to the Depositor or an Affiliate of
the Depositor, no
transfer of an ERISA-Restricted Certificate shall be made unless
the Trustee
shall have received either (i) a representation from the
transferee of such
Certificate acceptable to and in form and substance satisfactory
to the Trustee
(in the event such Certificate is a Private Certificate or a
Residual
Certificate, such requirement is satisfied only by the Trustee's
receipt of a
representation letter from the transferee substantially in the
form of Exhibit
I), to the effect that such transferee is not an employee
benefit plan or
arrangement subject to Section 406 of ERISA, a plan subject to
Section 4975 of
the Code or a plan subject to any Federal, state or local law
("Similar Law")
materially similar to the foregoing provisions of ERISA or the
Code, nor a
person acting on behalf of any such plan or arrangement nor
using the assets of
any such plan or arrangement to effect such transfer, or (ii) in
the case of an
ERISA-Restricted Certificate other than a Residual Certificate
or a Class P
Certificate that has been the subject of an ERISA-Qualifying
Underwriting, and
the purchaser is an insurance company, a representation that the
purchaser is an
insurance company that is purchasing such Certificates with
funds contained in
an "insurance company general account" (as such term is defined
in Section V(e)
of Prohibited Transaction Class Exemption 95-60 ("PTCE 95-60"))
and that the
purchase and holding of such Certificates are covered under
Sections I and III
of PTCE 95-60 or (iii) in the case of any such ERISA-Restricted
Certificate
other than a Residual Certificate or Class P Certificate
presented for
registration in the name of an employee benefit plan subject to
Title I of
ERISA, a plan or arrangement subject to Section 4975 of the Code
(or comparable
provisions of any subsequent enactments), or a plan subject to
Similar Law, or a
trustee of any such plan or any other person acting on behalf of
any such plan
or arrangement or using such plan's or arrangement's assets, an
Opinion of
Counsel satisfactory to the Trustee, which Opinion of Counsel
shall not be an
expense of the Depositor, the Trustee, the Servicer or the Trust
Fund, addressed
to the Trustee, to the effect that the purchase or holding of
such
ERISA-Restricted Certificate will not constitute or result in a
non-exempt
prohibited transaction within the meaning of ERISA, Section 4975
of the Code or
any Similar Law and will not subject the Depositor, the Trustee
or the Servicer
to any obligation in addition to those expressly undertaken in
this Agreement or
to any liability. For purposes of the preceding sentence, with
respect to an
ERISA-Restricted Certificate that is not a Private Certificate
or a Residual
Certificate, in the event the representation letter referred to
in the preceding
sentence is not furnished, such representation shall be deemed
to have been made
to the Trustee by the transferee's (including an initial
acquirer's) acceptance
of the ERISA-Restricted Certificates. Notwithstanding anything
else to the
contrary herein, (a) any purported transfer of an
ERISA-Restricted Certificate,
other than a Class P Certificate or Residual Certificate, to or
on behalf of an
employee benefit plan subject to ERISA, the Code or Similar Law
without the
delivery to the Trustee of an Opinion of Counsel satisfactory to
the Trustee as
described above shall be void and of no effect and (b) any
purported transfer of
a Class P Certificate or Residual Certificate to a transferee
that does not make
the representation in clause (i) above shall be void and of no
effect.
To the extent permitted under applicable law (including, but
not
limited to, ERISA), the Trustee shall be under no liability to
any Person for
any registration of transfer of any ERISA-Restricted Certificate
that is in fact
not permitted by this Section 5.02(b) or for making any payments
due on such
Certificate to the Holder thereof or taking any other action
with respect to
such Holder under the provisions of this Agreement so long as
the transfer was
registered by the Trustee in accordance with the foregoing
requirements.
(c) Each Person who has or who acquires any Ownership Interest
in a
Residual Certificate shall be deemed by the acceptance or
acquisition of such
Ownership Interest to have agreed to be bound by the following
provisions, and
the rights of each Person acquiring any Ownership Interest in a
Residual
Certificate are expressly subject to the following
provisions:
(i) Each Person holding or acquiring any Ownership Interest in
a
Residual Certificate shall be a Permitted Transferee and shall
promptly
notify the Trustee of any change or impending change in its
status as a
Permitted Transferee;
(ii) No Ownership Interest in a Residual Certificate may be
registered on the Closing Date or thereafter transferred, and
the Trustee
shall not register the Transfer of any Residual Certificate
unless, in
addition to the certificates required to be delivered to the
Trustee under
subparagraph (b) above, the Trustee shall have been furnished
with an
affidavit (a "Transfer Affidavit") of the initial owner or the
proposed
transferee in the form attached hereto as Exhibit G;
(iii) Each Person holding or acquiring any Ownership Interest in
a
Residual Certificate shall agree (A) to obtain a Transfer
Affidavit from
any other Person to whom such Person attempts to Transfer its
Ownership
Interest in a Residual Certificate, (B) to obtain a Transfer
Affidavit
from any Person for whom such Person is acting as nominee,
trustee or
agent in connection with any Transfer of a Residual Certificate
and (C)
not to Transfer its Ownership Interest in a Residual Certificate
or to
cause the Transfer of an Ownership Interest in a Residual
Certificate to
any other Person if it has actual knowledge that such Person is
a
Non-Permitted Transferee;
(iv) Any attempted or purported Transfer of any Ownership
Interest
in a Residual Certificate in violation of the provisions of this
Section
5.02(c) shall be absolutely null and void and shall vest no
rights in the
purported Transferee. If any purported transferee shall become a
Holder of
a Residual Certificate in violation of the provisions of this
Section
5.02(c), then the last preceding Permitted Transferee shall be
restored to
all rights as Holder thereof retroactive to the date of
registration of
Transfer of such Residual Certificate. The Trustee shall be
under no
liability to any Person for any registration of Transfer of a
Residual
Certificate that is in fact not permitted by Section 5.02(b) and
this
Section 5.02(c) or for making any payments due on such
Certificate to the
Holder thereof or taking any other action with respect to such
Holder
under the provisions of this Agreement so long as the Transfer
was
registered after receipt of the related Transfer Affidavit,
Transferor
Certificate and the Rule 144A Letter. The Trustee shall be
entitled but
not obligated to recover from any Holder of a Residual
Certificate that
was in fact a Non-Permitted Transferee at the time it became a
Holder or,
at such subsequent time as it became a Non-Permitted Transferee,
all
payments made on such Residual Certificate at and after either
such time.
Any such payments so recovered by the Trustee shall be paid and
delivered
by the Trustee to the last preceding Permitted Transferee of
such
Certificate; and
(v) The Depositor shall use its best efforts to make available,
upon
receipt of written request from the Trustee, all information
necessary to
compute any tax imposed under Section 860E(e) of the Code as a
result of a
Transfer of an Ownership Interest in a Residual Certificate to
any Holder
who is a Non-Permitted Transferee.
The restrictions on Transfers of a Residual Certificate set
forth in
this Section 5.02(c) shall cease to apply (and the applicable
portions of the
legend on a Residual Certificate may be deleted) with respect to
Transfers
occurring after delivery to the Trustee of an Opinion of
Counsel, which Opinion
of Counsel shall not be an expense of the Trust Fund, the
Trustee or the
Servicer, to the effect that the elimination of such
restrictions will not cause
either the Lower Tier REMIC or the Upper Tier REMIC hereunder to
fail to qualify
as a REMIC at any time that the Certificates are outstanding or
result in the
imposition of any tax on the Trust Fund, a Certificateholder or
another Person.
Each Person holding or acquiring any Ownership Interest in a
Residual
Certificate hereby consents to any amendment of this Agreement
which, based on
an Opinion of Counsel furnished to the Trustee, is reasonably
necessary (a) to
ensure that the record ownership of, or any beneficial interest
in, a Residual
Certificate is not transferred, directly or indirectly, to a
Person that is a
Non-Permitted Transferee and (b) to provide for a means to
compel the Transfer
of a Residual Certificate which is held by a Person that is a
Non-Permitted
Transferee to a Holder that is a Permitted Transferee.
(d) The preparation and delivery of all certificates and
opinions
referred to above in this Section 5.02 in connection with
transfer shall be at
the expense of the parties to such transfers.
(e) Except as provided below, the Book-Entry Certificates shall
at
all times remain registered in the name of the Depository or its
nominee and at
all times: (i) registration of the Certificates may not be
transferred by the
Trustee except to another Depository; (ii) the Depository shall
maintain
book-entry records with respect to the Certificate Owners and
with respect to
ownership and transfers of such Book-Entry Certificates; (iii)
ownership and
transfers of registration of the Book-Entry Certificates on the
books of the
Depository shall be governed by applicable rules established by
the Depository;
(iv) the Depository may collect its usual and customary fees,
charges and
expenses from its Depository Participants; (v) the Trustee shall
deal with the
Depository, Depository Participants and indirect participating
firms as
representatives of the Certificate Owners of the Book-Entry
Certificates for
purposes of exercising the rights of holders under this
Agreement, and requests
and directions for and votes of such representatives shall not
be deemed to be
inconsistent if they are made with respect to different
Certificate Owners; and
(vi) the Trustee may rely and shall be fully protected in
relying upon
information furnished by the Depository with respect to its
Depository
Participants and furnished by the Depository Participants with
respect to
indirect participating firms and persons shown on the books of
such indirect
participating firms as direct or indirect Certificate
Owners.
All transfers by Certificate Owners of Book-Entry Certificates
shall
be made in accordance with the procedures established by the
Depository
Participant or brokerage firm representing such Certificate
Owner. Each
Depository Participant shall only transfer Book-Entry
Certificates of
Certificate Owners it represents or of brokerage firms for which
it acts as
agent in accordance with the Depository's normal procedures.
If (x) (i) the Depository or the Depositor advises the Trustee
in
writing that the Depository is no longer willing or able to
properly discharge
its responsibilities as Depository, and (ii) the Trustee or the
Depositor is
unable to locate a qualified successor, or (y) the Depositor
notifies the
Depository (and the Trustee consents) of its intent to terminate
the book-entry
system through the Depository and, upon receipt of notice of
such intent from
the Depository, the Depository Participants holding beneficial
interests in the
Book-Entry Certificates agree to initiate such termination, the
Trustee shall
notify all Certificate Owners, through the Depository, of the
occurrence of any
such event and of the availability of definitive, fully
registered Certificates
(the "Definitive Certificates") to Certificate Owners requesting
the same. Upon
surrender to the Trustee of the related Class of Certificates by
the Depository,
accompanied by the instructions from the Depository for
registration, the
Trustee shall issue the Definitive Certificates. None of the
Servicer, the
Depositor or the Trustee shall be liable for any delay in
delivery of such
instruction and each may conclusively rely on, and shall be
protected in relying
on, such instructions. The Depositor shall provide the Trustee
with an adequate
inventory of Certificates to facilitate the issuance and
transfer of Definitive
Certificates. Upon the issuance of Definitive Certificates all
references herein
to obligations imposed upon or to be performed by the Depository
shall be deemed
to be imposed upon and performed by the Trustee, to the extent
applicable with
respect to such Definitive Certificates and the Trustee shall
recognize the
Holders of the Definitive Certificates as Certificateholders
hereunder;
provided, that the Trustee shall not by virtue of its assumption
of such
obligations become liable to any party for any act or failure to
act of the
Depository.
(f) Each Private Certificate presented or surrendered for
registration of transfer or exchange shall be accompanied by a
written
instrument of transfer and accompanied by IRS Form W-8ECI,
W-8BEN, W-8IMY (and
all appropriate attachments) or W-9 in form satisfactory to the
Trustee, duly
executed by the Certificateholder or his attorney duly
authorized in writing.
Each Certificate presented or surrendered for registration of
transfer or
exchange shall be canceled and subsequently disposed of by the
Trustee in
accordance with its customary practice. No service charge shall
be made for any
registration of transfer or exchange of Private Certificates,
but the Trustee
may require payment of a sum sufficient to cover any tax or
governmental charge
that may be imposed in connection with any transfer or exchange
of Private
Certificates.
Section 5.03 Mutilated, Destroyed, Lost or Stolen Certificates.
If
(a) any mutilated Certificate is surrendered to the Trustee, or
the Trustee
receives evidence to its satisfaction of the destruction, loss
or theft of any
Certificate and (b) there is delivered to the Depositor, the
Servicer and the
Trustee such security or indemnity as may be required by them to
hold each of
them harmless, then, in the absence of notice to the Trustee
that such
Certificate has been acquired by a bona fide purchaser, the
Trustee shall
execute, authenticate and deliver, in exchange for or in lieu of
any such
mutilated, destroyed, lost or stolen Certificate, a new
Certificate of like
Class, tenor and Percentage Interest. In connection with the
issuance of any new
Certificate under this Section 5.03, the Trustee may require the
payment of a
sum sufficient to cover any tax or other governmental charge
that may be imposed
in relation thereto and any other expenses (including the fees
and expenses of
the Trustee) connected therewith. Any replacement Certificate
issued pursuant to
this Section 5.03 shall constitute complete and indefeasible
evidence of
ownership, as if originally issued, whether or not the lost,
stolen or destroyed
Certificate shall be found at any time.
Section 5.04 Persons Deemed Owners. The Servicer, the Trustee,
the
Depositor and any agent of the Servicer, the Depositor or the
Trustee may treat
the Person in whose name any Certificate is registered as the
owner of such
Certificate for the purpose of receiving distributions as
provided in this
Agreement and for all other purposes whatsoever, and neither the
Servicer, the
Trustee, the Depositor, nor any agent of the Servicer, the
Depositor or the
Trustee shall be affected by any notice to the contrary.
Section 5.05 Access to List of Certificateholders' Names and
Addresses. If three or more Certificateholders (a) request such
information in
writing from the Trustee, (b) state that such Certificateholders
desire to
communicate with other Certificateholders with respect to their
rights under
this Agreement or under the Certificates and (c) provide a copy
of the
communication which such Certificateholders propose to transmit,
or if the
Depositor or Servicer shall request such information in writing
from the
Trustee, then the Trustee shall, within ten Business Days after
the receipt of
such request, provide the Depositor, the Servicer or such
Certificateholders at
such recipients' expense the most recent list of the
Certificateholders of such
Trust Fund held by the Trustee, if any. The Depositor and
every
Certificateholder, by receiving and holding a Certificate, agree
that the
Trustee shall not be held accountable by reason of the
disclosure of any such
information as to the list of the Certificateholders hereunder,
regardless of
the source from which such information was derived.
Section 5.06 Maintenance of Office or Agency. The Trustee
will
maintain or cause to be maintained at its expense an office or
offices or agency
or agencies in Minneapolis, Minnesota where Certificates may be
surrendered for
registration of transfer or exchange. The Trustee initially
designates its
offices located at Wells Fargo Center, Sixth Street and
Marquette Avenue,
Minneapolis, Minnesota 55479 for such purposes. The Trustee will
give prompt
written notice to the Certificateholders of any change in such
location of any
such office or agency.
ARTICLE VI
THE DEPOSITOR AND THE SERVICER
Section 6.01 Respective Liabilities of the Depositor and the
Servicer. The Depositor and the Servicer shall each be liable in
accordance
herewith only to the extent of the obligations specifically and
respectively
imposed upon and undertaken by them herein.
Section 6.02 Merger or Consolidation of the Depositor or the
Servicer. (a) The Depositor and the Servicer will each keep in
full effect its
existence, rights and franchises as a corporation or federally
chartered savings
bank, as the case may be, under the laws of the United States or
under the laws
of one of the states thereof and will each obtain and preserve
its qualification
to do business as a foreign corporation in each jurisdiction in
which such
qualification is or shall be necessary to protect the validity
and
enforceability of this Agreement, or any of the Mortgage Loans
and to perform
its respective duties under this Agreement.
(b) The Servicer is and shall continue to be an institution
which is
a Fannie Mae-approved and Freddie Mac-approved seller/servicer
in good standing,
shall maintain a net worth of at least $30,000,000 (as
determined in accordance
with generally accepted accounting principles) and shall
maintain its license to
do business or service residential mortgage loans in any
jurisdictions in which
the Mortgaged Properties are located.
(c) Any Person into which the Depositor or the Servicer may
be
merged or consolidated, or any Person resulting from any merger
or consolidation
to which the Depositor or the Servicer shall be a party, or any
person
succeeding to the business of the Depositor or the Servicer,
shall be the
successor of the Depositor or the Servicer, as the case may be,
hereunder,
without the execution or filing of any paper or any further act
on the part of
any of the parties hereto, anything herein to the contrary
notwithstanding;
provided, however, that the successor or surviving Person to the
Servicer shall
make the covenant set forth in Section 6.02(b).
Section 6.03 Limitation on Liability of the Depositor, the
Servicer
and Others. Neither the Depositor, the Servicer, nor any of
their respective
directors, officers, employees or agents shall be under any
liability to the
Certificateholders for any action taken or for refraining from
the taking of any
action in good faith pursuant to this Agreement, or for errors
in judgment;
provided, however, that this provision shall not protect the
Depositor, the
Servicer or any such Person against any breach of
representations or warranties
made by it herein or protect the Depositor, the Servicer or any
such Person from
any liability which would otherwise be imposed by reasons of
willful
misfeasance, bad faith or negligence (or gross negligence in the
case of the
Depositor) in the performance of duties or by reason of reckless
disregard of
obligations and duties hereunder. The Depositor, any of its
Affiliates, the
Servicer and any of their respective directors, officers,
employees or agents
may rely in good faith on any document of any kind prima facie
properly executed
and submitted by any Person respecting any matters arising
hereunder. The
Depositor and its Affiliates, the Servicer and any of their
respective
directors, officers, employees or agents shall be indemnified by
the Trust Fund
and held harmless against any loss, liability or expense
incurred in connection
with any audit, controversy or judicial proceeding relating to a
governmental
taxing authority or any legal action relating to this Agreement
or the
Certificates other than any loss, liability or expense related
to any specific
Mortgage Loan or Mortgage Loans (except as any such loss,
liability or expense
shall be otherwise reimbursable pursuant to this Agreement or
which relates to
litigation or other legal action to enforce the terms of this
Agreement or to
defend itself hereunder, unless such legal action results from
the willful
misfeasance, bad faith or negligence of the Servicer) and any
loss, liability or
expense incurred by reason of willful misfeasance, bad faith or
negligence (or
gross negligence in the case of the Depositor) in the
performance of duties
hereunder or by reason of reckless disregard of obligations and
duties
hereunder. Neither the Depositor nor the Servicer shall be under
any obligation
to appear in, prosecute or defend any legal action that is not
incidental to its
respective duties hereunder and which in its opinion may involve
it in any
expense or liability; provided, however, that each of the
Depositor and the
Servicer may in its discretion undertake any such action (or
direct the Trustee
to undertake such actions pursuant to Section 2.03 for the
benefit of the
Certificateholders) that it may deem necessary or desirable in
respect of this
Agreement and the rights and duties of the parties hereto and
interests of the
Trustee and the Certificateholders hereunder. In such event, the
legal expenses
and costs of such action and any liability resulting therefrom
shall be
expenses, costs and liabilities of the Trust Fund, the Depositor
and the
Servicer shall be entitled to be reimbursed therefor out of the
Collection
Account.
Section 6.04 Limitation on Resignation of the Servicer. Subject
to
Sections 7.01 and 10.07, the Servicer shall not assign this
Agreement or resign
from the obligations and duties hereby imposed on it except by
mutual consent of
the Servicer, the Depositor and the Trustee or upon the
determination that its
duties hereunder are no longer permissible under applicable law
and such
incapacity cannot be cured by the Servicer. Any such
determination permitting
the resignation of the Servicer shall be evidenced by an Opinion
of Counsel to
such effect delivered to the Depositor and the Trustee which
Opinion of Counsel
shall be in form and substance acceptable to the Depositor and
the Trustee. No
such resignation shall become effective until a successor shall
have assumed the
Servicer's responsibilities and obligations hereunder.
Notwithstanding the provisions of this Section 6.04 to the
contrary,
in the event that the Servicer determines that it will no longer
engage in the
business of servicing mortgage loans, the Servicer may assign
its rights under
this Agreement, provided that, (i) the Depositor in its sole
discretion has
consented, (ii) the Rating Agencies' ratings of the Certificates
in effect
immediately prior to such action will not be qualified, reduced
or withdrawn as
a result thereof (as evidenced by a letter to such effect from
the Rating
Agencies) and (iii) the Servicer shall be liable for all costs
and expenses
associated with the transfer of servicing, provided further,
that the Servicer
shall indemnify and hold each of the Trust Fund, the Trustee,
the Custodian, the
Depositor, any sub-servicer, the successor Servicer and each
Certificateholder
harmless against any and all claims, losses, penalties, fines,
forfeitures,
reasonable legal fees and related costs, judgments, and any
other costs, fees
and expenses that such party may sustain in any way related to
such assignment
except with respect to a successor Servicer's failure to comply
with the terms
of this Agreement. No assignment by the Servicer shall become
effective until a
successor Servicer acceptable to the Depositor and the Trustee
shall have
assumed in writing the Servicer's responsibilities, duties,
liabilities (other
than those liabilities arising prior to the appointment of such
successor) and
obligations under this Agreement. Any such assignment shall not
relieve the
Servicer of responsibility for any of the obligations specified
herein except to
the extent that such responsibilities have been expressly
assumed by the
successor Servicer.
Section 6.05 Additional Indemnification by the Servicer; Third
Party
Claims. The Servicer shall indemnify the Responsible Party, the
Depositor, the
Trustee, the Custodian, the Purchaser, and any director,
officer, employee or
agent of the Depositor, the Trustee, the Custodian and the
Purchaser and hold
them harmless against any and all claims, losses, damages,
penalties, fines,
forfeitures, reasonable and necessary legal fees and related
costs, judgments,
and any other costs, fees and expenses that any of them may
sustain in any way
related to any breach by the Servicer, of (i) any of its
representations and
warranties referred to in Section 2.03(a), (ii) any error in any
tax or
information return prepared by the Servicer or (iii) the failure
of the Servicer
to perform its duties and service the Mortgage Loans in
compliance with the
terms of this Agreement. The Servicer immediately shall notify
the Depositor and
the Trustee if such claim is made by a third party with respect
to this
Agreement or the Mortgage Loans, assume (with the prior written
consent of the
Depositor and the Trustee) the defense of any such claim and pay
all expenses in
connection therewith, including reasonable counsel fees, and
promptly pay,
discharge and satisfy any judgment or decree which may be
entered against it or
the Depositor, the Responsible Party or the Trustee in respect
of such claim.
This indemnity shall survive the termination of this Agreement
or the earlier
resignation or removal of the Servicer.
ARTICLE VII
DEFAULT
Section 7.01 Events of Default. "Event of Default," wherever
used
herein, means any one of the following events:
(a) any failure by the Servicer to remit to the Trustee any
payment
required to be made under the terms of this Agreement which
continues unremedied
for a period of one Business
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