EXECUTION COPY
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RESIDENTIAL ACCREDIT LOANS, INC.,
Company,
RESIDENTIAL FUNDING CORPORATION,
Master Servicer,
and
DEUTSCHE BANK TRUST COMPANY AMERICAS,
Trustee
SERIES SUPPLEMENT,
DATED AS OF APRIL 1, 2005,
TO
STANDARD TERMS OF
POOLING AND SERVICING AGREEMENT
dated as of August 1, 2004
Mortgage Asset-Backed Pass-Through Certificates
Series 2005-QS5
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Article I
DEFINITIONS.........................................................................................4
Section 1.01.
Definitions..............................................................................4
Section 1.02. Use of
Words and
Phrases................................................................20
Section 1.03.
Determination of
LIBOR..................................................................21
Article II CONVEYANCE OF MORTGAGE
LOANS; ORIGINAL
ISSUANCE OF
CERTIFICATES...............................................................................23
Section 2.01.
Conveyance of Mortgage
Loans...........................................................23
Section 2.02.
Acceptance by Trustee.
(See Section 2.02 of the Standard
Terms).......................24
Section 2.03.
Representations, Warranties and Covenants of the
Master Servicer and the
Company......................................................24
Section 2.04. Representations
and Warranties of
Sellers............................................27
Section 2.05. Execution and
Authentication of Certificates/Issuance of Certificates
Evidencing
Interests in REMIC I
Certificates....................................................27
Section 2.06.
Conveyance of Uncertificated REMIC I and REMIC II Regular
Interests; Acceptance by
the
Trustee..........................................................................27
Section 2.07. Issuance of
Certificates Evidencing Interest in REMIC
II.............................27
Section 2.08. Purposes and
Powers of the Trust (See Section 2.08 of the Standard
Terms)............27
Article III ADMINISTRATION AND SERVICING OF
MORTGAGE
LOANS.....................................................28
Article IV PAYMENTS TO
CERTIFICATEHOLDERS......................................................................29
Section 4.01. Certificate
Account. (See Section 4.01 of the Standard
Terms)........................29
Section 4.02. Distributions.
......................................................................29
Section 4.03. Statements to
Certificateholders; Statements to the Rating Agencies; Exchange
Act
Reporting (See Section 4.03 of the Standard
Terms)...................................36
Section 4.04. Distribution of
Reports to the Trustee and the Company; Advances by the Master
Servicer (See Section 4.04 of the Standard
Terms)....................................36
Section 4.05. Allocation of
Realized Losses.
......................................................36
Section 4.06. Reports of
Foreclosures and Abandonment of Mortgaged Property. (See Section 4.06 of
the Standard
Terms)..................................................................38
Section 4.07. Optional
Purchase of Defaulted Mortgage Loans. (See Section 4.07 of the
Standard
Terms)...............................................................................38
Section 4.08. Surety Bond.
(See Section 4.08 of the Standard
Terms)................................38
Section 4.09 Reserve Fund
..........................................................................38
Article V THE
CERTIFICATES.....................................................................................39
Article VI THE COMPANY AND THE
MASTER
SERVICER...............................................................40
Article VII
DEFAULT...........................................................................................41
Article VIII CONCERNING THE
TRUSTEE............................................................................42
Article IX
TERMINATION.......................................................................................43
Article X REMIC
PROVISIONS.................................................................................44
Section 10.01. REMIC Administration.
(See Section 10.01 of
the Standard Terms).....................44
Section 10.02. Master Servicer; REMIC
Administrator and Trustee Indemnification. (See Section 10.02
of the Standard
Terms)...............................................................44
Section 10.03. Designation of
REMICs................................................................44
Section 10.04.
Distributions on the Uncertificated REMIC I and REMIC II
Regular
Interests............................................................................44
Section 10.05.
Compliance with
Withholding
Requirements.............................................46
Article XI MISCELLANEOUS
PROVISIONS...........................................................................47
Section 11.01. Amendment.
(See Section 11.01 of
the Standard Terms)................................47
Section 11.02. Recordation of
Agreement;
Counterparts. (See
Section 11.02 of the Standard Terms)..47
Section 11.03. Limitation on Rights
of Certificateholders.
(See Section 11.03 of the Standard Terms)47
Section 11.04. Governing Laws.
(See Section 11.04 of
the Standard Terms)...........................47
Section 11.05.
Notices..............................................................................47
Section 11.06. Required Notices to
Rating Agency and Subservicer. (See Section 11.06 of the
Standard
Terms)......................................................................48
Section 11.07. Severability of
Provisions. (See Section 11.07 of the Standard
Terms)................49
Section 11.08. Supplemental
Provisions for Resecuritization. (See Section 11.08 of
theStandard
Terms)...............................................................................49
Section 11.09. Allocation of Voting
Rights..........................................................49
Section 11.10. No
Petition..........................................................................49
Article XII CERTAIN MATTERS REGARDING
THE CERTIFICATE
INSURER.................................................50
Section 12.01. Rights of the
Certificate Insurer to Exersize Rights of Insured
Certificateholders...50
Section 12.02. Claims Upon the
Certificate Policy; Certificate Insurance
Account....................50
Section 12.03. Effect of Payments by
the Certificate Insurer;
Subrogation...........................51
Section 12.04. Notices and
Information to the Certificate
Insurer...................................52
Section 12.05. Trustee to Hold
Certificate
Policy...................................................52
Section 12.06. Insurance Premium
Payments...........................................................52
Section 12.07.
Ratings..............................................................................53
Section 12.08. Third Party
Beneficiaries............................................................50
</TABLE>
<PAGE>
EXHIBITS
Exhibit One:
Mortgage Loan Schedule
Exhibit Two:
Schedule of Discount Fractions
Exhibit Three:
Information to be
Included in
Monthly Distribution Date Statement
Exhibit Four:
Standard Terms of Pooling and Servicing
Agreement Dated as of August 1, 2004
Exhibit Five:..
Certificate Policy of Radian Asset Assurance Inc.
<PAGE>
This is a Series
Supplement, dated as
of April 1, 2005
(the "Series
Supplement"), to the Standard Terms of
Pooling and Servicing Agreement, dated as
of August 1, 2004 and attached as Exhibit
Four hereto (the "Standard Terms" and,
together with this Series Supplement,
the "Pooling and
Servicing Agreement"
or
"Agreement"), among RESIDENTIAL ACCREDIT LOANS, INC., as the
company (together
with its permitted successors and assigns,
the "Company"),
RESIDENTIAL
FUNDING
CORPORATION, as master servicer (together with its permitted successors and
assigns, the "Master Servicer"),
and DEUTSCHE BANK
TRUST COMPANY AMERICAS, as
Trustee (together with its permitted
successors and assigns, the "Trustee").
PRELIMINARY STATEMENT:
The Company
intends
to sell mortgage asset-backed pass-through
certificates (collectively, the "Certificates"), to be issued hereunder in
multiple classes, which in the aggregate
will evidence the
entire beneficial
ownership interest in the Mortgage Loans (as defined herein). As provided
herein, the REMIC Administrator will make an election to treat the entire
segregated pool of assets described in the
definition of Trust Fund, and subject
to this Agreement (including the Mortgage
Loans), as two real estate mortgage
investment conduits (each, a "REMIC") for
federal income tax purposes.
The terms and provisions of the Standard Terms are hereby incorporated
by reference herein as though set forth in
full herein. If any term or provision
contained herein shall conflict with or be inconsistent with any provision
contained in the Standard Terms, the terms and provisions of this Series
Supplement shall govern. All capitalized terms not otherwise defined herein
shall have the meanings set forth in the Standard Terms. The Pooling and
Servicing Agreement shall be dated as of
the date of this Series Supplement.
1
<PAGE>
The following table sets forth the designation, type, Pass-Through
Rate,
aggregate Initial Certificate Principal
Balance, Maturity
Date, initial ratings
and certain features for each Class of
Certificates
comprising the interests in
the Trust Fund created hereunder.
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AGGREGATE
INITIAL
CERTIFICATE
FITCH/
PASS-THROUGH
PRINCIPAL
MATURITY --------
MINIMUM
DESIGNATION RATE
BALANCE FEATURES1
DATE
S&P
DENOMINATIONS2
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Class A-1 Adjustable
$85,000,000.00
Senior/Floater/AdjustablApril 25, 2035 AAA/AAA $25,000.00
Rate3
Rate
Class A-2 Adjustable
$0.00
Senior/Interest
April 25,
2035 AAA/AAA
$2,000,000.00
Rate3
Only/Inverse
Floater/Adjustable
Rate
Class A-3 5.70%
$83,591,000.00
Senior/Fixed Rate April 25, 2035
AAA/AAA
$25,000.00
Class A-4 5.75%
$5,221,000.00
Senior/Fixed Rate April 25, 2035
AAA/AAA
$25,000.00
Class A-5 5.75%
$21,403,000.00
Senior/Lockout/Fixed April 25, 2035 AAA/AAA $25,000.00
Rate
Class A-6 5.75%
$5,000,000.00
Senior/Fixed Rate April 25, 2035
AAA/AAA
$25,000.00
Class A-P 0.00%
$2,258,934.30
Senior/Principal Only April 25, 2035 AAA/AAA $25,000.00
Class A-V Variable $0.005
Senior/Interest April 25, 2035
AAA/AAA
$2,000,000.00
Rate4
Only/Variable Rate
Class R-I 5.75%
$100.00
Senior/Residual/Fixed April 25, 2035 AAA/AAA
6
Rate
Class R-II 5.75%
$100.00
Senior/Residual/Fixed April 25, 2035 AAA/AAA
6
Rate
Class M-1 5.75%
$5,886,200.00
Mezzanine/Fixed Rate April 25, 2035 AA/NA
$25,000.00
Class M-2 5.75%
$1,926,300.00
Mezzanine/Fixed Rate April 25, 2035 A/NA
$250,000.00
Class M-3 5.75%
$1,070,200.00
Mezzanine/Fixed Rate April 25, 2035 BBB/NA $250,000.00
Class B-1 5.75%
$1,070,100.00 Subordinate/Fixed Rate April 25, 2035 BB/NA
$250,000.00
Class B-2 5.75%
$642,100
Subordinate/Fixed Rate
April 25, 2035 B/NA
$250,000.00
Class B-3 5.75%%
$963,234.48
Subordinate/Fixed Rate
April 25, 2035 NA/NA
$250,000.00
</TABLE>
1 The
Certificates, other
than the Class B and Class R Certificates shall
be Book-Entry
Certificates. The
Class B Certificates
and the Class R
Certificates shall be delivered to the holders thereof in physical
form.
2 The
Certificates, other than the Class R Certificates, shall be
issuable
in minimum dollar
denominations
as indicated above (by Certificate
Principal Balance or
Notional Amount, as applicable) and integral
multiples of $1 (or
$1,000 in the case of the Class B-1, Class B-2 and
Class B-3
Certificates) in excess thereof, except that one Certificate
of any of the Class
B-1, Class B-2 and
Class B-3 Certificates that
contain an uneven
multiple of $1,000 shall be issued in a denomination
equal to the sum of the related minimum denomination set forth
above and
such uneven multiple for such Class or the sum of such denomination and
an integral multiple of $1,000.
3
Adjustable Initial
Formula
Maximum
Minimum
Rates:
Class A-1
3.12% LIBOR + 0.40%
Subject to the
0.40%
available funds cap
Class A-2
2.63%
5.35% - LIBOR
5.35%
0.00%
4 The
initial Pass-Through Rate on the Class A-V Certificates is
0.3030%.
5 The
Class A-V Certificates
do not have a
principal balance. For the
purpose of calculating
interest payments, interest on the Class A-V
Certificates will
accrue on a notional
amount equal to the
aggregate
Stated Principal
Balance of the Mortgage Loans immediately prior to the
related distribution date.
6 Each
class of the Class R
Certificates
shall be issuable in minimum
denominations of not
less than a 20%
Percentage
Interest; provided,
however, that one
Class R Certificate of each Class will be issuable to
Residential Funding as "tax matters person" pursuant to Section
10.01(c)
and (e) in a minimum denomination representing a Percentage Interest
of
not less than 0.01%.
2
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The Mortgage Loans have an aggregate principal balance as of the
Cut-off
Date of $214,032,268.78.
In consideration of the mutual agreements herein contained, the
Company,
the Master Servicer and the Trustee agree
as follows:
ARTICLE I
3
<PAGE>
ARTICLE I
DEFINITIONS
Section 1.01. Definitions.
Whenever used in this Agreement, the following words and phrases,
unless
the context otherwise requires, shall have the meanings specified in this
Article.
Adjustable Rate
Certificates: Any of
the Class A-1 Certificates and the
Class A-2 Certificates.
Available Funds Cap With respect to any Distribution Date on or before
the Distribution Date in June 2015 and the Class
A-1 Certificates,
5.75% per
annum plus amounts, if any, paid pursuant to the Yield
Maintenance
Agreement,
expressed as a per annum rate. With respect
to any Distribution Date on or after
July 2015 and the Class A-1 Certificates,
5.75% per annum.
Bankruptcy Amount:
As of any date of
determination prior to
the first
anniversary of the Cut-off Date, an amount
equal to the excess,
if any, of (A)
$100,000 over (B) the aggregate amount of
Bankruptcy Losses
allocated solely to
one or more specific Classes of Certificates in
accordance with Section 4.05 of
this Series Supplement. As of any date of determination on or after the
first
anniversary of the Cut-off Date, an amount
equal to the excess, if any, of
(1) the lesser of (a) the Bankruptcy Amount calculated as of the
close of business on the Business Day immediately preceding the most
recent anniversary of the Cut-off Date coinciding with or preceding
such
date of determination (or, if such date of determination is an
anniversary of the Cut-off Date, the Business Day immediately
preceding
such date of
determination)
(for purposes of this definition, the
"Relevant Anniversary") and (b) the greater of
(A) the greater of (i) the product of (x) an amount equal
to the largest
difference in the related Monthly Payment for any
Non-Primary Residence
Loan remaining in the Mortgage Pool (other
than Additional
Collateral
Loans)
which had an original
Loan-to-Value Ratio of
80% or greater that
would result if
the
Net Mortgage
Rate thereof was equal to the weighted average
(based on the principal balance of the Mortgage
Loans as of the
Relevant Anniversary)
of the Net Mortgage
Rates of all Mortgage
Loans as of the Relevant Anniversary less 1.25% per annum,
(y) a
number equal to the weighted average remaining term to maturity,
in months, of all
Non-Primary
Residence Loans
remaining in the
Mortgage Pool as of
the Relevant
Anniversary, and (z)
one plus
the quotient of the
number of all
Non-Primary Residence
Loans
remaining in the
Mortgage Pool divided by the total number of
Outstanding Mortgage
Loans in the Mortgage Pool as of the
Relevant Anniversary, and (ii) $50,000, and
(B) the greater of (i) 0.0006 times the aggregate
principal balance of
all the Mortgage Loans in the Mortgage Pool
as of the Relevant
Anniversary
having a Loan-to-Value Ratio
(other than Additional
Collateral
Loans) at origination
which
exceeds 75% and (ii) $100,000,
4
<PAGE>
over (2) the aggregate
amount of Bankruptcy Losses allocated
solely to one or more
specific Classes of
Certificates
in accordance
with Section 4.05 since the Relevant Anniversary.
The Bankruptcy
Amount may be further reduced by the Master Servicer
(including accelerating the manner in which
such coverage is reduced) provided
that prior to any such reduction, the Master Servicer shall (i)
obtain written
confirmation from each Rating Agency that such
reduction shall not reduce the
rating assigned to any Class of
Certificates
by such Rating
Agency (without
giving effect to the Certificate Policy in
the case of the Insured Certificates)
below the lower of the then-current rating or the rating assigned to such
Certificates as of the Closing Date by such Rating Agency and (ii) provide a
copy of such written confirmation to the
Trustee.
Certificate: Any Class
A, Class M, Class B or Class R Certificate.
Certificate Account:
The separate account or accounts created and
maintained pursuant to Section 4.01 of the Standard Terms, which shall be
entitled "Deutsche Bank Trust Company
Americas, as trustee, in trust for the
registered holders of Residential
Accredit Loans, Inc.,
Mortgage Asset-Backed
Pass-Through Certificates, Series 2004-QS5" and which must be an Eligible
Account.
Certificate Insurance
Account: The account established pursuant to
Section 12.02(b) of this Series
Supplement.
Certificate Insurance
Payment: Any payment made by the Certificate
Insurer with respect to the Insured
Certificates under the Certificate Policy.
Certificate Insurer:
Radian Asset Assurance Inc., a stock
insurance company
organized and created
under the laws of the State of
New York, and any
successors
thereto, as issuer of the Certificate
Policy.
Certificate Insurer Default: The existence and continuance of a
failure
by the Certificate Insurer to make a payment
required under the Certificate
Policy in accordance with its terms.
Certificate
Policy: The
financial guaranty insurance policy No.
FANI-0532-05118-NY issued by the Certificate Insurer for the benefit of the
Holders of the Insured Certificates, including any endorsements thereto,
attached hereto as Exhibit Five.
Certificate Principal
Balance: With respect
to each Certificate (other
than any Interest Only Certificate), on any date of determination, an amount
equal to:
(i) the
Initial Certificate
Principal Balance of such Certificate as
specified on the face thereof, plus
(ii) any
Subsequent
Recoveries
added to the
Certificate
Principal
Balance of such Certificate pursuant to Section 4.02, minus
5
<PAGE>
(iii) the sum of (x) the aggregate of all amounts previously
distributed with
respect to such Certificate (or any predecessor
Certificate), and
applied to reduce the
Certificate
Principal
Balance thereof pursuant to Section 4.02(a) and (y) the
aggregate
of all reductions in Certificate Principal Balance deemed to
have
occurred in connection with Realized Losses which were
previously
allocated to such
Certificate (or any
predecessor
Certificate)
pursuant to Section 4.05;
provided, that the Certificate Principal Balance of the Class of
Subordinate
Certificates with the Lowest Priority at
any given time shall be further reduced
by an amount equal to the Percentage Interest evidenced by such Certificate
multiplied by the excess, if any, of (A) the then aggregate Certificate
Principal Balance of all Classes of
Certificates then
outstanding over (B) the
then aggregate Stated Principal Balance of
the Mortgage Loans.
Class A Certificate:
Any one of the Class
A-1, Class A-2,
Class A-3,
Class A-4, Class A-5, Class A-6, Class A-V
or Class A-P
Certificates,
executed
by the Trustee and authenticated by the
Certificate Registrar
substantially in
the form annexed to the Standard Terms as
Exhibit A.
Class R Certificate:
Any one of the Class
R-I Certificates
and Class
R-II Certificates.
Class R-I Certificate: Any one of the Class R-I Certificates
executed by
the Trustee and authenticated by the
Certificate Registrar
substantially in the
form annexed to the Standard Terms as Exhibit D and
evidencing
an interest
designated as a "residual interest" in REMIC I for purposes of the REMIC
Provisions.
Class R-II Certificate: Any one of the Class R-II
Certificates executed
by the Trustee and authenticated by the
Certificate Registrar
substantially in
the form annexed to the Standard
Terms as Exhibit D and
evidencing an
interest
designated as a "residual interest" in REMIC II for purposes of the REMIC
Provisions.
Closing Date: April
28, 2005.
Corporate Trust Office: The principal office of the
Trustee at which at
any particular time its corporate trust business
with respect to this Agreement
shall be administered, which office at the date of the execution of this
instrument is located at 1761 East St.
Andrew Place, Santa Ana, California
92705-4934, Attention: Residential Funding
Corporation Series 2004-QS5.
Cumulative Insurance
Payments: As of any time of determination, the
aggregate of all Certificate Insurance Payments previously made by the
Certificate Insurer under the Certificate Policy minus the aggregate of all
payments previously made to the Certificate Insurer pursuant to Sections
4.02(a)(xvi) of this Series Supplement as reimbursement for Certificate
Insurance Payments.
Cut-off Date: April 1,
2005.
Deficiency Amount:
With respect to the
Insured Certificates
and as of
any Distribution Date, an amount equal to the sum
of (1) the excess of (a) the
Accrued Certificate Interest on the Insured
Certificates on that
Distribution
Date over (b) the Available Distribution Amount available to be distributed
in
respect of the Accrued Certificate
Interest on the
Insured Certificates on that
Distribution Date pursuant to Section 4.02(a)(i) hereof, (2) any amount
6
<PAGE>
allocated to the Insured Certificates which reduces the Accrued Certificate
Interest distributable to the Insured
Certificateholders
with respect to
that
Distribution Date pursuant to clause (ii), clause (iii), or, other than in
respect of Relief Act Shortfalls, clause (iv) of the definition of Accrued
Certificate Interest for the Insured
Certificates, (3) the
principal portion of
any Realized Losses allocated to the
Insured Certificates
with respect to
that
Distribution Date pursuant to Section 4.05 hereof, and (4) the Certificate
Principal Balance of the Insured
Certificates, net of
any Subsequent Recoveries
added thereto pursuant to clause (ii) of
the definition of Certificate Principal
Balance for the Insured Certificates,
to the extent unpaid
on the Maturity Date
for the Insured Certificates after taking into account all
distributions
of
principal and allocations of Realized
Losses to be made on that date pursuant to
this Agreement.
Determination Date:
With respect to any
Distribution Date, the
second
Business Day prior to each Distribution
Date.
Discount Net Mortgage Rate: 5.75% per annum.
Due Period: With
respect to each Distribution Date, the calendar month
in which such Distribution Date occurs.
Eligible Account:
An account that is any of the following: (i)
maintained with a depository institution
the debt obligations of which have been
rated by each Rating Agency in its highest
rating available, or
(ii) an account
or accounts in a depository institution in
which such accounts are fully insured
to the limits established by the FDIC,
provided that any deposits not so insured
shall, to the extent acceptable to each Rating Agency,
as evidenced in writing,
be maintained such that (as evidenced by an
Opinion of Counsel
delivered to the
Trustee and each Rating Agency) the
registered Holders of
Certificates
have a
claim with respect to the funds in such
account or a perfected
first security
interest against any collateral (which shall be limited to Permitted
Investments) securing such funds that is superior to claims of any other
depositors or creditors of the depository
institution with which such account is
maintained, or (iii) in the case of the
Custodial Account,
a trust account or
accounts maintained in the corporate
trust department of U.S. Bank,
National
Association, or (iv) in the case of the
Certificate Account, a trust account or
accounts maintained in the corporate
trust division of the
Trustee, or (v) an
account or accounts of a depository
institution acceptable to each Rating Agency
(as evidenced in writing by each
Rating Agency that use
of any such account as
the Custodial Account or the Certificate Account will not reduce the rating
assigned to any Class of Certificates by such Rating Agency below the
lower of
the then-current rating or the rating assigned to
such Certificates as
of the
Closing Date by such Rating Agency).
Eligible Funds: On any
Distribution
Date, the excess,
if any, of the
Available Distribution Amount over the sum of (i) the aggregate amount of
Accrued Certificate Interest on the Senior Certificates, (ii) the Senior
Principal Distribution Amount (determined without regard to Section
4.02(a)(ii)(Y)(D) hereof), (iii) the Class A-P Principal
Distribution
Amount
(determined without regard to clause (E) of the definition of Class A-P
Principal Distribution Amount) and (iv) the aggregate amount of Accrued
Certificate Interest on the Class M, Class
B-1 and Class B-2 Certificates.
7
<PAGE>
Floater Certificates:
Any of the Class A-1 Certificates.
Fraud Loss Amount:
As of any date of
determination
after the Cut-off
Date, an amount equal to: (X) prior to the
first anniversary of the Cut-off Date
an amount equal to 2.00% of the aggregate
outstanding
principal balance of
all
of the Mortgage Loans as of the Cut-off
Date minus the aggregate amount of Fraud
Losses allocated solely to one or more specific Classes of Certificates in
accordance with Section 4.05 of this Series
Supplement since the Cut-off Date up
to such date of determination, (Y) from the first to, but not
including,
the
second anniversary of the Cut-off Date, an
amount equal to (1) the lesser of (a)
the Fraud Loss Amount as of the most recent
anniversary of the
Cut-off Date and
(b) 1.00% of the aggregate outstanding principal balance of
all of the Mortgage
Loans as of the most recent anniversary of the Cut-off Date minus (2) the
aggregate amount of Fraud Losses allocated solely to one or more specific
Classes of Certificates in accordance with Section 4.05 since the most
recent
anniversary of the Cut-off Date up to such
date of determination,
and (Z) from
the second to, but not including,
the fifth anniversary
of the Cut-off Date, an
amount equal to (1) the lesser of (a) the Fraud Loss Amount as of the most
recent anniversary of the Cut-off Date and (b) 1.00% of the aggregate
outstanding principal balance of all of the
Mortgage Loans as of the most recent
anniversary of the Cut-off Date minus (2) the
aggregate amount of
Fraud Losses
allocated solely to one or more specific
Classes of
Certificates in accordance
with Section 4.05 since the most recent
anniversary
of the Cut-off Date up
to
such date of determination. On and after the fifth
anniversary of the
Cut-off
Date, the Fraud Loss Amount shall be
zero.
The Fraud Loss
Amount may be
further reduced by the Master Servicer
(including accelerating the manner in which
such coverage is reduced) provided
that prior to any such reduction, the Master Servicer shall (i)
obtain written
confirmation from each Rating Agency that such
reduction shall not reduce the
rating assigned to any Class of
Certificates
by such Rating
Agency (without
giving effect to the Certificate Policy in
the case of the Insured Certificates)
below the lower of the then-current rating or the rating assigned to such
Certificates as of the Closing Date by such Rating Agency and (ii) provide a
copy of such written confirmation to the
Trustee.
Initial Monthly Payment Fund: $0.00 representing scheduled principal
amortization and interest at the Net Mortgage
Rate payable during
the May 2005
Due Period, for those Mortgage Loans for which
the Trustee will not be entitled
to receive such payment.
Initial Notional
Amount: With respect to the Class A-2
Certificates,
$85,000,000. With respect to the Class A-V
Certificates
or Subclass
thereof
issued pursuant to Section 5.01(c) of the
Standard Terms, the aggregate Cut-off
Date Principal Balance of the Mortgage
Loans corresponding to the Uncertificated
REMIC I Regular Interests Z represented by
such Class or Subclass on such date.
Initial Subordinate
Class Percentage: With respect to each Class of
Subordinate Certificates, an amount which is equal to the initial aggregate
Certificate Principal Balance of such Class
of Subordinate
Certificates divided
by the aggregate Stated Principal Balance of all the Mortgage Loans
as of the
Cut-off Date as follows:
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<PAGE>
Class M-1: 2.75%
Class B-1: 0.50%
Class M-2: 0.90%
Class B-2: 0.30%
Class M-3: 0.50%
Class B-3: 0.45%
Insurance Premium:
With respect to any
Distribution
Date, an amount
equal to 1/12th of the product of (a) the
Certificate Principal
Balance of the
Class A-3 Certificates as of such
Distribution
Date (prior to giving
effect to
any distributions thereon on such
Distribution Date) and (b) 0.05% per annum.
Insured Certificateholder: Any holder of an Insured
Certificate.
Insured Certificate: Any one of the Class A-3 Certificates.
Insured Payment: With
respect to the Insured
Certificates, the sum
of
(a) as of any Distribution Date, any Deficiency Amount, and (b) any Preference
Amount.
Interest Accrual
Period: With respect to any Class of Certificates
(other than the Adjustable Rate
Certificates)
and any Distribution Date, the
calendar month preceding the month in which
such Distribution Date occurs. With
respect to the Adjustable Rate Certificates and any Distribution Date, the
period beginning on the 25th day of the
month preceding the month in which such
Distribution Date occurs and ending on the 24th day
of the month in which such
Distribution Date occurs.
Interest Only
Certificates:
Any one of the
Class A-2 or Class A-V
Certificates. The Interest Only Certificates
will have no Certificate Principal
Balance.
Inverse Floater Certificates: The Class A-2 Certificates.
LIBOR: With respect to any Distribution Date, the arithmetic mean
of the
London interbank offered rate quotations for
one-month U.S. Dollar
deposits,
expressed on a per annum basis, determined
in accordance with Section 1.03.
Lockout Certificates:
The Class A-5 Certificates.
Lockout Percentage:
For any Distribution Date occurring prior to the
Distribution Date in May 2010, 0%, and for
any Distribution Date thereafter, as
follows: 30% for any Distribution Date on or after May 2010 and prior to May
2011; 40% for any Distribution Date on or after May 2011 and
prior to May 2012;
60% for any Distribution Date on or after May 2012 and
prior to May 2013;
80%
for any Distribution Date on or after May 2013 and
prior to May 2014; and 100%
for any Distribution Date thereafter.
Maturity Date:
April 25, 2035, the Distribution Date immediately
following the latest scheduled maturity
date of any Mortgage Loan.
Mortgage Loan Schedule: The list or lists of the Mortgage Loans
attached
hereto as Exhibit One (as amended
from time to time to
reflect the addition
of
Qualified Substitute Mortgage Loans), which list or lists shall set
forth the
following information as to each Mortgage
Loan:
9
<PAGE>
(i)
the Mortgage Loan identifying number ("RFC LOAN #");
(ii)
the maturity of the Mortgage Note ("MATURITY DATE");
(iii)
the Mortgage Rate ("ORIG RATE");
(iv)
the Subservicer pass-through rate ("CURR NET");
(v)
the Net Mortgage Rate ("NET MTG RT");
(vi)
the Pool Strip Rate ("STRIP");
(vii)
the initial scheduled
monthly payment of
principal, if any,
and interest ("ORIGINAL P & I");
(viii)
the Cut-off Date Principal Balance ("PRINCIPAL BAL");
(ix)
the Loan-to-Value Ratio at origination ("LTV");
(x)
the rate at which the Subservicing Fee accrues ("SUBSERV FEE")
and
at which the Servicing Fee accrues ("MSTR SERV FEE");
(xi)
a code "T,"
"BT" or "CT"
under the column "LN FEATURE,"
indicating that the
Mortgage Loan is secured by a second or
vacation residence; and
(xii)
a code "N" under the column "OCCP CODE," indicating that the
Mortgage Loan is secured by a non-owner occupied residence.
Such schedule may consist of multiple
reports that collectively set forth all of
the information required.
Notional Amount: As of
any Distribution
Date, (i) with respect
to the
Class A-2 Certificates, an amount equal to the Certificate
Principal Balance of
the Class A-1 Certificates immediately
prior to such date; and (ii) with respect
to any Class A-V Certificates or Subclass thereof issued pursuant to Section
5.01(c) of the Standard Terms, the aggregate Stated Principal Balance of the
Mortgage Loans corresponding to the
Uncertificated REMIC I
Regular Interests Z
represented by such Class or Subclass
immediately prior to such date.
Pass-Through Rate: With respect to the Senior Certificates (other than
the Adjustable Rate, Class A-V and Class
A-P Certificates), Class M Certificates
and Class B Certificates and any Distribution Date, the per annum rates set
forth in the Preliminary Statement
hereto.
o
With respect
to the Class A-1 Certificates and the initial
Interest Accrual Period, 3.12% per annum, and as to any
Interest
Accrual Period
thereafter, a per
annum rate equal to LIBOR plus
0.40%, subject to a maximum rate equal to the Available Funds
Cap
and a minimum rate of 0. 40% per annum.
10
<PAGE>
o
With respect
to the Class A-2 Certificates and the initial
Interest Accrual Period, 2.63% per annum, and as to any
Interest
Accrual Period thereafter, a per annum rate equal to 5.35%
minus
LIBOR, subject to a maximum rate of 5.35% per annum and a
minimum
rate of 0.00% per annum.
With respect to the
Class A-V Certificates
(other than any Subclass
thereof) and any Distribution Date, a rate equal to the weighted average,
expressed as a percentage, of the Pool Strip Rates of all
Mortgage Loans as
of
the Due Date in the related Due Period,
weighted on the basis
of the respective
Stated Principal Balances of such Mortgage Loans as of the day immediately
preceding such Distribution Date (or, with respect to the
initial
Distribution
Date, at the close of business on the
Cut-off Date).
With respect to the
Class
A-V Certificates and the initial Distribution Date the Pass-Through Rate is
equal to 0. 3030% per annum. With respect to any Subclass of Class A-V
Certificates and any Distribution Date, a rate equal to the weighted
average,
expressed as a percentage, of the Pool Strip Rates of all Mortgage Loans
corresponding to the Uncertificated REMIC I Regular Interests Z
represented by
such Subclass as of the Due Date in the
related Due Period, weighted on the
basis of the respective Stated Principal Balances of such Mortgage Loans as
of
the day immediately preceding such Distribution Date (or with respect to the
initial Distribution Date, at the close of business on
the Cut-off Date).
The
Principal Only Certificates have no Pass-Through Rate and are not entitled to
Accrued Certificate Interest.
Permitted Investments:
One or more of the following:
(i) obligations
of or guaranteed as to timely payment of principal and
interest by the United States or any agency or instrumentality thereof
when such obligations
are backed by the full faith and credit of the
United States;
(ii) repurchase
agreements on
obligations
specified in clause
(i) maturing
not more than one month from the date of acquisition thereof, provided
that the unsecured
short-term debt obligations of the party agreeing to
repurchase such
obligations are at the time rated by each Rating Agency
in its highest short-term rating available;
(iii) federal funds, certificates of deposit,
demand deposits, time
deposits
and 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 of
any U.S. depository
institution or trust company incorporated under the
laws of the United States or any state thereof or of any domestic
branch
of a foreign
depository institution or trust company; provided that the
debt obligations of such depository institution or trust company at
the
date of acquisition thereof have been rated by each Rating Agency
in its
highest short-term rating available; and, provided further that, if
the
original maturity of such short-term obligations of a domestic
branch of
a foreign depository
institution or trust company shall exceed 30 days,
the short-term rating
of such institution
shall be A-1+ in the case of
Standard & Poor's if Standard & Poor's is a Rating
Agency;
11
<PAGE>
(iv) commercial
paper and demand notes
(having original maturities of not
more than 365 days) of
any corporation
incorporated
under the laws of
the United States or any state thereof which on the date of
acquisition
has been rated by each Rating Agency in its highest short-term rating
available; provided
that such commercial
paper shall have a
remaining
maturity of not more than 30 days;
(v) any mutual fund,
money market fund, common trust fund or other
pooled
investment vehicle,
the assets of which are limited to instruments that
otherwise would constitute Permitted Investments hereunder and have
been
rated by each Rating Agency in its highest short-term rating available
(in the case of Standard & Poor's such rating shall be either AAAm or
AAAm-G), including
any such fund that is
managed by the Trustee or any
affiliate of
the Trustee or for which the Trustee or any of its
affiliates acts as an adviser; and
(vi) other obligations or securities that are acceptable to each Rating
Agency as a Permitted
Investment
hereunder and will not reduce the
rating assigned
to any Class of
Certificates
by such Rating Agency
(without giving effect to any Certificate Policy (if any) in the
case of
Insured Certificates
(if any)) below the then-current rating, as
evidenced in writing;
provided, however, that no instrument shall be a Permitted
Investment if
it represents, either (1) the right to receive
only interest payments with
respect to the underlying debt instrument or (2) the right to receive both
principal and interest payments derived from obligations underlying such
instrument and the principal and interest payments with respect to such
instrument provide a yield to maturity greater than 120% of the yield to
maturity at par of such underlying
obligations. References herein to the highest
rating available on unsecured long-term debt shall mean AAA in the case of
Standard & Poor's and Fitch and Aaa in
the case of Moody's,
and for purposes of
this Agreement, any references herein to the highest rating available on
unsecured commercial paper and short-term debt obligations shall mean the
following: A-1 in the case of Standard &
Poor's, P-1 in the case of Moody's and
F-1 in the case of Fitch; provided,
however, that any
Permitted Investment that
is a short-term debt obligation
rated A-1 by Standard
& Poor's must satisfy the
following additional conditions: (i) the total amount of debt from
A-1 issuers
must be limited to the investment of monthly principal and interest payments
(assuming fully amortizing collateral);
(ii) the total amount of A-1 investments
must not represent more than 20% of the aggregate outstanding Certificate
Principal Balance of the Certificates and
each investment must not mature beyond
30 days; (iii) the terms of the debt must
have a predetermined fixed dollar
amount of principal due at maturity that cannot vary; and (iv) if the
investments may be liquidated prior to their maturity or are
being relied on to
meet a certain yield, interest must be tied
to a single interest rate index plus
a single fixed spread (if any) and must
move proportionately with that index.
Preference
Amount: Any
amount
previously
distributed to
a
Certificateholder on an Insured Certificate
that is recoverable and sought to be
recovered as a voidable preference by a trustee in
bankruptcy
pursuant to the
United States Bankruptcy Code (11 U.S.C.), as amended from time to time,
in
accordance with a final nonappealable order of a court having competent
jurisdiction.
12
<PAGE>
Prepayment Assumption:
The prepayment assumption to be used for
determining the accrual of original issue discount and premium and market
discount on the Certificates for federal income tax purposes,
which assumes a
constant prepayment rate of 6.0% per annum of the then
outstanding
principal
balance of the related Mortgage Loans in the first month of the life of such
Mortgage Loans and an additional
approximately 1.090909% per annum in each month
thereafter until the twelfth month, and beginning in the twelfth month
and in
each month thereafter during the life of the Mortgage Loans, a constant
prepayment rate of 18.0% per annum.
Prepayment
Distribution
Percentage: With
respect to any
Distribution
Date and each Class of Subordinate Certificates, under the applicable
circumstances set forth below, the
respective percentages set forth below:
(i) For
any Distribution Date
prior to the Distribution Date in May
2010 (unless the
Certificate
Principal Balances of the Senior
Certificates (other
than the Class A-P
Certificates) have
been
reduced to zero), 0%.
(ii) For any
Distribution
Date not discussed in clause (i) above
on
which any Class of Subordinate Certificates are outstanding:
(a) in the case of the Class of Subordinate Certificates
then outstanding
with the Highest
Priority and each other Class
of Subordinate
Certificates
for which the
related Prepayment
Distribution Trigger has been satisfied, a fraction, expressed
as
a percentage, the numerator of which is the Certificate
Principal
Balance of such
Class immediately prior to such date and the
denominator of
which is the sum of the Certificate Principal
Balances immediately
prior to such date of (1) the Class of
Subordinate
Certificates then
outstanding
with the Highest
Priority and (2) all other Classes of Subordinate Certificates
for which the respective Prepayment Distribution Triggers have
been satisfied; and
(b) in the
case of each other Class of Subordinate
Certificates for which the Prepayment Distribution Triggers have
not been satisfied, 0%; and
(iii) Notwithstanding the foregoing, if the application of the foregoing
percentages on
any Distribution Date as provided in Section 4.02 of this
Series Supplement
(determined
without regard to the proviso to the
definition of "Subordinate Principal Distribution Amount")
would result
in a distribution
in respect of
principal of any Class or Classes of
Subordinate
Certificates in
an amount greater than the remaining
Certificate Principal
Balance thereof (any such class, a "Maturing
Class"), then:
(a) the Prepayment Distribution Percentage of each
Maturing Class
shall be reduced to a level that, when applied as
described above, would exactly reduce the Certificate Principal Balance
of such Class to zero;
(b) the Prepayment
Distribution
Percentage of
each other
Class of Subordinate Certificates (any such Class, a
"Non-Maturing Class")
shall be recalculated in accordance with the
provisions in
paragraph (ii) above,
as if the Certificate Principal
Balance of each Maturing Class had been reduced to zero (such
percentage
as recalculated, the "Recalculated Percentage"); (c) the total
amount of
the reductions
in the Prepayment Distribution Percentages of the
Maturing Class or
Classes pursuant to clause (a) of this sentence,
expressed as an
aggregate percentage, shall be allocated among the
Non-Maturing Classes
in proportion
to their respective Recalculated
Percentages (the portion of such aggregate reduction so allocated
to any
Non-Maturing Class, the "Adjustment Percentage"); and (d) for purposes
of such Distribution
Date, the Prepayment
Distribution
Percentage of
each Non-Maturing
Class shall be equal to the sum of (1) the Prepayment
Distribution
Percentage thereof,
calculated
in accordance with the
provisions in
paragraph (ii) above as if the Certificate Principal
Balance of each
Maturing Class had not
been reduced to zero,
plus (2)
the related Adjustment Percentage.
13
<PAGE>
Principal Only Certificates: Any one of the Class A-P
Certificates.
Record Date: With
respect to each
Distribution Date and
each Class of
Certificates (other than the Adjustable Rate
Certificates
that are
Book-Entry
Certificates), the close of business on the last Business Day of the month
preceding the month in which the related
Distribution Date
occurs. With respect
to each Distribution Date and the
Adjustable Rate Certificates (so long as they
are Book-Entry Certificates), the close of
business on the Business Day prior to
such Distribution Date.
Related Classes:
As to any Uncertificated REMIC I Regular Interest,
those classes of Certificates identified as
"Related Classes of Certificates" to
such Uncertificated REMIC I Regular
Interest in the definition of Uncertificated
REMIC I Regular Interest.
Relief Act: The Service Members Civil Relief Act, formerly known as the
Soldiers' and Sailors' Civil Relief Act of
1940, as amended.
Relief Act Shortfalls:
Shortfalls
in interest
payable by a
Mortgagor
that is not collectable from the Mortgagor pursuant to the Relief Act or
any
similar legislation or regulations.
REMIC I: The segregated pool of assets (exclusive of the Yield
Maintenance Agreement, which is not an asset of any
REMIC), with respect to
which a REMIC election is to be made,
consisting of:
(i) the
Mortgage Loans and the related Mortgage Files,
(ii) all
payments and
collections
in respect of the
Mortgage
Loans due after the
Cut-off Date (other than Monthly
Payments due in the month of the Cut-off Date) as shall be
on deposit in the Custodial Account or in the Certificate
Account and identified
as belonging to the Trust Fund,
including the proceeds from the liquidation of Additional
Collateral for any
Additional
Collateral
Loan, but not
including amounts
on deposit in the Initial Monthly
Payment Fund,
(iii) property
which secured a
Mortgage Loan and which has been
acquired for the
benefit of the Certificateholders by
foreclosure or deed in lieu of foreclosure,
14
<PAGE>
(iv) the
hazard insurance policies and Primary Insurance
Policies, if any, the
Pledged Assets with respect to each
Pledged Asset
Mortgage Loan, and the interest in the
Surety Bond transferred to the Trustee pursuant to Section
2.01 herein, and
(v) all
proceeds of clauses (i) through (iv) above.
REMIC I Certificates:
The Class R-I Certificates.
REMIC II: The segregated pool of assets consisting of the
Uncertificated
REMIC I Regular Interests conveyed in trust to the Trustee for the
benefit of
the holders of each Class of Certificates (other than the Class R-I
Certificates) pursuant to Section 2.06,
with respect to which
a separate REMIC
election is to be made.
Senior Accelerated
Distribution
Percentage:
With
respect to any
Distribution Date occurring on or prior to the
60th Distribution Date and, with
respect to any Mortgage Pool comprised of two or more Loan Groups, any Loan
Group, 100%. With respect to any
Distribution Date thereafter and any such Loan
Group, if applicable, as follows:
(i) for any
Distribution
Date after the 60th
Distribution
Date but on or
prior to the 72nd
Distribution Date, the
related Senior Percentage for
such Distribution Date
plus 70% of the related Subordinate Percentage
for such Distribution Date;
(ii) for any Distribution Date after the 72nd Distribution Date but on or
prior to the 84th
Distribution Date, the
related Senior Percentage for
such Distribution Date
plus 60% of the related Subordinate Percentage
for such Distribution Date;
(iii) for any Distribution Date after the 84th Distribution Date but on or
prior to the 96th
Distribution Date, the
related Senior Percentage for
such Distribution Date
plus 40% of the related Subordinate Percentage
for such Distribution Date;
(iv) for any Distribution Date after the 96th Distribution Date but on or
prior to the 108th
Distribution Date, the related Senior Percentage for
such Distribution Date
plus 20% of the related Subordinate Percentage
for such Distribution Date; and
(v) for any
Distribution
Date thereafter,
the Senior
Percentage for
such
Distribution Date;
provided, however,
(i) that any scheduled reduction to the Senior Accelerated
Distribution
Percentage described above shall not occur as
of any Distribution
Date unless
either
(a)(1)(X) the outstanding principal balance of the Mortgage
Loans
delinquent 60 days or
more (including Mortgage Loans which are in
foreclosure, have been
foreclosed
or otherwise liquidated, or with
respect to which the
Mortgagor is in
bankruptcy and any REO
Property)
averaged over the last
six months, as a
percentage
of the aggregate
outstanding
Certificate
Principal
Balance of
the Subordinate
Certificates, is less
than 50% or (Y) the outstanding principal balance
of Mortgage Loans
delinquent 60 days or more (including Mortgage Loans
which are in foreclosure, have been foreclosed or otherwise
liquidated,
or with respect to
which the Mortgagor
is in bankruptcy and any REO
Property) averaged
over the last six
months, as a
percentage
of the
aggregate outstanding
principal balance of
all Mortgage Loans averaged
15
<PAGE>
over the last six months, does not exceed 2% and (2)
Realized Losses on
the Mortgage
Loans to date for such Distribution Date if occurring
during the
sixth, seventh, eighth, ninth or tenth year (or any
year
thereafter) after the
Closing Date are less than 30%, 35%, 40%, 45% or
50%, respectively,
of the sum of the Initial Certificate Principal
Balances of the Subordinate Certificates or
(b)(1) the
outstanding
principal balance of Mortgage Loans
delinquent 60 days or
more (including Mortgage Loans which are in
foreclosure, have been
foreclosed
or otherwise liquidated, or with
respect to which the
Mortgagor is in
bankruptcy and any REO
Property)
averaged over the last
six months, as a
percentage
of the aggregate
outstanding principal
balance of all
Mortgage Loans
averaged over the
last six months,
does not exceed 4% and (2) Realized Losses on the
Mortgage Loans to date for such Distribution Date, if occurring during
the sixth, seventh, eighth, ninth or tenth year (or any year
thereafter)
after the Closing Date are less than 10%, 15%, 20%, 25% or 30%,
respectively, of the
sum of the Initial Certificate Principal Balances
of the Subordinate Certificates, and
(ii) that for any
Distribution Date on
which the Senior
Percentage is
greater than the Senior Percentage as of the Closing Date, the Senior
Accelerated Distribution Percentage for such Distribution Date shall be
100%,
or, if the Mortgage Pool is comprised of two or more Loan Groups, for any
Distribution Date on which the weighted
average of the Senior
Percentages for
each Loan Group, weighted on the basis of the
Stated Principal
Balances of the
Mortgage Loans in the related Loan Group
(excluding the Discount Fraction of the
Discount Mortgage Loans in such Loan Group)
exceeds the weighted average of the
initial Senior Percentages (calculated on such basis) for
each Loan Group, each
of the Senior Accelerated Distribution Percentages for such Distribution
Date
will equal 100%.
Notwithstanding the foregoing, upon the reduction of the
Certificate
Principal
Balances of the related Senior Certificates (other than the Class A-P
Certificates, if any) to zero, the related Senior Accelerated Distribution
Percentage shall thereafter be 0%.
Senior Certificate:
Any one of the
Class A Certificates or Class R
Certificates, executed by the Trustee and authenticated by the Certificate
Registrar substantially in the form annexed to the
Standard Terms as Exhibit A
and Exhibit D.
Senior Percentage: As of any Distribution Date, the lesser of 100%
and a
fraction, expressed as a percentage, the numerator of which is the
aggregate
Certificate Principal Balance of the Senior
Certificates (other
than the Class
A-P Certificates) immediately prior to such Distribution Date and the
denominator of which is the aggregate
Stated Principal Balance of all of the
Mortgage Loans (or related REO Properties) (other than the related
Discount
Fraction of each Discount Mortgage Loan) immediately prior
to such Distribution
Date.
16
<PAGE>
Senior Principal
Distribution Amount:
With respect to any Distribution
Date, the lesser of (a) the balance of the Available Distribution Amount
remaining after the distribution of all amounts required to be distributed
therefrom pursuant to Section 4.02(a)(i)
and Section
4.02(a)(ii)(X)
(excluding
any amount distributable pursuant to clause (E) of the
definition of "Class A-P
Principal Distribution Amount") and (b) the sum of the
amounts required to
be
distributed to the Senior Certificateholders on such
Distribution Date pursuant
to Sections 4.02(a)(ii)(Y), 4.02(a)(xvii)
and 4.02(a)(xviii).
Special Hazard Amount:
As of any Distribution
Date, an amount equal to
$2,140,323 minus the sum of (i) the aggregate
amount of Special
Hazard Losses
allocated solely to one or more specific
Classes of
Certificates in accordance
with Section 4.05 of this Series
Supplement and (ii)
the Adjustment Amount
(as
defined below) as most recently calculated.
For each anniversary
of the Cut-off
Date, the Adjustment Amount shall be equal to the
amount, if any, by
which the
amount calculated in accordance
with the preceding
sentence (without giving
effect to the deduction of the Adjustment
Amount for such
anniversary)
exceeds
the greater of (A) the greater of (i) the product of the Special Hazard
Percentage for such anniversary
multiplied by the
outstanding principal balance
of all the Mortgage Loans on the
Distribution Date
immediately
preceding such
anniversary and (ii) twice the outstanding principal balance of the Mortgage
Loan with the largest outstanding
principal balance as
of the Distribution Date
immediately preceding such anniversary and
(B) the greater of (i) the product of
0.50% multiplied by the outstanding
principal balance of all Mortgage Loans
on
the Distribution Date immediately preceding such anniversary
multiplied by a
fraction, the numerator of which is equal
to the aggregate outstanding principal
balance (as of the immediately preceding Distribution Date) of all of the
Mortgage Loans secured by Mortgaged Properties located in the State of
California divided by the aggregate
outstanding
principal balance (as of the
immediately preceding Distribution Date) of
all of the Mortgage Loans, expressed
as a percentage, and the denominator of which is equal to 21.39% (which
percentage is equal to the percentage of
Mortgage Loans by
aggregate
principal
balance initially secured by Mortgaged Properties located in the State of
California) and (ii) the aggregate outstanding principal balance (as of the
immediately preceding Distribution Date) of
the largest Mortgage Loan secured by
a Mortgaged Property (or, with respect to a Cooperative Loan, the related
Cooperative Apartment) located in the State
of California.
The Special Hazard Amount may be further reduced by the Master Servicer
(including accelerating the manner in which
coverage is reduced)
provided that
prior to any such reduction, the Master Servicer shall (i) obtain written
confirmation from each Rating Agency that such
reduction shall not reduce the
rating assigned to any Class of
Certificates
by such Rating
Agency (without
giving effect to the Certificate Policy in
the case of the Insured Certificates)
below the lower of the then-current rating or the rating assigned to such
Certificates as of the Closing Date by such Rating Agency and (ii) provide a
copy of such written confirmation to the
Trustee.
Special Hazard
Percentage: As of each
anniversary of the Cut-off Date,
the greater of (i) 1.0% and (ii) the
largest percentage obtained by dividing the
aggregate outstanding principal balance (as of immediately preceding
Distribution Date) of the Mortgage Loans
secured by Mortgaged Properties located
in a single, five-digit zip code area in the State of California by the
outstanding principal balance of all the Mortgage Loans
as of the
immediately
preceding Distribution Date.
17
<PAGE>
Subordinate
Principal
Distribution
Amount: With
respect to any
Distribution Date and each Class of
Subordinate Certificates, (a) the sum of (i)
the product of (x) the related Subordinate Class Percentage for such Class
and
(y) the aggregate of the amounts calculated (without giving effect to the
related Senior Percentages) for such Distribution Date under clauses (1), (2)
and (3) of Section 4.02(a)(ii)(Y)(A) to the extent not payable to the Senior
Certificates; (ii) such Class's pro rata share, based on the Certificate
Principal Balance of each Class of
Subordinate Certificates then outstanding, of
the principal collections described in Section 4.02(a)(ii)(Y)(B)(b) (without
giving effect to the Senior Accelerated
Distribution
Percentage) to the
extent
such collections are not otherwise
distributed to the Senior Certificates; (iii)
the product of (x) the related Prepayment Distribution Percentage and (y) the
aggregate of all Principal Prepayments in Full received in the related
Prepayment Period and Curtailments received in the preceding
calendar month
(other than the related Discount Fraction
of such Principal
Prepayments in Full
and Curtailments with respect to a Discount
Mortgage Loan) to the extent not
payable to the Senior Certificates; (iv) if such Class is the Class of
Subordinate Certificates with the Highest Priority, any Excess Subordinate
Principal Amount for such Distribution Date
not paid to the Senior Certificates;
and (v) any amounts described in clauses (i), (ii) and
(iii) as determined
for
any previous Distribution Date, that remain undistributed to the extent that
such amounts are not attributable to Realized Losses which have been
allocated
to a Class of Subordinate Certificates;
minus (b) the sum of (i) with respect to
the Class of Subordinate Certificates with the Lowest Priority, any Excess
Subordinate Principal Amount for such Distribution Date; and (ii) the
Capitalization Reimbursement Amount for such Distribution Date,
other than the
related Discount Fraction of any portion of
that amount related to each Discount
Mortgage Loan, multiplied by a fraction, the numerator of which is the
Subordinate Principal Distribution Amount for such Class of Subordinate
Certificates, without giving effect to this
clause (b)(ii), and the denominator
of which is the sum of the principal distribution amounts for all Classes of
Certificates other than the Class A-P
Certificates, without giving effect to any
reductions for the Capitalization
Reimbursement Amount.
Uncertificated Accrued Interest: With respect to each Distribution
Date,
(i) as to each Uncertificated REMIC I Regular Interest other than each
Uncertificated REMIC I Regular Interest Z, an amount equal to the aggregate
amount of Accrued Certificate Interest that would result under
the terms of the
definition thereof on the Related Classes of Certificates (excluding any
Interest Only Certificates) if the Pass-Through
Rate on such Classes were equal
to the Uncertificated Pass-Through Rate on such
Uncertificated REMIC I
Regular
Interest, (ii) as to each Uncertificated REMIC I Regular Interest Z and each
Uncertificated REMIC II Regular Interest Z, an amount equal to one month's
interest at the Pool Strip Rate of the
related Mortgage
Loan on the
principal
balance of such Mortgage Loan reduced by
such Interest's
pro-rata share of
any
prepayment interest shortfalls or other
reductions of interest allocable to the
Class A-V Certificates.
Uncertificated
Pass-Through
Rate: With
respect to each of the
Uncertificated REMIC I Regular Interests,
other than the
Uncertificated REMIC I
Regular Interests Z, the per annum rate specified in the definition of
Uncertificated REMIC I Regular Interests.
With respect to each
Uncertificated
REMIC I Regular Interest Z and each
Uncertificated REMIC
II Regular Interest Z,
the Pool Strip Rate for the related
Mortgage Loan.
18
<PAGE>
Uncertificated
Principal Balance:
With respect to each
Uncertificated
REMIC I Regular Interest, as defined in the
definition of Uncertificated REMIC I
Regular Interest.
Uncertificated REMIC I
Regular Interests: The
Uncertificated
REMIC I
Regular Interests Z together with the
interests identified
in the table below,
each representing an undivided
beneficial
ownership interest in REMIC I, and
having the following characteristics:
1. The
principal balance from time to time of each Uncertificated REMIC I
Regular Interest
identified
in the table
below shall be the amount
identified as the Initial Principal Balance thereof in such table,
minus
the sum of (x) the aggregate of all amounts previously deemed
distributed with
respect to such
interest and applied to reduce the
Uncertificated
Principal
Balance thereof
pursuant
to Section
10.04(a)(ii) and (y)
the aggregate of all
reductions
in Certificate
Principal Balance
deemed to have
occurred in connection
with Realized
Losses that were
previously
deemed allocated to the Uncertificated
Principal Balance
of such Uncertificated REMIC I Regular Interest
pursuant to Section
10.04(d), which equals the aggregate principal
balance of the Classes
of Certificates
identified
as related to such
Uncertificated REMIC I Regular Interest in such table.
2. The
Uncertificated
Pass-Through
Rate for each
Uncertificated
REMIC I Regular Interest identified in the table below
shall be
the per annum rate set forth in the Pass-Through Rate column of
such table.
3. The
Uncertificated REMIC I
Distribution Amount for each REMIC I
Regular Interest identified in the table below shall be, for
any
Distribution Date, the amount deemed distributed with respect
to
such Uncertificated REMIC I Regular Interest on such
Distribution
Date pursuant
to the provisions of Section
10.04(a).
<TABLE>
<CAPTION>
-----------------------
--------------------------------- ------------------
--------------------
Uncertificated REMIC Related Classes of
Certificates
Pass-Through Rate Initial Principal
I Regular Interest
Balance
-----------------------
--------------------------------- ------------------
--------------------
-----------------------
--------------------------------- ------------------
--------------------
<S>
<C>
<C>
<C>
<C>
V
Class A-1, Class A-2
5.75%
$85,000,000.00
-----------------------
--------------------------------- ------------------
--------------------
-----------------------
--------------------------------- ------------------
--------------------
W
Class A-3
5.70%
$83,591,000.00
-----------------------
--------------------------------- ------------------
--------------------
-----------------------
--------------------------------- ------------------
--------------------
X
Class A-P
0.00%
$2,258,934.30
-----------------------
--------------------------------- ------------------
--------------------
-----------------------
--------------------------------- ------------------
--------------------
Y
Class A-4, Class A-5, Class
5.75%
$43,182,235.48
A-6, Class R-II, Class M-1,
Class M-2, Class M-3, Class
B-1, Class B-2, Class B-3
-----------------------
--------------------------------- ------------------
--------------------
</TABLE>
Uncertificated
REMIC I Regular Interests Z: Each of the 1,276
uncertificated partial undivided beneficial ownership interests in the Trust
Fund, numbered sequentially from 1 to 1,276, each relating to the
particular
Mortgage Loan identified by such sequential number on the Mortgage Loan
Schedule, each having no principal
balance, and each bearing interest at the
respective Pool Strip Rate on the Stated Principal Balance of the related
Mortgage Loan.
19
<PAGE>
Uncertificated
REMIC I Regular
Interests Z
Distribution Amount:
With
respect to any Distribution Date, the sum of the amounts deemed to be
distributed on the Uncertificated REMIC I Regular Interests Z for such
Distribution Date pursuant to Section
10.04(a).
Uncertificated REMIC I
Regular Interest Distribution Amounts: With
respect to each Uncertificated REMIC I Regular Interest, other than the
Uncertificated REMIC I Regular Interests Z, the amount specified as the
Uncertificated REMIC I Regular Interest
Distribution Amount with respect thereto
in the definition of Uncertificated
REMIC I Regular
Interests. With
respect to
the Uncertificated REMIC I Regular Interests Z, the Uncertificated REMIC I
Regular Interests Z Distribution
Amount.
Uncertificated
REMIC II Regular Interests Z: Each of the 1,276
uncertificated partial undivided beneficial ownership interests in REMIC II
numbered sequentially from 1 through 1,276 each relating to the identically
numbered Uncertificated REMIC I Regular Interests Z, each having no
principal
balance and bearing interest at a rate equal to the
related Pool Strip
Rate on
the Stated Principal Balance of the Mortgage
Loan related to the
identically
numbered Uncertificated REMIC I Regular Interests Z, comprising such
Uncertificated REMIC II Regular Interests Z's pro rata share of the amount
distributed pursuant to Section
10.04(a).
Uncertificated REMIC
II Regular Interests
Distribution
Amount: With
respect to any Distribution Date, the sum of the amounts deemed to be
distributed on the Uncertificated REMIC I Regular Interests Z for such
Distribution Date pursuant to Section
10.04(a).
Underwriters: Bear,
Stearns & Co., Inc., Citigroup Global Markets Inc.
and Residential Funding Securities
Corporation.
Yield Maintenance Agreement: The agreement dated as of the Closing
Date,
between the Trustee and the Yield
Maintenance Agreement
Provider, relating to
the Class A-1 Certificates, or any
replacement,
substitute, collateral or other
arrangement in lieu thereto.
Yield Maintenance
Agreement Provider:
Bear, Stearns Financial Products
Inc., and its successors and assigns or any party to any replacement,
substitute, collateral or other arrangement
in lieu thereof.
Yield Maintenance
Payment: For any
Distribution Date, the payment, if
any, due under the Yield Maintenance Agreement in respect of such
Distribution
Date.
Section 1.02. Use of Words and Phrases.
"Herein," "hereby," "hereunder," "hereof," "hereinbefore,"
"hereinafter"
and other equivalent words refer to the Pooling and
Servicing Agreement as a
whole. All references herein to Articles,
Sections or Subsections shall mean the
corresponding Articles, Sections and Subsections in the Pooling and
Servicing
Agreement. The definitions set forth herein include both the
singular and the
plural.
20
<PAGE>
Section 1.03. Determination of LIBOR.
LIBOR applicable to
the calculation of the
Pass-Through
Rates on the
Adjustable Rate Certificates for any Interest Accrual Period (other than the
initial Interest Accrual Period) will be
determined as described below:
On each Distribution
Date, LIBOR shall be established by the Trustee
and, as to any Interest Accrual Period,
will equal the rate for one month United
States dollar deposits that appears on the Telerate Screen Page 3750 of the
Moneyline Telerate Capital Markets Report as
of 11:00 a.m., London time, on the
second LIBOR Business Day prior to the
first day of such Interest Accrual Period
("LIBOR Rate Adjustment Date"). "Telerate Screen Page 3750" means the
display
designated as page 3750 on the Telerate Service (or such other page as may
replace page 3750 on that service for the
purpose of displaying London interbank
offered rates of major banks). If such rate does not appear on such page (or
such other page as may replace that page on
that service, or if
such service is
no longer offered, any other service for
displaying LIBOR or comparable rates as
may be selected by the Trustee after
consultation with the Master Servicer), the
rate will be the Reference Bank Rate. The "Reference Bank Rate" will be
determined on the basis of the rates at which
deposits in U.S. Dollars are
offered by the reference banks (which shall be any three major
banks that are
engaged in transactions in the London
interbank market,
selected by the Trustee
after consultation with the Master Servicer) as of
11:00 a.m., London time, on
the day that is one LIBOR Business Day prior to the immediately preceding
Distribution Date to prime banks in the London
interbank market for a period of
one month in amounts approximately equal to the
aggregate Certificate Principal
Balance of the Adjustable Rate Certificates
then outstanding.
The Trustee will
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
will be the arithmetic mean of the
quotations rounded up to the next multiple of
1/16%. If on such date fewer than two
quotations are provided as requested, the
rate will be the arithmetic mean of the rates quoted by one or
more major banks
in New York City, selected by the Trustee
after consultation with the Master
Servicer, as of 11:00 a.m., New York City time, on such date
for loans in U.S.
Dollars to leading European banks for a period of one month in amounts
approximately equal to the aggregate Certificate Principal Balance of the
Adjustable Rate Certificates then outstanding. If no such quotations can be
obtained, the rate will be LIBOR for the
prior Distribution
Date, or, in the
case of the first LIBOR Rate Adjustment Date, 2.06% per annum; provided,
however, if, under the priorities described
above, LIBOR for a Distribution Date
would be based on LIBOR for the previous Distribution Date for the third
consecutive Distribution Date, the Trustee shall,
after consultation
with the
Master Servicer, select an alternative comparable
index (over which the Trustee
has no control), used for determining
one-month Eurodollar lending rates that is
calculated and published (or otherwise made
available) by an independent party.
"LIBOR Business Day" means any day other
than (i) a Saturday or a Sunday or (ii)
a day on which banking institutions in the
city of London,
England are required
or authorized by law to be closed.
The establishment
of LIBOR by the
Trustee on any LIBOR Rate Adjustment
Date and the Master Servicer's subsequent
calculation of the
Pass-Through Rates
applicable to each of the Adjustable Rate
Certificates for the relevant Interest
Accrual Period, in the absence of manifest
error, will be final and binding.
21
<PAGE>
Promptly following
each LIBOR Rate
Adjustment
Date the Trustee
shall
supply the Master Servicer with the results of its
determination
of LIBOR on
such date. Furthermore, the Trustee will supply the
Pass-Through Rates on each
of the Adjustable Rate Certificates for the current and the immediately
preceding Interest Accrual Period via the
Trustee's internet website, which may
be obtained by telephoning the Trustee at
(800) 735-7777.
22
<PAGE>
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01. Conveyance of Mortgage Loans.
(a) (See Section 2.01(a) of the Standard Terms).
(b) (See Section 2.01(b) of the Standard Terms).
(c) The Company may, in lieu of delivering the original of the
documents
set forth in Section 2.01(b)(I)(ii), (iii), (iv) and (v) and Section
(b)(II)(ii), (iv), (vii), (ix) and (x) (or copies thereof as permitted by
Section 2.01(b)) to the Trustee or the
Custodian or
Custodians,
deliver such
documents to the Master Servicer, and the Master Servicer shall hold such
documents in trust for the use and benefit of all present and future
Certificateholders until such time as is
set forth in the next sentence. Within
thirty Business Days following the earlier
of (i) the receipt of the original of
all of the documents or instruments set
forth in Section 2.01(b)(I)(ii), (iii),
(iv) and (v) and Section (b)(II)(ii), (iv), (vii), (ix) and (x) (or copies
thereof as permitted by such Section) for any Mortgage
Loan and (ii) a
written
request by the Trustee to deliver those
documents with respect
to any or all of
the Mortgage Loans then being held by the
Master Servicer,
the Master
Servicer
shall deliver a complete set of such
documents to the
Trustee or the Custodian
or Custodians that are the duly appointed
agent or agents of the Trustee.
The parties hereto
agree that it is not intended that any Mortgage Loan
be included in the Trust Fund that is either (i) a
"High-Cost
Home Loan" as
defined in the New Jersey Home Ownership
Act effective November 27, 2003, (ii) a
"High-Cost Home Loan" as defined in the New
Mexico Home Loan Protection Act
effective January 1, 2004 or (iii) a "High
Cost Home Mortgage
Loan" as defined
in the Massachusetts Predatory Home Loan Practices Act effective
November 7,
2004 or (iv) a "High-Cost Home Loan" as defined in the
Indiana House
Enrolled
Act No. 1229, effective as of January 1,
2005.
(d) (See Section 2.01(d) of the Standard Terms).
(e) (See Section 2.01(e) of the Standard Terms).
(f) (See Section 2.01(f) of the Standard Terms).
(g) (See Section 2.01(g) of the Standard Terms).
(h) (See Section 2.01(h) of the Standard Terms).
(i) In connection with such assignment, and contemporaneously with the
delivery of this Agreement, the Company delivered or caused to be delivered
hereunder to the Trustee, the Yield
Maintenance Agreement (the delivery of which
shall evidence that the fixed payment
for the Yield
Maintenance Agreement
has
been paid and the Trustee and the Trust Fund shall have no further payment
obligation thereunder and that such fixed
payment has been authorized hereby).
23
<PAGE>
Section 2.02. Acceptance by Trustee.
(See Section 2.02 of
the Standard Terms)
Section 2.03. Representations, Warranties and
Covenants
of the Master Servicer and the Company.
(a) For representations, warranties and covenants of the Master
Servicer, see Section 2.03(a) of the
Standard Terms.
(b) The Company hereby
represents
and warrants to the
Trustee for the
benefit of Certificateholders that as of the Closing
Date (or, if otherwise
specified below, as of the date so
specified):
(i) No Mortgage
Loan is 30 or more
days Delinquent in
payment of principal
and interest
as of the Cut-off
Date and no Mortgage
Loan has been so
Delinquent more than
once in the 12-month
period prior to the
Cut-off
Date;
(ii) The information set forth in Exhibit One hereto
with respect to each
Mortgage Loan or the
Mortgage Loans, as the case may be, is true
and
correct in all material respects at the date or dates
respecting which
such information is furnished;
(iii) The Mortgage Loans are fully-amortizing (subject to interest only
periods, if
applicable),
fixed-rate mortgage
loans with level Monthly
Payments due, with respect to a majority of the Mortgage
Loans, on the
first day of each
month and terms to maturity at origination or
modification of not more than 30 years;
(iv) To the best of the
Company's knowledge if
a Mortgage Loan is secured by
a Mortgaged Property with a Loan-to-Value Ratio at origination in
excess
of 80%, such Mortgage Loan is the subject of a Primary Insurance Policy
that insures
(a) at least 35% of
the Stated Principal
Balance of the
Mortgage Loan at
origination
if the Loan-to-Value Ratio is between
100.00% and 95.01%,
(b) at least 30% of the Stated Principal Balance of
the Mortgage Loan at origination if the Loan-to-Value Ratio is between
95.00% and 90.01%, (c) at least 25% of such balance if the
Loan-to-Value
Ratio is between
90.00% and 85.01% and (d) at least 12% of such balance
if the Loan-to-Value
Ratio is between 85.00% and 80.01%. To the best of
the Company's
knowledge, each such
Primary Insurance Policy is in full
force and effect and the Trustee is entitled to the benefits
thereunder;
(v) The issuers of
the Primary Insurance
Policies are insurance
companies
whose claims-paying
abilities are
currently acceptable
to each Rating
Agency;
(vi) No more than 0.5% of
the Mortgage Loans by
aggregate Stated
Principal
Balance as of the
Cut-off Date are secured by Mortgaged Properties
located in any one zip code area in California and no more than 0.5% of
the Mortgage
Loans by aggregate Stated Principal Balance as of the
Cut-off Date are secured by Mortgaged Properties located in any one
zip
code area outside California;
(vii) The improvements upon the
Mortgaged Properties
are insured against loss
by fire and other
hazards as required by the Program Guide, including
flood insurance if
required under the National Flood Insurance Act of
1968, as amended. The
Mortgage requires the
Mortgagor to maintain such
casualty insurance at
the Mortgagor's
expense, and on the
Mortgagor's
failure to do so,
authorizes the holder
of the Mortgage to
obtain and
maintain such
insurance at the Mortgagor's expense and to seek
reimbursement therefor from the Mortgagor;
24
<PAGE>
(viii) Immediately prior to the assignment of the Mortgage Loans to the
Trustee, the Company
had good title to, and was the sole owner of, each
Mortgage Loan
free and clear of any pledge, lien, encumbrance or
security
interest (other
than rights to servicing and related
compensation) and such
assignment validly
transfers ownership of the
Mortgage Loans to the
Trustee free and clear of any pledge, lien,
encumbrance or security interest;
(ix) Approximately 64.97%
of the Mortgage Loans by aggregate Stated Principal
Balance as of the Cut-off Date were underwritten under a reduced loan
documentation program,
approximately
12.9% of the
Mortgage Loans by
aggregate Stated
Principal Balance as of the Cut-off Date were
underwritten under a no-stated income program, and approximately
4.4% of
the Mortgage
Loans by aggregate Stated Principal Balance as of the
Cut-off Date were underwritten under a no income/no asset
program;
(x) Except with
respect to
approximately 19.91%
of the Mortgage
Loans by
aggregate Stated Principal Balance as of the Cut-off Date, the
Mortgagor
represented in its loan application with respect to the related
Mortgage
Loan that the Mortgaged Property would be owner-occupied;
(xi) None of the Mortgage
Loans is a Buy-Down Mortgage Loan;
(xii) Each Mortgage Loan constitutes a qualified mortgage under Section
860G(a)(3)(A) of
the Code and Treasury Regulations Section
1.860G-2(a)(1),
(2), (4), (5) and (6), without reliance on the
provisions of Treasury
Regulation Section
1.860G-2(a)(3)
or Treasury
Regulation Section
1.860G-2(f)(2)
or any other
provision that would
allow a Mortgage Loan to be treated as a "qualified mortgage"
notwithstanding
its failure
to meet the requirements of Section
860G(a)(3)(A) of
the Code and Treasury Regulation
Section
1.860G-2(a)(1), (2), (4), (5) and (6);
(xiii) A policy of title insurance was effective as of the closing of each
Mortgage Loan and is
valid and binding
and remains in full force and
effect, unless the Mortgaged Properties are located in the State of
Iowa
and an attorney's
certificate
has been provided as described in the
Program Guide;
(xiv) None of the Mortgage Loans is a Cooperative Loan; with respect to a
Mortgage Loan that is a Cooperative Loan, the Cooperative Stock that
is
pledged as
security for the Mortgage Loan is held by a person
as a
tenant-stockholder (as
defined in Section 216 of the Code) in a
cooperative housing corporation (as defined in Section 216 of the
Code);
25
<PAGE>
(xv) With respect to each
Mortgage Loan originated under a "streamlined"
Mortgage Loan program
(through which no new or updated
appraisals of
Mortgaged Properties
are obtained in
connection with the
refinancing
thereof), the related
Seller has represented
that either (a) the value
of the related
Mortgaged Property as
of the date the Mortgage Loan was
originated was not
less than the appraised value of such property at the
time of origination of the refinanced Mortgage Loan or (b) the
Loan-to-Value Ratio of
the Mortgage Loan as of the date of origination
of the Mortgage Loan generally meets the Company's underwriting
guidelines;
(xvi) Interest on each
Mortgage Loan is calculated on the basis of
a 360-day
year consisting of twelve 30-day months;
(xvii) None of the Mortgage Loans contain in the related Mortgage File a
Destroyed Mortgage Note;
(xviii) None of the Mortgage Loans has been
made to an
International
Borrower,
and no such Mortgagor is a member of a foreign diplomatic mission with
diplomatic rank;
(xix) No Mortgage Loan provides for payments that
are subject to reduction by
withholding taxes
levied by any foreign
(non-United States)
sovereign
government; and
(xx) None of the Mortgage
Loans are Additional
Collateral Loans and
none of
the Mortgage Loans are Pledged Asset Loans.
It is understood and agreed that the
representations and warranties set forth in
this Section 2.03(b) shall survive delivery
of the respective
Mortgage Files to
the Trustee or any Custodian.
Upon discovery by any of the Company, the Master Servicer, the Trustee
or any Custodian of a breach of any of the
representations
and warranties set
forth in this Section 2.03(b) that materially and adversely affects the
interests of the Certificateholders in any Mortgage
Loan, the party discovering
such breach shall give prompt written
notice to the other parties (any Custodian
being so obligated under a Custodial
Agreement); provided,
however, that in the
event of a breach of the representation and warranty set forth in Section
2.03(b)(xii), the party discovering such breach shall give such notice
within
five days of discovery. Within 90 days of
its discovery or its receipt of notice
of breach, the Company shall either (i) cure such breach in all material
respects or (ii) purchase such Mortgage
Loan from the Trust Fund at the Purchase
Price and in the manner set forth in
Section 2.02;
provided that the Company
shall have the option to substitute a Qualified Substitute Mortgage Loan or
Loans for such Mortgage Loan if such substitution occurs within two years
following the Closing Date; provided that if the omission or
defect would cause
the Mortgage Loan to be other than a
"qualified mortgage"
as defined in Section
860G(a)(3) of the Code, any such cure or repurchase must occur within 90 days
from the date such breach was discovered. Any such substitution shall be
effected by the Company under the same terms and
conditions
as provided in
Section 2.04 for substitutions by Residential Funding. It is understood and
agreed that the obligation of the Company to cure
such breach or to so purchase
26
<PAGE>
or substitute for any Mortgage Loan as to which
such a breach has occurred and
is continuing shall constitute the sole
remedy respecting such
breach available
to the Certificateholders or the Trustee on behalf of the
Certificateholders.
Notwithstanding the foregoing, the Company shall not be required to cure
breaches or purchase or substitute for Mortgage Loans as provided in this
Section 2.03(b) if the substance of the breach of a
representation
set forth
above also constitutes fraud in the
origination of the Mortgage Loan.
Section 2.04. Representations and Warranties of Sellers.
(See Section 2.04
of
the Standard Terms)
Section 2.05. Execution and Authentication of Certificates/Issuance
of
Certificates Evidencing Interests in REMIC I Certificates.
The Trustee
acknowledges the assignment to it of the Mortgage Loans and
the delivery of the Mortgage Files to it, or any Custodian on its behalf,
subject to any exceptions noted, together
with the assignment to it of all other
assets included in the Trust Fund and/or
the applicable REMIC,
receipt of which
is hereby acknowledged. Concurrently with such delivery and in exchange
therefor, the Trustee, pursuant to the written request of
the Company executed
by an officer of the Company, has executed and caused to be
authenticated
and
delivered to or upon the order of the
Company the Class R-I Certificates in
authorized denominations which together with
the Uncertificated REMIC I Regular
Interests, evidence the beneficial interest
in REMIC I.
Section 2.06. Conveyance of Uncertificated REMIC I and REMIC II Regular
Interests; Acceptance by the Trustee.
The Company, as of the Closing Date, and concurrently with the
execution
and delivery hereof, does hereby assign without
recourse all the
right, title
and interest of the Company in and to the Uncertificated REMIC I Regular
Interests to the Trustee for the benefit of the Holders of each Class of
Certificates (other than the Class R-I
Certificates). The
Trustee
acknowledges
receipt of the Uncertificated REMIC I Regular Interests and declares that it
holds and will hold the same in trust for
the exclusive
use and benefit of
all
present and future Holders of each Class of
Certificates
(other than the
Class
R-I Certificates). The rights of the Holders of each Class of Certificates
(other than the Class R-I Certificates) to receive distributions from the
proceeds of REMIC II in respect of such
Classes, and all
ownership interests of
the Holders of such Classes in such
distributions, shall be as set forth in this
Agreement.
Section 2.07. Issuance of Certificates
Evidencing Interest in REMIC II.
The Trustee
acknowledges the
assignment
to it of the
Uncertificated
REMIC I Regular Interests and, concurrently
therewith and in
exchange therefor,
pursuant to the written request of the Company executed by an officer of the
Company, the Trustee has executed and
caused to be authenticated and delivered
to or upon the order of the Company, all
Classes of Certificates (other than the
Class R-I Certificates) in authorized denominations, which evidence the
beneficial interest in the entire REMIC
II.
Section 2.08. Purposes and Powers of the Trust. (See Section 2.08 of the
Standard Terms).
27
<PAGE>
ARTICLE III
ADMINISTRATION AND SERVICING
OF MORTGAGE LOANS
(SEE ARTICLE III OF THE STANDARD TERMS)
28
<PAGE>
ARTICLE IV
PAYMENTS TO CERTIFICATEHOLDERS
Section 4.01. Certificate Account. (See Section 4.01 of the Standard
Terms)
Section 4.02. Distributions.
(a) On each
Distribution Date the
Master Servicer on behalf of the
Trustee (or the Paying Agent appointed by the Trustee) shall
distribute to the
Certificate Insurer, the Insurance Premium,
to the Master Servicer, in the case
of a distribution pursuant to Section 4.02(a)(iii) below, to the Certificate
Insurer, in the case of a distribution
pursuant to Section
4.02(a)(xvi)
below,
the amount required to be distributed to the
Certificate
Insurer pursuant to
Section 4.02(a)(xvi) below, and to each
Certificateholder of
record on the next
preceding Record Date (other than as
provided in Section
9.01 of the
Standard
Terms respecting the final distribution)
either in immediately
available funds
(by wire transfer or otherwise)
to the account of such
Certificateholder
at a
bank or other entity having appropriate facilities therefor, if such
Certificateholder has so notified the Master
Servicer or the Paying
Agent, as
the case may be, or, if such Certificateholder has not so notified the Master
Servicer or the Paying Agent by the Record Date, by check mailed to such
Certificateholder at the address of such Holder
appearing in the Certificate
Register such Certificateholder's share (which share (A) with
respect to each
Class of Certificates (other than any Subclass of the
Class A-V
Certificates),
shall be based on the aggregate of the Percentage Interests represented by
Certificates of the applicable Class held by such Holder or (B)
with respect to
any Subclass of the Class A-V Certificates, shall be equal to the amount
(if
any) distributed pursuant to Section 4.02(a)(i) below to each Holder of a
Subclass thereof) of the following
amounts, in the following order of
priority
(subject to the provisions of Section
4.02(b), (c) and (e)
below), in each case
to the extent of the Available Distribution Amount (net of the Insurance
Premium) together with any Insured Payment pursuant to Section 12.02 of
this
Series Supplement:
(i) to the Senior
Certificates (other
than the Class A-P
Certificates), on a pro rata basis based on Accrued Certificate
Interest
payable on such
Certificates with
respect to such
Distribution Date,
Accrued Certificate
Interest on such Classes of Certificates (or
Subclasses, if any, with respect to the Class A-V Certificates) for
such
Distribution Date
(provided that for the purpose of this Section
4.02(a)(i) the
Available Funds Cap shall be 5.75%),
plus any Accrued
Certificate
Interest thereon
remaining
unpaid from any previous
Distribution Date
except as provided in the last paragraph of this
Section 4.02(a); and
(ii) (X) to the Class
A-P Certificates, the Class A-P
Principal
Distribution Amount
(applied to reduce the Certificate
Principal Balance of such Senior Certificates); and
(Y) to the Senior
Certificates (other than the Class A-P,
Class A-3 and Class A-V Certificates), in the priorities and
amounts set
forth in Section
4.02(b) and (c), the sum of the following (applied to
reduce the Certificate
Principal Balances of such Senior Certificates,
as applicable):
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<PAGE>
(A) the Senior Percentage for such Distribution Date times the sum of the
following:
(1) the principal
portion of each Monthly Payment due during the related Due
Period on each
Outstanding
Mortgage Loan (other than the related
Discount Fraction of
the principal portion of such payment with respect
to a Discount Mortgage Loan), whether or not received on or prior
to the
related Determination
Date, minus the principal portion of any Debt
Service Reduction
(other than the related Discount Fraction of the
principal portion of
such Debt Service
Reductions with respect to each
Discount Mortgage
Loan) which
together with other
Bankruptcy
Losses
exceeds the Bankruptcy Amount;
(2) the Stated
Principal Balance of any Mortgage Loan repurchased during the
preceding calendar
month (or deemed to have been so repurchased in
accordance with
Section 3.07(b) of the Standard Terms) pursuant to
Section 2.02,
2.03, 2.04 or 4.07 and the amount of any shortfall
deposited in the Custodial Account in connection with the
substitution
of a Deleted Mortgage
Loan pursuant to
Section 2.03 or 2.04 during the
preceding calendar
month (other than the related Discount Fraction of
such Stated Principal Balance or shortfall with respect to each
Discount
Mortgage Loan); and
(3) the principal
portion of all other unscheduled collections (other than
Principal Prepayments
in Full and
Curtailments and amounts received in
connection with a Cash Liquidation or REO Disposition of a Mortgage
Loan
described in
Section 4.02(a)(ii)(Y)(B) of this Series Supplement,
including without limitation Insurance Proceeds, Liquidation Proceeds
and REO Proceeds), including Subsequent Recoveries, received during the
preceding calendar
month (or deemed to have been so received in
accordance with
Section 3.07(b) of the
Standard Terms) to the extent
applied by the Master Servicer as recoveries of principal of the
related
Mortgage Loan pursuant to Section 3.14 of the Standard Terms (other
than
the related
Discount Fraction of the principal portion of such
unscheduled collections, with respect to each Discount Mortgage
Loan);
(B)
with respect to each Mortgage Loan for which a Cash Liquidation
or a REO Disposition
occurred during the preceding calendar
month (or was deemed
to have occurred
during such period in
accordance with
Section 3.07(b) of the
Standard Terms) and did
not result in any Excess Special Hazard Losses, Excess Fraud
Losses, Excess
Bankruptcy
Losses or
Extraordinary Losses,
an
amount equal to
the lesser of (a) the Senior Percentage for such
Distribution Date
times the Stated
Principal Balance of such
Mortgage Loan (other than the related Discount Fraction of such
Stated Principal Balance, with respect to each Discount
Mortgage
Loan) and (b) the Senior Accelerated Distribution Percentage
for
such Distribution Date times the related unscheduled
collections
(including without limitation Insurance Proceeds, Liquidation
Proceeds and REO
Proceeds) to the extent applied by the Master
Servicer as recoveries of principal of the related Mortgage
Loan
pursuant to Section
3.14 of the
Standard Terms (in each case
other than the portion
of such unscheduled
collections,
with
respect to a Discount
Mortgage Loan,
included in clause (C) of
the definition of Class A-P Principal Distribution Amount);
30
<PAGE>
(C)
the Senior
Accelerated
Distribution
Percentage
for such
Distribution
Date times
the aggregate of all Principal
Prepayments in Full received in the related Prepayment Period
and
Curtailments received in the preceding calendar month (other
than
the related Discount
Fraction of such
Principal Prepayments
in
Full and Curtailments,
with respect to each
Discount Mortgage
Loan);
(D)
any Excess Subordinate
Principal Amount for such Distribution
Date; and
(E)
any amounts described in subsection (ii)(Y), clauses (A), (B)
and
(C) of
this Section
4.02(a), as determined for any previous
Distribution Date,
which remain unpaid after application of
amounts previously distributed pursuant to this clause (E) to
the
extent that such amounts are not attributable to Realized
Losses
which have been allocated to the Subordinate Certificates;
minus
(F) the Capitalization Reimbursement Amount for such
Distribution Date,
other than the related
Discount Fraction
of
any portion of that
amount related to each Discount Mortgage
Loan, multiplied
by a fraction,
the numerator of which is the
Senior Principal
Distribution Amount,
without giving effect
to
this clause (F), and the denominator of which is the sum of the
principal distribution
amounts for all
Classes of
Certificates
other than the Class A-P Certificates, without giving effect to
any reductions for the Capitalization Reimbursement Amount;
(iii) if the
Certificate Principal
Balances of the
Subordinate
Certificates have not
been reduced to zero, to the Master Servicer or a
Sub-Servicer, by
remitting for deposit to the Custodial Account, to the
extent of and in reimbursement for any Advances or Sub-Servicer
Advances
previously made with
respect to any Mortgage Loan or REO Property which
remain unreimbursed in
whole or in part following the Cash Liquidation
or REO Disposition of such Mortgage Loan or REO Property, minus any
such
Advances that were made with respect to delinquencies that ultimately
constituted Excess
Special Hazard Losses,
Excess Fraud Losses,
Excess
Bankruptcy Losses or Extraordinary Losses;
(iv) to the Holders of
the Class M-1
Certificates, the
Accrued
Certificate Interest
thereon for such Distribution Date, plus any
Accrued Certificate
Interest thereon remaining unpaid from any previous
Distribution Date, except as provided below;
(v) to the Holders of the Class M-1 Certificates, an amount
equal
to (x) the Subordinate
Principal Distribution
Amount for such Class of
Certificates for such
Distribution
Date, minus (y) the amount of any
Class A-P Collection
Shortfalls for such Distribution Date or remaining
unpaid for all previous Distribution Dates, to the extent the amounts
available pursuant to clause (x) of Sections 4.02(a)(vii), (ix), (xi),
(xiii), (xiv)
and (xv) of this Series Supplement are insufficient
therefor, applied in
reduction of the Certificate Principal Balance of
the Class M-1 Certificates;
31
<PAGE>
(vi) to the Holders of
the Class M-2
Certificates, the
Accrued
Certificate Interest
thereon for such Distribution Date, plus any
Accrued Certificate
Interest thereon remaining unpaid from any previous
Distribution Date, except as provided below;
(vii) to the Holders
of the Class M-2
Certificates,
an amount
equal to (x) the
Subordinate Principal
Distribution
Amount for such
Class of Certificates for such Distribution Date, minus (y) the amount
of any Class A-P
Collection Shortfalls
for such Distribution
Date or
remaining unpaid for all previous Distribution Dates, to the extent
the
amounts available pursuant to clause (x) of Sections 4.02(a) (ix),
(xi),
(xiii), (xiv) and (xv) are insufficient therefor, applied in reduction
of the Certificate Principal Balance of the Class M-2
Certificates;
(viii) to the Holders of the Class M-3 Certificates, the Accrued
Certificate Interest
thereon for such Distribution Date, plus any
Accrued Certificate
Interest thereon remaining unpaid from any previous
Distribution Date, except as provided below;
(ix) to the Holders
of the Class M-3 Certificates, an amount
equal to (x) the
Subordinate Principal
Distribution
Amount for such
Class of Certificates for such Distribution Date minus (y) the
amount of
any Class A-P Collection Shortfalls for such Distribution Date or
remaining unpaid for all previous Distribution Dates, to the extent
the
amounts available
pursuant to clause (x) of Sections 4.02(a)(xi),
(xiii), (xiv) and (xv) are insufficient therefor, applied in reduction
of the Certificate Principal Balance of the Class M-3
Certificates;
(x) to the Holders of
the Class B-1
Certificates, the
Accrued
Certificate Interest
thereon for such Distribution Date, plus any
Accrued Certificate
Interest thereon remaining unpaid from any previous
Distribution Date, except as provided below;
(xi)
to the Holders
of the Class B-1 Certificates, an amount
equal to (x) the
Subordinate Principal
Distribution
Amount for such
Class of Certificates for such Distribution Date minus (y) the
amount of
any Class A-P Collection Shortfalls for such Distribution Date or
remaining unpaid for all previous Distribution Dates, to the extent
the
amounts available
pursuant to clause (x) of Sections 4.02(a)(xiii),
(xiv) and (xv) are
insufficient therefor,
applied in reduction
of the
Certificate Principal Balance of the Class B-1 Certificates;
(xii) to the Holders of the Class B-2 Certificates, the Accrued
Certificate Interest
thereon for such Distribution Date, plus any
Accrued Certificate
Interest thereon remaining unpaid from any previous
Distribution Date, except as provided below;
(xiii) to the Holders
of the Class B-2
Certificates, an
amount
equal to (x) the
Subordinate Principal
Distribution
Amount for such
Class of Certificates for such Distribution Date minus (y) the
amount of
any Class A-P Collection Shortfalls for such Distribution Date or
remaining unpaid for all previous Distribution Dates, to the extent
the
amounts available
pursuant to clause (x)
of Sections
4.02(a)(xiv) and
(xv) are insufficient therefor, applied in reduction of the
Certificate
Principal Balance of the Class B-2 Certificates;
32
<PAGE>
(xiv) to the Holders
of the Class B-3
Certificates,
an amount
equal to (x) the Accrued Certificate Interest thereon for such
Distribution Date,
plus any Accrued Certificate Interest thereon
remaining unpaid from any previous Distribution Date, except as
provided
below, minus (y) the
amount of any Class A-P Collection Shortfalls for
such Distribution Date or remaining unpaid for all previous
Distribution
Dates, to the extent
the amounts
available pursuant to clause (x) of
Section 4.02(a)(xv) are insufficient therefor;
(xv) to the Holders
of the Class B-3 Certificates, an amount
equal to (x) the
Subordinate Principal
Distribution
Amount for such
Class of Certificates for such Distribution Date minus (y) the
amount of
any Class A-P Collection Shortfalls for such Distribution Date or
remaining unpaid
for all previous Distribution Dates applied in
reduction of
the Certificate Principal Balance of the Class B-3
Certificates;
(xvi) only with respect to the Available Distribution Amount, to
the
Certificate Insurer, as subrogee of the Insured Certificateholders,
an amount necessary to reimburse the Certificate Insurer for claims
paid
under the Certificate
Policy, to the extent of Cumulative Insurance
Payments on the Insured Certificates;
(xvii) to the Senior Certificates, on a pro rata basis in
accordance with
their respective outstanding Certificate Principal
Balances, the portion,
if any, of the
Available Distribution Amount
remaining after the
foregoing distributions, together with Insured
Payments pursuant
to Section 12.02 herein, applied to reduce the
Certificate Principal
Balances of such Senior Certificates, but in no
event more than the aggregate of the outstanding Certificate Principal
Balances of each such Class of Senior Certificates, and thereafter, to
each Class of Subordinate Certificates then outstanding
beginning with
such Class with the
Highest Priority, any portion of the Available
Distribution Amount
remaining after the Senior Certificates have been
retired, applied to
reduce the Certificate
Principal Balance of each
such Class of
Subordinate
Certificates, but in
no event more than the
outstanding
Certificate Principal
Balance of each such Class of
Subordinate Certificates; and
(xviii)to the Class R-I Certificates, the balance, if any, of
the
Available Distribution
Amount.
Notwithstanding the foregoing, on any Distribution Date, with
respect to
the Class of Subordinate Certificates
outstanding on such Distribution Date with
the Lowest Priority, or in the event the
Subordinate
Certificates are no longer
outstanding, the Senior Certificates, Accrued Certificate Interest thereon
remaining unpaid from any previous
Distribution Date will
be distributable only
to the extent that (1) a shortfall in the amounts available to pay Accrued
Certificate Interest on any Class of
Certificates results from an interest rate
reduction in connection with a Servicing Modification, or (2) such unpaid
Accrued Certificate Interest was
attributable to interest shortfalls relating to
the failure of the Master Servicer to make any required Advance, or the
33
<PAGE>
determination by the Master Servicer that any proposed Advance would be a
Nonrecoverable Advance with respect to the related
Mortgage Loan where such
Mortgage Loan has not yet been the subject of a Cash Liquidation or REO
Disposition or the related Liquidation Proceeds, Insurance Proceeds and REO
Proceeds have not yet been distributed to
the Certificateholders.
(b) Distributions
of principal on the Senior Certificates on each
Distribution Date will be made as
follows:
(i) an amount equal Class A-P Principal Distribution Amount shall be
distributed to
the Class A-P Certificates, until the Certificate
Principal Balance thereof has been reduced to zero;
(ii) the Senior Principal Distribution Amount shall be distributed
in
the following manner and priority:
(A) first, to the
Lockout Certificates,
until the Certificate
Principal Balance of
the Lockout
Certificates has been
reduced to
zero, an amount equal to the Lockout Percentage of the Lockout
Certificates' pro rata
share (based on the Certificate Principal
Balance thereof
relative to the aggregate Certificate Principal
Balance of all classes
of Certificates (other than the Class A-P
Certificates)) of the
aggregate of the collections described in
clauses (A),
(B), (C), (D) and (E) (net of amounts set forth in
clause (F)) of Section
4.02(a)(ii)(Y),
without application
of the
Senior Percentage or the Senior Accelerated Distribution Percentage;
provided, however,
that if the aggregate of the amounts set forth in
clauses (A),
(B), (C), (D) and (E) (net of amounts set forth in
clause (F)) of Section 4.02(a)(ii)(Y) is more than the balance of
the
Available Distribution
Amount remaining after the Senior Interest
Distribution Amount
and the Class A-P Principal Distribution Amount
have been distributed,
the amount paid to the
Lockout
Certificates
pursuant to this Section 4.02(A)(ii)(A) shall be reduced by an
amount
equal to the Lockout
Certificates'
pro rata share (based on the
Certificate Principal Balance of the Lockout Certificates relative
to
the aggregate
Certificate
Principal
Balance
of the Senior
Certificates (other
than the Class A-P Certificates)) of such
difference;
(B) second, any
remaining amount
concurrently to the Class R-I
Certificates and Class
R-II Certificates, on a pro rata basis in
accordance with their
respective
Certificate
Principal Balances,
until the Certificate Principal Balances thereof have been reduced
to
zero;
(C) third, any
remaining amount
concurrently to the
Class A-1
Certificates, Class A-3 Certificates and Class A-6 Certificates, on
a
pro rata basis
in accordance with their respective Certificate
Principal Balances,
until the Certificate Principal Balances thereof
have been reduced to zero;
(D) fourth, any
remaining amount to
the Class A-4 Certificates
until the Certificate
Principal Balance
thereof has been reduced to
zero; and
34
<PAGE>
(E) fifth, any
remaining amount to
the Class A-5
Certificates
until the Certificate
Principal Balance
thereof has been reduced to
zero.
(c) Notwithstanding
Section 4.02(b), on or after the Credit
Support
Depletion Date, an amount equal to the Class A-P
Distribution
Amount will be
distributed to the Class A-P Certificates and then the Senior Principal
Distribution Amount will be distributed to the remaining
Senior Certificates
(other than the Class A-P Certificates and
the Class A-V
Certificates) pro rata
in accordance with their respective
outstanding Certificate Principal Balances.
(d) After the
reduction of the
Certificate Principal
Balances of the
Senior Certificates (other than the Class
A-P Certificates) to zero but prior to
the Credit Support Depletion Date, the
Senior Certificates (other than the Class
A-P Certificates) will be entitled to no further
distributions
of principal
thereon and the Available Distribution Amount will be
distributed solely to the
holders of the Class A-P, Class A-V and
Subordinate
Certificates, in each
case
as described herein.
(e) In addition to the
foregoing distributions, with respect to any
Subsequent Recoveries, the Master Servicer shall deposit such funds into
the
Custodial Account pursuant to Section 3.07(b)(iii) of the Standard
Terms. If,
after taking into account such Subsequent
Recoveries,
the amount of a
Realized
Loss is reduced, the amount of such Subsequent Recoveries will be applied to
increase the Certificate Principal Balance of the Class of Subordinate
Certificates with a Certificate Principal Balance greater than zero with the
highest payment priority to which Realized
Losses, other than
Excess Bankruptcy
Losses, Excess Fraud Losses, Excess Special Hazard Losses and Extraordinary
Losses, have been allocated, but not by more than the amount of
Realized Losses
previously allocated to that Class of
Certificates pursuant to Section 4.05. The
amount of any remaining Subsequent Recoveries will be applied to
increase from
zero the Certificate Principal Balance of the Class of
Certificates
with the
next lower payment priority, up to the amount of Realized
Losses previously
allocated to that Class of Certificates
pursuant to Section
4.05. Any remaining
Subsequent Recoveries will in turn be applied to increase from zero the
Certificate Principal Balance of the Class of
Certificates with the next lower
payment priority up to the amount of
Realized Losses
previously
allocated to
that Class of Certificates pursuant to Section 4.05, and so
on. Holders of such
Certificates will not be entitled to any payment in respect of Accrued
Certificate Interest on the amount of such
increases for any
Interest Accrual
Period preceding the Interest
Accrual Period that
relates to the
Distribution
Date on which such increase occurs. Any such increases shall be
applied to the
Certificate Principal Balance of each Certificate of such Class in
accordance
with its respective Percentage
Interest.
(f) On each
Distribution Date, the
Yield Maintenance
Payment will be
distributed to the Class A-1 Certificates, on a pro rata basis in
accordance
with their respective Percentage
Interests.
(g) Each distribution with respect to a Book-Entry Certificate shall be
paid to the Depository, as Holder thereof, and the Depository shall be solely
responsible for crediting the amount of
such distribution to the accounts of its
Depository Participants in accordance with its normal procedures. Each
Depository Participant shall be responsible
for disbursing such distribution to
the Certificate Owners that it represents
and to each indirect
participating
brokerage firm (a "brokerage firm") for which it acts as agent.
Each brokerage
firm shall be responsible for disbursing
funds to the Certificate Owners that it
represents. None of the Trustee, the
Certificate Registrar,
the Company or the
Master Servicer shall have any
responsibility therefor.
35
<PAGE>
(h) Except as otherwise provided in Section 9.01 of the
Standard Terms,
if the Master Servicer anticipates that a
final distribution with respect to any
Class of Certificates will be made on the next
Distribution
Date, the Master
Servicer shall, no later than the
Determination Date in
the month of such final
distribution, notify the Trustee and the Trustee
shall, no later than two (2)
Business Days after such Determination
Date, mail on such date to each Holder of
such Class of Certificates a notice to the effect that: (i) the Trustee
anticipates that the final distribution with respect to such Class of
Certificates will be made on such Distribution Date but only upon
presentation
and surrender of such Certificates at the office of the
Trustee or as otherwise
specified therein, and (ii) no interest shall accrue
on such Certificates from
and after the end of the related Interest Accrual Period. In the event that
Certificateholders required to surrender their
Certificates pursuant to Section
9.01(c) of the Standard Terms do not surrender their Certificates for final
cancellation, the Trustee shall cause funds
distributable with
respect to such
Certificates to be withdrawn from the Certificate Account and credited to a
separate escrow account for the benefit of
such
Certificateholders as
provided
in Section 9.01(d) of the Standard
Terms.
Section 4.03. Statements to Certificateholders; Statements to the
Rating
Agencies; Exchange
Act Reporting. (See Section 4.03 of the
Standard Terms)
Section 4.04.
Distribution of
Reports to the Trustee and the Company;
Advances by the
Master Servicer. (See Section 4.04 of the
Standard Terms)
Section 4.05. Allocation of Realized Losses.
Prior to each Distribution Date, the Master Servicer shall
determine the
total amount of Realized Losses, if any, that resulted from any Cash
Liquidation, Servicing Modification, Debt
Service Reduction, Deficient Valuation
or REO Disposition that occurred during the
related Prepayment Period or, in the
case of a Servicing Modification that constitutes a reduction of the
interest
rate on a Mortgage Loan, the amount of the
reduction in the interest portion of
the Monthly Payment due during the related Due Period. The amount of each
Realized Loss shall be evidenced by an Officers' Certificate. All Realized
Losses, other than Excess Special Hazard
Losses, Extraordinary
Losses, Excess
Bankruptcy Losses or Excess Fraud Losses,
shall be allocated as follows: first,
to the Class B-3 Certificates, until the Certificate Principal Balance thereof
has been reduced to zero; second, to the Class B-2 Certificates until the
Certificate Principal Balance thereof has been reduced
to zero; third, to
the
Class B-1 Certificates until the
Certificate Principal
Balance thereof has been
reduced to zero; fourth, to the Class M-3 Certificates until the Certificate
Principal Balance thereof has been reduced to zero; fifth, to the Class M-2
Certificates until the Certificate
Principal Balance thereof has been reduced to
zero; sixth, to the Class M-1 Certificates until the Certificate Principal
Balance thereof has been reduced to zero;
and, thereafter, if
any such Realized
Loss is on a Discount Mortgage Loan, to the Class A-P
Certificates in an amount
equal to the related Discount Fraction of the principal portion
of the Realized
Loss until the Certificate Principal Balance of the Class A-P
Certificates has
36
<PAGE>
been reduced to zero, and the remainder of
such Realized Losses
on the Discount
Mortgage Loans and the entire amount of
such Realized Losses on the Non-Discount
Mortgage Loans shall be allocated among all
Senior Certificates
(other than the
Class A-P Certificates) on a pro rata basis, as described
below. The principal
portion of any Excess Special Hazard
Losses, Excess
Bankruptcy Losses,
Excess
Fraud Losses and Extraordinary Losses on the Discount
Mortgage Loans shall
be
allocated to the Class A-P Certificates in an amount equal to the related
Discount Fraction thereof and the remainder of the
principal portion and the
entire interest portion of such Realized Losses on
the Discount Mortgage
Loans
and the entire principal and interest portion of such Realized Losses on
Non-Discount Mortgage Loans will be allocated among the Senior Certificates
(other than the Class A-P Certificates) and
the Subordinate
Certificates, on a
pro rata basis, as described below.
As used herein, an
allocation of a
Realized Loss on a "pro rata basis"
among two or more specified Classes of
Certificates means an allocation on a pro
rata basis, among the various Classes so specified, to each such Class of
Certificates, on the basis of their then outstanding
