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EXECUTION COPY
SALE AND SERVICING AGREEMENT
Dated as of September 14, 2006
among
INDYMAC BANK, F.S.B.
(Seller and Servicer)
INDYMAC MBS, INC.
(Depositor)
INDYMAC HOME EQUITY MORTGAGE LOAN ASSET-BACKED TRUST,
SERIES 2006-H3
(Trust)
and
DEUTSCHE BANK NATIONAL TRUST COMPANY
(Indenture Trustee)
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ARTICLE I.
DEFINITIONS
Section 1.01
Definitions............................................................................
2
Section 1.02 Other Definitional
Provisions..........................................................
33
Section 1.03 Interest
Calculations..................................................................
34
ARTICLE II.
CONVEYANCE OF THE MORTGAGE LOANS
Section 2.01 Conveyance of the
Mortgage
Loans.......................................................
34
Section 2.02 Acceptance by
Indenture Trustee, Review of
Documentation............................... 40
Section 2.03 Representations and
Warranties Regarding the Seller, the Depositor and the Servicer....
41
Section 2.04 Representations and
Warranties of the Seller Regarding the Mortgage Loans..............
44
Section 2.05 Substitution of
Mortgage
Loans.........................................................
51
Section 2.06
Tax
Treatment..........................................................................
53
Section 2.07 Representations,
Warranties and Covenants of the
Depositor............................. 53
ARTICLE III.
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 3.01 The
Servicer...........................................................................
55
Section 3.02 Collection of Certain
Mortgage Loan Payments...........................................
59
Section 3.03 Withdrawals from the
Collection Account................................................
61
Section 3.04 Maintenance of Hazard
Insurance; Property Protection Expenses..........................
62
Section 3.05 Maintenance of
Mortgage Impairment Insurance
Policy.................................... 62
Section 3.06 Maintenance of
Fidelity Bond and Errors and Omissions
Insurance........................ 63
Section 3.07 Management of and
Realization upon Defaulted Mortgage
Loans............................ 63
Section 3.08 Indenture Trustee to
Cooperate.........................................................
65
Section 3.09 Servicing
Compensation; Payment of Certain Expenses by
Servicer........................ 66
Section 3.10 Annual Statement as to
Compliance......................................................
67
Section 3.11 Assessment of
Compliance and Attestation
Report........................................ 67
Section 3.12 Access to Certain
Documentation and Information Regarding the Mortgage
Loans...........
69
Section 3.13 Early Termination
Fees.................................................................
69
Section 3.14 Commission
Reporting...................................................................
70
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Section 3.15 Reports of
Foreclosures and Abandonments of Mortgaged Properties, Returns
Relating
to Mortgage Interest Received from Individuals and Returns Relating
to
Cancellation of
Indebtedness...........................................................
73
Section 3.16 Assumption
Agreements..................................................................
74
Section 3.17 Payment of Taxes,
Insurance and Other
Charges.......................................... 74
Section 3.18 Servicing
Advances.....................................................................
74
Section 3.19 Allocation of
Charge-Off
Amounts.......................................................
75
ARTICLE IV.
INSURER
Section 4.01 Claims upon the
Policy.................................................................
75
Section 4.02 Effect of Payments by
the Insurer; Subrogation.........................................
76
ARTICLE V.
PRIORITY OF DISTRIBUTIONS; STATEMENTS TO CLASS A NOTEHOLDERS;
RIGHTS OF CLASS A NOTEHOLDERS
Section 5.01
Distributions..........................................................................
77
Section 5.02 Calculation of the
Note
Rate...........................................................
80
Section 5.03 Servicing Certificate
and Statement to
Noteholders.................................... 80
Section 5.04 Other
Receipts.........................................................................
81
Section 5.05 Payment
Account........................................................................
82
Section 5.06 Reserve
Account........................................................................
82
Section 5.07 The Certificate
Account................................................................
83
Section 5.08 Rapid Amortization
Event...............................................................
83
Section 5.09 Indenture Trustee Fees
and Indemnification Expenses....................................
86
ARTICLE VI.
THE SELLER, THE SERVICER AND THE DEPOSITOR
Section 6.01 Liability of the
Seller, the Servicer and the
Depositor................................ 86
Section 6.02 Merger or
Consolidation of, or Assumption of the Obligations of, the Seller,
the
Servicer or the
Depositor..............................................................
86
Section 6.03 Limitation on
Liability of the Seller, the Depositor, the Servicer and
Others..........
86
Section 6.04 Servicer Not to
Resign.................................................................
87
Section 6.05 Delegation of
Duties...................................................................
88
Section 6.06 Indemnification of the
Trust by the Servicer...........................................
88
ARTICLE VII.
SERVICER TERMINATION
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Section 7.01 Events of Servicer
Termination.........................................................
88
Section 7.02 Indenture Trustee to
Act; Appointment of Successor.....................................
91
Section 7.03 Waiver of
Defaults.....................................................................
92
Section 7.04 Notification to
Noteholders............................................................
92
ARTICLE VIII.
TERMINATION
Section 8.01
Termination............................................................................
93
ARTICLE IX.
THE INDENTURE TRUSTEE
Section 9.01 Indenture Trustee Not
Liable for the Notes or Mortgage Loans...........................
94
Section 9.02 Indenture Trustee May
Own Notes........................................................
95
Section 9.03 Indenture Trustee's
Fees and Expenses..................................................
95
ARTICLE X.
MISCELLANEOUS PROVISIONS
Section 10.01
Amendment..............................................................................
96
Section 10.02
Recordation of
Agreement...............................................................
97
Section 10.03
Duration of
Agreement..................................................................
97
Section 10.04
Governing
Law..........................................................................
98
Section 10.05
Notices................................................................................
98
Section 10.06
Severability of
Provisions.............................................................
98
Section 10.07 No
Partnership.........................................................................
98
Section 10.08
Counterparts...........................................................................
98
Section 10.09
Successors and
Assigns.................................................................
98
Section 10.10
Headings...............................................................................
99
Section 10.11
Reports to Rating
Agencies.............................................................
99
Section 10.12
Inconsistencies Among Transaction
Documents............................................ 99
Section 10.13
Rights of the Insurer to Exercise Rights of Class A
Noteholders........................ 99
Section 10.14
Enforceability Rights of the Indenture
Trustee......................................... 99
Section 10.15
Matters Regarding the
Trust............................................................
100
Section 10.16
Reports to
Insurer.....................................................................
100
Section 10.17
Matters Regarding the Indenture
Trustee................................................
100
Section 10.18
Limitation of Owner Trustee
Liability..................................................
100
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EXHIBITS
EXHIBIT A
Mortgage Loan Schedule
EXHIBIT B List
of Servicing Officers
EXHIBIT C Form
of Annual Officer's Certificate
EXHIBIT D Form
of Advance Notice
EXHIBIT E Form
of Mortgage Note
EXHIBIT F Form
of Mortgage
EXHIBIT G
Specimen of the Policy
EXHIBIT H Form
of Lost Note Affidavit
EXHIBIT I Form
of Request for Release
EXHIBIT J Form
of Initial Certification
EXHIBIT K Form of Interim Certification
EXHIBIT L Form
of Final Certification
EXHIBIT M Form
of Certification to be Provided by the Depositor with Form 10-K
EXHIBIT N
Indenture Trustee's Officer's Certificate
EXHIBIT O
Originators' Appraisal Matrix
EXHIBIT P
Servicing Criteria
EXHIBIT Q Form
of Statement to Noteholders
EXHIBIT R Form
10-D, Form 8-K and Form 10-K Reporting Responsibility
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This Sale
and Servicing Agreement (the "Agreement") is entered into
effective as of September 14, 2006, among INDYMAC BANK, F.S.B., a
federal
savings bank, as seller (in such capacity, the "Seller"), and as
servicer (in
such capacity, the "Servicer"), INDYMAC MBS, INC., a Delaware
corporation, as
the depositor (the "Depositor"), INDYMAC HOME EQUITY MORTGAGE LOAN
ASSET-BACKED
TRUST, SERIES 2006-H3, a Delaware statutory trust (the "Trust"),
and DEUTSCHE
BANK NATIONAL TRUST COMPANY, a national banking association, as
Indenture
Trustee on behalf of the Class A Noteholders (in such capacity, the
"Indenture
Trustee").
PRELIMINARY STATEMENT
In
consideration of the mutual agreements herein contained, the
parties
hereto hereby agree as follows:
The
following table sets forth the Class Designation, Note Rate,
Initial
Note Principal Amount and minimum denomination for the Notes of
each Class
issued pursuant to the Indenture.
Class
Initial Note
Minimum
Designation Note
Rate Principal
Amount
Denominations
-----------
---------
----------------
-------------
Class A
(1)
$ 496,786,000
$100,000
Class M1 (2)
$ 2,509,000
$100,000
Class M2 (3)
$ 2,509,000
$100,000
----------
(1) The Note
Rate with respect to any Payment Date (and the related Interest
Accrual
Period) for the Class A Notes is the per annum rate equal to
the
lesser of
(i) LIBOR plus 0.17% and (ii) the Maximum Rate for such Payment
Date.
(2) The Note
Rate with respect to any Payment Date (and the related Interest
Accrual
Period) for the Class M1 Notes is the per annum rate equal to
the
lesser of
(i) LIBOR plus 3.00% and (ii) the Maximum Rate for such Payment
Date.
(3) The Note
Rate with respect to any Payment Date (and the related Interest
Accrual
Period) for the Class M2 Notes is the per annum rate equal to
the
lesser of
(i) LIBOR plus 3.00% and (ii) the Maximum Rate for such Payment
Date.
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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.
Accelerated Principal Payment: With respect to any Payment Date a
payment
received as a payment of principal by the Noteholders of any Class
of Notes, for
the purpose of increasing the Overcollateralization Amount, and to
be paid from
the Excess Cashflow for such Class, and equal to for any Payment
Date the lesser
of (x) the amount of the Excess Cashflow for such Class and (y)
the
Overcollateralization Deficiency Amount for such Payment Date
(after giving
effect to any Class of Notes senior to such Class).
Accepted
Servicing Practices: The Servicer's normal servicing practices
in
servicing and administering revolving home equity line of credit
mortgage loans
for its own account, which in general will conform to the mortgage
servicing
practices of prudent mortgage lending institutions which service
for their own
account, mortgage loans of the same type as the Mortgage Loans in
the
jurisdictions in which the related Mortgaged Properties are
located.
Accountant's Opinion: A written opinion of the Servicer's
internal
accountants, delivered and acceptable to the Indenture Trustee.
Accrual
Period: With respect to each Mortgage Loan and Due Date, the
period from and including the preceding Due Date to but not
including such Due
Date.
Additional
Balance: As to any Mortgage Loan and day, the aggregate amount
of all Draws conveyed to the Trust pursuant to Section 2.01(a).
Additional
Balance Advance Amount: As to any Payment Date during the
Managed Amortization Period, the excess, if any, of (i) the
aggregate principal
amount of all Additional Balances created during the Collection
Period relating
to such Payment Date over (ii) the Principal Collections in respect
of the
Mortgage Loans received during the Collection Period relating to
such Payment
Date.
Administration Agreement: The Administration Agreement dated as
of
September 29, 2006 among the Issuer, the Administrator, the Owner
Trustee and
the Depositor, as may be amended or supplemented from time to
time.
Advance
Notice: A notice to the Class L Certificateholder substantially
in
the form of Exhibit D.
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Affiliate:
With respect to any Person, any other Person controlling,
controlled by or under common control with such Person. For
purposes of this
definition, "control" means the power to direct the management and
policies of a
Person, directly or indirectly, whether through ownership of voting
securities,
by contract or otherwise and "controlling" and "controlled" shall
have meanings
correlative to the foregoing.
Aggregate
Draw Amount - As of any day during the Managed Amortization
Period, the sum of (x) the Floating Allocation Percentage of the
aggregate
principal balance of all Draws on such day and (y) the amount of
any Daily Draw
Deficits remaining from the preceding day of the related Collection
Period (if
such preceding day is not within the related Collection Period, the
Daily Draw
Deficit from the preceding day shall be zero).
Agreement:
This Sale and Servicing Agreement and all amendments hereof and
supplements hereto.
Anniversary Year: Means the one-year period beginning on the
Closing Date
and ending on the first anniversary thereof, and each subsequent
one-year period
beginning on the day after the end of the preceding Anniversary
Year and ending
on the next succeeding anniversary of the Closing Date.
Appraised
Value: The appraised value of a Mortgaged Property based upon
the appraisal made by or for the originator, in compliance with the
Servicer's
underwriting criteria (which criteria may permit an electronic
appraisal or
other abbreviated appraisal process), in each case at the time of
the
origination of the related Mortgage Loan or, if new appraisals are
obtained, the
appraised value based upon the most recent appraisal.
Assessment
of Compliance: As defined in Section 3.11.
Assignment
of Mortgage: With respect to any Mortgage, an assignment,
notice of transfer or equivalent instrument, in recordable form,
sufficient
under the laws of the jurisdiction in which the related Mortgaged
Property is
located to effect the sale of the Mortgage to the Indenture
Trustee, on behalf
of the Trust, which assignment, notice of transfer or equivalent
instrument may
be in the form of one or more blanket assignments covering the
Mortgage Loans
secured by Mortgaged Properties located in the same
jurisdiction.
Available
Funds: With respect to any Payment Date, the sum of (i) the
Principal Collections for the related Collection Period, (ii) the
Interest
Collections for the related Collection Period, (iii) Early
Termination Fees
recovered from any Mortgagor during the related Collection Period
and (iv) any
other amounts remitted by the Servicer with respect to that Payment
Date on the
Servicer Remittance Date pursuant to Section 3.03(ii).
Avoided
Payment: As defined in the Policy.
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Book-Entry
Note: Any Class A Note registered in the name of the Depository
or its nominee, ownership of a security entitlement with respect to
which is
reflected on the books of the Depository or on the books of a
Person maintaining
an account with such Depository (directly or as an indirect
participant in
accordance with the rules of such Depository).
Business
Day: Any day other than (i) a Saturday or Sunday, or (ii) a day
on which banking institutions in the States of New York or
California or the
city in which the Corporate Trust Office or the office of the
Insurer is located
are required or authorized by law to be closed.
Certificate Account: The account maintained by the Administrator
pursuant
to Section 5.07
Certificate Principal Balance: The Class Principal Balance of the
Class B
Certificates, the Class Principal Balance of the Class L
Certificates or the
Class Principal Balance of the Class R Certificates, as
applicable.
Certificate Register and Certificate Registrar: The register
which
provides for the registration of the Certificates and the
registration of
transfers of Certificates, which shall be maintained by the
Indenture Trustee,
as Certificate Registrar.
Certificateholders: The holders of the Class B Certificates, the
Class L
Certificates or the Class R Certificates.
Certificates: The Class B Certificates, Class L Certificates and
Class R
Certificates.
Charge-Off
Amount: With respect to any Charged-Off HELOC under clause (i)
of the definition thereof, the amount of the Principal Balance that
has been
written down (including, for any Mortgage Loan that became a
Liquidated Mortgage
Loan during the related Collection Period, any unrecovered portion
of its
Principal Balance that is written down during that Collection
Period after
giving effect to the Net Liquidation Proceeds applied in reduction
of the
Principal Balance of such Mortgage Loan) and with respect to any
Charged-Off
HELOC that became a Charged-Off HELOC during the related Collection
Period under
clause (ii) of the definition thereof, the entire Principal Balance
of such
Mortgage Loan minus the Appraised Value of the related Mortgaged
Property
reduced by the principal balance of any senior mortgage loan also
secured by
such Mortgaged Property.
Charged-Off HELOC: Means (i) a Mortgage Loan with a Principal
Balance that
has been written down on the Servicer's servicing system in
accordance with its
policies and procedures (including, any Mortgage Loan that became a
Liquidated
Mortgage Loan during the related Collection Period, and had an
unrecovered
portion of its related Principal Balance written down during that
Collection
Period) and (ii) any Mortgage Loan that is more than 180 days past
due.
Class: All
Notes and Certificates bearing the same class designation.
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Class A
Note: Any Note designated as a "Class A Asset-Backed Note" on
the
face thereof, substantially in the form of Exhibit A-1 to the
Indenture.
Class A
Noteholder: The owner of the Class A Notes, as shown on the
Note
Register.
Class A
Principal Payment Amount: With respect to each Payment Date,
(a)
prior to the Stepdown Date or if a Trigger Event is in effect or a
Rapid
Amortization Trigger Event has occurred, the Principal Payment
Amount for such
Payment Date and (b) on or after the Stepdown Date unless a Trigger
Event is in
effect or a Rapid Amortization Trigger Event has occurred, the
lesser of (A) the
excess of (i) the Note Principal Amount of the Class A Notes
immediately prior
to the applicable Payment Date over (ii) the Class A Target Amount
for such
Payment Date and (B) the Principal Payment Amount for such Payment
Date.
Class A
Target Amount: For each Payment Date, the lesser of (a) the
product of (i) 94.80% and (ii) the Invested Amount for such Payment
Date and (b)
the excess if any of (i) the Invested Amount for such Payment Date
over (ii)
0.50% of the Cut-off Date Pool Balance.
Class B
Certificate: A Certificate, substantially in the form of
Exhibit
A-1 to the Trust Agreement.
Class L
Certificate: A Certificate, substantially in the form of
Exhibit
A-2 to the Trust Agreement.
Class L
Interest: The beneficial ownership interest in the assets of
the
Trust not represented by the Class B Certificate and the Class R
Certificate and
is evidenced by the Class L Certificate.
Class L
Interest Collections: With respect to any Payment Date and the
Class L Certificate, an amount equal to the Interest Collections
allocable to
such Payment Date times the Class L Percentage.
Class L
Percentage: For any Payment Date, 100% minus the Floating
Allocation Percentage for such Payment Date.
Class R
Certificate: A Residual Certificate, substantially in the form
of
Exhibit A-3 to the Trust Agreement.
Class M1
Note: Any Note designated as a "Class M1 Asset-Backed Note" on
the face thereof, substantially in the form of Exhibit A-2 to the
Indenture.
Class M1
Principal Payment Amount: With respect to any Payment Date, (a)
prior to the Stepdown Date or if a Trigger Event is in effect or a
Rapid
Amortization Trigger Event has occurred, the Principal Payment
Amount for such
Payment Date remaining after the Note
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Principal Amount of the Class A Notes has been reduced to zero and
(b) on or
after the Stepdown Date unless a Trigger Event is in effect or a
Rapid
Amortization Trigger Event has occurred, the lesser of (i) the
excess of (A) the
aggregate of the Note Principal Amount of the Class A Notes (after
giving effect
to payments of principal on such Payment Date) and the Note
Principal Amount of
the Class M1 Notes immediately prior to such Payment Date over (B)
the Class M1
Target Amount for such Payment Date and (ii) the Principal Payment
Amount for
such Payment Date after giving effect to payments of principal to
the Holders of
the Class A Notes therefrom.
Class M1
Target Amount: With respect to each Payment Date, the lesser of
(a) the product of (i) 95.80% and (ii) the Invested Amount for such
Payment Date
and (b) the excess if any of (i) the Invested Amount for such
Payment Date over
(ii) 0.50% of the Cut-off Date Pool Balance.
Class M2
Note: Any Note designated as a "Class M2 Asset-Backed Note" on
the face thereof, substantially in the form of Exhibit A-3 to the
Indenture.
Class M2
Principal Payment Amount: With respect to any Payment Date, (a)
prior to the Stepdown Date or if a Trigger Event is in effect or a
Rapid
Amortization Trigger Event has occurred, the Principal Payment
Amount for such
Payment Date remaining after the Note Principal Amount of the Class
A Notes and
the Class M1 Notes has been reduced to zero and (b) on or after the
Stepdown
Date unless a Trigger Event is in effect or a Rapid Amortization
Trigger Event
has occurred, the lesser of (i) excess of (A) the aggregate of the
Note
Principal Amount of the Class A Notes (after giving effect to
payments of
principal on such Payment Date), the Note Principal Amount of the
Class M1 Notes
(after giving effect to payments of principal on such Payment Date)
and the Note
Principal Amount of the Class M2 Notes immediately prior to such
Payment Date
over (B) the Class M2 Target Amount for such Payment Date and (ii)
the Principal
Payment Amount for such Payment Date after giving effect to
payments of
principal to the Holders of the Class A Notes and the Class M1
Notes therefrom.
Class M2
Target Amount: With respect to each Payment Date, the lesser of
(a) the product of (i) 96.80% and (ii) the Invested Amount for such
Payment Date
and (b) the excess if any of (i) the Invested Amount for such
Payment Date over
(ii) 0.50% of the Cut-off Date Pool Balance.
Class
Principal Balance: With respect to the Class L Certificates and
any
Payment Date during the Managed Amortization Period, the sum of the
Additional
Balance Advance Amount for such Payment Date and any prior Payment
Date, less
(x) the sum of the amount, calculated for such Payment Date and any
prior
Payment Date, equal to all Charge-off Amounts for such Payment Date
multiplied
by the Class L Percentage for such Payment Date, and (y)
distributions to such
Class pursuant to Section 3.11 of the Trust Agreement representing
principal
payments on the Mortgage Loans for such Payment Date and any prior
Payment Date.
With respect to the Class L Certificates and any Payment Date
during the Rapid
Amortization Period, the sum of (a) the Class Principal Balance of
the Class L
Certificates on the last Payment Date prior to the commencement of
the Rapid
Amortization Period (after giving effect to the payment of all
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distributions, and the allocation of Charge-Off Amounts on such
Payment Date)
plus (b) the aggregate amount of Draws conveyed to the Issuer
during the Rapid
Amortization Period, less (x) the sum of the amount, calculated for
such Payment
Date and any prior Payment Date during the Rapid Amortization
Period, equal to
all Charge-off Amounts for such Payment Dates multiplied by the
Class L
Percentage and (y) distributions to such Class pursuant to Section
3.11 of the
Trust Agreement representing principal payments on the Mortgage
Loans during the
Rapid Amortization Period.
With
respect to the Class B Certificates and any Payment Date, an
amount
equal to the excess of the Invested Amount on the last day of the
related
Collection Period (after taking into account all Interest
Collections and
Principal Collections for such Payment Date) over the sum of the
aggregate Note
Principal Amount of the Notes immediately prior to such Payment
Date.
With
respect to the Class R Certificates and any Payment Date, zero.
Close of
Business: With respect to any Business Day, 5:00 p.m. (New York
time).
Closing
Date: September 29, 2006.
Code: The
Internal Revenue Code of 1986, as amended from time to time,
and
Treasury Regulations promulgated thereunder.
Collection
Account: The custodial account or accounts created and
maintained for the benefit of the Noteholders, the
Certificateholders and the
Insurer pursuant to Section 3.02(b).
Collection
Period: With respect to any Payment Date and Mortgage Loan, the
15th day of the calendar month immediately preceding such Payment
Date to the
14th day of the calendar month of such Payment Date.
Combined
Loan-to-Value Ratio or CLTV: With respect to any Mortgage Loan
the sum of the Credit Limit of such Mortgage Loan at the time such
Mortgage Loan
was originated or at the time such Mortgage Loan is modified
pursuant to Section
3.01(h) and the outstanding principal balance of any Senior Liens
as of the date
of origination of the Mortgage Loan, divided by (i) in the case of
a purchase,
the lesser of the selling price of the Mortgaged Property or its
Appraised Value
at the time of sale, or (ii) in the case of a refinance, the
Appraised Value of
the Mortgaged Property at the time of the refinance.
Commission: The Securities and Exchange Commission.
Controlling Class Notes: The Class A Notes, so long as any Class A
Notes
are Outstanding, then the Class M1 Notes, so long as any Class M1
Notes are
Outstanding after the Class A Notes are no longer Outstanding, and
finally the
Class M2 Notes.
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Controlling Party: The Insurer, so long as the Class A Notes
are
Outstanding or any Reimbursement Amounts remain due and owing to
the Insurer and
no Insurer Default shall have occurred and be continuing, and the
Majority
Securityholders, after the Class A Notes are no longer Outstanding
and no
Reimbursement Amounts are due and owing to the Insurer or for so
long as an
Insurer Default shall have occurred and is continuing.
Conveyed
Assets: As defined in Section 2.01(a).
Corporate
Trust Office: The principal office of the Indenture Trustee at
which at any particular time its corporate business shall be
administered, which
office on the Closing Date is located at 1761 East Saint Andrew
Place, Santa
Ana, California 92705-4934, Attention: IN06H3 or with respect to
the Certificate
Registrar, the designated office for presentment and surrender of
Certificates
for registration, transfer or exchange thereof located at DB
Services Tennessee,
646 Grassmere Road, Nashville, Tennessee 37211, Attn: Transfer
Unit.
Credit
Enhancement Percentage: With respect to the Class A Notes and
any
Payment Date, a percentage equal to (x) the sum of (i) the Note
Principal Amount
of the Class M1 Notes and the Class M2 Notes (after taking into
account any
payments of principal on such Payment Date) and (ii) the
Overcollateralization
Amount for such Payment Date, divided by (y) the Invested Amount
for such
Payment Date.
Credit
Limit: As to any Mortgage Loan, the maximum principal balance
permitted under the terms of the related Mortgage Note.
Credit
Line Agreement: The Mortgage Note.
Cut-off
Date: As to any Mortgage Loan, the close of business on
September
14, 2006.
Cut-off
Date Pool Balance: $501,804,955.
Cut-off
Date Principal Balance: With respect to any Mortgage Loan, the
unpaid principal balance thereof as of the Cut-off Date (or as of
the applicable
date of substitution with respect to an Eligible Substitute
Mortgage Loan
pursuant to Section 2.02 or 2.05).
Daily Draw
Deficit: As of any day during any Collection Period preceding
the commencement of the Rapid Amortization Period, the excess, if
any, of the
Aggregate Draw Amount on such day over the Floating Allocation
Percentage of
Principal Collections in respect of the Mortgage Loans received
during such
Collection Period and remaining on deposit in the Collection
Account.
Defective
Mortgage Loan: Any Mortgage Loan subject to repurchase or
substitution by the Seller pursuant to Section 2.02 or 2.05.
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Deferred
Interest: With respect to the Notes of each Class and any
Payment
Date, the excess, if any, of interest due at the applicable Formula
Note Rate
over interest due at the applicable Note Rate.
Deficiency
Amount: As defined in the Policy.
Definitive
Notes: As defined in the Indenture.
Delinquent
Mortgage Loan and Delinquent: A Mortgage Loan is a Delinquent
Mortgage Loan if the Monthly Payment due thereon is not received by
the close of
business on the Due Date in accordance with the related Mortgage
Note and until
such delinquency is subsequently cured.
Depositor:
IndyMac MBS Inc., a Delaware corporation.
Depositor
Certification: As defined in Section 3.14(e).
Depository: The
initial Depository shall be The Depository Trust Company,
the nominee of which is Cede & Co. The Depository shall at all
times be a
"clearing corporation" as defined in Section 8-102(a)(5) of the UCC
of the State
of New York.
Depository
Agreement: The agreement dated as of September 29, 2006, among
the Indenture Trustee, acting on behalf of the Trust, and The
Depository Trust
Company, as the initial Depository, relating to the Book-Entry
Notes.
Depository
Participant: A broker, dealer, bank or other financial
institution or other Person for whom from time to time the
Depository effects
book-entry transfers and pledges of securities deposited with the
Depository.
Determination Date: With respect to any Payment Date, the date
which is
five (5) Business Days prior to such Payment Date.
Distribution Report: As defined in Section 3.14.
Draw: With
respect to any Mortgage Loan, an additional borrowing by the
related Mortgagor subsequent to the Cut-off Date in accordance with
the related
Mortgage Note.
Draw
Period: With respect to any Mortgage Loan, the period during
which
the related Mortgagor is permitted to make Draws.
Due Date:
With respect to any Mortgage Loan and any Monthly Payment, the
date on which such Monthly Payment is due from the related
Mortgagor.
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Early
Termination Fee: As to a Mortgage Loan, any charge owed by a
Mortgagor in connection with the termination of the related Credit
Line
Agreement within a specified period following the origination of
such Mortgage
Loan.
Eligible
Account: Any of (i) an account or accounts maintained with a
federal or state chartered depository institution or trust company
the
short-term unsecured debt obligations of which (or, in the case of
a depository
institution or trust company that is the principal subsidiary of a
holding
company, the debt obligations of such holding company) have the
highest
short-term ratings of Moody's or Fitch and one of the two highest
short-term
ratings of Standard & Poor's, if Standard & Poor's is a
Rating Agency at the
time any amounts are held on deposit therein, or (ii) an account or
accounts in
a depository institution or trust company in which such accounts
are insured by
the FDIC (to the limits established by the FDIC) and the uninsured
deposits in
which accounts are otherwise secured such that, as evidenced by an
Opinion of
Counsel delivered to the Indenture Trustee and to each Rating
Agency, the
Noteholders have a claim with respect to the funds in such account
or a
perfected first priority security interest against any collateral
(which shall
be limited to Eligible Investments) securing such funds that is
superior to
claims of any other depositors or creditors of the depository
institution or
trust company in which such account is maintained, or (iii) a trust
account or
accounts maintained with (a) the trust department of a federal or
state
chartered depository institution or (b) a trust company, acting in
its fiduciary
capacity, or (iv) any other account acceptable to each Rating
Agency. Eligible
Accounts may bear interest, and may include, if otherwise qualified
under this
definition, accounts maintained with the Indenture Trustee.
Eligible
Institution: Shall mean (1) any depository institution (which
may
be the Indenture Trustee) organized under the laws of the United
States or any
one of the States thereof, including the District of Columbia (or
any domestic
branch of a foreign bank) which at all times (a) has a short-term
unsecured debt
rating of "P-1" by Moody's, (b) has a short-term unsecured debt
rating of "A-1"
by Standard & Poor's and (c) has its accounts fully insured by
the FDIC or
maintains trust accounts in a fiduciary capacity, or (2) any other
institution
that is acceptable to each Rating Agency; provided, however, that
if such other
institution does not satisfy the rating criteria set forth in
clause (1), such
other institution shall also be acceptable to the Insurer. If so
qualified, the
Indenture Trustee or the Servicer may be considered an Eligible
Institution for
the purposes of this definition.
Eligible
Investments: One or more of the following:
(i) obligations of or guaranteed as to 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 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;
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(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 (or, if the only Rating Agency is
Standard &
Poor's, in the case of the principal depository institution in a
depository
institution holding company, debt obligations of the depository
institution
holding 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 only Rating Agency is Standard & Poor's and if the
depository or
trust company is a principal subsidiary of a bank holding company
and the debt
obligations of such subsidiary are not separately rated, the
applicable rating
shall be that of the bank holding company; 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 the Rating Agency;
(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) a money market fund or a qualified investment fund rated by
each
Rating Agency in its highest long-term rating available; and
(vi) other obligations or securities that are acceptable to
each
Rating Agency and the Insurer as an Eligible Investment hereunder
and will not
reduce the rating assigned to any Class of Notes by such Rating
Agency below the
lower of the then-current rating or the rating assigned to such
Notes as of the
Closing Date by such Rating Agency, as evidenced in writing;
provided, however, no instrument shall be an Eligible 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
references
herein to the highest rating available on unsecured commercial
paper and
short-term debt obligations shall mean A-1 in the case of Standard
& Poor's, P-1
in the case of Moody's and either A-1 by Standard & Poor's, P-1
by Moody's or
F-1 by Fitch in the case of Fitch; provided, however, that any
Eligible
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
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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 Note Principal Amount of the Notes and each investment
must not
mature beyond 30 days; and (iii) 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.
Eligible
Substitute Mortgage Loan: With respect to Mortgage Loans, a
Mortgage Loan substituted by the Seller for a Mortgage Loan that
constitutes a
Defective Mortgage Loan which must, on the date of such
substitution, (i) have
an outstanding Principal Balance that is approximately equal to the
Principal
Balance of such Defective Mortgage Loan; (ii) have a Loan Rate not
less than the
Loan Rate of the Defective Mortgage Loan and not more than 1% in
excess of the
Loan Rate of such Defective Mortgage Loan; (iii) have a Loan Rate
Cap based on
the Index, determined in accordance with then current underwriting
standards;
(iv) have a Margin that is not less than the Margin of the
Defective Mortgage
Loan and not more than 1% in excess of the Margin for the Defective
Mortgage
Loan; (v) have a Mortgage of the same or higher level of priority
as the
Mortgage relating to the Defective Mortgage Loan at the time such
Mortgage was
transferred to the Trust; (vi) have a maturity not later than the
Final
Scheduled Payment Date; (vii) comply with each representation and
warranty set
forth in Section 2.04 (deemed to be made as of the date of
substitution); (viii)
have an original Combined Loan-to-Value Ratio not greater than that
of the
Defective Mortgage Loan; and (ix) have a Mortgagor that has a
credit score at
least equal to that of the Mortgagor under the Defective Mortgage
Loan.
More than
one Eligible Substitute Mortgage Loan may be substituted for a
Defective Mortgage Loan if such Eligible Substitute Mortgage Loans
meet the
foregoing attributes in the aggregate.
ERISA:
Employee Retirement Income Security Act of 1974, as amended.
Errors and
Omissions Insurance Policy: As defined in Section 3.06.
Event of
Servicer Termination: As defined in Section 7.01.
Excess
Cashflow: With respect to any Payment Date and each Class of
Notes,
the Floating Allocation Percentage of Net Available Funds for such
Payment Date
which remain on deposit in the Payment Account after taking into
account the
payments on such Payment Date listed in (x) in the case of the
Class A Notes,
clauses (i) through (vii) of Section 5.01(a)(I), (y) in the case of
the Class M1
Notes, clauses (i) through (viii) of Section 5.01(a)(I) and the
Class M1
Principal Payment Amount paid to the Holders of the Class M1 Notes
pursuant to
clause (I) of Section 5.01(a) and (z) in the case of the Class M2
Notes, clauses
(i) through (ix) of Section 5.01(a)(I) and the Class M2 Principal
Payment Amount
paid to the Holders of the Class M2 Notes pursuant to clause (x) of
Section
5.01(a)(I).
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Exchange
Act: The Securities Exchange Act of 1934, as amended.
Expense
Fee Rate: Is an amount equal to the sum of (i) the Servicing
Fee
Rate, (ii) the fees of the Owner Trustee, (iii) a per annum rate
equal to a
fraction, the numerator of which is the product of (a) 12 and the
sum of (b)(1)
current interest shortfalls resulting from the application of the
Servicemembers
Civil Relief Act, or any similar state law, (2) any interest
shortfalls
resulting from prepayments of the Mortgage Loans and (3) payments
to the
Indenture Trustee in respect of the Indenture Trustee Expense
Amount and the
denominator of which is the Pool Balance at the beginning of the
related
Collection Period and (iv) the product of (a) the rate at which the
Insurer
Premium is calculated and (b) a fraction, the numerator of which is
the Note
Principal Amount of the Class A Notes immediately before the
Payment Date and
the denominator of which is the Pool Balance at the beginning of
the related
Collection Period.
Fannie
Mae: Federal National Mortgage Association, a federally
chartered
and privately owned corporation organized and existing under the
Federal
National Mortgage Association Charter Act, or any successor
thereto.
FDIC: The
Federal Deposit Insurance Corporation and any successor
thereto.
Fidelity
Bond: As defined in Section 3.06.
Final
Recovery Determination: With respect to any defaulted Mortgage
Loan
or any REO Property (other than a Mortgage Loan or REO Property
purchased by the
Seller or the Servicer pursuant to or as contemplated by Sections
2.02, 2.04,
2.05, 3.07 or 8.01), a determination made by the Servicer that all
Insurance
Proceeds, Liquidation Proceeds and other payments or recoveries
which the
Servicer, in its reasonable good faith judgment, expects to be
finally
recoverable in respect thereof have been so recovered. The Servicer
shall
maintain records, prepared by a Servicing Officer, of each Final
Recovery
Determination made thereby.
Final
Scheduled Payment Date: The Payment Date in September 2036,
whereby
the Holders of each Class of Notes shall be entitled to receive a
payment of
principal in an amount equal to the Note Principal Amount of such
Class of Notes
and any accrued and unpaid interest thereon.
Floating
Allocation Percentage: With respect to any Payment Date, the
percentage equivalent of a fraction the numerator of which is the
Invested
Amount for the preceding Payment Date (or in the case of the first
Payment Date,
the Initial Invested Amount) and the denominator of which is the
Pool Balance at
the end of the Collection Period preceding the previous Payment
Date (or in the
case of the first Payment Date, the Cut-off Date Pool Balance),
provided such
percentage shall not be greater than 100%.
Foreclosure Profit: With respect to a Liquidated Mortgage Loan,
the
amount, if any, by which (i) the related aggregate Net Recoveries
exceed (ii)
the related Principal Balance (without giving effect to any
reduction thereto in
respect of any prior Charge-Off Amounts) immediately
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prior to receipt of the final Recoveries plus accrued and unpaid
interest
thereon at the applicable Loan Rate from the date interest was last
paid through
the date of receipt of the final Recoveries.
Formula
Note Rate: (i) with respect to the Class A Notes and any
Interest
Accrual Period, the per annum rate equal to LIBOR plus 0.17%; (ii)
with respect
to the Class M1 Notes and any Interest Accrual Period, the per
annum rate equal
to LIBOR plus 3.00%; and (iii) with respect to the Class M2 Notes
and any
Interest Accrual Period, the per annum rate equal to LIBOR plus
3.00%.
Holders:
The holders of the Class A Notes, the Class M Notes, the Class
B
Certificates, the Class L Certificates or the Class R
Certificates.
Indenture:
The Indenture dated as of September 29, 2006, between the
Issuer and the Indenture Trustee, as such may be amended, modified
or
supplemented from time to time.
Indenture
Trustee: Deutsche Bank National Trust Company, a national
banking association, as Indenture Trustee under this Agreement, or
any successor
Indenture Trustee appointed in accordance with this agreement.
Indenture
Trustee Expense Amount: Means, any costs, expenses or
liabilities reimbursable to the Indenture Trustee to the extent
provided in the
Indenture; provided, however, such reimbursable amounts may not
exceed $20,000
on any Payment Date or $150,000 during any Anniversary Year
(excluding, for this
purpose, costs and expenses of the indenture trustee incurred in
connection with
any transfer of servicing following a default by the Servicer). In
the event
that the Indenture Trustee incurs reimbursable amounts in excess of
$150,000, it
may seek reimbursement for such amounts in subsequent Anniversary
Years, but
(subject to the immediately preceding sentence) in no event shall
more than
$150,000 be reimbursed to the Indenture Trustee per Anniversary
Year.
Indenture
Trustee Fee: An amount equal to 0.0055% per annum of the
outstanding Principal Balance of each Mortgage Loan.
Index:
Means the Prime Rate.
Initial
Invested Amount: $501,804,955.
Initial
LIBOR Rate: 5.32438%.
Initial
Note Principal Amount: (i) with respect to the Class A Notes,
$496,786,000, (ii) with respect to the Class M1 Notes, $2,509,000,
and (iii)
with respect to the Class M2 Notes, $2,509,000.
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Insurance
and Indemnity Agreement or Insurance Agreement: The Insurance
and Indemnity Agreement dated as of September 29, 2006 among the
Indenture
Trustee, the Insurer, the Depositor and the Seller and Servicer,
including any
amendments and supplements thereto in accordance with the terms
thereof.
Insurance
Agreement Event of Default: For purposes of Section 7.01
hereunder, and notwithstanding the definition of the same set forth
in the
Insurance and Indemnity Agreement, the occurrence of one or more of
the
following events:
(a) Any
representation or warranty (other than a representation or
warranty in respect of the Mortgage Loans contained in Section 3.01
of the
Mortgage Loan Purchase Agreement or Section 2.04 of the Sale and
Servicing
Agreement, so long as the party breaching such representation or
warranty shall
have performed its obligations with respect thereto in accordance
with the
Mortgage Loan Purchase Agreement or the Sale and Servicing
Agreement, as the
case may be) made by the Sponsor, the Seller, the Servicer, the
Depositor or the
Trust under the Insurance and Indemnity Agreement or under any
other Transaction
Document, or in any certificate furnished under the Insurance and
Indemnity
Agreement or under any other Transaction Document, shall prove to
be untrue or
incomplete in any material respect; provided, however, that if the
Sponsor, the
Seller, the Servicer, the Depositor or the Trust effectively cures
any such
defects in any representation or warranty under any Transaction
Document or
certificate or report furnished under any Transaction Document,
within the time
period specified in the related document as the cure period
therefor, such
defect shall not in and of itself constitute an Insurance Agreement
Event of
Default;
(b) (i)
The Sponsor, the Seller, the Servicer, the Depositor or the
Trust
shall fail to pay when due any amount payable by the Sponsor, the
Seller, the
Servicer, the Depositor or the Trust unless such amounts are paid
in full within
the cure period therefor, respectively, under the Insurance and
Indemnity
Agreement or (ii) a legislative body has enacted any law that
declares or a
court of competent jurisdiction shall find or rule that the
Insurance Agreement
or any other Transaction Document are not valid and binding on the
Sponsor, the
Seller, the Servicer, the Depositor or the Trust;
(c) Any
failure on the part of the Sponsor, the Seller, the Servicer,
the
Depositor or the Trust duly to observe or perform in any material
respect any
other of the covenants or agreements on the part of the Sponsor,
the Seller, the
Servicer, the Depositor or the Trust contained in the Insurance and
Indemnity
Agreement or in any other Transaction Document which continues
unremedied beyond
any cure period provided therein, or, in the case of the Insurance
and Indemnity
Agreement, for a period of 30 days after the date on which written
notice of
such failure, requiring the same to be remedied, shall have been
given to the
Sponsor, the Seller, the Servicer, the Depositor or the Trust by
the Insurer
(with a copy to the Indenture Trustee) or by the Indenture Trustee
(with a copy
to the Insurer). Such failure shall not constitute an Insurance
Agreement Event
of Default hereunder, if within such 30-day period the Sponsor, the
Seller, the
Servicer, the Depositor or the Trust, as the case may be, shall
have given
notice to the Insurer of corrective action it proposes to take,
which corrective
action is agreed, in
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writing by the Insurer to be satisfactory and the Sponsor, the
Seller, the
Servicer, the Depositor or the Trust shall thereafter pursue such
corrective
action diligently until such default is cured;
(d) A
decree or order of a court or agency or supervisory authority
having
jurisdiction in the premises in an involuntary case under any
present or future
federal or state insolvency or similar law or the appointment of a
conservator
or receiver or liquidator or other similar official in any
insolvency,
readjustment of debt, marshaling of assets and liabilities or
similar
proceedings, or for the winding-up or liquidation of its affairs,
shall have
been entered against the Sponsor, the Seller or the Servicer and
such decree or
order shall have remained in force undischarged or unstayed for a
period of 90
consecutive days;
(e) The
Sponsor, the Seller or the Servicer shall consent to the
appointment of a conservator or receiver or liquidator or other
similar official
in any involuntary insolvency, readjustment of debt, marshaling of
assets and
liabilities or similar proceedings of or relating to the Sponsor,
the Seller or
the Servicer or of or relating to all or substantially all of its
property and
if the Sponsor, the Seller or the Servicer, shall fail to take
appropriate
action resulting in the withdrawal or dismissal of such proceeding
within 60
Business Days; or
(f) The
Sponsor, the Seller or the Servicer shall admit in writing its
inability to pay its debts generally as they become due, file a
petition to take
advantage of or otherwise voluntarily commence a case or proceeding
under any
applicable insolvency, reorganization or other similar statute,
make an
assignment for the benefit of its creditors or voluntarily suspend
payment of
its obligations.
Insurance
Proceeds: Proceeds of any title policy or other insurance
policy
covering a Mortgage Loan, to the extent such proceeds are not to be
applied to
the restoration of the related Mortgaged Property or released to
the Mortgagor
in accordance with the procedures that the Servicer would follow in
servicing
mortgage loans held for its own account, subject to the terms and
conditions of
the related Mortgage Note and Mortgage.
Insured
Amount: As defined in the Policy with respect to the Class A
Notes
and each Payment Date.
Insured
Payments: As defined in the Policy with respect to the Class A
Notes and each Payment Date.
Insurer:
XL Capital Assurance Inc., a monoline financial guaranty
insurance company incorporated under the laws of the State of New
York.
Insurer
Default: The failure by the Insurer to make a payment required
under the Policy in accordance with the terms thereof.
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Interest
Accrual Period: with respect to each Payment Date will be the
period from and including the preceding Payment Date (or, in the
case of the
first Payment Date, from the Closing Date) to, but excluding the
current Payment
Date.
Interest
Collections: with respect to any Payment Date, is equal to the
sum of (a) all payments by or on behalf of mortgagors and any other
amounts
constituting interest, including the portion of Net Liquidation
Proceeds and
Insurance Proceeds allocated to interest pursuant to the terms of
the related
Mortgage Note (excluding the fees or late charges or similar
administrative fees
paid by Mortgagors) collected during the related Collection Period
and all
Recoveries, less the Servicing Fee for the related Collection
Period and (b) the
interest portion of (i) the purchase price paid for a Mortgage Loan
repurchased
by the Seller during the related Collection Period, (ii) any
Substitution
Amounts in respect of an Eligible Substitute Mortgage Loan which is
substituted
by the Seller during the related Collection Period for a removed
Mortgage Loan,
and (iii) the Optional Redemption Price in connection with any
Optional
Redemption of the Notes during the related Collection Period. The
terms of the
related Mortgage Note shall determine the portion of each payment
in respect of
such Mortgage Loan that constitutes principal or interest.
Interest
Payment Amount: With respect to the Notes of each Class and any
Payment Date, (x) the Note Rate applicable to such Class and
Payment Date
multiplied by (y) the Note Principal Amount of such Class
immediately prior to
such Payment Date multiplied by (z) a fraction, the numerator of
which is the
actual number of days in the related Interest Accrual Period and
the denominator
of which is 360.
Invested
Amount: On any Payment Date, is the Invested Amount for the
preceding Payment Date (or in the case of the First Payment Date,
the Initial
Invested Amount) reduced by (i) the Floating Allocation Percentage
of Principal
Collections for such Payment Date and (ii) the Investor Charge-Off
Amounts for
such Payment Date.
Investor
Charge-Off Amount: For any Payment Date, the Charge-Off Amounts
incurred during the related Collection Period multiplied by the
Floating
Allocation Percentage for such Payment Date.
Late
Payment Rate: For any Payment Date, the lesser of (a) the greater
of
(i) the rate of interest, as it is publicly announced by Citibank,
N.A., as its
prime rate (any change in such prime rate of interest to be
effective on the
date such change is announced by Citibank, N.A.), plus 2% per annum
and (ii) the
then applicable highest rate of interest on the Notes and (b) the
maximum rate
permissible under applicable usury or similar laws limiting
interest rates, as
determined by the Insurer. The Late Payment Rate shall be computed
on the basis
of the actual number of days elapsed over a year of 360 days.
LIBOR:
With respect to the first Interest Accrual Period, the Initial
LIBOR Rate. With respect to each subsequent Interest Accrual
Period, a per annum
rate determined on the LIBOR Determination Date in the following
manner by the
Indenture Trustee on the basis of the
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"Interest Settlement Rate" set by the British Bankers' Association
(the "BBA")
for one-month United States dollar deposits, as such rates appear
on the
Telerate Page 3750, as of 11:00 a.m. (London time) on such LIBOR
Determination
Date.
(a) If on
such a LIBOR Determination Date, the BBA's Interest Settlement
Rate does not appear on the Telerate Page 3750 as of 11:00 a.m.
(London time),
or if the Telerate Page 3750 is not available on such date, the
Indenture
Trustee will obtain such rate from Reuters' "page LIBOR 01" or
Bloomberg's page
"BBAM". If such rate is not published for such LIBOR Determination
Date, LIBOR
for such date will be the most recently published Interest
Settlement Rate. In
the event that the BBA no longer sets an Interest Settlement Rate,
the Indenture
Trustee will designate an alternative index that has performed, or
that the
Indenture Trustee expects to perform, in a manner substantially
similar to the
BBA's Interest Settlement Rate.
(b) The
establishment of LIBOR by the Indenture Trustee and the
Indenture
Trustee's subsequent calculation of the Note Rate for the relevant
Interest
Accrual Period, in the absence of manifest error, will be final and
binding.
LIBOR
Business Day: Any day on which banking institutions in the State
of
New York or in the city of London, England are open for conducting
transactions
in foreign currency and exchange.
LIBOR
Determination Date: With respect to any Interest Period, the
second
LIBOR Business Day preceding the first day of such Interest
Period.
Lien: Any
lien, charge, mortgage, claim, participation interest, equity,
pledge or security interest of any nature, encumbrances or right of
others.
Liquidation Expenses: Expenses that are incurred by the Servicer
in
connection with the liquidation of any defaulted Mortgage Loan and
are not
recoverable under the applicable primary mortgage insurance policy,
if any,
including, without limitation, foreclosure and rehabilitation
expenses, legal
expenses and unreimbursed amounts, if any, expended pursuant to
Sections 3.07 or
3.08.
Liquidated
Mortgage Loan: Any Mortgage Loan as to which the Servicer has
made a Final Recovery Determination.
Liquidation Event: With respect to any Mortgage Loan, any of the
following
events: (i) such Mortgage Loan is paid in full; (ii) a Final
Recovery
Determination is made as to such Mortgage Loan or (iii) such
Mortgage Loan is
removed from the Trust Fund by reason of its being purchased, sold
or replaced
pursuant to or as contemplated by Sections 2.02, 2.04, 2.05 3.07 or
8.01. With
respect to any REO Property, either of the following events: (i) a
Final
Recovery Determination is made as to such REO Property or (ii) such
REO Property
is removed from the Trust Fund by reason of its being sold or
purchased pursuant
to Sections 3.07(a) or 8.01.
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Liquidation Proceeds: The amount (other than amounts received in
respect
of the rental of any REO Property prior to REO Disposition)
received by the
Servicer in connection with (i) the taking of all or a part of a
Mortgaged
Property by exercise of the power of eminent domain or
condemnation, (ii) the
liquidation of a defaulted Mortgage Loan by means of a trustee's
foreclosure
sale or otherwise or (iii) the repurchase, substitution or sale of
a Mortgage
Loan or an REO Property pursuant to or as contemplated by Sections
2.02, 2.04,
2.05, 3.07 or 8.01.
Loan Rate:
With respect to any Mortgage Loan as of any day, the variable
interest rate applicable under the related Mortgage Note.
Loan Rate
Cap: With respect to any Mortgage Loan, the lesser of (i) the
maximum Loan Rate permitted by the related Mortgage Note over the
life of the
Mortgage Loan, and (ii) the applicable state usury ceiling.
Lost Note
Affidavit: An affidavit in the form of Exhibit H.
Majority
Securityholders: During the period that any Notes are
outstanding, the holder or holders of in excess of 50% of the Note
Principal
Amount of the Controlling Class Notes; and thereafter, the holders
of the
Certificates (voting collectively as a single class).
Managed
Amortization Period: With respect to the Notes, the period
commencing on the first Payment Date and ending on the earlier to
occur of (x)
the 120th Payment Date and (y) the Payment Date which immediately
follows the
occurrence of a Rapid Amortization Trigger Event.
Margin:
With respect to each Mortgage Loan, the fixed percentage amount
set forth in the related Credit Line Agreement which amount is
added to the
Prime Rate in accordance with the terms of such Credit Line
Agreement to
determine the Loan Rate for such Mortgage Loan, subject to the Loan
Rate Cap.
Material
Adverse Change: As defined in the Insurance and Indemnity
Agreement.
Maximum
Principal Payment: With respect the Notes, (i) during the
Managed
Amortization Period, the Net Principal Collections with respect to
such Payment
Date, and (ii) during the Rapid Amortization Period, the Floating
Allocation
Percentage of Principal Collections for such Payment Date.
Maximum
Rate: With respect to the Notes on any Payment Date, the
quotient
of (A) the excess of (x) the Interest Collections for that Payment
Date over (y)
the sum of (i) the fees of the Owner Trustee for that Payment Date;
(ii)
payments to the Indenture Trustee in respect of the Indenture
Trustee Expense
Amount; (iii) the Indenture Trustee Fee; and (iv) the Premium
Amount payable to
the Insurer on that Payment Date divided by (B) the product of (x)
the Pool
Balance on the first day of the related Collection Period, and (y)
a fraction,
the numerator of
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which is the actual number of days in the related Interest Accrual
Period for
the Notes and the denominator of which is 360.
MERS:
Mortgage Electronic Registration Systems, Inc., a Delaware
corporation, or any successor in interest thereto.
MERS
Mortgage Loan: Any Mortgage Loan as to which the related Mortgage,
or
an Assignment of Mortgage, has been or will be recorded in the name
of MERS, as
nominee for the holder from time to time of the Credit Line
Agreement.
Monthly
Payment: With respect to a Mortgage Loan, the scheduled monthly
payment of principal and/or interest required to be made by a
Mortgagor on such
Mortgage Loan.
Moody's:
Moody's Investors Service, Inc., or any successor thereto.
Mortgage:
The mortgage, deed of trust or other instrument creating a
first, second or third lien on an estate in fee simple interest in
real property
securing a Mortgage Loan.
Mortgage
File: The mortgage documents listed in Section 2.01(e)(i) and
(ii), pertaining to a particular Mortgage Loan and any additional
documents
required to be added to the Mortgage File pursuant to this
Agreement.
Mortgage
Loan: Each of the home equity line of credit mortgage loans
that
is transferred and assigned to the Trust pursuant to Sections 2.01
and 2.05,
together with the Related Documents, exclusive of home equity line
of credit
mortgage loans that are transferred to the Seller, from time to
time pursuant to
Sections 2.02 and 2.05.
Mortgage
Loan Purchase Agreement: The mortgage loan purchase agreement,
dated as of September 29, 2006, between the Seller and the
Depositor, relating
to the sale of the Mortgage Loans from the Seller to the
Depositor.
Mortgage
Loan Schedule: With respect to the Cut-off Date, the schedule
of
Mortgage Loans constituting assets of the Trust and thereafter as
amended or
supplemented pursuant to the terms hereof. The Mortgage Loan
Schedule is the
schedule set forth herein as Exhibit A, which schedule sets forth
as to each
Mortgage Loan: (i) the Cut-off Date Principal Balance, (ii) the
loan number,
(iii) the Credit Limit, (iv) the CLTV as of the date of the
origination of the
related Mortgage Loan, (v) occupancy and loan purpose, (vi) the
Loan Rate as of
the Cut-off Date, (vii) the Margin, (viii) the type of property,
(ix) the
debt-to-income ratio, (x) the credit score, (xi) the Originator,
(xii) the Loan
Rate Cap, (xiii) documentation type, (xiv) zip code, (xv) term of
the draw
period, (xvi) lien position, (xvii) maximum rate, (xviii) original
term, (xix)
remaining term, and (xx) any related Early Termination Fee.
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Mortgage
Note: With respect to a Mortgage Loan, the related credit line
account agreement executed by the related Mortgager and any
amendment or
modification thereof.
Mortgaged
Property: With respect to each Mortgage Loan, the underlying
real property, including improvements thereon.
Mortgagee:
With respect to any Mortgage Loan as of any date of
determination, the holder of the related Mortgage Note and any
related Mortgage
as of such date.
Mortgagor:
With respect to any Mortgage Loan, the obligor or obligors
under the related Mortgage Note.
Net
Available Funds: With respect to each Payment Date, the excess of
(A)
the Available Funds for that Payment Date, over (B) the sum of (i)
the payment
of the Indenture Trustee Expense Amount, (ii) the payment of the
Indenture
Trustee Fee, (iii) the payment to the Owner Trustee of its fee for
services
rendered pursuant to the Trust Agreement, (iv) all Early
Termination Fees (which
are distributable only to the Class L Certificates), and (v) during
the Managed
Amortization Period, the amount of Principal Collections for that
Payment Date
applied to purchase additional Draws under the Mortgage Loans.
Net
Charge-Off Amount: With respect to any Mortgage Loan, the
Charge-Off
Amount, less any Net Recoveries with respect to such Mortgage
Loan.
Net
Liquidation Proceeds: With respect to any Liquidated Mortgage Loan
or
any other disposition of related Mortgaged Property (including REO
Property),
the related Liquidation Proceeds net of Servicing Advances,
Servicing Fees and
any other accrued and unpaid servicing fees received and retained
in connection
with the liquidation of such Mortgage Loan or Mortgaged
Property.
Net Loan
Rate: With respect to any Mortgage Loan on any day, the Loan
Rate
less the Expense Fee Rate.
Net
Principal Collections: With respect to the Mortgage Loans and
any
Payment Date, an amount equal the positive difference between (x)
the Floating
Allocation Percentage of Principal Collections with respect to such
Payment Date
and (y) the Floating Allocation Percentage of the aggregate
principal amount of
all Additional Balances arising during the related Collection
Period; provided,
however, that in no event will Net Principal Collections be less
than zero with
respect to any Payment Date.
Net
Recoveries: With respect to any Charged-Off HELOC, Recoveries net
of
unreimbursed Servicing Fees with respect thereto.
Non-MERS
Mortgage Loan: Any Mortgage Loan other than a MERS Mortgage
Loan.
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Nonrecoverable Advance: Any Advance previously made or proposed to
be made
by the Servicer in respect of a Mortgage Loan which, in the good
faith judgment
of the Servicer, will not, or, in the case of a proposed Advance,
would not, be
ultimately recoverable by the Servicer from related late
collections, Insurance
Proceeds, Liquidation Proceeds or proceeds from the disposition of
any REO
Property. To the extent that any Mortgagor is not obligated under
the related
Mortgage documents to pay or reimburse any portion of any Servicing
Advances
that are outstanding with respect to the related Mortgage Loan as a
result of a
modification of such Mortgage Loan by the Servicer, which forgives
amounts which
the Servicer or Subservicer had previously advanced, and the
Servicer determines
that no other source of payment or reimbursement for such advances
is available
to it, such Servicing Advances shall be deemed to be Nonrecoverable
Advances.
The determination by the Master Servicer that it has made a
Nonrecoverable
Advance or that any proposed Advance would constitute a
Nonrecoverable Advance,
shall be evidenced by an Officer's Certificate delivered to the
Company, the
Indenture Trustee and the Insurer.
Note
Principal Amount: With respect to any Class of Notes and any
date,
the Initial Note Principal Amount, less the amount of all
principal
distributions previously distributed with respect to such Note and,
in the case
of the Class M1 and Class M2 Notes, any Investor Charge-Off Amounts
allocated to
such Class pursuant to Section 3.19(b).
Note Rate:
With respect to each Class of Notes and any Payment Date, the
lesser of the applicable Formula Note Rate and the Maximum Rate for
such Payment
Date.
Note
Register and Note Registrar: The register which provides for
the
registration of the Class A Notes and the registration of transfers
of the Class
A Notes, which shall be maintained by the Indenture Trustee, as
Note Registrar.
Noteholder: Any owner of the Notes, as shown on the Note
Register.
Notes: The
Class A Notes, the Class M1 Notes and the Class M2 Notes,
collectively.
Officer's
Certificate: A certificate signed by the President, an
Executive
Vice President, a Senior Vice President, a Vice President, an
Assistant Vice
President, the Treasurer, Assistant Treasurer, Cashier, Assistant
Cashier,
Controller or Assistant Controller of the Servicer, Seller or the
Depositor, as
the case may be, and delivered to the Indenture Trustee and the
Insurer.
Opinion of
Counsel: A written opinion of counsel, who may be in-house
counsel for the Servicer (or its affiliate), the Depositor (or its
affiliate),
the Seller (or its affiliate) or the Depositor (or its affiliate)
(except that
any opinion pursuant to Section 2.01 or 6.04 or relating to
taxation or
otherwise as required by the Insurer must be an opinion of
independent outside
counsel) and who, in the case of opinions delivered to the Insurer,
the
Indenture Trustee and the Rating Agency, is reasonably acceptable
to each of
them.
Optional
Redemption Date: As defined in Section 8.01(b) of this
Agreement.
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Optional
Redemption Holder: The Servicer.
Optional
Redemption Price: An amount equal to the greater of: (a) the
sum
of (i) the aggregate outstanding Principal Balance of each Mortgage
Loan, plus
accrued interest at the applicable Loan Rate, (ii) any costs and
damages
incurred by the Trust in connection with a violation of any
applicable federal,
state or local predatory or abusive lending law, (iii) the lesser
of (A) the
fair market value of all other property being purchased and (B) the
unpaid
Principal Balance of the related Mortgage Loan that was secured by
such property
and (iv) any unreimbursed Servicing Advances, unreimbursed expenses
and any
unpaid fees due to the Servicer, the Insurer (including premiums
and
Reimbursement Amounts), the Indenture Trustee and the Owner Trustee
for the
related Payment Date and (b) the sum of (i) the Note Principal
Amount of the
Class A Notes, the Class M1 Notes and the Class M2 Notes with
interest due
thereon (including Deferred Interest), (ii) any costs and damages
incurred by
the Trust in connection with a violation of any federal, state or
local
predatory or abusive lending laws, (iii) any unreimbursed Servicing
Advances,
unreimbursed expenses and any unpaid fees due to the Servicers, the
Insurer, the
Indenture Trustee, and the Owner Trustee and (iv) any Reimbursement
Amounts.
Originator: With respect to each Mortgage Loan sold by the Seller,
the
originator of such Mortgage Loan as specified in the Mortgage Loan
Schedule.
Outstanding: The meaning specified in the Indenture.
Overcollateralization Amount: With respect to the Notes and any
Payment
Date, the excess, if any, of (x) the Invested Amount for that
Payment Date over
(y) the sum of the Note Principal Amount of the Notes as of such
Payment Date
(after taking into account any reductions to such Note Principal
Amount
resulting from payments made pursuant to clauses (iii), (iv),
(viii), (ix) and
(x) of Section 5.01(a)(I) of this Agreement on such Payment
Date).
Overcollateralization Deficiency Amount: With respect to the Notes
and any
Payment Date, the excess, if any, of (i) the Specified
Overcollateralization
Amount for such Payment Date over (ii) the Overcollateralization
Amount for such
Payment Date.
Overcollateralization Deficit: With respect to the Class A Notes
and any
Payment Date, the amount, if any, by which (a) the Note Principal
Amount of the
Class A Notes, after taking into account the payment to the Holders
of the Class
A Notes of all principal from all sources other than the Policy on
such Payment
Date, exceeds (b) the Invested Amount for such Payment Date
(without taking into
account any payment made under the Policy).
Overcollateralization Reduction Amount: With respect to the Notes
and any
Payment Date, the excess, if any, of (i) the Overcollateralization
Amount for
such Payment Date over (ii) the Specified Overcollateralization
Amount for such
Payment Date, assuming that the Maximum Principal Payment has been
distributed
to the Noteholders on such Payment Date.
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Owner
Trustee: Wilmington Trust Company, a Delaware banking
corporation,
not in its individual capacity but solely as owner trustee under
the Trust
Agreement, and any successor owner trustee under the Trust
Agreement appointed
in accordance with the terms thereof.
Payment
Account: The segregated non-interest bearing trust account
established by the Indenture Trustee pursuant to Section 5.05.
Payment
Date: The 25th day of each month or, if such day is not a
Business
Day, then the next Business Day, beginning in October 2006.
Permitted
Activities: The activities allowed under Paragraph 35 of SFAS
140.
Percentage
Interest: With respect to the Notes of any Class, the
percentage obtained by dividing the principal denomination of such
Note by the
aggregate of the principal denominations of all Notes of such
Class. With
respect to a Certificate, the percentage set forth on the face of
such
Certificate.
Person:
Any individual, corporation, partnership, joint venture,
limited
partnership, limited liability company, association, joint-stock
company, trust,
unincorporated organization or government or any agency or
political subdivision
thereof.
Plan: An
employee benefit plan or other retirement arrangement which is
subject to Section 406 of ERISA and/or Section 4975 of the Code or
any entity
whose underlying assets include such plan's or arrangement's assets
by reason of
their investment in the entity.
Policy:
The financial guaranty insurance policy (No.CA03295A) with
respect
to the Class A Notes and all endorsements thereto, if any, dated
the Closing
Date, issued by the Insurer for the benefit of the Holders of the
Class A Notes,
a copy of which is attached hereto as Exhibit G.
Pool
Balance: With respect to any date, the aggregate of the
Principal
Balances of all of the Mortgage Loans as of such date.
Premium
Amount: The premium payable to the Insurer for the Policy
pursuant
to the Premium Letter.
Premium
Letter: The premium letter between the Insurer, the Indenture
Trustee and the other parties thereto dated September 29, 2006.
Prime
Rate: As of any date, the prime rate of the United States money
center commercial banks as published in the latest edition of The
Wall Street
Journal, Northeast Edition.
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Principal
Balance: As of any date of determination and any Mortgage Loan,
an amount equal to the Cut-off Date Principal Balance of the
Mortgage Loan, plus
(i) any Additional Balances transferred to the trust in respect of
the Mortgage
Loan, minus (ii) all collections credited against the principal
balance of the
Mortgage Loan in accordance with the related Credit Line Agreement
prior to that
day, and minus (iii) all prior related Charge-Off Amounts. For
purposes of this
definition, a Liquidated Mortgage Loan will have a Principal
Balance equal to
the Principal Balance of that Mortgage Loan prior to the final
recovery of
liquidation proceeds and a Principal Balance of zero
thereafter.
Principal
Collections: with respect to any Payment Date, is equal to the
sum of amounts allocated to principal collected during the related
Collection
Period, the portion of Net Liquidation Proceeds and Insurance
Proceeds allocated
to principal pursuant to the terms of the Credit Line Agreements,
any amounts
allocable to principal with respect to any Mortgage Loans that are
repurchased
out of the trust, the principal portion of any Substitution Amount
and the
principal portion of any Optional Redemption Price.
Principal
Payment Amount: With respect to the Notes on any Payment Date,
the excess of (a) the Maximum Principal Payment over (b) the
Overcollateralization Reduction Amount, if any, in each case, with
respect to
such Payment Date.
Principal
Prepayment: Any payment of principal made by the Mortgagor on a
Mortgage Loan which is received in advance of its scheduled Due
Date and which
is not accompanied by an amount of interest representing the full
amount of
scheduled interest due on any Due Date in any month or months
subsequent to the
month of prepayment.
Purchase
Price: An amount equal to the principal balance of the Mortgage
Loan at the time of any transfer Pursuant to Sections 2.03 or 2.04
plus (a) the
greater of (i) accrued and unpaid interest at the applicable
mortgage loan rate
net of the servicing fee to the date of repurchase and (ii) 30
days' interest,
computed at the applicable mortgage loan rate and (b) any expenses
incurred by
the trust as a result of the defect, including any costs and
damages actually
incurred and paid by or on behalf of the trust in connection with
any violation
of such mortgage loan of any predatory or abusive lending laws.
Purchaser:
The Depositor, as purchasers of the Mortgage Loans under the
Mortgage Loan Purchase Agreement.
Qualifying
SPE: As set forth in SFAS 140.
Rapid
Amortization Event: As defined in Section 5.08.
Rapid
Amortization Period: The period commencing on the day
immediately
following the end of the Managed Amortization Period and continuing
until the
termination of the Trust pursuant to Section 8.01.
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Rapid
Amortization Trigger Event: A "Rapid Amortization Trigger
Event"
shall occur if a Rapid Amortization Event is declared to have
occurred or has
occurred automatically as set forth in Section 5.08.
Rating
Agency: Any statistical credit rating agency, or its successor,
that rated the Class A Notes at the request of the Depositor at the
time of the
initial issuance of the Class A Notes. If such agency or a
successor is no
longer in existence, "Rating Agency" shall be such statistical
credit rating
agency, or other comparable Person, designated by the Servicer and
the Insurer,
notice of which designation shall be given to the Indenture
Trustee. References
herein to the highest short term unsecured rating category of a
Rating Agency
shall mean "A-1+" or better in the case of Standard & Poor's
and "P-1" or better
in the case of Moody's and in the case of any other Rating Agency
shall mean the
ratings such other Rating Agency deems equivalent to the foregoing
ratings.
References herein to the highest long-term rating category of a
Rating Agency
shall mean "AAA" in the case of Standard & Poor's and "Aaa" in
the case of
Moody's and in the case of any other Rating Agency, the rating such
other Rating
Agency deems equivalent to the foregoing ratings.
Ratings:
The ratings initially assigned to the Notes and the
Certificates
by the Rating Agencies, as evidenced by letters from the Rating
Agencies.
Record
Date: With respect to the Class A Notes for so long as the Class
A
Notes are held in book-entry form, the Business Day immediately
preceding the
related Payment Date following the date on which Definitive Notes
are issued for
the Class A Notes, and with respect to any other Class of Notes or
Certificates,
the last Business Day of the calendar month preceding the month in
which the
related Payment Date occurs
Recordation Event: Any of (i) the long-term senior unsecured debt
rating
of the Seller (or any successor in interest thereto) is reduced to
below "BBB-"
by Standard & Poor's, (ii) an Event of Servicer Termination has
occurred and is
continuing, or (iii) the occurrence of a bankruptcy, insolvency or
foreclosure
relating to the Servicer; provided, that any Recordation Event may
be waived by
the Insurer (so long as the Class A Notes are Outstanding or any
Reimbursement
Amounts remain due and owing to the Insurer and no Insurer Default
has occurred
and is continuing) by its providing written notice of such waiver
to the
Servicer and the Indenture Trustee; and (iv) at the written request
of the
Insurer (so long as the Class A Notes are Outstanding or any
Reimbursement
Amounts remain due and owing to the Insurer and no Insurer Default
has occurred
and is continuing) to the Indenture Trustee to cause the Custodian
to record
Assignments of Mortgages because the Insurer has determined, in the
exercise of
its reasonable judgment, that such recordation is necessary to
protect the
Insurer's interest with respect to such Mortgage Loans because (a)
a Material
Adverse Change with respect to the Seller or the Servicer has
occurred, (b) the
Insurer has been so advised by counsel as a result of a change that
occurred
after the Closing Date in applicable law or the interpretation
thereof or (c)
with respect to a particular Mortgage Loan, the insolvency of the
related
Mortgagor.
Recoveries: With respect to a Charged-Off HELOC, the proceeds
(including
Released Mortgaged Property Proceeds but not including amounts
drawn under the
Policy) received by the
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Servicer in connection with such Charged-Off HELOC minus related
Servicing
Advances and any amount due the holder of any Senior Lien that has
not been
previously paid.
Reference
Banks: Three major banks that are engaged in the London
interbank market, selected by the Servicer and identified in
writing to the
Indenture Trustee.
Regulation
AB: Subpart 229.1100 - Asset Backed Securities (Regulation AB),
17 C.F.R. Sections 229.1100-229.1123, as such may be amended from
time to time,
and subject to such clarification and interpretation as have been
provided by
the Commission in the adopting release (Asset-Backed Securities,
Securities Act
Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531 (Jan. 7, 2005)) or
by the staff
of the Commission, or as may be provided by the Commission or its
staff from
time to time.
Reimbursement Amount: As to any Payment Date with respect to the
Class A
Notes, the sum of (x)(i) all Insured Payments and Avoided Payments
paid by the
Insurer, but for which the Insurer has not been reimbursed prior to
such Payment
Date pursuant to Section 5.01(a)(I)(v) of this Agreement, plus (ii)
interest
accrued on such Insured Payments and Avoided Payments not
previously repaid
calculated at the Late Payment Rate from the date the Indenture
Trustee received
the related Insured Payments or Avoided Payments and (y), without
duplication,
(i) any other amounts then due and owing to the Insurer under the
Insurance
Agreement but for which the Insurer has not been paid or reimbursed
prior to
such Payment Date, plus (ii) interest on such amounts at the Late
Payment Rate.
Related
Documents: With respect to each Mortgage Loan, the documents
listed in Section 2.01(e)(ii)(B) through (D).
Released
Mortgaged Property Proceeds: As to any Mortgage Loan, proceeds
received by the Servicer in connection with (a) a taking of an
entire Mortgaged
Property by exercise of the power of eminent domain or condemnation
or (b) any
release of part of the Mortgaged Property from the lien of the
related Mortgage,
whether by partial condemnation, sale or otherwise, which are not
released to
the Mortgagor in accordance with (i) applicable law, (ii) mortgage
servicing
standards employed by the Servicer in servicing home equity line of
credit
mortgage loans for its own account and (iii) this Agreement.
Relief
Act: The Servicemembers Civil Relief Act, as amended.
Relief Act
Interest Shortfall: With respect to any Payment Date, for any
Mortgage Loan with respect to which there has been a reduction in
the amount of
interest collectible thereon for the most recently ended Collection
Period or
(without duplication) any earlier Collection Period as a result of
the
application of the Relief Act, the amount by which (i) interest
collectible on
such Mortgage Loan during each such Collection Period is less than
(ii) one
month's interest on the Stated Principal Balance of such Mortgage
Loan at the
Loan Rate for such Mortgage Loan before giving effect to the
application of the
Relief Act.
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REMIC: A
"real estate mortgage investment conduit" within the meaning of
Section 860D of the Code.
REO
Account: The account or accounts maintained by the Servicer in
respect
of an REO Property pursuant to Section 3.07.
REO
Disposition: The sale or other disposition of an REO Property
on
behalf of the Trust.
REO
Imputed Interest: As to any REO Property, for any calendar
month
during which such REO Property was at any time part of the Trust
Fund, one
month's interest at the applicable Net Loan Rate on the Stated
Principal Balance
of such REO Property (or, in the case of the first such calendar
month, of the
related Mortgage Loan if appropriate) as of the close of business
on the Payment
Date in such calendar month.
REO
Principal Amortization: With respect to any REO Property, for
any
calendar month, the excess, if any, of (a) the aggregate of all
amounts received
in respect of such REO Property during such calendar month, whether
in the form
of rental income, sale proceeds (including, without limitation,
that portion of
the Optional Redemption Price paid in connection with a purchase of
all of the
Mortgage Loans and REO Properties pursuant to Section 8.01 that is
allocable to
such REO Property) or otherwise, net of any portion of such amounts
(i) payable
pursuant to Section 3.07 in respect of the proper operation,
management and
maintenance of such REO Property or (ii) payable or reimbursable to
the Servicer
pursuant to Section 3.07 for unpaid Servicing Fees in respect of
the related
Mortgage Loan and unreimbursed Servicing Advances, over (b) the REO
Imputed
Interest in respect of such REO Property for such calendar
month.
REO
Property: A Mortgaged Property that is acquired by the Trust in
foreclosure or by deed in lieu of foreclosure.
Reserve
Account: The account designated as the "Reserve Account" and
established pursuant to Section 5.06 hereof.
Residual
Certificate: The Class L or Class R Certificate, as applicable.
Residual
Certificateholder: Any holder of a Residual Certificate.
Responsible Officer: With respect to the Indenture Trustee, any
Managing
Director, any Director, any Vice President, any Assistant Vice
President, any
Associate, any Assistant Secretary, any Trust Officer, or any other
officer of
the Indenture Trustee customarily performing functions similar to
those
performed by any of the above designated officers who at such time
shall be
officers to whom with respect to a particular matter, the matter is
referred
because of such officer's knowledge of and familiarity with the
particular
subject and who has
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direct responsibility for administration of this Agreement. When
used with
respect to a Seller, the Depositor or the Servicer, the Chief
Executive Officer
or any Vice President, Assistant Vice President, Treasurer,
Assistant Treasurer,
Cashier, Assistant Cashier or any Secretary or Assistant
Secretary.
Securities
Act: The Securities Act of 1933, as amended.
Securityholders: The Noteholders and the Certificateholders.
Seller:
IndyMac Bank, F.S.B., a federal savings bank, as seller under
the
Mortgage Loan Purchase Agreement.
Senior
Lien: With respect to any Mortgage Loan that is not a first
priority lien, the mortgage loan or mortgage loans relating to the
corresponding
Mortgaged Property having priority senior to that of such Mortgage
Loan.
Servicer:
IndyMac Bank, F.S.B., a federal savings bank, as Servicer, or
any successor hereunder appointed in accordance with the terms
hereof.
Servicer
Employees: As defined in Section 3.06.
Servicer
Remittance Date: With respect to any Payment Date, the Business
Day prior to such Payment Date.
Servicing
Advances: All reasonable and customary unanticipated "out of
pocket" costs and expenses incurred in the performance by the
Servicer of its
servicing obligations, including, but not limited to, the cost of
(i) the
preservation, restoration and protection of the Mortgaged Property,
(ii) any
enforcement or judicial proceedings, including foreclosures, (iii)
the
management and liquidation of the REO Property, including
reasonable fees paid
to any independent contractor in connection therewith, and (iv)
compliance with
the obligations under Sections 3.04, 3.07 or 3.17 hereunder;
provided however,
that such obligation with respect to any related Mortgage Loan
shall cease if
the Servicer determines, in its sole discretion, that Servicing
Advances with
respect to such Mortgage Loan are or would be Nonrecoverable
Advances.
Servicing
Certificate: As defined in Section 5.03(a).
Servicing
Fee: With respect to any Payment Date and Mortgage Loans, the
product of (i) the Servicing Fee Rate, (ii) the aggregate Principal
Balance of
Mortgage Loans as of the opening of business on the first day of
the related
Collection Period (or at the Cut-off Date with respect to the first
Payment
Date), and (iii) 1/12; a portion of such Servicing Fee may be
retained by a
Sub-Servicer as its servicing compensation.
Servicing
Fee Rate: 0.50% per annum, with respect to Mortgage Loans.
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Servicing
Officer: Any officer of the Servicer involved in, or
responsible
for, the administration and servicing of the Mortgage Loans whose
name and
specimen signature appear on a list of servicing officers furnished
to the
Indenture Trustee (with a copy to the Insurer) by the Servicer on
the Closing
Date, as such list may be amended from time to time, initially set
forth in
Exhibit B.
SFAS 140:
Statement of Financial Accounting Standards No. 140 of the
Financial Accounting Standards Board, as in effect on the date
hereof.
60+ Day
Delinquent Mortgage Loan: For any Collection Period, any
Mortgage
Loan that is (i) more than 60 days delinquent, (ii) for which the
related
Mortgagor has filed for bankruptcy protection or is otherwise the
subject of a
bankruptcy or similar insolvency preceding, (iii) that is in
foreclosure, or
(iv) with respect to which the related Mortgaged Property is
characterized as
REO Property as of the end of such Collection Period.
Specified
Overcollateralization Amount: on any Payment Date prior to the
Stepdown Date, is an amount equal to 1.60% of the Initial Invested
Amount and on
any Payment Date on or after the Stepdown Date is an amount equal
to the greater
of (i) 0.50% of the Initial Invested Amount and (ii) 3.20% of the
Invested
Amount for such Payment Date.
Sponsor:
IndyMac Bank, F.S.B., a federal savings bank.
Stated
Principal Balance: With respect to any Mortgage Loan: (a) as of
any
date of determination up to but not including the Payment Date on
which the
proceeds, if any, of a Liquidation Event with respect to such
Mortgage Loan
would be distributed, the outstanding Stated Principal Balance of
such Mortgage
Loan as of the Cut-off Date, as shown in the Mortgage Loan
Schedule, plus any
Additional Balances transferred to the trust in respect of the
Mortgage Loan,
minus the sum of (i) the principal portion of each Monthly Payment
due on a Due
Date subsequent to the Cut-off Date, (ii) the portion of all
Principal
Prepayments received after the Cut-off Date, to the extent paid
pursuant to
Section 5.01 on or before such date of determination, (iii) all
Liquidation
Proceeds and Insurance Proceeds allocable to Principal to the
extent paid
pursuant to Section 5.01 on or before such date of determination,
and (iv) any
Charge-off Amount incurred with respect thereto during or prior to
the
Collection Period for the most recent Payment Date coinciding with
or preceding
such date of determination; and (b) as of any date of determination
coinciding
with or subsequent to the Payment Date on which the proceeds, if
any, of a
Liquidation Event with respect to such Mortgage Loan would be paid,
zero. With
respect to any REO Property: (a) as of any date of determination up
to but not
including the Payment Date on which the proceeds, if any, of a
Liquidation Event
with respect to such REO Property would be paid, an amount (not
less than zero)
equal to the Stated Principal Balance of the related Mortgage Loan
as of the
date on which such REO Property was acquired on behalf of the Trust
Fund, minus
the aggregate amount of REO Principal Amortization in respect of
such REO
Property for all previously ended calendar months, to the extent
paid pursuant
to Section 5.01 on or before such date of determination; and (b) as
of any date
of determination coinciding with or subsequent to the Payment on
which the
proceeds, if any, of a Liquidation Event with respect to such REO
Property would
be paid, zero.
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Statement
to Noteholders: As defined in Section 5.03(b).
Stepdown
Date: With respect to the Notes, the later to occur of (a) the
31st Payment Date and (b) the first Payment Date following the
Payment Date on
which the Credit Enhancement Percentage is greater than or equal to
5.20%.
Subsequent
Recoveries: As of any Payment Date, amounts received by the
Servicer (net of any related expenses permitted to be reimbursed to
the
Servicer) specifically related to a Charged-Off HELOC.
Subservicer: Any Person with whom the Servicer has entered into
a
Subservicing Agreement and who satisfies the requirements set forth
in Section
3.01(a) in respect of the qualification of a Subservicer.
Subservicing Agreement: Any agreement between the Servicer and
any
Subservicer relating to subservicing and/or administration of
certain Mortgage
Loans as provided in Section 3.01, a copy of which shall be
delivered, along
with any modifications thereto, to the Indenture Trustee and the
Insurer.
Substitution Adjustment: As to any date on which a substitution
occurs
pursuant to Section 2.05, the sum of (a) the excess of (i) the
aggregate
Principal Balances of all Defective Mortgage Loans to be replaced
by Eligible
Substitute Mortgage Loans (after application of principal payments
received on
or before the date of substitution of any Eligible Substitute
Mortgage Loans as
of the date of substitution) over (ii) the Principal Balance of
such Eligible
Substitute Mortgage Loans and (b) the greater of (x) accrued and
unpaid interest
(accruing at the Loan Rate for such Defective Mortgage Loan) on
such excess
through the Collection Period relating to the Payment Date for
which such
Substitution Adjustment will be included as part of Available Funds
and (y) 30
days' interest on such excess calculated on a 360-day year in each
case at the
Loan Rate (or Loan Rate net of the Servicing Fee Rate if the
related Seller is
the Servicer) and (c) if the Servicer is not the related Seller the
amount of
any unreimbursed Servicing Advances made by the Servicer with
respect to such
Defective Mortgage Loan and (d) the amounts referred to in clause
(b) of the
definition of Purchase Price in respect of such Defective Mortgage
Loan.
Substitution Date: As defined in Section 2.05(b).
Supplemental Mortgage Loan Schedule: As defined in Section
2.05(b).
Telerate
Page 3750: The display designated as page 3750 on the Moneyline
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).
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Three
Month Rolling Delinquency Rate: With respect to any Payment Date
on
and after the third Payment Date, the average of the Principal
Balances of 60+
Day Delinquent Mortgage Loans for the related Collection Period and
the two
preceding Collection Periods divided by the Pool Balance, in each
case on the
last day of those Collection Periods, respectively.
Transaction Documents: This Agreement, the Mortgage Loan
Purchase
Agreement, the Indenture, the Insurance and Indemnity Agreement,
the Trust
Agreement, the Administration Agreement and the Premium Letter.
Trigger
Event: With respect to any Payment Date, will be in effect if:
(a) the
sum of the Investor Charge-Off Amounts for that Payment Date
and
all prior Payment Dates, expressed as a percentage of the Initial
Invested
Amount, is greater than
(i) with respect to the first Payment Date to and including the
48th
Payment
Date, 1.75%,
(ii) with respect to
the 49th Payment Date to and including the 60th
Payment
Date, 1.75% initially, plus 0.0625% per month thereafter,
(iii) with respect to the 61st Payment Date to and including
the
72nd
Payment Date, 2.50% initially, plus 0.0417% per month
thereafter,
(iv) with respect to the 73rd Payment Date to and including the
84th
Payment
Date, 3.00% initially, plus 0.0208% per month thereafter,
(v) with respect to the 85th Payment Date and thereafter, 3.25%
or
(b) the
Three Month Rolling Delinquency Rate for such Payment Date is
greater than 3.50%.
Trust,
Trust Estate or Trust Fund: IndyMac Home Equity Mortgage Loan
Asset-Backed Trust, Series 2006-H3, a Delaware statutory trust,
established
pursuant to the Trust Agreement, the corpus of which consists of
the Mortgage
Loans and Mortgage Files, such other assets as shall from time to
time be
identified as deposited in the Trust Accounts in accordance with
this Agreement,
property that secured a Mortgage Loan and that has become REO
Property, the
interest of the Seller in certain hazard insurance policies
maintained by the
Mortgagors or the Servicer in respect of the Mortgage Loans, the
Depositor's
rights under the Mortgage Loan Purchase Agreement and all proceeds
of the
foregoing.
Trust
Accounts: The Collection Account, the Certificate Account, the
Payment Account and the Reserve Account.
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Trust
Agreement: The Trust Agreement, dated as of September 19, 2006,
among the Depositor and the Owner Trustee, as amended and restated
as of
September 29, 2006, among the Administrator, the Depositor and the
Owner
Trustee.
UCC: The
Uniform Commercial Code, as amended from time to time, as in
effect in any specified jurisdiction.
Uninsured
Cause: Any cause of damage to a Mortgaged Property such that
the
complete restoration of such property is not fully reimbursable by
the insurance
policies required to be maintained pursuant to Section 3.04
hereof.
Utilization Rate: As of any date, the percentage of the line of
credit
relating to a Mortgage Loan that has been drawn upon.
Section
1.02 Other Definitional Provisions.
(a)
Capitalized terms used herein and not otherwise defined herein
have
the meanings assigned to them in the Indenture and the Trust
Agreement, as
applicable.
(b) All
terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered
pursuant hereto
unless otherwise defined therein.
(c) As
used in this Agreement and in any certificate or other document
made or delivered pursuant hereto or thereto, accounting terms not
defined in
this Agreement or in any such certificate or other document, and
accounting
terms partly defined in this Agreement or in any such certificate
or other
document to the extent not defined, shall have the respective
meanings given to
them under generally accepted accounting principles. To the extent
that the
definitions of accounting terms in this Agreement or in any such
certificate or
other document are inconsistent with the meanings of such terms
under generally
accepted accounting principles, the definitions contained in this
Agreement or
in any such certificate or other document shall control.
(d) The
words "hereof," "herein," "hereunder" and words of similar
import
when used in this Agreement shall refer to this Agreement as a
whole and not to
any particular provision of this Agreement; Article, Section,
Schedule and
Exhibit references contained in this Agreement are references to
Articles,
Sections, Schedules and Exhibits in or to this Agreement unless
otherwise
specified; and the term "including" shall mean "including without
limitation."
(e) The
definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the
masculine as well
as to the feminine genders of such terms.
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(f) Any
agreement, instrument or statute defined or referred to herein
or
in any instrument or certificate delivered in connection herewith
means such
agreement, instrument or statute as from time to time amended,
modified or
supplemented and includes (in the case of agreements or
instruments) references
to all attachments thereto and instruments incorporated therein;
references to a
Person are also to its permitted successors and assigns.
Section
1.03 Interest Calculations.
All
calculations of interest that are made in respect of the
Principal
Balance of a Mortgage Loan shall be made on a daily basis using a
365-day year
and the actual number of days elapsed. All calculations of interest
that are
made in respect of the Notes and the Certificates, shall be
calculated on the
basis of a 360 day year and the actual number of days elapsed in
the related
Interest Accrual Period. The calculation of the Premium Amount, the
Owner
Trustee Fee and the Indenture Trustee Fee shall be made on the
basis of the
actual number of days in each Collection Period divided by 360. All
dollar
amounts calculated hereunder shall be rounded to the nearest penny
with one-half
of one penny being rounded up.
ARTICLE II.
CONVEYANCE OF THE MORTGAGE LOANS
Section
2.01 Conveyance of the Mortgage Loans.
(a) The
Depositor, concurrently with the execution and delivery of this
Agreement, does hereby transfer, assign, set over and otherwise
convey to the
Trust, without recourse (subject to Sections 2.02 and 2.04) all of
its right,
title and interest in and to (i) each Mortgage Loan listed on the
Mortgage Loan
Schedule on the Closing Date and the related Mortgage File
(including the
related Mortgage Note and Mortgage), including its Cut-off Date
Principal
Balance (including all rights of the Depositor pursuant to the
Mortgage Loan
Purchase Agreement to purchase Additional Balances resulting from
Draws made
pursuant to the related Mortgage Note prior to the termination of
this
Agreement) and all related collections in respect of such Mortgage
Loan received
after the Cut-off Date (excluding scheduled interest payments due
on or prior to
the Cut-off Date); (ii) related property that secured a Mortgage
Loan and which
has been acquired by foreclosure or deed in lieu of foreclosure;
(iii) its
rights under any related insurance policies maintained in respect
of the
Mortgage Loans (including any Insurance Proceeds) provided,
however, that
neither the Indenture Trustee nor the Trust assumes any obligation
under any
Mortgage Note for the funding of future Draws to the Mortgagor
thereunder, and
neither the Indenture Trustee nor the Trust will be obligated or
permitted to
fund any such future Draws; and (vi) any and all proceeds of the
foregoing
(collectively, the "Conveyed Assets"). Additional Balances shall be
included in
the related Principal Balance transferred to the Trust pursuant to
this Section
2.01 and therefore will be part of the corpus of the Trust.
The Seller, the
Depositor and the Trust agree to take or cause to be taken
such actions (including without limitation the filing of the UCC-1
financing
statements in the States of
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California, in the case of the Seller, and the State of Delaware,
in the case of
the Depositor (which shall have been filed on or before the Closing
Date)
describing the Cut-off Date Principal Balances and Additional
Balances related
to the Mortgage Loans, and naming the Seller as debtor and the
Depositor as
secured party, in the case of the Seller, and naming the Depositor
as debtor and
the Trust as secured party, in the case of the Depositor, and any
amendments to
such UCC-1 financing statements required to reflect a change in the
name or
corporate structure of the Seller, the Depositor, or the Trust, as
the case may
be, or the filing of any additional financing statement due to the
change in the
jurisdiction of formation of the Seller, the Depositor or the
Trust, as the case
may be, within 30 days of any event necessitating such filing) as
are necessary
to perfect and protect the Depositor's interest in the case of the
Seller and
the Trust and the Insurer's interest in the case of the Depositor,
in each case
describing Cut-off Date Principal Balance and the Additional
Balances related to
the Mortgage Loans, the remainder of the trust estate and the
proceeds thereof.
In addition, the Servicer agrees to file continuation statements
with respect to
such UCC-1 financing statements as required and as long as this
Agreement
remains outstanding with such authorization and information as may
be necessary
to make such filing to be provided by the applicable parties.
In the
event any loss is suffered by the Insurer or the Indenture
Trustee,
on behalf of the Trust, in respect of any Mortgage Loan, as a
result of a
failure by the Seller or the Depositor to file the UCC-1 financing
statements
when required to perfect or maintain the perfection of the
Indenture Trustee's
security interest hereunder and afford it first priority, the
Seller shall, on
the Business Day next preceding the Payment Date in the month
following the
Collection Period during which such loss occurred, purchase such
Mortgage Loan.
Such purchase shall be accomplished in the same manner as set forth
in Section
2.02.
In
addition, on or prior to the Closing Date, the Depositor shall
cause
the Insurer to deliver the Policy to the Indenture Trustee, for the
benefit of
the Class A Noteholders.
(b) In
exchange for the transfer of the Mortgage Loans on the Closing
Date, the Class B, Class L and Class R Certificates and the Class
M1 and Class
M2 Notes shall be issued to or at the direction of the
Depositor.
(c) In
consideration of the sale of any Additional Balance from the
Depositor to the Trust on any day, the Trust shall pay or cause to
be paid to
the Depositor or its designee an amount equal to the aggregate
principal
balances of the related Draws on such day. The Trust shall fund the
amount
specified in the preceding sentence in one of the following ways,
as applicable:
(i) with respect to any Collection Period preceding the
commencement of the
Rapid Amortization Period, (a) on each day during such Collection
Period, a cash
payment, to the extent then available from the Floating Allocation
Percentage of
Principal Collections on the Mortgage Loans received during such
Collection
Period and remaining on deposit in the Collection Account, in an
amount equal to
the Aggregate Draw Amount on such day, and (b) on the last day of
such
Collection Period, to the extent there exists an Additional Balance
Advance
Amount for such Collection Period, an increase in the Class
Principal Balance of
the Class L Certificate, equal to such Additional Balance Advance
Amount, and
(ii) for any day on and after the first day of the Collection
Period in which
the commencement of the Rapid Amortization Period occurs,
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and any Collection Period thereafter, an increase in the Class
Principal Balance
of the Class L Certificate in an amount equal to the aggregate
principal balance
of Additional Balances on such day.
(d) Prior
to the last day of each Collection Period preceding the
commencement of the Rapid Amortization Period, the Holder of the
Class L
Certificate shall purchase the Additional Balance Advance Amount
for the related
Payment Date, if any, and the Seller shall deliver to the Indenture
Trustee and
the Holder of the Class L Certificates two Business Days prior to
the following
Servicer Remittance Date an Advance Notice including the aggregate
amount of the
expected Additional Balance Advance Amount for that date. Upon
receipt of such
notice and in any event no later than two Business Days prior to
the following
Payment Date, the Holder of the Class L Certificate shall make an
advance to the
Trust in the amount specified in such Advance Notice by depositing
such amount
into the Reserve Account. The Indenture Trustee shall cause such
amount to be
remitted to the Seller on such following Payment Date. In addition,
on and after
the first day of the Collection Period in which the commencement of
the Rapid
Amortization Period occurs, the Holder of the Class L Certificate
shall purchase
Additional Balances that are transferred to the Trust (as such
Additional
Balances are conveyed and in the amounts specified by the Servicer)
by
depositing into the Reserve Account the amount of the Draws
relating to such
Additional Balances, which amount shall be disbursed by the
Indenture Trustee to
the Seller. The Class Principal Balance of the Class L Certificates
will be
increased by the amount of any such purchased Additional Balance
Advance Amounts
or Additional Balances, as applicable, as described in Section
2.01(c) above.
(e) (i) In
connection with such transfer, assignment, sale and conveyance
by the Depositor will deliver or have delivered to, and deposit
with, the
Indenture Trustee (or its designee), on or before the Closing Date,
the Mortgage
Loan Schedule in computer readable format.
(ii) In
connection with such transfer, assignment, sale and conveyance
by
the
Depositor, the Depositor shall cause the Seller to deliver to
and
deposit
with the Indenture Trustee (x) the Mortgage Note in respect of
each
Mortgage Loan and (y) the Related Documents within 90 days
following
the
occurrence of the Closing Date. The Mortgage Note and the
Related
Documents
shall be in the following form:
(A) the original Mortgage Note, endorsed in blank, or a copy
of such original Mortgage Note with an accompanying Lost Note
Affidavit;
(B) the original Assignment of Mortgage, from the Seller
either in blank or to "Deutsche Bank National Trust Company, as
Indenture Trustee for IndyMac Home Equity Mortgage Loan
Asset-Backed
Trust, Series 2006-H3 under the Sale and Servicing Agreement
dated
September 14, 2006," which assignment shall be in form and
substance
acceptable for recording;
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(C) the original Mortgage, with evidence of recording thereon,
provided that if the original Mortgage has been delivered for
recording to the
appropriate public recording office of the
jurisdiction in which the Mortgaged Property is located but has
not
yet been returned to the Seller by such recording office, the
Seller
shall deliver to the Indenture Trustee a certified true copy of
such
original Mortgage so certified by or on behalf of the Seller,
together with a certificate by or on behalf of the Seller
certifying
that such original Mortgage has been so delivered to such
recording
office; in all such instances, the Seller shall deliver or cause
to
be delivered the original recorded Mortgage to the Indenture
Trustee
promptly upon receipt of the original recorded Mortgage;
(D) intervening assignments, if any, with evidence of
recording thereon, provided that if such intervening assignment
has
been delivered for recording to the appropriate public
recording
office of the jurisdiction in which the Mortgaged Property is
located but has not yet been returned to the Seller by such
recording office, the Seller shall deliver to the Indenture
Trustee
a certified true copy of such intervening assignment so certified
by
the Seller, together with a certificate by or on behalf of the
Seller certifying that such intervening assignment has been so
delivered to such recording office; in all such instances, the
Seller shall deliver or cause to be delivered the original
intervening assignment to the Indenture Trustee promptly upon
receipt of the original intervening assignment; and
provided,
however, that as to any Mortgage Loan, if as evidenced by an
Opinion of Counsel delivered to and in form and substance
satisfactory to the
Indenture Trustee, the Insurer, and the Rating Agencies (x) an
optical image or
other representation of the related document specified in clause
(d)(ii)(C)
above is enforceable in the relevant jurisdictions to the same
extent as the
original of such document and (y) such optical image or other
representation
does not impair the ability of an owner of such Mortgage Loan to
transfer or
perfect its interest in such Mortgage Loan, such optical image or
other
representation may be delivered as required in clause (d)(ii).
The Seller
and the Depositor each hereby confirms to the Indenture Trustee
and the Insurer that it has made the appropriate entries in its
general
accounting records, to indicate that such Mortgage Loans have been
sold to the
Depositor by the Seller, and sold by the Depositor to the Trust.
The Servicer
hereby confirms to the Indenture Trustee and the Insurer that it
has clearly and
unambiguously made appropriate entries in its general accounting
records
indicating that such Mortgage Loans constitute part of the Trust
and are
serviced by it on behalf of the Trust in accordance with the terms
hereof.
The Seller
shall deliver to the Indenture Trustee, as initial custodian
and bailee for the benefit of the Trust, the documents and
instruments listed
above in this clause (e).
The
Assignments of Mortgage will be held by the Indenture Trustee,
subject
to the conditions provided below in clause (f).
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(f) It is
the express intent of the parties hereto that the conveyance of
the Mortgage Loans and the other property described above by the
Depositor to
the Trust, as provided in this Agreement be, and be construed as, a
sale of all
of the Depositor's right, title and interest in the Mortgage Loans
and the other
property described above by the Depositor to the Trust. It is,
further, not the
intention of the parties that such conveyance be deemed a pledge of
the Mortgage
Loans and the other property described above by the Depositor to
the Trust to
secure a debt or other obligation of the Depositor. However, in the
event that,
notwithstanding the intent of the parties, the Mortgage Loans and
the other
property described above are held to be property of the Depositor,
or if for any
reason this Agreement is held or deemed to create a security
interest in the
Mortgage Loans and the other property described above, then, (x)
this Agreement
shall also be deemed to be a security agreement within the meaning
of Articles 8
and 9 of the UCC; and (y) the Depositor hereby grants to the Trust
a security
interest in and to all of the Depositor's right, title, and
interest, whether
now owned or hereafter acquired, in and to the Conveyed Assets.
The
possession by the Indenture Trustee or its designee, of
Mortgage
Files, including the Mortgage Notes and the Mortgages and such
other goods,
letters of credit, advices of credit, instruments, money,
documents, chattel
paper (tangible and electronic) or certificated securities in
accordance with
the terms of this Agreement shall be deemed to be "possession by
the secured
party," or possession by a purchaser or a person designated by him
or her, for
purposes of perfecting the security interest pursuant to the UCC
(including,
without limitation, Sections 9-313, 8-313 or 8-321 thereof); and
notifications
to persons holding such property, and acknowledgments, receipts or
confirmations
from persons holding such property, shall be deemed to be
notifications to, or
acknowledgments, receipts or confirmations from, securities
intermediaries,
bailees or agents of, or persons holding for, the Indenture Trustee
or its
designee, as applicable, for the purpose of perfecting such
security interest
under applicable law. The Seller, the Servicer and the Depositor
shall, to the
extent consistent with this Agreement, take such actions as may be
necessary to
ensure that, if this Agreement were deemed to create a security
interest in the
Mortgage Loans and the proceeds thereof, such security interest
would be deemed
to be a perfected security interest of first priority under
applicable law and
will be maintained as such throughout the term of the Agreement. In
connection
herewith, the Trust shall have all of the rights and remedies of a
secured party
and creditor under the UCC. Notwithstanding the foregoing, in
taking such
actions as may be necessary to ensure that, if this Agreement were
deemed to
create a security interest in the Mortgage Loans and the proceeds
thereof, such
security interest would be deemed to be a perfected security
interest of first
priority under applicable law, and maintaining such throughout the
term of this
Agreement.
(g) On the
Closing Date, the Indenture Trustee, will, for the benefit of
Noteholders and the Insurer, review each Mortgage Loan and the
related Mortgage
File to ascertain that all required documents set forth in
Section
2.01(e)(ii)(A) have been received and shall deliver to the
Depositor, the
Servicer, and the Insurer an initial certification (the "Initial
Certification")
in the form annexed hereto as Exhibit J to the effect that as to
each Mortgage
Loan listed in the Mortgage Loan Schedule (other than any Mortgage
Loan prepaid
in full or any specifically identified in such certification as not
covered by
such certification), all of the applicable documents specified in
Section
2.01(e)(ii)(A) are in its possession. Within 90 days after the
Closing Date, the
Indenture Trustee, will, for the benefit of Noteholders and the
Insurer, review
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each Mortgage File to ascertain that all required documents set
forth in Section
2.01(e)(ii) have been received and appear on their face to contain
the requisite
signatures by or on behalf of the respective parties thereto, and
shall deliver
to the Depositor, the Servicer and the Insurer an interim
certification (the
"Interim Certification") in the form annexed hereto as Exhibit K to
the effect
that, as to each Mortgage Loan listed in the Mortgage Loan Schedule
(other than
any Mortgage Loan prepaid in full or any specifically identified in
such
certification as not covered by such certification), (i) all of the
applicable
documents specified in Section 2.01(e) are in its possession and
(ii) such
documents have been reviewed by it and appear to relate to such
Mortgage Loan.
The Indenture Trustee shall determine whether such documents are
executed and
endorsed, but shall be under no duty or obligation to inspect,
review or examine
any such documents, instruments, certificates or other papers to
determine that
the same are valid, binding, legally effective, properly endorsed,
genuine,
enforceable or appropriate for the represented purpose or that they
have
actually been recorded or are in recordable form or that they are
other than
what they purport to be on their face. The Indenture Trustee shall
not have any
responsibility for verifying the genuineness or the legal
effectiveness of or
authority for any signatures of or on behalf of any party or
endorser.
(h) If in
the course of the review described in paragraph (e) above the
Indenture Trustee discovers any document or documents constituting
a part of a
Mortgage File that is missing, does not appear regular on its face
(i.e., is
mutilated, damaged, defaced, torn or otherwise physically altered)
or appears to
be unrelated to the Mortgage Loans identified in the Mortgage Loan
Schedule, as
applicable (each, a "Material Defect"), the Indenture Trustee, upon
discovering
such Material Defect shall promptly identify the Mortgage Loan to
which such
Material Defect relates in the Interim Certification delivered to
each of the
Depositor and the Servicer and give notice thereof to the
Seller.
(i) Within
180 days following the Closing Date, the Indenture Trustee
shall deliver to the Depositor, the Servicer and the Insurer a
final
certification (the "Final Certification") substantially in the form
attached as
Exhibit L evidencing the completeness of the Mortgage Files in its
possession or
control, with any exceptions noted thereto.
(j)
Nothing in this Agreement shall be construed to constitute an
assumption by the Trust Estate, the Indenture Trustee, the
Administrator, any
Custodian or the Noteholders of any unsatisfied duty, claim or
other liability
on any Mortgage Loan or to any Mortgagor. The Indenture Trustee
shall have no
responsibility for reviewing any Mortgage File except as expressly
provided in
this Section 2.01. In reviewing any Mortgage File pursuant to this
Section, the
Indenture Trustee shall have no responsibility for determining
whether any
document is valid and binding, whether the text of any assignment
or endorsement
is in proper or recordable form (except, if not assigned to the
Indenture
Trustee or endorsed in blank, to determine if the Indenture Trustee
is the
assignee or endorsee), whether any document has been recorded in
accordance with
the requirements of any applicable jurisdiction, or whether a
blanket assignment
is permitted in any applicable jurisdiction, whether any Person
executing any
document is authorized to do so or whether any signature thereon is
genuine, but
shall only be required to determine whether a document has been
executed, that
it appears regular on its face and is
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related to such Mortgage Loan, and, upon the return of such
document from the
county recorder's office in accordance with this section, that it
purports to be
recorded.
(k) The
Indenture Trustee shall have the right to appoint a custodian
to
act on its behalf with respect to its obligations under Section
2.01(g) through
(i).
(l) (i)
Upon the occurrence of a Recordation Event, the Indenture
Trustee
shall within 90 days of such Recordation Event submit, at the
expense of the
Seller, to the appropriate recording offices Assignments of
Mortgage to the
Indenture Trustee on behalf of the Trust, which may be blanket
assignments if
permitted by applicable law, for the Mortgage Loans. In lieu of
recording any
such Assignments of Mortgage, the Servicer may provide to the
Indenture Trustee
and the Insurer an Opinion of Counsel in a form reasonably
acceptable to the
Owner Trustee, Indenture Trustee and the Insurer, to the effect
that recordation
of an Assignment of Mortgage in the state where the related
Mortgaged Property
is located is not necessary to protect the interests of the Owner
Trustee, the
Indenture Trustee or the Securityholders in the related Mortgage.
In the event
that any such Assignment of Mortgage is lost or returned unrecorded
because of a
defect therein, the Indenture Trustee shall promptly prepare, at
the expense of
the Seller, a substitute Assignment of Mortgage or cure such
defect, as the case
may be, and thereafter the Indenture Trustee shall, at the expense
of the
Seller, submit each such Assignment of Mortgage for recording.
(ii) With
respect to each MERS Mortgage Loan, the Servicer shall, at the
expense of the Depositor, take such actions as are necessary to
cause the
Indenture Trustee to be clearly identified as the owner of each
such Mortgage
Loan on the records of MERS for purposes of the system of recording
transfers of
beneficial ownership of mortgages maintained by MERS.
Section
2.02 Acceptance by Indenture Trustee, Review of Documentation.
(a) The
Indenture Trustee hereby acknowledges the issuance of the
Policy
by the Insurer for the benefit of the Class A Noteholders and the
sale and
assignment of the Mortgage Loans, and, subject to the review
provided for in
Section 2.01, and declares that, when delivered to the Indenture
Trustee in
accordance with Section 2.01(e), the Indenture Trustee will hold
the documents
constituting the Mortgage Files and that all amounts received by it
under the
Indenture in trust, upon the terms herein set forth, for the use
and benefit of
all present and future Class A Noteholders and the Insurer.
(b) If the
Seller is given notice under Section 2.01(h) and if the Seller
does not correct or cure the omission or defect within the 90-day
period
specified in Section 2.01(h), the Seller shall purchase the
Mortgage Loan from
the Trust or substitute an Eligible Substitute Mortgage Loan, as
provided in
Section 2.05, for such Mortgage Loan. Any such purchase by the
Seller shall be
at the Purchase Price and in each case shall be accomplished in the
manner set
forth in Section 2.04. It is understood and agreed that the
obligation of the
Seller to purchase any Mortgage Loan or substitute an Eligible
Substitute
Mortgage Loan for such Mortgage Loan as to which a material defect
in or
omission of a constituent document exists shall constitute the
sole
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remedy against the Seller respecting such defect or omission
available to the
Insurer, the Noteholders, the Indenture Trustee or the
Certificateholders.
The
Servicer, promptly following the transfer of (i) a Mortgage Loan
with
a Material Defect or (ii) an Eligible Substitute Mortgage Loan to
the Indenture
Trustee pursuant to this Section and Section 2.05, as the case may
be, shall
amend the Mortgage Loan Schedule and make appropriate entries in
its general
account records to reflect such transfer and the addition of any
Eligible
Substitute Mortgage Loan, if applicable.
Section 2.03
Representations and Warranties Regarding the Seller, the
Depositor and the Servicer.
(a) The
Seller, the Depositor and the Servicer each represents and
warrants as to itself to the parties hereto and the Insurer that,
as of the
Closing Date:
(i) Each of the Seller, the Depositor and the Servicer is duly
organized,
validly existing and in good standing under the laws of its
respective
jurisdiction of organization and has the power and authority to
own its
assets and to transact the business in which it is currently
engaged.
Each of the Seller, the Depositor and the Servicer is duly
qualified
to do business and is in good standing in each jurisdiction in
which the
character of the business transacted by it or properties owned
or leased
by it requires such qualification and in which the failure so
to
qualify
would have a material adverse effect on (a) its business,
properties, assets or condition (financial or other), (b) its
performance
of its
obligations under this Agreement, (c) the value or marketability
of
the
Mortgage Loans or (d) the ability to foreclose on the related
Mortgaged
Properties;
(ii) Each of the Seller, the Depositor and the Servicer has the
power and
authority to make, execute, deliver and perform this Agreement
and to
consummate all of the transactions contemplated under this
Agreement,
and has taken all necessary action to authorize the execution,
delivery
and performance of this Agreement. When executed and delivered,
this
Agreement will constitute its legal, valid and binding
obligation
enforceable in accordance with its terms, except as enforcement of
such
terms may
be limited by bankruptcy, insolvency, reorganization,
receivership, moratorium or similar laws affecting the enforcement
of
creditors'
rights generally and by the availability of equitable remedies;
(iii) Each of the Seller, the Depositor and the Servicer holds
all
necessary
licenses, certificates and permits from all government
authorities necessary for conducting its business as it is
presently
conducted.
Neither the Seller, the Depositor, nor the Servicer is required
to obtain
the consent of any other party or any consent, license,
approval
or
authorization from, or registration or declaration with, any
governmental authority, bureau or agency in connection with the
execution,
delivery,
performance, validity or enforceability of this Agreement,
except for
such consents, licenses, approvals
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or
authorizations, or registrations or declarations, as shall have
been
obtained
or filed, as the case may be, prior to the Closing Date;
(iv) The execution, delivery and performance of this Agreement
by
each of
the Seller, the Depositor and the Servicer will not conflict
with
or result
in a breach of, or constitute a default under, any provision of
its
charter documents, or constitute a material breach of or result in
the
creation
or imposition of any lien, charge or encumbrance upon any of
its
properties
pursuant to, any mortgage, indenture, contract or any other
agreement
to which it is a party or by which it may be bound;
(v) No certificate of an officer, statement furnished in writing
or
report
delivered pursuant to the terms hereof by the Seller, the
Depositor
or the
Servicer contains any untrue statement of a material fact or
omits
to state
any material fact necessary to make the certificate, statement
or
report not
misleading;
(vi) The transactions contemplated by this Agreement are in the
ordinary course of the
Seller's, the Depositor's and the Servicer's
business;
(vii) None of the Seller, the Depositor nor the Servicer is
insolvent,
nor will the Seller, the Depositor or the Servicer be made
insolvent
by the transfer of the Mortgage Loans, nor are the Seller, the
Depositor
or the Servicer aware of any pending insolvency;
(viii) None of the Seller, the Depositor or the Servicer is in
violation
of, and the execution and delivery of this Agreement by it and
its
performance and compliance with the terms of this Agreement will
not
constitute
a violation with respect to, any provision of any existing law,
any order
or decree of any court or any order or regulation of any
federal, state,
municipal or governmental agency having jurisdiction over
the
Seller, the Depositor or the Servicer, which violation would
materially
and adversely affect the Seller's, the Depositor's or the
Servicer's
ability to perform or meet any of their respective obligations
under this
Agreement;
(ix) There are no actions or proceedings against, or
investigations
of it,
pending or, to the best of its knowledge, threatened, before
any
court,
administrative agency or other tribunal (A) that, if determined
adversely,
would prohibit the Seller, the Depositor or the Servicer from
entering
into this Agreement, (B) seeking to prevent the consummation of
any of the
transactions contemplated by this Agreement or (C) that, if
determined
adversely, would prohibit or materially and adversely affect
the
Seller's, the Depositor's and the Servicer's performance of any
of
their
respective obligations under, or the validity or enforceability
of,
this
Agreement;
(x) The Servicer represents and warrants that the collection
practices
used by the Servicer with respect to the Mortgage Loans have
been, in
all material respects, legal, proper, prudent and customary in
the home
equity mortgage servicing business and in accordance with
Accepted
Servicing Practices;
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(xi) The Servicer represents and warrants that it believes that
the
Servicing Fee
Rate provides a reasonable level of base compensation to the
Servicer
for servicing the Mortgage Loans on the terms set forth herein;
(xii) The Seller represents and warrants that it did not sell
the
Mortgage
Loans to the Depositor, and the Depositor represents and
warrants
that it
did not sell the Mortgage Loans to the Trust, in each case,
with
any intent
to hinder, delay or defraud any of its creditors; and neither
the Seller
nor the Depositor will be rendered insolvent as a result of
their
sales under the Mortgage Loan Purchase Agreement and this
Agreement,
as
applicable;
(xiii) The Seller and the Depositor each represents and
warrants
that it
acquired title to the Mortgage Loans in good faith, without
notice
of any
adverse claim;
(xiv) The Seller and the Depositor each represents and warrants
that
the
transfer, assignment and conveyance of the Mortgage Notes and
the
Mortgages
by the Seller and the Depositor pursuant to the Mortgage Loan
Purchase
Agreement and this Agreement are not subject to the bulk
transfer
laws or
any similar statutory provisions in effect in any applicable
jurisdiction;
(xv) The Seller represents, warrants and covenants that so long
as
the Notes
remain outstanding, this Agreement shall be treated as an
official
record of the Seller within the meaning of Section 13(e) of the
Federal
Deposit Insurance Act (12 U.S.C. Section 1823(e));
(xvi) The Seller and the Depositor each represents and warrants
that
it has
caused the filing of all appropriate financing statements in
the
proper
filing office in the appropriate jurisdictions under applicable
law
in order
to perfect the security interest in the Mortgage Loans sold to
the
Depositor and transferred to the Indenture Trustee on behalf of
the
Trust,
respectively, pursuant to the Mortgage Loan Purchase Agreement
and
this
Agreement;
(xvii) This Agreement creates a valid and continuing security
interest
(as defined in the applicable Uniform Commercial Code) in the
Mortgage
Loans in favor of the Noteholders and the Certificateholders,
which
security interest is prior to all other liens, and is enforceable
as
such as
against creditors of and purchasers from the Seller;
(xviii) Each of the Seller and the Depositor has caused or will
have
caused,
within ten days, the filing of all appropriate financing
statements
in the proper filing office in the appropriate jurisdictions
under
applicable law in order to perfect the security interest in the
Mortgage
Loans granted to the Depositor and the Indenture Trustee,
respectively, under the Mortgage Loan Purchase Agreement and
hereunder;
and
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(b) The
representations and warranties set forth in Section 2.03(a)
shall
survive the sale and assignment of the Mortgage Loans to the Trust.
Upon
discovery of a breach of any representations and warranties which
materially and
adversely affect the interests of the Indenture Trustee, the
Noteholders, the
Certificateholders, the Depositor or the Insurer, the Person
discovering such
breach shall give prompt written notice to the other parties and to
the Insurer.
Within 60 days of its discovery or its receipt of notice of breach,
or, with the
prior written consent of the Insurer, such longer period specified
in such
consent, the Seller, the Depositor or the Servicer, as appropriate,
shall cure
such breach in all material respects.
Section
2.04 Representations and Warranties of the Seller Regarding the
Mortgage Loans.
(a) The
Seller hereby represents and warrants to the Depositor and the
Insurer, and the Depositor hereby assigns its rights with respect
to such
representations and warranties to the Trust, the Indenture Trustee
on behalf of
the Noteholders and the Certificateholders and the Insurer as
follows as of the
Closing Date, and with respect to each Eligible Substitute Mortgage
Loan, as of
the date of such substitution (and to the extent expressly stated
therein as of
such other time):
(i) The information with respect to each Mortgage Loan set forth
in
the
Mortgage Loan Schedule is complete, true and correct in all
material
respects
as of the Closing Date;
(ii) As of the Closing Date, for each Mortgage Loan, the
related
Mortgage
File contains the documents and instruments referred to in
Section
2.01(e)(ii);
(iii) Each Mortgaged Property relating to a Mortgage Loan is
improved
by a residential dwelling, which does not include cooperatives
or
mobile
homes and does not constitute other than real property under
state
law;
(iv) Each Mortgage Loan is being serviced by the Servicer or one
or
more
Subservicers according to Accepted Servicing Practices;
(v) Each Mortgage Note provides for (a) Monthly Payments which
are
at least
equal to accrued interest during such Accrual Period and (b) at
the
maturity of the related Mortgage Loan, payment in full of the
principal
balance of such Mortgage Note;
(vi) The Mortgage Notes related to Mortgage Loans bear a
variable
Loan Rate
and there is only one original of each such Mortgage Note;
(vii) Each Mortgage is a valid and subsisting first or second
lien
of record
on the Mortgaged Property subject, in the case of any second
Mortgage
Loan, only to a Senior Lien or Senior Liens on such Mortgaged
Property
and subject in all cases to the
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exceptions
to title set forth in the title insurance policy, if any, with
respect to
the related Mortgage Loan, which exceptions are generally
acceptable
to second mortgage lending companies (or first mortgage lending
companies
in the case of first lien Mortgage Loans), and such other
exceptions
to which similar properties are commonly subject and which do
not
individually, or in the aggregate, materially and adversely affect
the
benefits
of the security intended to be provided by such Mortgage;
(viii) No Mortgage Note and related Mortgage has been assigned
or
pledged
and immediately prior to the transfer and assignment
contemplated
in the
Mortgage Loan Purchase Agreement, the Seller held good,
marketable
and
indefeasible title to, and was the sole owner and holder of,
each
Mortgage
Loan subject to no Liens; the Seller has full right and
authority
under all
governmental and regulatory bodies having jurisdiction over the
Seller,
subject to no interest or participation of, or agreement with,
any
party, to
sell and assign the same pursuant to the Mortgage Loan Purchase
Agreement;
and immediately upon the transfer and assignment therein
contemplated, the Seller shall have transferred all of its right,
title
and
interest in and to each Mortgage Loan to the Purchaser (or its
assignee)
and the Purchaser (or its assignee) will hold good, equitable,
and when
recorded, marketable title to, and be the sole owner of, each
Mortgage
Loan subject to no Liens; without limiting the generality of
the
foregoing,
the Seller has taken all steps necessary to effect the release
of each
Mortgage Loan from any lien thereon held by a Federal Home Loan
Bank;
(ix) None of the Mortgage Loans is subject to a bankruptcy
proceeding;
(x) As of the Cut-off Date, none of the Mortgage Loans was more
than
30 days
Delinquent;
(xi) No Mortgage Loan is subject to any right of rescission,
set
off,
counterclaim or defense, including the defense of usury, nor will
the
operation
of any of the terms of any Mortgage Note or Mortgage, or the
exercise
of any right thereunder, render either the Mortgage Note or the
Mortgage
unenforceable in whole or in part, or subject to any right of
rescission, set off, counterclaim or defense, including the defense
of
usury, and
no such right of rescission, set off, counterclaim or defense
has been
asserted with respect thereto;
(xii) There is no mechanics' lien or claim for work, labor or
material
affecting any Mortgaged Property which is or may be a lien
prior
to, or
equal or coordinate with, the lien of the related Mortgage, and
no
rights are
outstanding that under law could give rise to such a lien
except
those which are insured against by the title insurance policy;
(xiii) (a) Each Mortgage Loan at the time it was made complied
with,
and each
Mortgage Loan at all times was serviced in compliance with, in
each case,
in all material respects, applicable state, local and federal
laws and
regulations, including, without limitation, usury, equal credit
opportunity, consumer credit, applicable predatory and
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abusive
lending laws, truth in lending and disclosure laws and (b) no
Mortgage
Loan is classified as (1) a "high cost" loan under the Home
Ownership
and Equity Protection Act of 1994 or (2) a "high cost,"
"threshold," "covered," "predatory" or similar loan under any
other
applicable
state, federal or local law which applies to mortgage loans
originated
by a state-chartered bank or any state or local law, rule or
regulation
applicable to the Mortgage Loans (or a similar classified loan
using
different terminology under a law imposing heightened
regulatory
scrutiny
or additional legal liability for residential mortgage loans
having
high interest rates, points and/or fees);
(xiv) (a) No Mortgage Loan is a "High Cost Loan" or "Covered
Loan,"
as
applicable (as such terms are defined in Standard & Poor's
LEVELS(R)
Version
5.7 Glossary Revised, Appendix E), (b) no Mortgage Loan
originated
on or
after October 1, 2002 through March 6, 2003 is governed by the
Georgia
Fair Lending Act and (c) no Mortgage Loan originated in the
State
of
Illinois is governed by the Illinois Interest Act (815 ILCS
205);
(xv) The improvements upon each Mortgaged Property relating to
Mortgage
Loans are covered by a valid and existing hazard insurance
policy
with a
generally acceptable carrier that provides for fire and
extended
coverage
representing coverage described in Sections 3.04 and 3.05;
(xvi) A flood insurance policy is in effect with respect to
each
Mortgaged
Property with a generally acceptable carrier in an amount
representing coverage described in Sections 3.04 or 3.05, if and to
the
extent
required by Sections 3.04 or 3.05;
(xvii) Each Mortgage and Mortgage Note is the legal, valid and
binding
obligation of the related Mortgagor and is enforceable in
accordance
with its terms, except only as such enforcement may be limited
by
bankruptcy, insolvency, reorganization, moratorium or other
similar
laws
affecting the enforcement of creditors' rights generally and by
general
principles of equity (whether considered in a proceeding or
action
in equity
or at law), and all parties to each Mortgage Loan and the
Mortgagee
had full legal capacity to execute all Mortgage Loan documents
and to
convey the estate therein purported to be conveyed. To the best
of
the
Seller's knowledge, there was no fraud involved in the origination
of
any
Mortgage Loan by the mortgagee or by the Mortgagor, any appraiser
or
any other
party involved in the origination of the Mortgage Loan;
(xviii) As of the Closing Date, approximately 93.14% of the
Mortgage
Loans
(measured by the Cut-off Date Pool Balance) are secured by
Mortgaged
Properties
that are owner-occupied residences, based on representations by
the
related Mortgagors made by such Mortgagors at origination.
(xix) The terms of the Mortgage Note and the Mortgage have not
been
impaired,
altered or modified in any material respect, except by a
written
instrument
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which has
been recorded or is in the process of being recorded and which
has been
or will be held by the Seller or delivered to the Indenture
Trustee in
accordance with the provisions of this Agreement. The substance
of any
such alteration or modification is reflected on the related
Mortgage
Loan Schedule and was approved, if required, by the related
primary
mortgage guaranty insurer, if any. Each original Mortgage was
recorded,
and all subsequent assignments of the original Mortgage have
been
recorded in the appropriate jurisdictions wherein such recordation
is
necessary
to perfect the lien thereof as against creditors of the Seller,
or are in
the process of being recorded;
(xx) As of the Closing Date, no Mortgage has been satisfied,
cancelled
or subordinated, in whole, or rescinded, and no instrument of
release or
waiver has been executed in connection with any Mortgage Loan,
and no
Mortgage has been released in whole or in part, in either case,
that would
have a material adverse affect on the related Mortgage Loan;
(xxi) There is no proceeding pending or threatened for the total
or
partial
condemnation of any Mortgaged Property, nor is such a
proceeding
currently
occurring, and as of the Cut-off Date and the Closing Date,
each
Mortgaged
Property is in good repair and is free of damage by waste,
fire,
earthquake
or earth movement, flood, tornado, hurricane or other casualty
that would
affect adversely the value of the Mortgaged Property as
security
for the related Mortgage Loan or the use for which the premises
were
intended;
(xxii) All of the improvements which were included for the
purpose
of
determining the Appraised Value of the Mortgaged Property lie
wholly
within the
boundaries and building restriction lines of such property, and
no
improvements on adjoining properties encroach upon the
Mortgaged
Property;
(xxiii) No improvement located on or being part of the
Mortgaged
Property
is in violation of any applicable zoning law or regulation and
all
inspections, licenses and certificates required to be made or
issued
with
respect to all occupied portions of the Mortgaged Property,
including
but not
limited to certificates of occupancy and fire underwriting
certificates, have been made or obtained from the appropriate
authorities;
(xxiv) All costs, fees and expenses incurred in making or closing
or
recording
the Mortgage Loans were paid, and no Mortgagor is entitled to
any refund
of any such amount paid or due under the related Mortgage or
Mortgage
Note;
(xxv) No Mortgage Note is or was secured by any collateral,
pledged
account or
other security except the lien of the corresponding Mortgage;
(xxvi) There is no obligation on the part of the Seller or any
other
party to
make payments in addition to those made by the Mortgagor;
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(xxvii) With respect to each Mortgage constituting a deed of
trust,
a trustee,
duly qualified under applicable law to serve as such, has been
properly
designated and currently so serves and is named in such
Mortgage,
and no
fees or expenses are or will become payable by the Trust, the
Indenture
Trustee or the Noteholders to the Indenture Trustee under the
deed of
trust, except in connection with a trustee's sale after default
by
the
Mortgagor;
(xxviii) No Mortgage Loan has a shared appreciation feature, or
other
contingent interest feature;
(xxix) There is no delinquent tax or assessment lien or judgment
on
any
Mortgaged Property;
(xxx) Each Mortgage contains customary and enforceable
provisions
which,
subject to clause (xvii) above, render the rights and remedies
of
the holder
thereof adequate for the realization against the related
Mortgaged
Property of the benefits of the security, including (A) in the
case of a
Mortgage designated as a deed of trust, by trustee's sale and
(B)
otherwise by judicial or non-judicial foreclosure, as applicable
in
the
relevant jurisdiction;
(xxxi) Each Mortgage contains a customary provision for the
acceleration of the payment of the unpaid principal balance of
the
Mortgage
Loan in the event the related security for the Mortgage Loan is
sold
without the prior consent of the mortgagee thereunder;
(xxxii) Except as set forth in clause (x) above, there is no
default,
breach, violation or event of acceleration existing under any
Mortgage
or the related Mortgage Note and no event which, with the
passage
of time or with notice
and the expiration of any grace or cure period,
would
constitute a default, breach, violation or event of
acceleration;
and the
Seller has not waived any default, breach, violation or event
of
acceleration;
(xxxiii) All parties to the Mortgage Note and the Mortgage had
legal
capacity
to execute the Mortgage Note and the Mortgage and each Mortgage
Note and
Mortgage have been duly and properly executed by such parties;
(xxxiv) All of the Mortgage Loans were originated in all
material
respects
in accordance with the applicable Originator's underwriting
criteria
in effect at the time of origination;
(xxxv) The Mortgage Loans were not selected by the Seller for
inclusion
in the Trust on any basis intended to adversely affect the
Trust, the
Noteholders the Certificateholders or the Insurer; and each
Mortgage
Note and Mortgage is in substantially one of the forms attached
as Exhibit
E and Exhibit F;
48
<Page>
(xxxvi) As of the Cut-off Date, approximately 0.72% of the
Mortgage
Loans
(measured by the Cut-off Date Pool Balance) were secured by
Mortgaged
Properties that had a Combined Loan to Value Ratio of more than
100%;
(xxxvii) Each Mortgage Loan was originated by the Originator
listed
on the
Mortgage Loan Schedule and was acquired in the ordinary course
of
business
by the Seller;
(xxxviii)
As of the Closing Date, the Seller has not received a
notice of
default of a Senior Lien which has not been cured;
(xxxix) Each of the documents and instruments included in a
Mortgage
File
referred to in Section 2.01(e)(ii)(A) and (C) through (D) is, and
at
such time
as Assignments of Mortgage are required to have been prepared,
such
Assignments of Mortgage will have been, duly executed and in due
and
proper
form and each such document or instrument is or will be in a
form
generally
acceptable to prudent institutional mortgage lenders that
regularly
originate or purchase mortgage loans similar to the Mortgage
Loans;
(xl) The Conveyed Assets constitute either "instruments" or
"general
intangibles" within the meaning of the New York UCC;
(xli) All consents and approvals required by the terms of each
Mortgage
Loan to the sale of such Mortgage Loan to the Purchaser under
the
Mortgage
Loan Purchase Agreement have been obtained;
(xlii) Other than the security interest granted by the Seller to
the
Purchaser
pursuant to the Mortgage Loan Purchase Agreement and other than
any
security interest which shall have been released immediately prior
to
the
consummation of the transactions contemplated hereby, the Seller
has
not
pledged, assigned, released, sold, granted a security interest in,
or
otherwise
conveyed any of the Mortgage Loans. The Seller has not
authorized
the filing of and is not aware of any financing statements
against
the Seller that include a description of collateral covering
the
Mortgage
Loans other than any financing statement relating to the
security
interest
granted to the Purchaser under the Mortgage Loan Purchase
Agreement.
The Seller is not aware of any judgment or tax lien filings
against
the Seller;
(xliii) The Servicer has in its possession all original copies
of
the
Mortgage Notes that constitute or evidence the Mortgage Loans.
The
Mortgage
Notes that constitute or evidence the Mortgage Loans do not
have
any marks
or notations indicating that they have been pledged, assigned
or
oth
