POOLING AND SERVICING AGREEMENT

[ Exhibit 4.1 ]

 

 

FIRST NLC SECURITIZATION, INC.,

as Depositor

 

FIRST NLC FINANCIAL SERVICES, LLC,

as Originator

 

[ - ]

as Sellers

 

[ - ]

as Trustee

 

[ - ]

as Servicer

 

and

 

[ - ]

as Master Servicer

 

 

POOLING AND SERVICING AGREEMENT

 

Dated as of                   , 200   

 

 

First NLC Securitization Trust 200    -   

Asset-Backed Certificates,

Series 200    -   

 

TABLE OF CONTENTS

 

 

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TABLE OF CONTENTS

 

 

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TABLE OF CONTENTS

 

 

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TABLE OF CONTENTS

 

 

 

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THIS POOLING AND SERVICING AGREEMENT, dated as of                       , 200    , is made by and among FIRST NLC SECURITIZATION, INC., a Delaware corporation, as depositor (the “ Depositor ”), FIRST NLC FINANCIAL SERVICES, LLC, as originator (the “ Originator ”),                          , as trustee (the “ Trustee ”),                          , as sellers (collectively, the “ Sellers ” and each, individually, a “ Seller ”),                          , as servicer (the “ Servicer ”), and                          , as master servicer (the “ Master Servicer ”).

 

PRELIMINARY STATEMENT

 

WHEREAS, the Depositor will acquire all of the rights, title and interest of the Sellers in certain [conventional, first priority lien, fixed rate and adjustable rate], [residential mortgage loans] identified in Schedule I hereto on a servicing-[released][retained] basis from the Sellers pursuant to this Agreement, and at the Closing Date will be the owner of the Mortgage Loans and the other property being conveyed by it to the Trustee, for the benefit of the Certificateholders, hereunder for inclusion in the Trust Fund;

 

WHEREAS, the Depositor has duly authorized the execution and delivery of this Agreement to provide for the conveyance to the Trustee, for the benefit of the Certificateholders, of the Mortgage Loans and the other property constituting the Trust Fund;

 

WHEREAS, on the Closing Date, the Depositor will acquire the Certificates as consideration for its transfer to the Trustee, for the benefit of the Certificateholders, of the Mortgage Loans and the other property constituting the Trust Fund;

 

WHEREAS, the Master Servicer shall be obligated under this Agreement, among other things, to supervise the servicing of the Mortgage Loans on behalf of the Trustee, and shall have the right, under certain circumstances, to terminate the rights and obligations of the Servicer under this Agreement upon the occurrence and continuance of a Servicer Event of Default as provided herein;

 

WHEREAS, as provided herein, the Trustee shall elect that the Trust Fund be treated for federal income tax purposes as comprising one or more real estate mortgage investment conduits (each a “ REMIC ” or, in the alternative, the “ Pooling REMIC ,” the “ Intermediate REMIC ” and the “ Issuing REMIC ,” respectively). Each Certificate, other than the Class R-[ - ] Certificate, shall represent ownership of a “regular interest” in the Issuing REMIC for purposes of the REMIC Provisions;

 

WHEREAS, the Issuing REMIC shall hold as its assets the several classes of uncertificated Intermediate REMIC Interests in the Intermediate REMIC, and each such Intermediate REMIC Interest, other than the interest represented by the Class R-[ - ] Certificate, is hereby designated as a “regular interest” in the Intermediate REMIC for purposes of the REMIC Provisions. The Intermediate REMIC shall hold as its assets the several classes of uncertificated Pooling REMIC Interests in the Pooling REMIC, and each such Pooling REMIC Interest, other than the interest represented by the Class R-[ - ]

Certificate, is hereby designated as a “regular interest” in the Pooling REMIC for purposes of the REMIC Provisions. The Pooling REMIC shall hold as its assets the property of the Trust Fund. The “ Startup Day ” for each REMIC created hereby for purposes of the REMIC Provisions is the Closing Date. In addition, for purposes of the REMIC Provisions, the latest possible maturity date for each regular interest in each REMIC created hereby is the month following the month in which the Mortgage Loan having the latest maturity date matures;

 

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The Pooling REMIC Interests

 

The following table sets forth (or describes) the class designation, interest rate, initial principal amount, and corresponding class of certificates for each class of Pooling REMIC Interests.

 

(1)	The interest rate for each Pooling REMIC Interest for any Distribution Date (and the related Accrual Period) is a per annum rate equal to the Net WAC.

 

(2)	The Class R-[ - ] Certificate is the sole class of residual interest in the Pooling REMIC. It does not have an interest rate or a principal balance.

 

The Intermediate REMIC Interests

 

The following table sets forth (or describes) the class designation, interest rate, initial principal amount, and corresponding class of certificates for each class of Intermediate REMIC Interests.

 

(1)	The interest rate for each Intermediate REMIC Interest for any Distribution Date (and the related Accrual Period) is a per annum rate equal to the Net WAC.

 

(2)	The Class R-[ - ] Certificate is the sole class of residual interest in the Intermediate REMIC. It does not have an interest rate or a principal balance.

 

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The Certificates

 

The following table sets forth (or describes) the Class designation, Pass-Through Rate, initial Certificate Principal Balance, and minimum denomination for each Class of Certificates.

 

(1)	The Pass-Through Rate for each Class of Certificates is as stated in the definition of “Pass-Through Rate” herein.

 

(2)	On the Margin Stepup Date, the margin for each Class of the Class A Certificates will increase to 2 times the applicable margin shown above and the margin for each Class of Class M Certificates will increase to 1.5 times the applicable margin shown above.

 

(3)	Assumes the Distribution Date following the latest possible maturity date for any Mortgage Loan plus one month.

 

(4)	The designation “NR” means that the Depositor has not and will not obtain a rating from the respective Rating Agency for the applicable Class of Certificates.

 

(5)

The Class A Certificates and the Class M Certificates will be issued in minimum denominations of $[25,000] and increments of $[1] thereafter. The Class C and Class P Certificates are issuable only in minimum Percentage Interests of [ - ]%. The Class R Certificates are issuable only in minimum Percentage Interests of [ - ]%.

 

NOW, THEREFORE, in consideration of the mutual agreements herein contained, the parties hereto agree as follows:

 

ARTICLE I

 

DEFINITIONS AND INTERPRETATION

 

SECTION 1.1 Definitions .

 

Whenever used in this Agreement, the following words and phrases, unless the context otherwise requires, shall have the meanings specified in this Section 1.1. All calculations of interest described herein shall be made on the basis of an assumed 360-day year consisting of twelve 30-day months:

 

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Accepted Servicing Practices : The servicing and administration of the Mortgage Loans for which the Master Servicer or the Servicer is responsible hereunder:

 

(a) in the same manner in which, and with the same care, skill, prudence and diligence with which, the Master Servicer or the Servicer, as applicable, generally services and administers similar mortgage loans with similar mortgagors (i) for other third parties, giving due consideration to customary and usual standards of practice of prudent institutional residential mortgage lenders servicing their own loans or (ii) held in the Master Servicer’s or the Servicer’s own portfolio, as applicable, whichever standard is higher;

 

(b) with a view to the maximization of the recovery on such Mortgage Loans on a net present value basis and the best interests of the Trust or any Person to which the Mortgage Loans may be transferred by the Trust;

 

(c) without regard to (i) any relationship that the Master Servicer or the Servicer or any affiliate thereof may have with the related Mortgagor or any other party to the transactions; (ii) the right of the Master Servicer or the Servicer to receive compensation or other fees for its services rendered pursuant to this Agreement; (iii) the obligation of the Master Servicer or the Servicer to make Servicing Advances; (iv) the ownership, servicing or management by the Master Servicer or the Servicer or any affiliate thereof for others of any other mortgage loans or mortgaged properties; and (v) any debt the Master Servicer or any affiliate of the Master Servicer or the Servicer has extended to any mortgagor; and

 

(d) in accordance with the applicable state, local and federal laws, rules and regulations.

 

Account : Each of the Custodial Account, the Escrow Account, the Collection Account, the Payment Account (including each sub-account thereof), the Pre-Funding Account and the Capitalized Interest Account.

 

Accountant : A person engaged in the practice of accounting who (except when this Agreement provides that an Accountant must be Independent) may be employed by or affiliated with the Master Servicer or an Affiliate of the Master Servicer.

 

Addition Notice : [ - ].

 

Additional Collateral : With respect to any Additional Collateral Mortgage Loan, the marketable securities and other acceptable collateral pledged as collateral pursuant to the related pledge agreements.

 

Additional Collateral Mortgage Loan : Each Mortgage Loan identified as such in the Mortgage Loan Schedule.

 

Adjustable Rate Mortgage Loan : A Mortgage Loan that contains a provision pursuant to which the Mortgage Rate is adjusted periodically.

 

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Adjusted Net Mortgage Rate : With respect to any Mortgage Loan, the Mortgage Rate thereof reduced by the related Servicing Fee Rate, the Master Servicing Fee Rate and the Trustee Fee Rate for such Mortgage Loan.

 

Adjustment Date : As to each Adjustable Rate Mortgage Loan, the date on which the Mortgage Rate is adjusted in accordance with the terms of the related Mortgage Note and Mortgage. The first Adjustment Date following the Cut-off Date with respect to each Adjustable Rate Mortgage Loan is set forth on the Mortgage Loan Schedule attached hereto as Schedule I .

 

Administrative Expenses : With respect to any Distribution Date, the sum of:

 

(a) all related fees, charges and other amounts payable or reimbursable to the Trustee and to the Servicer under this Agreement;

 

(b) any related unreimbursed expenses incurred by the Servicer in connection with a liquidation or foreclosure and any unreimbursed Monthly Advances or Servicing Advances due to the Servicer to the extent of and from of any Insurance Proceeds, Liquidation Proceeds, Condemnation Proceeds, the proceeds of from the sale of any defaulted Mortgage Loans during the related Prepayment Period, and any partial or full Principal Prepayments, together with any accrued interest thereon, received during the related Prepayment Period; and

 

(c) any related unreimbursed Non-recoverable Advances due to the Servicer.

 

Advance : Any Monthly Advance or Servicing Advance.

 

Adverse REMIC Event : As defined in Section 13.1.

 

Affiliate : With respect to any specified Person, any other Person controlling or controlled by or under common control with such specified Person. For the purposes of this definition, “control” when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

 

Aggregate Overcollateralization Release Amount : With respect to any Distribution Date, the lesser of (i) the Principal Proceeds and (ii) the Overcollateralization Release Amount.

 

Agreement : This Pooling and Servicing Agreement, including all exhibits and schedules hereto, and all amendments or supplements hereto.

 

Allocable Share : With respect to each Class of Certificates and any Distribution Date, the percentage equivalent of a fraction, the numerator of which is the Certificate Principal Balance of such Class of Certificates and the denominator of which is the aggregate of the Certificate Principal Balance of all the Certificates.

 

Applied Loss Amount : As defined in Section 8.2.

 

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Appraised Value : With respect to any Mortgage Loan, the lesser of (i) the value set forth on the appraisal made in connection with the origination of the related Mortgage Loan as the value of the related Mortgaged Property, or (ii) the amount paid by the Mortgagor for the Mortgaged Property, provided, however , that in the case of a refinanced Mortgage Loan, such value shall be based solely on the appraisal made in connection with the origination of such Mortgage Loan.

 

Assignment of Mortgage : An assignment of the Mortgage, notice of transfer or equivalent instrument, in recordable form, sufficient under the laws of the jurisdiction wherein the related Mortgaged Property is located to reflect the assignment of the Mortgage to the Trustee for the benefit of the Certificateholders, which assignment shall be at the expense of the Sellers; provided, however , that the Trustee shall not be responsible for determining whether any such assignment is in recordable form.

 

Available Distribution Amount : With respect to any Distribution Date, the sum of the Available Principal Funds and the Available Interest Funds for such Distribution Date, net of Administrative Expenses, including amounts with respect to indemnification, withdrawn from the Custodial Account or Payment Account, as applicable, during the related Interest Accrual Period.

 

Available Interest Funds : With respect to any Distribution Date, the total amount of all cash in respect of interest received on the Mortgage Loans including without limitation:

 

(a) all Scheduled Monthly Payments of interest collected on the Mortgage Loans and due during the Due Period related to such Distribution Date, together with any Monthly Advances in respect thereof;

 

(b) all Insurance Proceeds, Liquidation Proceeds and Condemnation Proceeds from the Mortgage Loans, in each case in respect of interest, for such Distribution Date;

 

(c) all other amounts received from the Servicer with respect to the sale of any defaulted Mortgage Loans in respect of interest during the related Prepayment Period;

 

(d) all accrued interest on full Principal Prepayments identified as having been received in respect of the Mortgage Loans during the related Prepayment Period;

 

(e) any Compensating Interest Payments paid by the Master Servicer and/or received from the Servicer in respect of Prepayment Interest Shortfalls with respect to the Mortgage Loans;

 

(f) the aggregate Repurchase Price in respect of interest of all Mortgage Loans purchased by the Sellers from the Trust Fund during the related Prepayment Period;

 

(g) any amounts withdrawn from the Capitalized Interest Account in the amount of the Capitalized Interest Requirement;

 

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(h) any amounts remaining in the Pre-Funding Account and transferred to the Payment Account immediately following the termination of the Pre-Funding Period; minus

 

(i) all related fees, charges and other amounts payable or reimbursable to the Master Servicer, the Trustee to the Servicer under this Agreement;

 

(j) in the case of (b), (c) and (d) above, any related unreimbursed expenses incurred by the Servicer in connection with a liquidation or foreclosure and any unreimbursed Advances or Servicing Advances due to the Master Servicer or the Servicer;

 

(k) any related unreimbursed Non-recoverable Advances due to the Master Servicer or the Servicer; and

 

(l) in the case of (a) through (d) above, any related amounts collected which are determined to be attributable to a subsequent Due Period or Prepayment Period.

 

Available Principal Funds : With respect to each Distribution Date, the excess, if any, of (a) the sum of the Principal Proceeds and the Extra Principal Distribution Amount for such Distribution Date, over (b) the Overcollateralization Release Amount for such Distribution Date.

 

Average Sixty-Day Delinquency Ratio : The ratio of the average of the aggregate Scheduled Principal Balance of Mortgage Loans delinquent (including each Mortgage Loan in foreclosure or for which the Mortgagor has filed for bankruptcy after the Closing Date) 60 days or more for the preceding six Due Periods to the average of the sum of the aggregate Scheduled Principal Balance of the Mortgage Loans and the Pre-Funded Amount, each for such periods.

 

Bankruptcy Code : The United States Bankruptcy Code of 1986, as amended, as codified in 11 U.S.C. §§ 101-1330.

 

[Bankruptcy Loss Coverage Amount]

 

Benefit Plan Affidavit : An affidavit in substantially the form attached hereto as Exhibit M .

 

Book-Entry Certificates : Each Class of Certificates other than the Class C, P and R Certificates.

 

Business Day : Any day other than (a) a Saturday or a Sunday, or (b) a day on which banking institutions in the State of New York or any city in which the Corporate Trust Office of the Trustee or the principal office of the Servicer is located, are authorized or obligated by law or executive order to be closed.

 

Cap Agreement : The rate cap agreement entered into by and between the Trust and the Cap Provider, dated as of                       , 200_.

 

Cap Provider :                              .

 

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Capitalized Interest Account : The account created and maintained by the Trustee pursuant to Section 7.10. Such account will not be an asset of any REMIC.

 

Capitalized Interest Requirement : As to any Distribution Date to and including the first Distribution Date following the end of the Pre-Funding Period, an amount equal to the lesser of (a) amounts on deposit in the Capitalized Interest Account and (b) the excess of (i) the aggregate Interest Distribution Amount for all Classes of Certificates over (ii) the Available Interest Funds (determined exclusive of any amounts withdrawn from the Capitalized Interest Account for such Distribution Date).

 

Certificate : Any one of the asset-backed certificates issued pursuant to this Agreement executed by the Trustee in substantially the forms attached hereto as Exhibit A , Exhibit B , Exhibit C , Exhibit D , Exhibit E , and Exhibit F .

 

Certificate Principal Balance : With respect to any Class of Certificates other than the Class C and R Certificates and any Distribution Date, the maximum dollar amount of principal to which the Holder thereof is then entitled hereunder, such amount being equal to the initial principal balance of such Class of Certificates as of the Closing Date minus the sum of (a) all distributions of principal previously made with respect that Class of Certificates and (b) all Applied Loss Amounts previously allocated to that Class of Certificates and increased by any Subsequent Recoveries allocated to such Class for previous Distribution Dates. With respect to each Class C Certificate as of any Distribution Date, the Percentage Interest evidenced by such Certificate times the Uncertificated Principal Balance of the Class C Interest. For purposes of Article VIII hereof, unless specifically provided to the contrary, the Certificate Principal Balance shall be determined as of the close of business of the immediately preceding Distribution Date, after giving effect to all distributions made on such Distribution Date.

 

Certificateholder or Holder : With respect to a Book-Entry Certificate, the beneficial owner of such Book-Entry Certificate, and with respect to a Definitive Certificate, the Holder of such Definitive Certificate and in whose name a Certificate is registered in the Certificate Register.

 

Certificate Register : The register maintained pursuant to Section 9.2.

 

Class : All Certificates bearing the same class designation as set forth in the Preliminary Statement. In the case of the Pooling REMIC Interests and the Intermediate REMIC Interests, the term “Class” refers to such Pooling REMIC Interests and Intermediate REMIC Interests having the same alphanumeric designation as set forth in the Preliminary Statement.

 

Class A Certificates : The Class A-1 and A-2 Certificates.

 

Class A-1 Certificates : The First NLC Securitization Trust 200_-_ Asset-Backed Pass-Through Certificates, Series 200_-_, Class A-1 Certificates having an initial Certificate Principal Balance and Pass-Through Rate as set forth herein.

 

Class A-2 Certificates : The First NLC Securitization Trust 200_-_ Asset-Backed Pass-Through Certificates, Series 200_-_, Class A-2 Certificates having an initial Certificate Principal Balance and Pass-Through Rate as set forth herein.

 

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Class C Certificates : The First NLC Securitization Trust 200    -    Asset-Backed Pass-Through Certificates, Series 200    -    , Class C Certificates having an initial Certificate Principal Balance, a Notional Amount and associated Pass-Through Rate as set forth herein.

 

Class C Distributable Amount : With respect to any Distribution Date and the Class C Interest, the sum of (i) the interest accrued on such Class C Interest at its Pass-Through Rate calculated on its Notional Amount less the amount (without duplication) of Net WAC Cap Carryover Amounts paid pursuant to Section [    -    ], (ii) any remaining Aggregate Overcollateralization Release Amounts and (iii) the aggregate of amounts remaining in the Reserve Account after the distributions in Section [ - ], as specified in Section [ - ]. With respect to the Class C Certificate, 100% of the amount distributed to the Class C Interest.

 

Class Interest Shortfall : As to any Distribution Date and Class, the amount by which the Interest Distribution Amount for such Class on such Distribution Date exceeds the amount of interest actually distributed on such Class on such Distribution Date.

 

Class M Certificates : The Class M-1, M-2 and M-3 Certificates.

 

Class M-1 Certificates : The First NLC Securitization Trust 200_-_ Asset-Backed Pass-Through Certificates, Series 200    -    , Class M-1 Certificates having an initial Certificate Principal Balance and Pass-Through Rate as set forth herein.

 

Class M-1 Principal Distribution Amount : As of any Distribution Date on or after the Stepdown Date and as long as a Trigger Event is not in effect, the excess of (a) the sum of (i) the aggregate Certificate Principal Balance of the Class A Certificates (after taking into account the payment of the Senior Principal Distribution Amount on such Distribution Date) and (ii) the Certificate Principal Balance of the Class M-1 Certificates immediately prior to such Distribution Date over (b) the lesser of (i) the product of (A) approximately [ - ]% and (B) the sum of the aggregate Scheduled Principal Balance of the Mortgage Loans and the Pre-Funded Amount, each as of the last day of the related Due Period and (ii) the amount by which the sum of the aggregate Scheduled Principal Balance of the Mortgage Loans and the Pre-Funded Amount, each as of the last day of the related Due Period exceeds the product of (A) [ - ]% and (B) the sum of the aggregate Scheduled Principal Balance of the Closing Date Mortgage Loans as of the Cut-off Date and the Pre-Funded Amount as of the Closing Date.

 

Class M-2 Certificates : The First NLC Securitization Trust 200    -    Asset-Backed Pass-Through Certificates, Series 200    -    , Class M-2 Certificates having an initial Certificate Principal Balance and Pass-Through Rate as set forth herein.

 

Class M-2 Principal Distribution Amount : As of any Distribution Date on or after the Stepdown Date and as long as a Trigger Event is not in effect, the excess of (a) the sum of (i) the aggregate Certificate Principal Balance of the Class A and M-1 Certificates (after taking into account the payment of the Senior Principal Distribution Amount and the Class Principal Distribution Amount for the Class M-1 Certificates on such Distribution Date) and (ii) the Certificate Principal Balance of the Class M-2 Certificates immediately prior to such Distribution Date over (b) the lesser of (i) the product of (A) approximately [ - ]% and (B) the sum of the aggregate Scheduled Principal Balance of the Mortgage Loans and the Pre-Funded Amount, each

 

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as of the last day of the related Due Period and (ii) the amount by which the sum of the aggregate Scheduled Principal Balance of the Mortgage Loans and the Pre-Funded Amount, each as of the last day of the related Due Period exceeds the product of (A) [ - ]% and (B) the sum of the aggregate Scheduled Principal Balance of the Closing Date Mortgage Loans as of the Cut-off Date and the Pre-Funded Amount as of the Closing Date.

 

Class M-3 Certificates : The First NLC Securitization Trust 200    -    Asset-Backed Pass-Through Certificates, Series 200    -    , Class M-3 Certificates having an initial Certificate Principal Balance and Pass-Through Rate as set forth herein.

 

Class M-3 Principal Distribution Amount : As of any Distribution Date on or after the Stepdown Date and as long as a Trigger Event is not in effect, the excess of (a) the sum of (i) the aggregate Certificate Principal Balance of the Class A, M-1 and M-2 Certificates (after taking into account the payment of the Senior Principal Distribution Amount and the Class Principal Distribution Amounts for such Class M Certificates on such Distribution Date) and (ii) the Certificate Principal Balance of the Class M-3 Certificates immediately prior to such Distribution Date over (b) the lesser of (i) the product of (A) approximately [ - ]% and (B) the sum of the aggregate Scheduled Principal Balance of the Mortgage Loans and the Pre-Funded Amount, each as of the last day of the related Due Period and (ii) the amount by which the sum of the aggregate Scheduled Principal Balance of the Mortgage Loans and the Pre-Funded Amount, each as of the last day of the related Due Period exceeds the product of (A) [ - ]% and (B) the sum of the aggregate Scheduled Principal Balance of the Closing Date Mortgage Loans as of the Cut-off Date and the Pre-Funded Amount as of the Closing Date.

 

Class P Certificates : The First NLC Securitization Trust 200    -    Asset-Backed Pass-Through Certificates, Series 200    -    , Class P Certificates having an initial Certificate Principal Balance and Pass-Through Rate as set forth herein.

 

Class Principal Amount : With respect to any Class and as to any date of determination, the aggregate of the Certificate Principal Balances of all Certificates of such Class as of such date.

 

Class Principal Distribution Amount : With respect to each Distribution Date, each of the Class M-1 Principal Distribution Amount, the Class M-2 Principal Distribution Amount and the Class M-3 Principal Distribution Amount for such Distribution Date.

 

Class R Certificates : The First NLC Securitization Trust 200    -    Asset-Backed Pass-Through Certificates, Series 200    -    , Class R Certificates having an initial Certificate Principal Balance and Pass-Through Rate as set forth herein.

 

Closing Date :                           , 200    .

 

Closing Date Mortgage Loans : Those Mortgage Loans in the Trust Fund as of the Closing Date.

 

Co-Underwriter :                              .

 

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Code : The Internal Revenue Code of 1986, as may be amended from time to time, or any successor statutes thereto, and applicable U.S. Department of the Treasury regulations issued pursuant thereto.

 

Collection Account : The account established pursuant to Section 7.4.

 

Commission : The United States Securities and Exchange Commission.

 

Compensating Interest Payment : With respect to any Distribution Date and with respect to any Principal Prepayment in full, an amount equal to the lesser of (a) the aggregate Prepayment Interest Shortfall on the Mortgage Loans for the related Prepayment Period resulting from Principal Prepayments in full and (b) one half (1/2) of the aggregate Servicing Fee received by the Servicer in respect of such Distribution Date without regard to any [Compensating Interest].

 

Condemnation Proceeds : All awards or settlements in respect of a Mortgaged Property, whether permanent or temporary, partial or entire, by exercise of the power of eminent domain or condemnation, to the extent not required to be released to a Mortgagor in accordance with the terms of the related Mortgage Loan documents.

 

Convertible Mortgage Loan : Those Mortgage Loans which contain a provision allowing the Mortgagor to convert the Mortgage Loan from an Adjustable Rate Mortgage Loan to a Fixed Rate Mortgage Loan.

 

Control : The meaning specified in Section 8-106 of the UCC.

 

Corporate Trust Office : The designated office of the Trustee at which at any particular time (a) its corporate trust business with respect to this Agreement shall be administered, which office at the Closing Date is located at                              , Attention:                              , and (b) presentment of Certificates for registration of transfer, exchange or final payment may be made, which office is located at                              , Attention:                              , or at such other address as the Trustee may designate from time to time by notice to Certificateholders, the Depositor, the Sellers and the Servicer.

 

Cumulative Realized Losses : The aggregate Realized Losses incurred in respect of Liquidated Mortgage Loans since the Cut-off Date, as reduced by the aggregate amount of Subsequent Recoveries received since the Cut-off Date.

 

Current Interest : With respect to any Distribution Date and each Class of Certificates (other than the Class C, Class P and Class R Certificates), the amount of interest accrued during the related Interest Accrual Period at the Pass-Through Rate for such Class on the related Certificate Principal Balance immediately prior to such Distribution Date.

 

Custodial Account : The separate custodial account (other than an Escrow Account) established and maintained by the Master Servicer pursuant to Section 4.4.

 

Cut-off Date : With respect to any Closing Date Mortgage Loan, the later of (i) the date of origination of such Mortgage Loan or (ii)                       , 200    , and with respect to any Subsequent Mortgage Loans, the date on which such Subsequent Mortgage Loan is transferred to the Trust Fund.

 

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Cut-off Date Balance : As to any Mortgage Loan, its Scheduled Principal Balance as of the close of business on the Cut-off Date.

 

Debt Service Reduction : With respect to any Mortgage Loan, a reduction of the Scheduled Monthly Payment that the related Mortgagor is obligated to pay on any Due Date as a result of any proceeding under bankruptcy law or any similar proceeding.

 

Deficient Valuation : With respect to any Mortgage Loan, a valuation by a court of competent jurisdiction of the Mortgaged Property in an amount less than the then-outstanding indebtedness under the Mortgage Loan, or any reduction in the amount of principal to be paid in connection with any Scheduled Monthly Payment that results in a permanent forgiveness of principal, which valuation or reduction results from an order of such court which is final and non-appealable in a proceeding under the Bankruptcy Code.

 

Definitive Certificates : Any Certificate evidenced by a physical certificate and any Certificate issued in lieu of a Book-Entry Certificate pursuant to Section 9.2(e).

 

Deleted Mortgage Loan : A Mortgage Loan that is repurchased from the Trust Fund or as to which one or more Qualified Substitute Mortgage Loans are substituted therefor.

 

Depositor : First NLC Securitization, Inc., a Delaware corporation.

 

Depository : The initial Depository shall be The Depository Trust Company, the nominee of which is Cede & Co., as the registered Holder of the Book-Entry Certificates. The Depository shall at all times be a “clearing corporation” as defined in Section 8-102(a)(5) of the Uniform Commercial Code of the State of New York and registered as a “clearing agency” pursuant to Section 17A of the Exchange Act, as amended.

 

Depository Participant : A broker, dealer, bank or other financial institution or other Person for whom from time to time a Depository effects book-entry transfers and pledges of securities deposited with the Depository.

 

Determination Date : With respect to any Distribution Date, the      day of the month in which such Distribution Date occurs, or if the      day is not a Business Day, the immediately preceding Business Day.

 

Disqualified Organization : (a) The United States, any State or political subdivision thereof, any foreign government, any international organization, or any agency or instrumentality of any of the foregoing; (b) any organization (other than a farmer’s cooperative as defined in Section 521 of the Code) that is exempt from federal income taxation (including taxation under the unrelated business taxable income provisions of the Code); (c) any rural telephone or electrical service cooperative described in Section 1381(a)(2)(C) of the Code; (d) any foreign permanent establishment or fixed base (within the meaning of an applicable income tax treaty) of a U.S. Person; (e) any “electing large partnership”; or (f) any other entity so designated by Treasury rulings or regulations promulgated or otherwise in effect as of the date hereof. In

 

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addition, a corporation will not be treated as an instrumentality of the United States or of any state or political subdivision thereof if all of its activities are subject to tax and, with the exception of Freddie Mac, a majority of its board of directors is not selected by such governmental unit.

 

Distribution Date : The      day of each calendar month or if the      day is not a Business Day, the next succeeding Business Day, commencing in                      200    .

 

Due Date : The day of the month on which the Scheduled Monthly Payment is due on a Mortgage Loan, exclusive of any days of grace, as specified in the related Mortgage Note.

 

Due Period : With respect to any Distribution Date and a Mortgage Loan, the period commencing on the second day of the month preceding the month in which the Distribution Date occurs (or the day following the Cut-off Date in respect of the initial Due Period) and ending at the close of business on the first day of the month in which the Distribution Date occurs.

 

EDGAR : As defined in Section 7.14(a).

 

Eligible Account : Any of (a) an account or accounts maintained with a federal or state chartered depository institution or trust company the short-term unsecured debt obligations of which (or, in the case of a depository institution or trust company that is the principal subsidiary of a holding company, the debt obligations of such holding company) have the highest short-term ratings of each Rating Agency at the time any amounts are held on deposit therein, (b) 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), provided that any such deposits not so insured shall be maintained in an account at a depository institution or trust company whose commercial paper or other short term debt obligations (or, in the case of a depository institution or trust company which is the principal subsidiary of a holding company, the commercial paper or other short term debt obligations of such holding company) have been rated by each Rating Agency in its highest short-term rating category, (c) a trust account or accounts maintained with (i) the trust department of a federal or state chartered depository institution or (ii) a trust company, acting in its fiduciary capacity or (d) any other account acceptable to each Rating Agency. Eligible Accounts may bear interest, and may include, if otherwise qualified under this definition, accounts maintained with the Trustee or the Master Servicer.

 

Eligible Investments : Any dollar-denominated investment that is one or more of the following (and may include investments for which the Trustee and/or its Affiliates, or the Master Servicer and/or its Affiliates, provides services or receives compensation):

 

(a) cash;

 

(b) direct registered obligations of, and registered obligations the timely payment of principal and interest on which is fully and expressly guaranteed by, the United States or any agency or instrumentality of the United States the obligations of which are expressly backed by the full faith and credit of the United States;

 

(c) demand and time deposits in, interest bearing trust accounts at, certificates of deposit of, bankers’ acceptances payable within 183 days of issuance issued by, or Federal funds

 

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sold by any depository institution or trust company incorporated under the laws of the United States or any state thereof and subject to supervision and examination by Federal and/or state banking authorities so long as the commercial paper and/or the debt obligations of such depository institution or trust company (or, in the case of the principal depository institution in a holding company system, the commercial paper or debt obligations of such holding company) at the time of such investment or contractual commitment providing for such investment have a credit rating of not less than “AA+” by S&P, “Aa2” by Moody’s (and if rated “Aa2”, such rating is not on watch for downgrade by Moody’s), and “AA+” by Fitch (if rated by Fitch) in the case of long-term debt obligations, or “A-1+” by S&P, “P-1” by Moody’s (and if rated “P-1”, such rating is not on watch for downgrade by Moody’s) and “F1+” by Fitch (if rated by Fitch) in the case of commercial paper and short-term debt obligations; provided that (i) in each case, the issuer thereof must have at the time of such investment or contractual commitment providing for such investment a long-term credit rating of not less than “Aa2” by Moody’s (and if rated “Aa2”, such rating is not on watch for downgrade by Moody’s) and “AA+” by Fitch (if rated by Fitch) and (ii) in the case of commercial paper and short-term debt obligations with a maturity of longer than 91 days, the issuer thereof must also have at the time of such investment or contractual commitment providing for such investment a long-term credit rating of not less than “AA+” by S&P and “AA+” by Fitch (if rated by Fitch);

 

(d) unleveraged repurchase obligations (if treated as debt for U.S. Federal income tax purposes by the issuer) with respect to (i) any security described in clause (b) above or (ii) any other registered security issued or guaranteed by an agency or instrumentality of the United States (in each case without regard to the final maturity of such security), in either case entered into with a U.S. Federal or state depository institution or trust company (acting as principal) described in clause (c) above or entered into with a corporation (acting as principal) whose long-term rating at the time of such investment or contractual commitment providing for such investment is not less than “AA+” by S&P, “Aa2” by Moody’s (and if rated “Aa2”, such rating is not on watch for downgrade by Moody’s) and “AA+” by Fitch (if rated by Fitch) or whose short-term credit rating at the time of such investment or contractual commitment providing for such investment is “A-1+” by S&P, “P-1” by Moody’s (and if rated “P-1”, such rating is not on watch for downgrade by Moody’s) and “F1+” by Fitch (if rated by Fitch) at the time of such investment; provided that (A) in each case, the issuer thereof must have at the time of such investment or contractual commitment providing for such investment a long-term credit rating of not less than “Aa2” by Moody’s (and if rated “Aa2”, such rating is not on watch for downgrade by Moody’s) “AA+” by Fitch (if rated by Fitch) and (B) if such security has a maturity of longer than 91 days, the issuer thereof must also have at the time of such investment or contractual commitment providing for such investment a long-term credit rating of not less than “AA+” by S&P, “Aa2” by Moody’s (and if rated “Aa2”, such rating is not on watch for downgrade by Moody’s) and “AA+” by Fitch (if rated by Fitch);

 

(e) registered debt securities bearing interest or sold at a discount issued by any corporation incorporated under the laws of the United States or any state thereof that have a credit rating at the time of such investment or contractual commitment providing for such investment of not less than “AA” by S&P, “Aa2” by Moody’s (and if rated “Aa2”, such rating is not on watch for downgrade by Moody’s) and “AA+” by Fitch (if rated by Fitch);

 

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(f) commercial paper or other short-term obligations with a maturity of not more than 183 days from the date of issuance and having at the time of such investment or contractual commitment providing for such investment a credit rating of “A-1+” by S&P and “F1+” by Fitch (if rated by Fitch); provided that (i) in each case, the issuer thereof must have at the time of such investment or contractual commitment providing for such investment a long-term credit rating of not less than “Aa2” by Moody’s (and if rated “Aa2”, such rating is not on watch for downgrade by Moody’s) and “AA+” by Fitch (if rated by Fitch) and (ii) if such security has a maturity of longer than 91 days, the issuer thereof must also have at the time of such investment or contractual commitment providing for such investment a long-term credit rating of not less than “AA” by S&P and “AA+” by Fitch (if rated by Fitch);

 

(g) Reinvestment Agreements issued by any bank (if treated as a deposit by such bank), or a registered Reinvestment Agreement issued by any insurance company or other corporation or entity organized under the laws of the United States or any state thereof (if treated as debt for tax purposes by the issuer), in each case, that has a credit rating of not less than “A-1+” by S&P, “P-1” by Moody’s (and if rated “P-1”, such rating is not on watch for downgrade by Moody’s) and “F1+” by Fitch (if rated by Fitch); provided that (i) in each case, the issuer thereof must have at the time of such investment or contractual commitment providing for such investment a long-term credit rating of not less than “Aa2” by Moody’s (and if rated “Aa2”, such rating is not on watch for downgrade by Moody’s) and not less than “AA+” by Fitch (if rated by Fitch) and (ii) if such security has a maturity of longer than 91 days, the issuer thereof must also have at the time of such investment or contractual commitment providing for such investment a long-term credit rating of not less than “AA” by S&P and “AA+” by Fitch (if rated by Fitch); and

 

(h) interests in any money market fund or similar investment vehicle having at the time of investment therein the highest credit rating assigned by each of the Rating Agencies (excluding, if not rated by Fitch, Fitch); provided that such fund or vehicle is formed and has its principal office outside the United States and is not engaged in a United States trade or business;

 

and, in each case (other than clause (a)), with a final maturity (giving effect to any applicable grace period) no later than the Business Day immediately preceding the Distribution Date next following the Due Period in which the date of investment occurs; provided that Eligible Investments may not include (i) any interest-only security, any security purchased at a price in excess of 100% of the par value thereof, (ii) any floating rate security whose interest rate is inversely or otherwise not proportionately related to an interest rate index or is calculated as other than the sum of an interest rate index plus a spread, (iii) securities subject to an offer, (iv) any security with a rating from S&P which includes the subscript “p,” “pi,” “q,” “r” or “t”; or (v) any investment, the income from which is or will be subject to deduction or withholding for or on account of any withholding or similar tax.

 

Entitlement Order : The meaning specified in Section 8-102(a)(8) of the UCC ( e.g., orders directing the transfer or redemption of any Financial Asset).

 

ERISA : The Employee Retirement Income Security Act of 1974, as amended.

 

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ERISA Restricted Certificates : Any of the Class C and Class P Certificates and any Class of Certificates that no longer satisfies the applicable rating requirement of Prohibited Transaction Exemption 2002-41, 67 Fed. Reg. 54487 (August 22, 2002).

 

ERISA Prohibited Certificates : The Class R Certificates.

 

Errors and Omissions Insurance Policy : An errors and omissions insurance policy to be maintained by the Servicer pursuant to Section 4.13.

 

Escrow Account : The separate account or accounts created and maintained by the Servicer pursuant to Section 4.7.

 

Escrow Payments : With respect to any Mortgage Loan, the amounts constituting ground rents, taxes, assessments, water rates, sewer rents, municipal charges, mortgage insurance premiums, fire and hazard insurance premiums, condominium charges, and any other payments required to be escrowed by the Mortgagor with the mortgagee pursuant to the Mortgage or any other related document.

 

Excess Cash Flow : With respect to any Distribution Date, the sum of (a) any Available Interest Funds remaining after application pursuant to clauses [ - ] and (b) any Available Principal Funds remaining after application pursuant to either clauses [ - ] or clauses [ - ].

 

Exchange Act : The Securities Exchange Act of 1934, as amended.

 

Extra Principal Distribution Amount : With respect to any Distribution Date, the lesser of (a) Available Interest Funds applied to Excess Cash Flow pursuant to Section [ - ] and after application thereof pursuant to Section [ - ] and (b) the Overcollateralization Deficiency Amount for such Distribution Date.

 

Fannie Mae : Fannie Mae, a federally chartered and privately owned corporation organized and existing under the Federal National Mortgage Association Charter Act.

 

FDIC : The Federal Deposit Insurance Corporation.

 

Fidelity Bond : A fidelity bond to be maintained by the Servicer pursuant to Section 4.13.

 

Final Certification: A certification as to the completeness of the Mortgage File substantially in the form of Exhibit H attached hereto provided by the Trustee within [90] days of the Closing Date (or, in the case of the Subsequent Mortgage Loans, [180] days of the applicable Subsequent Sale Date) pursuant to Section 2.5 hereof.

 

Final Scheduled Distribution Date : The Distribution Date following the month of the scheduled maturity date of the Mortgage Loan having the latest scheduled maturity date as of the Cut-off Date.

 

Financial Asset : The meaning specified in Section 8-102(a)(9) of the UCC.

 

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Fitch : Fitch, Inc.

 

Fixed Rate Mortgage Loan: Any Mortgage Loan for which the Mortgage Rate is constant and is not determined by reference to an Index.

 

Formula Rate : For each Class of Certificates, the lesser of (i) One Month LIBOR plus the applicable Pass-Through Margin and (ii) [ - ]%.

 

[Fraud Loss Coverage Amount]

 

Freddie Mac : The entity formerly known as the Federal Home Loan Mortgage Corporation.

 

Ginnie Mae : The Government National Mortgage Association, a wholly owned corporate instrumentality of the United States within HUD.

 

Gross Margin : With respect to each Adjustable Rate Mortgage Loan, the fixed percentage amount set forth in the related Mortgage Note which is added to the Index in order to determine the related Mortgage Rate, as set forth in the Mortgage Loan Schedule.

 

HUD : The United States Department of Housing and Urban Development.

 

Indenture : An indenture relating to the issuance of notes secured by all or a portion of the Class C Certificates and/or the Class R Certificates.

 

Independent : When used with respect to any Accountants, Lawyers, a Person who is “independent” within the meaning of Rule 2-01(b) of the Securities and Exchange Commission’s Regulation S-X. When used with respect to any other Person, a Person who (a) is in fact independent of another specified Person and any Affiliate of such other Person, (b) does not have any material direct financial interest in such other Person or any Affiliate of such other Person, and (c) is not connected with such other Person or any Affiliate of such other Person as an officer, employee, promoter, underwriter, trustee, partner, director or Person performing similar functions.

 

Index : The index specified in the related Mortgage Note for calculation of the Mortgage Rate thereof.

 

Initial Certification: A certification as to the completeness of the Mortgage File substantially in the form of Exhibit G hereto provided by the Trustee on the Closing Date (or, in the case of the Subsequent Mortgage Loans, the applicable Subsequent Sale Date) pursuant to Section 2.5 hereof.

 

[Insurance Policy : Any primary mortgage insurance policy, any standard hazard insurance policy, flood insurance policy, earthquake insurance policy or title insurance policy relating to the Mortgage Loans or the Mortgaged Properties, to be in effect as of the Closing Date or thereafter during the term of this Agreement.]

 

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Insurance Proceeds : With respect to each Mortgage Loan, proceeds of insurance policies insuring the Mortgage Loan or the related Mortgaged Property, if applicable, including the proceeds of any hazard or flood insurance policy.

 

Interest Accrual Period : With respect to any Distribution Date and each Class of Certificates, other than the Class C Certificates, the period commencing on the Distribution Date in the calendar month immediately preceding the month in which such Distribution Date occurs (or, in the case of the first Distribution Date, the Closing Date) and ending at the close of business on the calendar day immediately preceding such Distribution Date. With respect to any Distribution Date and the Class C Certificates, the one-month period ending on the last day of the calendar month immediately preceding the month in which such Distribution Date occurs.

 

Interest Distribution Amount : For each Class of Certificates, on any Distribution Date, an amount equal to the excess of (a) the sum of (i) the Current Interest for such Class of Certificates for such Distribution Date, (ii) any unpaid Current Interest for such Class from a prior Distribution Date (together with any unpaid interest thereon), and (iii) interest accrued during the related Interest Accrual Period on the amount described in clause (ii) above at the Pass-Through Rate applicable to such Class of Certificates, over (b) the Allocable Share of Net Prepayment Interest Shortfalls and Relief Act Reductions for such Class of Certificates.

 

Interest Distribution Shortfall Amount : As to any Distribution Date, the amount by which the aggregate Class Interest Shortfall for such Class on prior Distribution Dates exceeds the aggregate Interest Distribution Amount distributed to such Class on prior Distribution Dates.

 

Interim Funder : With respect to each MERS Designated Mortgage Loan, the Person named on the MERS System as the interim funder pursuant to the MERS Procedures Manual.

 

Intermediate REMIC : The REMIC identified as such in the Preliminary Statement.

 

Intermediate REMIC Interests : The interests described as such in the Preliminary Statement.

 

Investment Letter : As defined in Section 9.2.

 

Investor: With respect to each MERS Designated Mortgage Loan, the Person named on the MERS System as the investor pursuant to the MERS Procedures Manual.

 

Lead Underwriter :                              .

 

Issuing REMIC : The REMIC identified as such in the Preliminary Statement.

 

LIBOR : The London interbank offered rate for one-month United States dollar deposits established on each LIBOR Determination Date pursuant to Schedule II .

 

Liquidated Mortgage Loan : With respect to any Distribution Date, a defaulted Mortgage Loan (including any REO Property) which was liquidated in the calendar month preceding the month of such Distribution Date and as to which the Servicer has determined, in accordance with the servicing procedures specified herein, that it has received all amounts it expects to receive in connection with the liquidation of such Mortgage Loan, including the final disposition of any REO Property.

 

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Liquidation Proceeds : Cash received in connection with the liquidation of a defaulted Mortgage Loan, whether through the sale or assignment of such Mortgage Loan, trustee’s sale, foreclosure sale or otherwise, or the sale of the related Mortgaged Property if the Mortgaged Property is acquired in satisfaction of the Mortgage Loan.

 

Loan-to-Value Ratio or LTV : With respect to any Mortgage Loan, the ratio of the original loan amount of the Mortgage Loan at its origination (unless otherwise indicated) to the Appraised Value of the related Mortgaged Property.

 

Losses: As defined in Section 13.3.

 

Majority in Interest : As to any Class of Certificates, the Holders of Certificates of such Class evidencing, in the aggregate, at least 51% of the Percentage Interests evidenced by all Certificates of such Class.

 

Margin Stepup Date : The first Distribution Date on or after the date on which the Optional Termination may be exercised.

 

Master Servicer : [ - ] and its successors and assigns in its capacity as Master Servicer.

 

[Master Servicer Certification ]

 

Master Servicer Errors and Omissions Insurance Policy : An errors and omissions insurance policy to be maintained by the Master Servicer pursuant to Section 6.2.

 

Master Servicer Event of Default : As defined in Section 6.23.

 

Master Servicer Fidelity Bond : A fidelity bond to be maintained by the Master Servicer pursuant to Section 6.2(a).

 

Master Servicing Fee : As to each Mortgage Loan and any Distribution Date, an amount equal to (i) one-twelfth of the Master Servicing Fee Rate multiplied by (ii) the Scheduled Principal Balance of such Mortgage Loan as of the Due Date in the prior calendar month.

 

Master Servicing Fee Rate : [ - ]% per annum.

 

Material Defect : As defined in Section 2.5(d).

 

MERS : MERSCORP, Inc.

 

MERS Designated Mortgage Loan : A Mortgage Loan for which (a) a Seller has designated or will designate MERS as, and has taken or will take such action as is necessary to cause MERS to be, the mortgagee of record, as nominee for the Seller, in accordance with MERS Procedures Manual and (b) a Seller has designated or will designate the Trustee as the Investor on the MERS System.

 

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MERS Procedures Manual : The MERS Procedures Manual, as it may be amended, supplemented or otherwise modified from time to time.

 

MERS Report : The report from the MERS System listing MERS Designated Mortgage Loans and other information.

 

MERS System : MERS mortgage electronic registry system, as more particularly described in the MERS Procedures Manual.

 

MOM Loan : Any Mortgage Loan as to which MERS acts as the mortgagee of such Mortgage Loan, solely as nominee for the originator of such Mortgage Loan and its successors and assigns, at the origination thereof.

 

Monthly Advance : The portion of each Scheduled Monthly Payment that is delinquent with respect to each Mortgage Loan at the close of business on the Determination Date required to be advanced by the Servicer.

 

Moody’s : Moody’s Investors Service, Inc.

 

Mortgage : The mortgage, deed of trust or other instrument (including all riders) securing a Mortgage Note, which creates a first lien on an unsubordinated estate in fee simple or leasehold estate in real property securing the Mortgage Note.

 

Mortgage File : The mortgage documents listed on Exhibit R to this Agreement pertaining to a particular Mortgage Loan.

 

Mortgage Loan : Any mortgage loan sold and subject to this Agreement being identified on the Mortgage Loan Schedule, which mortgage loan includes without limitation the Mortgage File, the Scheduled Monthly Payments, Principal Prepayments, Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds, REO Disposition Proceeds and all other rights, benefits, proceeds and obligations arising from or in connection with such mortgage loan as set forth in Sections 2.1 and 2.2 with respect to the Closing Date Mortgage Loans, Section 2.8 with respect to the Subsequent Mortgage Loans and Section 3.6(d) with respect to the Qualified Substitute Mortgage Loans. The Subsequent Mortgage Loans subject to this Agreement will be identified on each Subsequent Mortgage Loan Schedule to be annexed to the Mortgage Loan Schedule on each Subsequent Sale Date and the Qualified Substitute Mortgage Loans will be identified on the Mortgage Loan Schedule on the applicable substitution date.

 

Mortgage Loan Documents : The documents referred to in Exhibit R as items 1 through 10.

 

Mortgage Loan Remittance Rate : With respect to each Mortgage Loan, the annual rate of interest remitted to the Master Servicer, which shall be equal to the related Mortgage Rate minus the Servicing Fee Rate.

 

Mortgage Loan Schedule : The list of Mortgage Loans (as from time to time amended by the Depositor to reflect the addition of Qualified Substitute Mortgage Loans and Subsequent Mortgage Loans and the deletion of Deleted Mortgage Loans pursuant to the provisions of this

 

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Agreement) transferred to the Trustee as part of the Trust Fund and from time to time subject to this Agreement, attached hereto as Schedule I that sets forth the information required by Exhibit Q for each Mortgage Loan.

 

Mortgage Note : The original executed note (including all riders) or other evidence of indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan, including any riders or addenda thereto.

 

Mortgage Rate : With respect to each Mortgage Loan, the annual rate at which interest accrues on such Mortgage Loan from time to time in accordance with the provisions of the related Mortgage Note, net of any interest premium charged by the mortgagee to obtain or maintain any PMI Policy.

 

Mortgaged Property : The real property securing repayment of the debt evidenced by the Mortgage Note.

 

Mortgagor : The obligor on a Mortgage Note.

 

Net Prepayment Interest Shortfalls : As to any Distribution Date, the amount by which the aggregate of Prepayment Interest Shortfalls during the related Prepayment Period exceeds the Compensating Interest Payments made with respect to such Distribution Date.

 

Net WAC Cap Carryover Amount : For each Class of Certificates on a Distribution Date, the sum of (i) the excess, if any, of (a) the amount that would have been the Current Interest for such Class of Certificates at the Formula Rate for such Distribution Date over (b) the actual amount of Current Interest distributable for such Class of Certificates on such Distribution Date, (ii) any excess described in clause (i) above for any prior Distribution Date that remains unpaid (together with any unpaid interest thereon) on such Distribution Date, and (iii) interest accrued during the Interest Accrual Period related to such Distribution Date on the amount described in clause (ii) above at the Formula Rate applicable to such Class of Certificates.

 

Non-recoverable Advance : Any Servicing Advance or Monthly Advance previously made or proposed to be made in respect of a Mortgage Loan by the Servicer or Master Servicer which, in the reasonable discretion of the Servicer or Master Servicer, will not or, in the case of a proposed Servicing Advance or Monthly Advance, would not, ultimately be recoverable by the Servicer or Master Servicer from the related Mortgagor, related Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds, REO Disposition Proceeds or otherwise. The determination by the Servicer that all or a portion of a Servicing Advance or Monthly Advance would be a Non-recoverable Advance shall be evidenced by an Officer’s Certificate delivered to the Master Servicer setting forth such determination and a reasonable explanation thereof.

 

Non-permitted Foreign Holder : As defined in Section 9.2(f).

 

Non-U.S. Person : A Person that is not a U.S. Person.

 

Offered Certificates : The Class A Certificates and the Class M-1 and M-2 Certificates.

 

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Officer’s Certificate : [A certificate (a) signed by the Chairman of the Board, the Vice Chairman of the Board, the President, a Managing Director, a Vice President, an Assistant Vice President, the Treasurer, the Secretary, or one of the Assistant Treasurers or Assistant Secretaries of the Depositor or the Servicer, as the case may be, or (b), if provided for in this Agreement, signed by a Servicing Officer and delivered to the Depositor and the Trustee, as the case may be, as required by this Agreement.]

 

Opinion of Counsel : A written opinion of counsel, who may be counsel for the Sellers, the Master Servicer, the Servicer or the Depositor, including in-house counsel, reasonably acceptable to the Trustee; provided, however , that with respect to the interpretation or application of the REMIC Provisions, such counsel must be nationally recognized as expert in the federal income tax aspects of asset securitization and must be Independent of the Depositor, the Trustee, the Sellers, the Master Servicer and the Servicer. Any such opinion shall not be at the expense of the Trustee.

 

Optional Termination : The termination of the trust created hereunder in connection with the purchase of the Mortgage Loans pursuant to Section 12.1(a).

 

Original Capitalized Interest Amount : $                      .

 

Original Pre-Funded Amount : $                      .

 

Originator : First NLC Financial Services, LLC or any successor to the Originator under this Agreement.

 

OTS : The Office of Thrift Supervision.

 

Outstanding : As of the date of determination, all Certificates theretofore executed authenticated and delivered under this Agreement except:

 

(a) Certificates theretofore cancelled by the Certificate Register or delivered to the Certificate Register for cancellation;

 

(b) Certificates the payment for which money in the necessary amount has been theretofor deposited with the Master Servicer in trust for the Holders of such Certificates ( provided, however , that if such Certificates are to be redeemed, notice of such redemption has been duly given pursuant to this Agreement or provision for such notice has been made, satisfactory to the Master Servicer); and

 

(c) Certificates in exchange for or in lieu of which other Certificates have been authenticated and delivered pursuant to this Agreement unless proof satisfactory to the Trustee is presented that any such Certificates are held by a bona fide purchaser;

 

provided, that in determining whether the Certificateholders of the requisite Outstanding Balance of the Certificates have given any request, demand, authorization, direction, notice, consent or waiver hereunder or under any operative agreement, Certificates owned by the Trust, the Depositor, the Master Servicer, the Servicer, or any Affiliate of any of the foregoing Persons shall be disregarded and deemed not to be Outstanding, except that, in determining whether the

 

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Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Certificates that a Responsible Officer of the Trustee actually knows to be so owned shall be so disregarded (unless such action requires the consent, waiver, request or demand of 100% of the outstanding balance represented by a particular Class and 100% of the outstanding balance represented by such Class is registered in the name of one or more of the foregoing entities). Certificates so owned that have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee’s right so to act with respect to such Certificates and that the pledgee is not the Trust, the Depositor, the Master Servicer, the Servicer, or any Affiliate of any of the foregoing Persons.

 

Overcollateralization Amount : As of any Distribution Date, the excess, if any, of the sum of the aggregate Scheduled Principal Balance and the Pre-Funded Amount, each as of the last day of the related Due Period, over the aggregate Certificate Principal Balance of all Classes of Certificates other than Class C Certificates (after taking into account all distributions of principal on such Distribution Date and the increase of any Certificate Principal Balance as a result of Subsequent Recoveries).

 

Overcollateralization Deficiency Amount : With respect to any Distribution Date, the excess, if any, of the Target Overcollateralization Amount for such Distribution Date over the Overcollateralization Amount for such Distribution Date, after giving effect to distributions of the Principal Proceeds, but prior to allocation of the Applied Loss Amount, on such Distribution Date.

 

Overcollateralization Release Amount : With respect to any Distribution Date on or after the Stepdown Date on which a Trigger Event is not in effect, the lesser of (a) the Principal Proceeds for such Distribution Date and (b) the excess, if any, of (i) the Overcollateralization Amount for such Distribution Date, assuming that 100% of the Principal Proceeds is applied as a principal payment on the Certificates on such Distribution Date over (ii) the Target Overcollateralization Amount for such Distribution Date. With respect to any Distribution Date on which a Trigger Event is in effect, the Overcollateralization Release Amount will be zero.

 

Owner Trust Agreement : The owner trust agreement entered into by and among the Depositor, the owner trustee and the securities administrator, dated as of                         , 200      .

 

Pass-Through Margin : With respect to the Class A-1 and Class A-2 Certificates, and the Class M-1, Class M-2 and Class M-3 Interests, the following percentages:

 

 

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Pass-Through Rate : With respect to each Class of Certificates, the per annum rate, if any, set forth or calculated in the manner described in the Preliminary Statement.

 

Payment Account : The separate account established and maintained pursuant to Section 7.5.

 

Percentage Interest : As to any Certificate, the percentage interest set forth on the face thereof or equal to the percentage obtained by dividing the amount set forth on the face of such Certificate by the aggregate amounts set forth on the face of all Certificates of the same Class.

 

Permitted Transferee : Any person other than:

 

(a) a Disqualified Organization;

 

(b) a Non-U.S. Person unless such Non-U.S. Person has furnished the transferor and the Trustee with a duly completed Internal Revenue Service Form W-8ECI or any applicable successor form; and

 

(c) any other Person so designated by the Depositor based upon an Opinion of Counsel that the Transfer of an ownership interest in a Residual Certificate to such Person may cause the REMIC hereunder to fail to qualify as a REMIC at any time that the Certificates are outstanding.

 

Person : Any individual, corporation, partnership, joint venture, limited liability company, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof.

 

Pool Scheduled Principal Balance : With respect to any Distribution Date, the sum of (a) the aggregate Scheduled Principal Balance of the Mortgage Loans immediately prior to the beginning of the related Due Period, plus (b) the amount, if any, on deposit in the Pre-Funding Account.

 

Pooling REMIC : The REMIC identified as such in the Preliminary Statement.

 

Pooling REMIC Interests : The interests described as such in the Preliminary Statement.

 

PMI Policy : A policy of primary mortgage guaranty insurance issued by a Qualified Insurer, as required by this Agreement with respect to certain Mortgage Loans.

 

PPMI Policy : A policy of mortgage guaranty insurance issued by a mortgage insurer in which a party other than the Mortgagor is responsible for the premiums associated with such mortgage insurance policy.

 

Pre-Funded Amount : On any date of determination, the amount on deposit in the Pre-Funding Account on such date exclusive of any investment earnings therein.

 

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Pre-Funding Account : The separate account established and maintained pursuant to Section 7.9.

 

Pre-Funding Period : The period beginning on the Closing Date and ending on the earliest of (i)                           , 200    , (ii) the date on which the Pre-Funded Amount in the Pre-Funding Account is less than $                      , and (iii) the date on which there are no outstanding Certificates remaining.

 

Prepayment Interest Shortfall : As to any Distribution Date and each Mortgage Loan subject to a Principal Prepayment received during the calendar month preceding such Distribution Date, the amount, if any, by which one month’s interest at the related Adjusted Net Mortgage Rate, on such Principal Prepayment exceeds the amount of interest paid in connection with such Principal Prepayment.

 

Prepayment Period : With respect to any Distribution Date, the calendar month preceding the calendar month of such Distribution Date.

 

Prepayment Premium : With respect to a Mortgage Loan, the prepayment charge or penalty interest required, if any, to be paid by the related Mortgagor in connection with a prepayment of such Mortgage Loan, as provided in the related Mortgage Note or Mortgage, and as specified on the related Mortgage Loan Schedule (other than any Servicer Prepayment Premium Payment Amount).

 

Principal Prepayment : Any payment or other recovery of principal on a Mortgage Loan which is received in advance of its scheduled Due Date, including any Prepayment Premium thereon and which is not accompanied by an amount of interest representing scheduled interest due on any date or dates in any month or months subsequent to the month of prepayment.

 

Principal Proceeds : With respect to any Distribution Date, the sum of:

 

(a) the total amount of all cash in respect of principal received on the Mortgage Loans including without limitation:

 

(i) all Scheduled Monthly Payments of principal collected on the Mortgage Loans and due during the Due Period related to such Distribution Date, together with any Monthly Advances in respect thereof;

 

(ii) all Insurance Proceeds, Liquidation Proceeds, Subsequent Recoveries and Condemnation Proceeds from the Mortgage Loans, in each case in respect of principal, for such Distribution Date;

 

(iii) all other amounts received from the Servicer with respect to the sale of any defaulted Mortgage Loans in respect of principal during the related Prepayment Period;

 

(iv) all partial or full Principal Prepayments identified as having been received in respect of the Mortgage Loans during the related Prepayment Period;

 

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(vi) the aggregate repurchase price of all Mortgage Loans in respect of principal purchased by the Originator from the Trust during the related Prepayment Period; and

 

(vii) any amounts remaining in the Pre-Funding Account and transferred to the Payment Account immediately following the termination of the Pre-Funding Period; and

 

(b) in the case of (i) through (iv) above, any related amounts collected which are determined to be attributable to a subsequent Due Period or Prepayment Period.

 

Private Certificates : The Class M-3, C, P and R Certificates.

 

Prospectus : The prospectus, dated                           , 200    , together with the accompanying prospectus supplement, dated                           , 200    , relating to the Offered Certificates.

 

Qualified Insurer : A mortgage guaranty insurance company duly authorized and licensed where required by law to transact mortgage guaranty insurance business and approved as an insurer by Fannie Mae or Freddie Mac.

 

Qualified Substitute Mortgage Loan : A mortgage loan eligible to be substituted by the Originator for a Deleted Mortgage Loan which must meet the following criteria:

 

(a) have an outstanding principal balance, after deduction of all Scheduled Monthly Payments due in the month of substitution (or in the case of a substitution of more than one mortgage loan for a Deleted Mortgage Loan, an aggregate principal balance), not in excess of the Scheduled Principal Balance of the Deleted Mortgage Loan;

 

(b) have a Mortgage Loan Remittance Rate not less than, and not more than 2% greater than, the Mortgage Loan Remittance Rate of the Deleted Mortgage Loan;

 

(c) have a remaining term to maturity not greater than and not more than one year less than that of the Deleted Mortgage Loan;

 

(d) comply with each representation and warranty set forth in Section 3.6 and Schedule III ;

 

(e) be of the same type as the Deleted Mortgage Loan;

 

(f) have a Gross Margin not less than that of the Deleted Mortgage Loan;

 

(g) have the same Index as the Deleted Mortgage Loan if the Deleted Mortgage Loan is an Adjustable Rate Mortgage Loan;

 

(h) be a first lien priority mortgage;

 

(i) have a FICO score not less than that of the Deleted Mortgage Loan;

 

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(j) have an LTV not greater than that of the Deleted Mortgage Loan; and

 

(k) have a Prepayment Premium with a term and an amount at least equal to the Prepayment Premium of the Deleted Mortgage Loan.

 

Rating Agency : Each of Fitch, Moody’s and S&P.

 

Realized Loss : With respect to each Liquidated Mortgage Loan, an amount (not less than zero or more than the Scheduled Principal Balance of the Mortgage Loan) as of the date of such liquidation, equal to (a) the Scheduled Principal Balance of the Liquidated Mortgage Loan as of the date of such liquidation, plus (b) interest at the Adjusted Net Mortgage Rate from the Due Date as to which interest was last paid or advanced (and not reimbursed) to Certificateholders up to the Due Date in the month in which Liquidation Proceeds are required to be distributed on the Scheduled Principal Balance of such Liquidated Mortgage Loan from time to time, minus (c) the Liquidation Proceeds received during the calendar month in which such liquidation occurred, to the extent applied as recoveries of interest at the Adjusted Net Mortgage Rate and to principal of the Liquidated Mortgage Loan. With respect to each Mortgage Loan which has become the subject of a Deficient Valuation, if the principal amount due under the related Mortgage Note has been reduced, the difference between the principal balance of the Mortgage Loan outstanding immediately prior to such Deficient Valuation and the principal balance of the Mortgage Loan as reduced by the Deficient Valuation. With respect to each Mortgage Loan which has become the subject of a Debt Service Reduction, the amount, if any, by which the principal portion of the related Scheduled Monthly Payment has been reduced.

 

Record Date : As to any Distribution Date the last Business Day preceding such Distribution Date.

 

Regular Certificates : Any of the Class A Certificates, Class M Certificates, Class C Certificates or Class P Certificates.

 

Reinvestment Agreement : A guaranteed reinvestment agreement from a bank, insurance company or other corporation or entity organized under the laws of the United States or any state thereof under which no payments are subject to any withholding tax or, if subject to withholding tax imposed by any jurisdiction, the obligor thereunder is required to make “gross up” payments that cover the full amount of any such withholding tax on an after-tax basis; provided that such agreement provides that it is terminable by the purchaser, without premium or penalty, in the event that the rating assigned to such agreement by any Rating Agency is at any time lower than the rating required pursuant to the terms of this Agreement to be assigned to such agreement in order to permit the purchase thereof.

 

Relief Act : The Servicemembers Civil Relief Act, as such may be amended from time to time, and any similar state laws.

 

Relief Act Reductions : With respect to any Distribution Date and any Mortgage Loan as to which there has been a reduction in the amount of interest collectible thereon for the most recently ended calendar month as a result of the application of the Relief Act, the amount, if any, by which (a) interest collectible on such Mortgage Loan for the most recently ended calendar month is less than (b) interest accrued thereon for such month pursuant to the Mortgage Note.

 

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Regular Interest : A “regular interest” in a REMIC within the meaning of Section 860G(a)(1) of the Code.

 

REMIC : A “real estate mortgage investment conduit” within the meaning of Section 860D of the Code.

 

REMIC Provisions : Provisions of the federal income tax law relating to real estate mortgage investment conduits, which appear at Sections 860A through 860G of Subchapter M of Chapter 1 of the Code, and related provisions, and regulations promulgated thereunder, as the foregoing may be in effect from time to time as well as provisions of applicable state laws.

 

REO Disposition Proceeds : All amounts received with respect to any REO Property pursuant to Section 4.17.

 

REO Property : A Mortgaged Property acquired by the Servicer on behalf of the Trust through foreclosure or deed-in-lieu of foreclosure in connection with a defaulted Mortgage Loan.

 

Repurchase Price : With respect to any Mortgage Loan required to be purchased pursuant to Section 2.5, Section 3.6 and Section [5.2]of this Agreement, an amount equal to the sum of (a) 100% of the unpaid principal balance of the Mortgage Loan at the close of business on the date of such purchase, (b) accrued interest thereon at the applicable Mortgage Rate (less the applicable Servicing Fee Rate if the purchaser is the Seller and the Servicer of such Mortgage Loan) from the date through which interest was last paid by the Mortgagor to the Due Date in the month in which the Repurchase Price is to be distributed to Certificateholders, and (c) any unreimbursed Monthly Advances and Servicing Advances made by the Servicer and any costs and damages incurred with respect to a Mortgage Loan in connection with the violation of any predatory or abusive lending law with respect to a Mortgage Loan.

 

Request for Release : [The Request for Release submitted by the Servicer to the Trustee] in the form of Exhibit L .

 

Residual Certificates : The Class R Certificates.

 

Residual Interest : The sole class of “residual interests” in a REMIC within the meaning of Section 860G(a)(2) of the Code.

 

Responsible Officer : [When used with respect to the Trustee, Depositor,] any vice president, any assistant vice president, the secretary, any assistant secretary, any trust officer or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also to whom, with respect to a particular matter, such matter is referred because of such officer’s knowledge of and familiarity with the particular subject, and in each case who shall have direct responsibility for the administration of this Agreement.

 

Rule 144A Letter : As defined in Section 9.2(b).

 

S&P : Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc.

 

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Scheduled Monthly Payment : Each scheduled payment of principal and interest (or of interest only, if applicable) to be paid by the Mortgagor on a Mortgage Loan, as reduced (except where otherwise specified herein) by the amount of any related Debt Service Reduction or pursuant to the Relief Act (excluding all amounts of principal and interest that were due on or before the Cut-off Date whenever received) and, in the case of an REO Property, an amount equivalent to the Scheduled Monthly Payment that would have been due on the related Mortgage Loan if such Mortgage Loan had remained in existence.

 

Scheduled Principal Balance : With respect to (a) any Mortgage Loan as of any Distribution Date, the principal balance of such Mortgage Loan at the close of business on the applicable Cut-off Date after giving effect to Scheduled Monthly Payments due on or before such Cut-off Date, whether or not received, less an amount equal to principal portion of Scheduled Monthly Payments due after the Cut-off Date and on or before the Due Date in the related Due Period, whether or not received from the Mortgagor or advanced by any Servicer, and all amounts allocable to unscheduled principal payments (including Principal Prepayments, Liquidation Proceeds, Insurance Proceeds and condemnation proceeds, in each case to the extent identified and applied prior to or during the related Prepayment Period) and (b) any REO Property as of any Distribution Date, the Scheduled Principal Balance of the related Mortgage Loan on the Due Date immediately preceding the date of acquisition of such REO Property by or on behalf of the Trustee (reduced by any amount applied as a reduction of principal on the Mortgage Loan).

 

Securities Act : The Securities Act of 1933, as amended.

 

Sellers :                                                   .

 

Senior Enhancement Percentage : For a Distribution Date, a fraction expressed as a percentage equal to (a) the sum of the aggregate Certificate Principal Balance of the Class M Certificates and the Overcollateralization Amount, in each case before taking into account any payments of principal to the Certificates on that Distribution Date, divided by (b) the sum of the aggregate Scheduled Principal Balance of the Mortgage Loans and the Pre-Funded Amount as of the last day of the related Due Period.

 

[Senior Percentage]

 

[Senior Prepayment Percentage]

 

Senior Principal Distribution Amount : As of any Distribution Date on or after the Stepdown Date and as long as a Trigger Event is not in effect is the excess of (a) the aggregate Certificate Principal Balance of the Class A Certificates immediately prior to such Distribution Date over (b) the lesser of (i) the product of (1) approximately [ - ]% and (2) the sum of the aggregate Scheduled Principal Balance of the Mortgage Loans and the Pre-Funded Amount, each as of the last day of the related Due Period and (ii) the amount by which the sum of the aggregate Scheduled Principal Balance of the Mortgage Loans and the Pre-Funded Amount, each as of the last day of the related Due Period exceeds the product of (1) [ - ]% and (2) the sum of the aggregate Scheduled Principal Balance of the Closing Date Mortgage Loans as of the Cut-Off Date and the Pre-Funded Amount as of the Closing Date.

 

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Servicer :                      or its successor in interest or assigns or any successor to the Servicer under this Agreement.

 

Servicer Event of Default : As defined in Section 5.9.

 

Servicer Prepayment Premium Payment Amount : The amount payable by the Servicer in respect of any waived or uncollected Prepayment Premiums pursuant to Section 8.1, which amount shall be equal to the difference between the amount of Prepayment Premium due by a Mortgagor before any waiver and the actual amount of the Prepayment Premium that was paid by the Mortgagor, which amounts shall not be a part of any REMIC formed hereunder.

 

Servicer Remittance Amount : As defined in Section 7.1.

 

Servicer Remittance Date : The day in each calendar month on which the Servicer is required to remit payments to the Trustee for deposit into the Payment Account, which will be the Business Day prior to the Distribution Date, commencing in              200_.

 

Servicing Advance : All customary, reasonable and necessary “out of pocket” costs and expenses (including reasonable attorneys’ fees and disbursements) other than Monthly Advances incurred in the performance by the Servicer of its servicing obligations, including, but not limited to, the cost of (a) the preservation, restoration and protection of the Mortgaged Property, (b) any enforcement or judicial proceedings, including foreclosures, (c) the management and liquidation of any REO Property and (d) compliance with the obligations under Section 4.9.

 

Servicing Fee : With respect to each Mortgage Loan, the amount of the annual fee the Master Servicer shall pay to the Servicer, which shall, for a period of one full month, be equal to one-twelfth of the product of (a) the applicable Servicing Fee Rate and (b) the outstanding principal balance of such Mortgage Loan. Such fee shall be payable monthly, computed on the basis of the same principal amount and period respecting which any related interest payment on a Mortgage Loan is computed. The obligation of the Master Servicer to pay the Servicing Fee is limited to, and the Servicing Fee is payable solely from, the interest portion (including recoveries with respect to interest from Liquidation Proceeds, Condemnation Proceeds and Insurance Proceeds to the extent permitted by Section 4.6) of such Scheduled Monthly Payment collected by the Servicer, or as otherwise provided under Section 4.6.

 

Servicing Fee Rate : With respect to each Mortgage Loan, the per annum rate equal to [ - ]%.

 

Servicing File : With respect to each Mortgage Loan, the file retained by the Master Servicer or the Servicer, as the case may be, consisting of originals of all documents in the Mortgage File which are not delivered to the Trustee and copies of the Mortgage Loan Documents the originals of which are delivered to the Trustee.

 

Servicing Officer : Any officer of a Servicer involved in or responsible for the administration and servicing of the Mortgage Loans whose name appears on a list of servicing officers furnished by the Servicer on the Closing Date to the Master Servicer upon request, as such list may from time to time be amended.

 

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Startup Day : As defined in the Preliminary Statement.

 

Stepdown Date : The earlier to occur of (a) the Distribution Date on which the aggregate Certificate Principal Balance of the Class A Certificates has been reduced to zero, and (b) the later to occur of (i) the Distribution Date in              200      and (ii) the first Distribution Date on which the Senior Enhancement Percentage is greater than or equal to [ - ]%.

 

[Subordinate Percentage]

 

Subsequent Mortgage Loans : Each of the Mortgage Loans acquired with amounts in the Pre - Funding Account conveyed to the Trust Fund that is listed on a schedule attached to a Subsequent Transfer Agreement.

 

Subsequent Mortgage Loan Schedule : The schedule to be annexed to the Mortgage Loan Schedule on each Subsequent Sale Date identifying the relevant Subsequent Mortgage Loans subject to this Agreement.

 

Subsequent Recovery : Any amount (net of reimbursable expenses) received on a Mortgage Loan subsequent to such Mortgage Loan being determined to be a Liquidated Mortgage Loan that resulted in a Realized Loss in a prior month. If Subsequent Recoveries are received, they will be included as part of the Principal Proceeds for the Distribution Date following the calendar month in which they are received and distributed in accordance with the priorities described herein. In addition, after giving effect to all distributions on a Distribution Date, the unpaid Applied Loss Amount for the Class M Certificates then outstanding with the highest distribution priority will be decreased by the amount of such Subsequent Recoveries until reduced to zero (with any remaining Subsequent Recoveries applied to reduce the Applied Loss Amount of the class with the next highest distribution priority), and the Certificate Principal Balance of such Class or Classes of Class M Certificates will be increased by the same amount.

 

Subsequent Sale Date : The date of each Subsequent Transfer Agreement.

 

Subsequent Transfer Agreement : A Subsequent Transfer Agreement entered into between a Seller, the Depositor, the Trustee and the Servicer substantially in the form attached as Exhibit P .

 

Substituting Party : As defined in Section 3.6(d).

 

Substitution Adjustment Amount : As defined in Section 3.6(f).

 

Target Overcollateralization Amount : For any Distribution Date prior to the Stepdown Date, [ - ]% of the sum of (a) the aggregate Scheduled Principal Balance of the Closing Date Mortgage Loans as of the Cut-off Date and (b) the Pre - Funded Amount as of the Closing Date.

 

For any Distribution Date on or after the Stepdown Date, the lesser of (a) [ - ]% of the sum of (i) the aggregate Scheduled Principal Balance of the Closing Date Mortgage Loans as of the Cut-off Date and (ii) the Pre-Funded Amount as of the Closing Date, and (b) [ - ]% of the sum of (i) the aggregate Scheduled Principal Balance of the Mortgage Loans and (ii) the Pre - Funded Amount, each as of the last day of the related Due Period, subject to a floor equal to [ - ]%

 

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of the sum of (i) the aggregate Scheduled Principal Balance of the Closing Date Mortgage Loans as of the Cut-off Date and (ii) the Pre-Funded Amount as of the Closing Date; provided, however , if a Trigger Event has occurred and is continuing on a Distribution Date, the Target Overcollateralization Amount will be the same as the Target Overcollateralization Amount on the preceding Distribution Date. The Target Overcollateralization Amount will be zero when the Certificate Principal Balance of each of the Offered Certificates and the Class M-3 Certificates is reduced to zero.

 

Tax Matters Person : The person designated as “tax matters person” in the manner provided under Treasury regulation § 1.860F-4(d) and temporary Treasury regulation § 301.6231(a)(7)1T. Initially, the Tax Matters Person shall be the Holder of the Class R Certificates.

 

Termination Price : As defined in Section 12.1(a).

 

Transferor Certificate : As defined in Section 9.2.

 

[Transferor Prepayment Premium Payment Amount]

 

Trigger Event : An event that is in effect on any Distribution Date on or after the Stepdown Date, if either (a) the Average Sixty-Day Delinquency Ratio equals or exceeds [ - ]% of the Senior Enhancement Percentage on such Distribution Date or (b) Cumulative Realized Losses as a percentage of the sum of (i) the aggregate Scheduled Principal Balance of the Closing Date Mortgage Loans as of the Cut-off Date and (ii) the Pre-Funded Amount as of the Closing Date, exceeds the applicable percentages set forth in the table below with respect to such Distribution Date:

 

 

Trust or Issuer : First NLC Securitization Trust 2005-2.

 

Trust Fund : As defined in Section 2.2(a).

 

Trustee :                              and, if a successor trustee is appointed hereunder, such successor.

 

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Trustee Fee : As to any Distribution Date, an amount equal to (a) one-twelfth of the Trustee Fee Rate multiplied by (b) the Scheduled Principal Balance of the Mortgage Loans and the Pre-Funded Amount as of the Due Date in the prior calendar month, subject to a minimum of $              per calendar month.

 

Trustee Fee Rate : [ - ]% per annum.

 

UCC : The Uniform Commercial Code as enacted in the relevant jurisdiction.

 

Underwriters : The Lead Underwriter and the Co-Underwriter.

 

Underwriting Agreement : The Underwriting Agreement, dated                   , 200      , between the Depositor and the Underwriters.

 

Underwriter’s Exemption : Prohibited Transaction Exemption (“PTE”) 90-24 (May 11, 1990), as most recently amended by PTE 97-34 at 62 Fed. Reg. 39021 (July 21, 1997), PTE 2000-58 at 65 Fed. Reg. 67765 (November 13, 2000) and PTE 2002-41 at 67 Fed. Reg. 54487 (August 22, 2002), or any substantially similar administrative exemption granted by the U.S. Department of Labor.

 

Underwriting Guidelines : Those underwriting guidelines employed by the Originator in originating the Mortgage Loans.

 

U.S. Person : (a) A citizen or resident of the United States, (b) a corporation created or organized in or under the laws of the United States, any state thereof or the District of Columbia, including an entity treated as a corporation for federal income tax purposes (c) a partnership (unless Treasury regulations are adopted that provide otherwise) created or organized in or under the laws of the United States, any state thereof or the District of Columbia, including an entity treated as a partnership for federal income tax purposes, none of the interests in which are owned, directly or indirectly through one or more intermediate entities, by a person that is not a U.S. Person within the meaning this paragraph, (d) an estate the income of which is includible in gross income for United States federal income tax purposes, regardless of its source, (e) a trust if a court within the United States is able to exercise primary supervision over the administration of such trust and one or more United States fiduciaries have the authority to control all substantial decisions of the trust (or to the extent provided in applicable Treasury regulations, certain trusts in existence on August 20, 1996 that are eligible to be treated as United States persons).

 

Voting Interests : The portion of the voting rights of all of the Certificates which is allocated to any Certificate. As of any date of determination, the Voting Interests shall be allocated among Holders of the Certificates in proportion to the Certificate Principal Balance of their respective Certificates on such date.

 

SECTION 1.2 Calculations With Respect to the Mortgage Loans.

 

Calculations required to be made pursuant to this Agreement with respect to any Mortgage Loan in the Trust Fund shall be made based upon current information as to the terms of the Mortgage Loans and reports of payments received from the Mortgagor on such Mortgage Loans provided by the Servicer to the Master Servicer. Payments to be made by the Trustee

 

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shall be based on information provided by the Master Servicer. The Trustee shall not be required to recompute, verify or recalculate the information supplied to it by the Master Servicer, or the Servicer.

 

SECTION 1.3 Calculations With Respect to Accrued Interest.

 

Accrued interest, if any, on any Certificate shall be calculated based upon a 360-day year and the actual number of days in each Interest Accrual Period.

 

SECTION 1.4 Rules of Construction .

 

Unless the context otherwise clearly requires:

 

(a) the definitions of terms herein shall apply equally to the singular and plural forms of the terms defined;

 

(b) whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms;

 

(c) the words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation;”

 

(d) the word “will” shall be construed to have the same meaning and effect as the word “shall;”

 

(e) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein);

 

(f) any reference herein to any Person, or to any Person in a specified capacity, shall be construed to include such Person’s permitted successors and assigns or such Person’s permitted successors in such capacity, as the case may be; and

 

(g) all references in this instrument to designated “Sections,” “clauses” and other subdivisions are to the designated Sections, clauses and other subdivisions of this instrument as originally executed, and the words “herein,” “hereof,” “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular Section, clause or other subdivision.

 

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ARTICLE II

 

CONVEYANCE OF MORTGAGE LOANS; CREATION AND DECLARATION OF

TRUST FUND

 

SECTION 2.1 Conveyance of Mortgage Loans to the Depositor

 

(a) On the Closing Date, in exchange for good and valuable consideration, the receipt and sufficiency of which the Sellers hereby acknowledge, each Seller does hereby sell, transfer, assign, or set over, deposit with and otherwise convey to the Depositor and the Depositor does hereby purchase, without recourse (except as provided herein), on a servicing-[released] [retained] basis, all right, title and interest of such Seller in and to

 

(i) the Closing Date Mortgage Loans indicated as being sold by such Seller in the Closing Date Mortgage Loan Schedule, having an aggregate Cut-off Date Balance as set forth in such Mortgage Loan Schedule;

 

(ii) all payments on the Closing Date Mortgage Loans as provided in Section 2.1(b);

 

(iii) the Mortgage Notes, the Mortgages, any related insurance policies and all other documents in the related Mortgage Files;

 

(iv) any and all general intangibles consisting of, arising from or relating to any of the foregoing;

 

(v) the property that secures the Closing Date Mortgage Loans, including the Mortgaged Properties, that has been acquired by foreclosure, deed-in-lieu of foreclosure or otherwise; and

 

(vi) all proceeds of the conversion, voluntary or involuntary, of the foregoing into cash, instruments, securities or other property.

 

The Depositor will pay to the Sellers the proceeds from the transfer of the Class C Certificates and the Class P Certificates on or before the close of business on the Business Day following the Closing Date or, if such proceeds are not paid by the required date, will immediately deliver the Class C Certificate and the Class P Certificates to the Sellers.

 

(b) The Depositor, subject to Section 2.2, shall be entitled to:

 

(i) all scheduled principal on the Closing Date Mortgage Loans due after their respective Cut-off Dates;

 

(ii) all collections of principal on the Closing Date Mortgage Loans received after their respective Cut-off Dates (other than principal due on or before their respective Cut-off Date and collected after the Cut-off Dates);

 

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(iii) all collections of interest on the Closing Date Mortgage Loans (other than pre-paid interest paid at each Mortgage Loan closing with respect to Closing Date Mortgage Loans originated after                   , 200    ) at the Mortgage Loan Remittance Rate (minus that portion of any such payment which is allocable to the period prior to the Cut-off Date); and

 

(iv) all Prepayment Premiums.

 

Scheduled Monthly Payments paid prior to the Closing Date with respect to a Due Date after the Cut-off Date shall not be applied to the principal balance as of the Cut-off Date, but shall be the property of the Depositor. The applicable Seller shall remit to the Master Servicer for deposit any such prepaid amounts into the Custodial Account for the benefit of the Depositor.

 

(c) Upon the sale of the Mortgage Loans, the ownership of each Mortgage Note, the related Mortgage and the related Mortgage File shall vest immediately in the Depositor, and the ownership of all records and documents with respect to the related Mortgage Loan prepared by or which come into the possession of the applicable Seller shall vest immediately in the Depositor and shall be retained and maintained by such Seller, in trust, at the will of the Depositor and only in such custodial capacity.

 

(d) On or prior to the Closing Date, each Seller shall deliver the Mortgage Loan Schedule, the Mortgage Files and Mortgage Loan Documents relating to the Closing Date Mortgage Loans to be transferred on the related Closing Date to the Trustee and the Master Servicer, as applicable.

 

SECTION 2.2 Creation and Declaration of Trust Fund .

 

(a) On the Closing Date, in exchange for good and valuable consideration, the receipt and sufficiency of which the Depositor hereby acknowledges, the Depositor does hereby sell, transfer, assign, or set over, deposit with and otherwise convey to the Trustee on behalf of the Certificateholders, and the Trustee on behalf of the Certificateholders does hereby purchase, without recourse (except as provided herein), on a servicing-[released] [retained] basis, all right, title and interest of the Depositor in and to the Trust Fund. Such conveyance includes (collectively, the “ Trust Fund ”), without limitation:

 

(i) the Closing Date Mortgage Loans and related assets as provided in Section 2.1(a);

 

(ii) the Accounts, and all amounts deposited therein pursuant to the applicable provisions of this Agreement; and

 

(iii) the rights of the Trust under the Cap Agreement.

 

and the Trustee declares that, subject to the review provided for in Section 2.5, it has received and shall hold the Trust Fund, as trustee, in trust, for the benefit and use of the Certificateholders and for the purposes and subject to the terms and conditions set forth in this Agreement, and, concurrently with such receipt, has caused to be executed, authenticated and delivered to or upon the order of the Depositor, in exchange for the Trust Fund, Certificates in the authorized denominations evidencing the entire ownership of the Trust Fund.

 

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(b) In connection with such transfer and assignment of the Mortgage Loans, the Depositor does hereby (and upon the transfer and assignment of any Subsequent Mortgage Loans, shall) deliver to, and deposit with, or cause to be delivered to and deposited with the Trustee for the benefit of the Certificateholders, the Mortgage File with respect to each Mortgage Loan, and the ownership of all records and documents with respect to the related Mortgage Loan prepared by or which come into the possession of the Depositor shall vest immediately in the Trustee for the benefit of the Certificateholders and shall be retained and maintained by the Depositor, in trust, at the will of the Trustee for the benefit of the Certificateholders and only in such custodial capacity.

 

SECTION 2.3 Assignment of Mortgage Loans .

 

(a) Each Seller shall cause an Assignment of Mortgage with respect to each Mortgage Loan (other than a MOM Loan) to be completed in the form and substance acceptable for recording in the relevant jurisdiction, such assignment shall either be in blank or be endorsed to “                      , as Trustee of the First NLC Securitization Trust 200    -    , Asset-Backed Pass-Through Certificates, Series 200_-_, without recourse,” within 30 days following the Closing Date. Any such recordation of an Assignment of Mortgage shall be effected at the expense of the applicable Seller.

 

(b) In the event that the Servicer is required to record an Assignment of Mortgage, the related Seller shall pay all costs, fees and expenses in connection with such recordation.

 

(c) In connection with the assignment of any Mortgage Loan registered on the MERS® System, the applicable Seller agrees that it will cause, within 30 Business Days after the Closing Date, the Originator to cause the MERS® System to indicate that such Mortgage Loans have been assigned by the applicable Seller to the Depositor which has assigned such Mortgage Loans to the Trustee in accordance with this Agreement for the benefit of the Certificateholders by including (or deleting, in the case of Mortgage Loans which are repurchased in accordance with this Agreement) in such computer files the code in the field that identifies the specific Trustee and the code in the field “Pool Field” that identifies the series of the Certificates for which such Mortgage Loans serve as collateral. The applicable Seller further agrees that it will not, and will not permit the Servicer to, and the Servicer agrees that it will not, alter the codes referenced in this paragraph with respect to any MOM Loan during the term of this Agreement unless and until such MOM Loan is repurchased in accordance with the terms of this Agreement.

 

(d) In the event that any Assignment of Mortgage is not recorded or is improperly recorded, neither the Trustee, the Master Servicer nor the Servicer shall have any liability for any failure to receive or act on notices related to such Assignments of Mortgage.

 

SECTION 2.4 Books and Records .

 

(a) The contents of each Servicing File are and shall be held by the Master Servicer or the Servicer, as the case may be, in trust for the benefit of the Trustee on behalf of the Certificateholders. The Master Servicer and the Servicer shall take all necessary steps to ensure

 

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that the documents required to be included in the Servicing File are complete and shall maintain the Servicing File as required by this Agreement, Accepted Servicing Practices and applicable law. Possession of each Servicing File by the Master Servicer or the Servicer, as the case may be, is at the will of the Trustee for the sole purpose of servicing the related Mortgage Loan and such retention and possession by the Master Servicer or the Servicer, as the case may be, is in a custodial capacity only. The Master Servicer or the Servicer, as the case may be, shall release its custody of the contents of any Servicing File only in accordance with written instructions from the Trustee, unless such release is required as incidental to any of the Master Servicer or the Servicer, as the case may be, servicing of the Mortgage Loans or is in connection with the transfer of servicing or a repurchase of any Mortgage Loan.

 

(b) All original documents relating to the Mortgage Loans that are not delivered to the Trustee, to the extent delivered to the Master Servicer or the Servicer, as the case may be, are and shall be held by the Master Servicer or the Servicer, as the case may be, in trust for the benefit of the Trustee on behalf of the Certificateholders. In the event that any such original document is required pursuant to the terms of this Section to be a part of a Mortgage File, such document shall be delivered promptly to the Trustee.

 

(c) Upon and after a conveyance of Mortgage Loans to the Trustee for the benefit of the Certificateholders, all proceeds arising out of the Mortgage Loans, including, but not limited to, all funds received on or in connection with the Mortgage Loans, shall be received and held by the Master Servicer or the Servicer, as the case may be, in trust for the benefit of the Trustee on behalf of the Certificateholders.

 

(d) The applicable Seller and Depositor shall each be responsible for maintaining, and shall maintain, a complete set of books and records for each Mortgage Loan which shall be marked clearly to reflect the ownership of each Mortgage Loan by the Trustee for the benefit of the Certificateholders.

 

(e) Nothing in this Agreement shall be construed to constitute an assumption by the Trust Fund, the Trustee, the Master Servicer, the Servicer or the Certificateholders of any unsatisfied duty, claim or other liability on any Mortgage Loan or to any Mortgagor.

 

SECTION 2.5 Acceptance of Trust Fund; Review of Documentation.

 

(a) The Trustee, by execution and delivery hereof, acknowledges receipt by it of the Mortgage Files pertaining to the Mortgage Loans delivered on or before the Closing Date.

 

(b) On the Closing Date, the Trustee will execute and deliver to the Depositor, Master Servicer and Servicer an Initial Certification with respect to the Mortgage Loans delivered on or before the Closing Date, as applicable. The Trustee shall not be under any duty or obligation to inspect, review or examine said documents, instruments, certificates or other papers to determine that the same are genuine, enforceable, recordable or appropriate for the represented purpose or that they have actually been recorded in the real estate records or that they are other than what they purport to be on their face.

 

(c) Within [90] days after the Closing Date, the Trustee will deliver to the Depositor, Master Servicer and Servicer a Final Certification with any applicable exceptions noted therein.

 

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The 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 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.

 

(d) If in the course of the review described in paragraphs (b) and (c) above the 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 Trustee shall identify the Mortgage Loan to which such Material Defect relates in the Final Certification delivered to the Depositor, Master Servicer and Servicer. Within [90] days of their receipt of such notice, the Originator shall be required to cure such Material Defect (and, in such event, the Originator shall provide the Trustee with an Officer’s Certificate confirming that such cure has been effected). If the Originator does not so cure such Material Defect, the Originator shall repurchase the related Mortgage Loan from the Trust Fund at the Repurchase Price. The Originator may, in lieu of repurchasing a Mortgage Loan pursuant to this Section 2.5, substitute for such Mortgage Loan a Qualified Substitute Mortgage Loan subject to the provisions of Section 3.6(a), provided that such substitution occurs within two years of the Closing Date. The failure of the Trustee to deliver the Final Certification shall not affect or relieve the Originator of its obligation to repurchase any Mortgage Loan pursuant to this Section 2.5 or any other Section of this Agreement requiring the repurchase of Mortgage Loans from the Trust Fund.

 

(e) Nothing in this Agreement shall be construed to constitute an assumption by the Trust Fund, the Trustee, the Master Servicer, the Servicer or the Certificateholders of any unsatisfied duty, claim or other liability on any Mortgage Loan or to any Mortgagor.

 

SECTION 2.6 Execution and Delivery of Certificates.

 

The Trustee acknowledges the transfer and assignment to it of the Trust Fund and, concurrently with such transfer and assignment, has executed the Certificates in authorized denominations evidencing directly or indirectly the entire ownership of the Trust Fund, and, upon the written order of the Depositor, has authenticated the same Certificates. The Trustee agrees to hold the Trust Fund and exercise the rights referred to above for the benefit of all present and future Holders of the Certificates and to perform the duties set forth in this Agreement in accordance with the standard of care set forth herein.

 

SECTION 2.7 Granting Clause.

 

(a) It is intended that the conveyance of the Mortgage Loans by each Seller to the Depositor and by the Depositor to the Trustee for the benefit of the Certificateholders, as provided for in Sections 2.1 and 2.2, be construed as sales of the Mortgage Loans and other assets in the Trust Fund by the Sellers to the Depositor and by the Depositor to the Trustee for

 

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the benefit of the Certificateholders. Further, it is not intended that any such conveyances be deemed a pledge of the Mortgage Loans by a Seller to the Depositor to secure a debt or other obligation of the applicable Seller, or a pledge of the Mortgage Loans by the Depositor to the Trustee for the benefit of the Certificateholders to secure a debt or other obligation of the Depositor. However, in the event that the Mortgage Loans are held to be property of a Seller or the Depositor or if for any reason this Agreement is held or deemed to create a security interest in the Mortgage Loans and other assets in the Trust Fund, then it is intended that:

 

(i) this Agreement shall also be deemed to be a security agreement within the meaning of Articles 8 and 9 of the UCC;

 

(ii) the conveyances provided for in Sections 2.1 and 2.2 shall be deemed (1) a grant by each Seller to the Depositor, and by the Depositor to the Trustee for the benefit of the Certificateholders, as the case may be, of a security interest in all of the applicable Seller’s right and Depositor’s right, as applicable, (including the power to convey title thereto), title and interest, whether now owned or hereafter acquired, in and to (A) the Mortgage Loans, including the Mortgage Notes, the Mortgages, any related insurance policies and all other documents in the related Mortgage Files, (B) all amounts payable pursuant to the Mortgage Loans in accordance with the terms thereof and (C) any and all general intangibles consisting of, arising from or relating to any of the foregoing, and all proceeds of the conversion, voluntary or involuntary, of the foregoing into cash, instruments, securities or other property, including without limitation all Liquidation Proceeds, all Insurance Proceeds and all amounts from time to time held or invested in the Payment Account and the Custodial Account, whether in the form of cash, instruments, securities or other property and (2) an assignment by the Sellers to the Depositor and by the Depositor to the Trustee for the benefit of the Certificateholders of any security interest in any and all of the Sellers’ and Depositor’s right (including the power to convey title thereto), title and interest, whether now owned or hereafter acquired, in and to the property described in the foregoing clauses (1)(A) through (C);

 

(iii) the possession by the Trustee of Mortgage Notes, and such other items of property as constitute instruments, money, negotiable documents or chattel paper shall be deemed to be “possession by the secured party,” or possession by a purchaser or a person designated by such secured party, for purposes of perfecting the security interest pursuant to the UCC (including, without limitation, Sections 9-313, 8-313 or 8-321 thereof); and

 

(iv) notifications to persons holding such property, and acknowledgments, receipts or confirmations from persons holding such property, shall be deemed notifications to, or acknowledgments, receipts or confirmations from, financial intermediaries, bailees or agents (as applicable) of the Trust for the purpose of perfecting such security interest under applicable law.

 

(b) Each Seller and the Depositor shall, to the extent consistent with this Agreement, take such reasonable actions as may be necessary to ensure that, if this Agreement were deemed to create a security interest in the Mortgage Loans and the other property of the Trust Fund, 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 this Agreement. Without

 

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limiting the generality of the foregoing, the applicable Seller and the Depositor shall prepare and file any UCC financing statements that are necessary to perfect the Depositor’s and the Trustee’s security interest in or lien on the Mortgage Loans, as evidenced by an Officer’s Certificate of the applicable Seller and the Depositor, and furnish a copy of each such filed financing statement to the Trustee. The Depositor shall prepare and file, at the expense of the Trust Fund, all filings necessary to maintain the effectiveness of any original filings necessary under the relevant UCC to perfect the Trustee’s security interest in or lien on the Mortgage Loans for the benefit of the Certificateholders, including without limitation (i) continuation statements, and (ii) to the extent that a Responsible Officer of the Depositor has received written notice of such change or transfer, such other statements as may be occasioned by (A) any change of name of a Seller, the Depositor or the Trustee, (B) any change of location of the place of business or the chief executive office of a Seller or the Depositor, (C) any change in the jurisdiction of formation of a Seller or the Depositor, or (D) any transfer of any interest of a Seller or the Depositor in any Mortgage Loan.

 

(c) Neither a Seller nor the Depositor shall organize under the law of any jurisdiction other than the State under which each is organized as of the Closing Date (whether changing its jurisdiction of organization or organizing under an additional jurisdiction) without giving 30 days prior written notice of such action to the Master Servicer, the Servicer and the Trustee. Before effecting such change, each of a Seller or the Depositor proposing to change its jurisdiction of organization shall prepare and file in the appropriate filing office any financing statements or other statements necessary to continue the perfection of the interests of its transferees, including the Trustee for the benefit of the Certificateholders, in the Mortgage Loans.

 

(d) Neither any Seller nor the Depositor shall take any action inconsistent with the sale by such Seller or the Depositor of its right, title and interest in and to the Mortgage Loans or Trust Fund and shall indicate or shall cause to be indicated in its records and records held on its behalf that ownership of each Mortgage Loan and the other property of the Trust Fund is held by the Trustee for the benefit of the Certificateholders. In addition, each Seller and the Depositor shall respond to any inquiries from third parties with respect to ownership of a Mortgage Loan or any other property of the Trust Fund by stating that it is not the owner of such Mortgage Loan and that ownership of such Mortgage Loan or other property of the Trust Fund is held by the Trustee for the benefit of the Certificateholders.

 

SECTION 2.8 Delivery of Subsequent Mortgage Loans.

 

(a) Subject to the satisfaction of the conditions set forth in paragraph (b) below and pursuant to the terms of each Subsequent Transfer Agreement, in consideration of the Trustee’s delivery on the related Subsequent Sale Date to or upon the order of the Depositor of the purchase price therefor solely from the Pre-Funded Amount, on any Subsequent Sale Date, the Depositor shall sell, transfer, assign, set over and otherwise convey without recourse to the Trustee for the benefit of the Certificateholders, all right, title and interest of the Depositor in and to each Subsequent Mortgage Loan transferred pursuant to such Subsequent Transfer Agreement, including:

 

(i) the related Scheduled Principal Balance as of the Related Cut-Off Date after giving effect to payments of principal due on or before the Related Cut-Off Date;

 

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(ii) all collections of principal on the Subsequent Mortgage Loan received after the related Cut-off Date (other than principal due on or before related Cut-off Date and collected after the related Cut-off Date);

 

(iii) all collections of interest on the Subsequent Mortgage Loans at the Mortgage Loan Remittance Rate (minus that portion of any such payment which is allocable to the period prior to the related Cut-off Date);

 

(iv) all Prepayment Premiums with respect to such Subsequent Mortgage Loan;

 

(v) the Mortgage Notes, the Mortgages, any related insurance policies and all other documents in the related Mortgage Files with respect to such Subsequent Mortgage Loan;

 

(vi) any and all general intangibles consisting of, arising from or relating to any of the foregoing;

 

(vii) the property that secured such Subsequent Mortgage Loan, including the Mortgaged Properties and any Additional Collateral, and has been acquired by foreclosure, deed-in-lieu of foreclosure or otherwise;

 

(viii) the Capitalized Interest Account, and all amounts deposited therein pursuant to the applicable provisions of this Agreement; and

 

(ix) all proceeds of the conversion, voluntary or involuntary, of the foregoing into cash, instruments, securities or other property, including without limitation all Liquidation Proceeds and all Insurance Proceeds.

 

The transfer by the Seller to the Depositor and by the Depositor to the Trustee for the benefit of the Certificateholders of the Subsequent Mortgage Loans set forth on the Subsequent Mortgage Loan Schedule shall be absolute and shall be intended by the applicable Seller, the Depositor and all parties hereto, other than for federal income tax purposes, to be treated as a sale by the applicable Seller to the Depositor and by the Depositor to the Trustee for the benefit of the Certificateholders.

 

If the assignment and transfer of the Mortgage Loans and the other property specified in this Section 2.8(a) from the applicable Seller to the Depositor and from the Depositor to the Trustee for the benefit of the Certificateholders pursuant to the Subsequent Transfer Agreement and this Agreement is held or deemed not to be a sale or is held or deemed to be a pledge of security for a loan, the applicable Seller and the Depositor intend that the rights and obligations of the parties shall be established pursuant to the terms of the Subsequent Transfer Agreement and this Agreement and that, in such event, (i) the applicable Seller and the Depositor shall be deemed to have granted and does hereby grant to the Depositor and the Trustee for the benefit of the Certificateholders, respectively, as of such Subsequent Sale Date a first priority security

 

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interest in the entire right, title and interest of the applicable Seller and the Depositor in and to the Subsequent Mortgage Loans and all other property conveyed to the Trustee for the benefit of the Certificateholders pursuant to this Section 2.8(a) and all proceeds thereof and (ii) this Agreement and the Subsequent Transfer Agreement each shall constitute a security agreement under applicable law. The purchase price shall be 100% of the Scheduled Principal Balance of the Subsequent Mortgage Loans as of the related Cut-Off Date. On or before each Subsequent Sale Date, the Depositor shall deliver to, and deposit with the Trustee for the benefit of the Certificateholders the related documents with respect to each Subsequent Mortgage Loan transferred on such Subsequent Sale Date, and the related Subsequent Mortgage Loan Schedule in computer readable format with respect to such Subsequent Mortgage Loans.

 

(b) The Depositor shall transfer and deliver to the Trustee for the benefit of the Certificateholders the Subsequent Mortgage Loans and the other property and rights related thereto described in paragraph (a) of this Section 2.8 only upon the satisfaction of each of the following conditions on or prior to the applicable Subsequent Sale Date:

 

(i) The Originator or the applicable Seller shall have provided the Master Servicer, the Servicer, the Trustee, the Depositor and the Rating Agencies with an Addition Notice, which notice shall be given not less than two Business Days prior to the applicable Subsequent Sale Date (or on or before the Subsequent Sale Date if such Subsequent Sale Date is within two Business Days of the Closing Date) and shall designate the Subsequent Mortgage Loans to be sold to the Trustee for the benefit of the Certificateholders and the aggregate Scheduled Principal Balance of such Mortgage Loans and the Rating Agencies shall have informed the Seller, the Depositor, the Trustee, the Master Servicer and the Servicer prior to the applicable Subsequent Sale Date that the inclusion of such Subsequent Mortgage Loans will not result in the downgrade, withdrawal or qualification of the ratings assigned to the Certificates;

 

(ii) The Originator or the applicable Seller shall have delivered to the Trustee, the Depositor, the Master Servicer and the Servicer a duly executed Subsequent Transfer Agreement in substantially the form of Exhibit P ;

 

(iii) The Originator or the applicable Seller shall have delivered to the Trustee for deposit in the Payment Account all principal collected and interest collected to the extent accrued and due after the Related Cut-Off Date;

 

(iv) As of each Subsequent Sale Date, the Originator or the applicable Seller was not insolvent, the Originator or the applicable Seller will not be made insolvent by such transfer and the Originator or the applicable Seller is not aware of any pending insolvency;

 

(v) Such addition will not result in a material adverse tax consequence to any Certificateholder;

 

(vi) The Pre-Funding Period shall not have terminated;

 

(vii) The Originator or the applicable Seller shall have provided the Trustee, the Depositor and the Rating Agencies with an Opinion of Counsel relating to the sale of the

 

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Subsequent Mortgage Loans from the applicable Seller to the Depositor and from the Depositor to the Trust and the enforceability of the Subsequent Transfer Agreement with respect to the Originator or the applicable Seller, which matters may be covered in the opinions delivered on the Closing Date;

 

(viii) The Depositor shall have provided the Trustee, the Depositor and the Rating Agencies with an Opinion of Counsel to the effect that the transfer of such Subsequent Mortgage Loans will not adversely affect the tax status of the Certificates;

 

(ix) The aggregate Scheduled Principal Balance of Subsequent Mortgage Loans does not exceed the amount on deposit in the Pre-Funding Account as of the Closing Date;

 

(x) The Originator and the Depositor shall have provided to the Trustee an Officer’s Certificate indicating that the conditions specified in Schedule IV hereto shall be met; and

 

(xi) On the last Subsequent Sale Date, the Trustee shall have received an accountant’s letter confirming that the characteristics of the Mortgage Loans (including the Subsequent Mortgage Loans), satisfy the parameters set forth in Schedule IV hereto.

 

(c) Each party hereto shall comply with its respective obligations set forth in Sections 2.1, 2.2, 2.5 and 3.6 respect to the Subsequent Mortgage Loans delivered on each Subsequent Sale Date. References in such Sections to the Mortgage Loans shall be deemed to refer to the Subsequent Mortgage Loans and references to the Cut-Off Date or the Closing Date, as applicable, shall be deemed to refer to the applicable related Cut-Off Date or Subsequent Sale Date, respectively, except that representations made with specific reference to the Closing Date Mortgage Loans delivered on the Closing Date shall remain unchanged.

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES

 

SECTION 3.1 Representations and Warranties of each Seller.

 

Each Seller hereby represents and warrants to the other parties hereto as of the Closing Date that:

 

(a) Each Seller has been duly organized and is validly existing as a                      in good standing under the laws of              , with full power and authority to own its assets and conduct its business as presently being conducted.

 

(b) Each Seller has the full power and authority to execute and deliver this Agreement and to perform its obligations hereunder, and the execution, delivery and performance of this Agreement (including all instruments of transfer to be delivered pursuant to this Agreement) by such Seller and the consummation of the transactions contemplated hereby have been duly and validly authorized.

 

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(c) This Agreement constitutes a legal, valid and binding obligation of such Seller, enforceable against such Seller in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect affecting the enforcement of creditors’ rights in general and except as such enforceability may be limited by general principles of equity (whether considered in a proceeding at law or in equity).

 

(d) None of the execution and delivery of this Agreement, the sale of the Mortgage Loans by such Seller, the transactions contemplated hereby, or the fulfillment of or compliance with the terms and conditions of this Agreement will conflict with or result in a breach of any of the terms, certificate of formation or operating agreements or any legal restriction or any agreement or instrument to which such Seller is now a party or by which it is bound, or constitute a default or result in the violation of any law, rule, regulation, order, judgment or decree to which such Seller or its property is subject, or impair the ability of the Trust to realize on the Mortgage Loans, or impair the value of the Mortgage Loans.

 

(e) No consent, approval, authorization or order of any court or governmental agency or body is required for the execution, delivery and performance by a Seller of or compliance by such Seller with this Agreement or the sale of the Mortgage Loans as evidenced by the consummation of the transactions contemplated by this Agreement, or if required, such consent, approval, authorization or order has been obtained prior to the related Closing Date.

 

(f) There is no action, suit, proceeding or investigation pending or to its knowledge threatened, against such Seller which, either individually or in the aggregate, may result in any material adverse change in the business, operations, financial condition, properties or assets of such Seller, or in any material impairment of the right or ability of each Seller to carry on its business substantially as now conducted, or which would draw into question the validity of this Agreement or the Mortgage Loans or of any action taken or contemplated herein, or which would be likely to impair materially the ability of each Seller to perform under the terms of this Agreement.

 

(g) The transfer, assignment and conveyance of the Mortgage Notes and the Mortgages by such Seller pursuant to this Agreement are not subject to the bulk transfer or any similar statutory provisions in effect in any applicable jurisdiction.

 

(h) Such Seller is solvent and the sale of the Mortgage Loans will not cause such Seller to become insolvent. The sale of the Mortgage Loans is not undertaken to hinder, delay or defraud any of such Seller’s creditors.

 

(i) The consideration received by such Seller upon the sale of the Mortgage Loans under this Agreement constitutes fair consideration and reasonably equivalent value for the Mortgage Loans.

 

(j) The Mortgage Loans have been selected on such Closing Date from among the outstanding fixed and adjustable rate one- to four-family mortgage loans in such Seller’s portfolio at such Closing Date as to which the representations and warranties set forth in Schedule III could be made and such selection will not be made in a manner so as to affect adversely the interests of the Trust.

 

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(k) None of this Agreement, the information set forth in the Mortgage Loan Schedule attached hereto and the information contained in the related electronic data file delivered to the Trustee by such Seller, nor any statement, report or other document furnished or to be furnished by or on behalf of such Seller pursuant to this Agreement or in connection with the transactions contemplated hereby contains any untrue statement of material fact or omits to state a material fact necessary to make the statements contained therein not misleading.

 

(l) Such Seller has determined that the disposition of the Mortgage Loans from Seller to Depositor pursuant to this Agreement will be afforded sale treatment for accounting purposes, all on a non-consolidated basis.

 

(m) Such Seller has not dealt with any broker, investment banker, agent or other Person that may be entitled to any commission or compensation in the connection with the sale of the Mortgage Loans.

 

(n) The information about such Seller under the heading [“The Trust—Assignment of Mortgage Loans”] in the Prospectus relating to the Sellers does not include an untrue statement of a material fact and does not omit to state a material fact, with respect to the statements made, necessary in order to make the statements in light of the circumstances under which they were made not misleading.

 

SECTION 3.2 Representations and Warranties of the Originator .

 

The Originator hereby represents and warrants to the other parties hereto as of the Closing Date that:

 

(a) The Originator has been duly organized and is validly existing as a limited liability company in good standing under the laws of Florida, with full power and authority to own its assets and conduct its business as presently being conducted.

 

(b) The Originator has the full power and authority to execute and deliver this Agreement and to perform its obligations hereunder, and the execution, delivery and performance of this Agreement (including all instruments of transfer to be delivered pursuant to this Agreement) by the Originator and the consummation of the transactions contemplated hereby have been duly and validly authorized.

 

(c) This Agreement constitutes a legal, valid and binding obligation of the Originator, enforceable against the Originator in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect affecting the enforcement of creditors’ rights in general and except as such enforceability may be limited by general principles of equity (whether considered in a proceeding at law or in equity).

 

(d) None of the execution and delivery of this Agreement, the transactions contemplated hereby, or the fulfillment of, or compliance with the terms and conditions of this

 

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Agreement will conflict with or result in a breach of any of the terms, certificate of formation, operating agreement or any legal restriction or any agreement or instrument to which the Originator is now a party or by which it is bound, or constitute a default or result in the violation of any law, rule, regulation, order, judgment or decree to which Originator or its property is subject, or impair the ability of the Trust to realize on the Mortgage Loans, or impair the value of the Mortgage Loans.

 

(e) No consent, approval, authorization or order of any court or governmental agency or body is required for the execution, delivery and performance by the Originator of or compliance by the Originator with this Agreement, or if required, such consent, approval, authorization or order has been obtained prior to the related Closing Date.

 

(f) There is no action, suit, proceeding or investigation pending or to its knowledge threatened against the Originator which, either individually or in the aggregate, may result in any material adverse change in the business, operations, financial condition, properties or assets of the Originator, or in any material impairment of the right or ability of the Originator to carry on its business substantially as now conducted, or which would draw into question the validity of this Agreement or the Mortgage Loans or of any action taken or to be contemplated herein, or which would be likely to impair materially the ability of the Originator to perform under the terms of this Agreement.

 

(g) The information about the Originator under the heading [“The Originator”] in the Prospectus relating to the Originator does not include an untrue statement of a material fact and does not omit to state a material fact, with respect to the statements made, necessary in order to make the statements in light of the circumstances under which they were made not misleading.

 

(h) All financial statements provided by the Originator fairly present the pertinent results of operations and changes in financial position for each of such periods and the financial position at the end of each such period of the Originator and its subsidiaries and have been prepared in accordance with generally accepted accounting principles consistently applied throughout the periods involved.

 

(i) There has been no material adverse change in the business, operations, financial condition or assets of the Originator since the date of the Originator’s most recent financial statements.

 

SECTION 3.3 Representation