STRUCTURED ASSET MORTGAGE INVESTMENTS II INC.,
DEPOSITOR
CITIBANK, N.A.,
TRUSTEE
WELLS FARGO BANK, NATIONAL ASSOCIATION,
MASTER SERVICER AND SECURITIES ADMINISTRATOR
and
EMC MORTGAGE CORPORATION
SPONSOR AND COMPANY
________________________________________
POOLING AND SERVICING AGREEMENT
Dated as of October 1, 2006
________________________________________
STRUCTURED ASSET MORTGAGE INVESTMENTS II INC.,
Bear Stearns ALT-A Trust, Mortgage Pass-Through Certificates
Series 2006-7
ARTICLE I
DEFINITIONS
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01.
Conveyance of Mortgage Loans to
Trustee...................................................60
Section 2.02.
Acceptance of Mortgage Loans by
Trustee...................................................62
Section 2.03.
Assignment of Interest in the Mortgage Loan Purchase
Agreement............................65
Section 2.04.
Substitution of Mortgage
Loans............................................................66
Section 2.05.
Issuance of
Certificates..................................................................68
Section 2.06.
Representations and Warranties Concerning the
Depositor...................................68
Section 2.07.
[Reserved]................................................................................69
Section 2.08.
Purposes and Powers of the
Trust..........................................................70
ARTICLE III
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 3.01.
Master
Servicer...........................................................................71
Section 3.02.
REMIC-Related
Covenants...................................................................72
Section 3.03.
Monitoring of
Servicers...................................................................72
Section 3.04.
Fidelity
Bond.............................................................................74
Section 3.05.
Power to Act;
Procedures..................................................................74
Section 3.06.
Due-on-Sale Clauses; Assumption
Agreements................................................75
Section 3.07.
Release of Mortgage
Files.................................................................75
Section 3.08.
Documents, Records and Funds in Possession of Master Servicer To Be
Held
for
Trustee...............................................................................76
Section 3.09.
Standard Hazard Insurance and Flood Insurance
Policies....................................76
Section 3.10.
Presentment of Claims and Collection of
Proceeds..........................................77
Section 3.11.
Maintenance of the Primary Mortgage Insurance
Policies....................................77
Section 3.12.
Trustee to Retain Possession of Certain Insurance Policies and
Documents..................78
Section 3.13.
Realization Upon Defaulted Mortgage
Loans.................................................78
Section 3.14.
Compensation for the Master
Servicer......................................................78
Section 3.15.
REO
Property..............................................................................78
Section 3.16.
Annual Statement as to
Compliance.........................................................79
Section 3.17.
Assessments of Compliance and Attestation
Reports.........................................80
Section 3.18.
Reports Filed with Securities and Exchange
Commission.....................................82
Section 3.19.
The
Company...............................................................................92
Section 3.20.
UCC.......................................................................................92
Section 3.21.
Optional Purchase of Defaulted Mortgage
Loans.............................................92
Section 3.22.
Reserved..................................................................................92
Section 3.23.
Intention of the Parties and
Interpretation...............................................92
ARTICLE IV
ACCOUNTS
Section 4.01.
Protected
Accounts........................................................................93
Section 4.02.
[Reserved]................................................................................95
Section 4.03.
[Reserved]................................................................................95
Section 4.04.
Distribution
Account......................................................................95
Section 4.05.
Permitted Withdrawals and Transfers from the Distribution
Account.........................97
Section 4.06.
Reserve
Fund..............................................................................99
Section 4.07.
Class XP Reserve
Account.................................................................100
ARTICLE V
CERTIFICATES
Section 5.01.
Certificates.............................................................................101
Section 5.02.
Registration of Transfer and Exchange of
Certificates....................................109
Section 5.03.
Mutilated, Destroyed, Lost or Stolen
Certificates........................................113
Section 5.04.
Persons Deemed
Owners....................................................................113
Section 5.05.
Transfer Restrictions on Residual
Certificates...........................................113
Section 5.06.
Restrictions on Transferability of
Certificates..........................................115
Section 5.07.
ERISA
Restrictions.......................................................................115
Section 5.08.
Rule 144A
Information....................................................................116
Section 5.09.
Exchangeable
Certificates................................................................116
ARTICLE VI
PAYMENTS TO CERTIFICATEHOLDERS
Section 6.01.
Distributions on the Group I
Certificates................................................118
Section 6.02.
Distributions on the Group II
Certificates...............................................121
Section 6.03.
Allocation of Losses and Subsequent Recoveries on the Group I
Certificates...............125
Section 6.04.
Allocation of Losses and Subsequent Recoveries on the Group II
Certificates.............................................................................126
Section 6.05.
Cross-Collateralization..................................................................128
Section 6.06.
Payments.................................................................................129
Section 6.07.
Statements to
Certificateholders.........................................................129
Section 6.08.
Monthly
Advances.........................................................................132
Section 6.09.
Compensating Interest
Payments...........................................................132
Section 6.10.
Distributions on REMIC Regular
Interests.................................................133
ARTICLE VII
THE MASTER SERVICER
Section 7.01.
Liabilities of the Master
Servicer.......................................................134
Section 7.02.
Merger or Consolidation of the Master
Servicer...........................................134
Section 7.03.
Indemnification of the Trustee, the Master Servicer and the
Securities
Administrator............................................................................134
Section 7.04.
Limitations on Liability of the Master Servicer and
Others...............................134
Section 7.05.
Master Servicer Not to
Resign............................................................136
Section 7.06.
Successor Master
Servicer................................................................136
Section 7.07.
Sale and Assignment of Master
Servicing..................................................136
ARTICLE VIII
DEFAULT
Section 8.01.
Events of
Default........................................................................138
Section 8.02.
Successor to Act; Appointment of
Successor...............................................140
Section 8.03.
Notification to
Certificateholders.......................................................141
Section 8.04.
Waiver of
Defaults.......................................................................141
Section 8.05.
List of
Certificateholders...............................................................142
Section 8.06.
Duties of Trustee and Securities
Administrator...........................................142
Section 8.07.
Certain Matters Affecting the Trustee and the Securities
Administrator...................144
ARTICLE IX
CONCERNING THE TRUSTEE AND THE SECURITIES ADMINISTRATOR
Section 9.01.
Trustee and Securities Administrator Not Liable for Certificates or
Mortgage
Loans...........................................................................146
Section 9.02.
Trustee and Securities Administrator May Own
Certificates................................146
Section 9.03.
Trustee's and Securities Administrator's Fees and
Expenses...............................147
Section 9.04.
Eligibility Requirements for Trustee and Securities
Administrator........................147
Section 9.05.
Insurance................................................................................147
Section 9.06.
Resignation and Removal of the Trustee and Securities
Administrator......................148
Section 9.07.
Successor Trustee and Successor Securities
Administrator.................................149
Section 9.08.
Merger or Consolidation of Trustee or Securities
Administrator...........................149
Section 9.09.
Appointment of Co-Trustee or Separate
Trustee............................................149
Section 9.10.
Federal Information Returns and Reports to Certificateholders;
REMIC
Administration...........................................................................151
ARTICLE X
TERMINATION
Section 10.01.
Termination Upon Repurchase by EMC or its Designee or Liquidation
of the
Mortgage
Loans...........................................................................153
Section 10.02.
Additional Termination
Requirements......................................................156
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01.
Intent of
Parties........................................................................157
Section 11.02.
Amendment................................................................................157
Section 11.03.
Recordation of
Agreement.................................................................158
Section 11.04.
Limitation on Rights of
Certificateholders...............................................158
Section 11.05.
Acts of
Certificateholders...............................................................159
Section 11.06.
Governing
Law............................................................................160
Section 11.07.
Notices..................................................................................160
Section 11.08.
Severability of
Provisions...............................................................161
Section 11.09.
Successors and
Assigns...................................................................161
Section 11.10.
Article and Section
Headings.............................................................161
Section 11.11.
Counterparts.............................................................................161
Section 11.12.
Notice to Rating
Agencies................................................................161
APPENDICES
Appendix 1
-
Combination Groups
Appendix 2
-
Calculation of REMIC I Y Principal Reduction Amounts
EXHIBITS
Exhibit A-1
-
Form of Class I-A Certificates
Exhibit A-2
-
Form of Class I-M Certificates
Exhibit A-3
-
Form of Class I-B-1 Certificates and Class I-B-2 Certificates
Exhibit A-4
-
Form of Class I-B-3 Certificates
Exhibit A-5-1
-
Form of Class R Certificates
Exhibit A-5-2
-
Form of Class R-X Certificates
Exhibit A-6
-
Form of Class B-IO Certificates
Exhibit A-7
-
Form of Class XP Certificates
Exhibit A-8
-
Form of Class II-A Certificates
Exhibit A-9
-
Form of Class II-X Certificates
Exhibit A-10
-
Form of Class II-B-1, Class II-B-2 and Class II-B-3 Certificates
Exhibit A-11
-
Form of Class II-B-4, Class II-B-5 and Class II-B-6 Certificates
EXHIBIT A-12
-
FORM OF EXCHANGED CERTIFICATES
Exhibit B
-
Mortgage Loan Schedule
Exhibit C
-
[Reserved]
Exhibit D
-
Request for Release of Documents
Exhibit E
-
Form of Affidavit pursuant to Section 860E(e)(4)
Exhibit F-1
-
Form of Investment Letter
Exhibit F-2
-
Form of Rule 144A and Related Matters Certificate
Exhibit F-3
-
Form of Transferor Representation Letter
Exhibit G-1
-
Form of Treasury Bank Custodial Agreement
Exhibit G-2
-
Form of Wells Fargo Custodial Agreement
Exhibit H-1
-
Countrywide Servicing Agreement
Exhibit H-2
-
EMC Servicing Agreement
Exhibit H-3
-
Everhome Servicing Agreement
Exhibit H-4
-
First Horizon Servicing Agreement
Exhibit H-5
-
Homebanc Servicing Agreement
Exhibit H-6
-
HSBC Servicing Agreement
Exhibit H-7
-
Mid America Servicing Agreement
Exhibit H-8
-
Wells Fargo Servicing Agreement
Exhibit I
-
Assignment Agreements
Exhibit J
-
Form of Mortgage Loan Purchase Agreement
Exhibit K
-
[Reserved]
Exhibit L
-
Form of Securities Administrator Back-Up Certification
Exhibit M
-
Servicing Criteria to Be Addressed in Assessment of Compliance
Exhibit N
-
Form of Back-Up Certification
Exhibit O
-
Form of Trustee Limited Power of Attorney
Exhibit P
-
Form of Cap Contracts
Exhibit Q
-
Form 10-D, Form 8-K and Form 10-K Reporting Responsibility
Exhibit R
-
Additional Disclosure Information
Exhibit S
-
Form of Exchange Letter
POOLING AND SERVICING AGREEMENT
Pooling and Servicing
Agreement
dated as of October 1, 2006,
among
Structured
Asset Mortgage
Investments II Inc., a Delaware
corporation,
as depositor (the "Depositor"),
Citibank,
N.A., a banking
association
organized under the laws of the United States,
not in its individual
capacity but solely as
trustee (the "Trustee"),
Wells Fargo Bank,
National
Association,
as master servicer (in such capacity,
the
"Master
Servicer")
and
as
securities
administrator
(in
such
capacity,
the
"Securities
Administrator"),
and EMC
Mortgage
Corporation,
as sponsor (in such
capacity,
the
"Sponsor")
and as
company (in such capacity, the "Company").
PRELIMINARY STATEMENT
On or prior to the Closing
Date,
the
Depositor
acquired the Mortgage
Loans from the Sponsor.
On the Closing Date,
the Depositor
will sell the Mortgage
Loans and certain other property to the Trust
Fund and
receive in
consideration
therefor
Certificates
evidencing
the entire
beneficial
ownership
interest in the Trust Fund.
The
Securities
Administrator
on behalf of the Trustee
shall make an
election
for the assets
constituting
REMIC I to be treated for federal
income tax
purposes as a REMIC.
On the Startup Day, the
REMIC I Regular Interests will be designated "regular interests" in
such REMIC.
The
Securities
Administrator
on behalf of the Trustee
shall make an
election
for the assets
constituting
REMIC II to be treated for federal
income tax purposes as a REMIC.
On the Startup Day, the
REMIC II Regular Interests will be designated "regular interests"
in such REMIC.
The
Securities
Administrator
on behalf of the Trustee
shall make an
election
for the assets
constituting
REMIC III to be treated for federal
income tax
purposes
as a REMIC.
On the Startup
Day,
the REMIC III Regular Interests will be designated "regular
interests" in such REMIC.
The
Securities
Administrator
on behalf of the Trustee
shall make an
election
for the assets
constituting
REMIC IV to be treated for federal
income tax purposes as a REMIC.
On the Startup Day, the
REMIC IV Regular Interests will be designated "regular interests"
in such REMIC.
The
Securities
Administrator
on behalf of the Trustee
shall make an
election
for the assets
constituting
REMIC V to be treated for federal
income tax
purposes as a REMIC.
On the Startup Day, the
REMIC V Regular Interest will be designated the "regular interest"
in such REMIC.
The Class R
Certificates will evidence ownership of the "residual
interest" in each of REMIC I,
REMIC II, REMIC III and REMIC IV. The
Class R-X
Certificates
will
evidence
ownership of the "residual
interest" in REMIC V.
The Group I Loans will have an
Outstanding
Principal
Balance
as of the
Cut-off
Date,
after
deducting all Scheduled
Principal
due on or before the Cut-off
Date, of
$575,842,082.76.
The Sub-Loan
Group II-1
Mortgage
Loans will have an
Outstanding
Principal
Balance as of the
Cut-off
Date,
after
deducting all Scheduled
Principal
due on or before the Cut-off
Date, of
$166,048,631.89.
The Sub-Loan
Group II-2
Mortgage
Loans will have an
Outstanding
Principal
Balance as of the
Cut-off
Date,
after
deducting all Scheduled
Principal
due on or before the Cut-off
Date, of
$468,911,690.78.
The Sub-Loan
Group II-3
Mortgage
Loans will have an
Outstanding
Principal
Balance as of the
Cut-off
Date,
after
deducting all Scheduled Principal due on or before the Cut-off
Date, of $59,122,216.39.
In consideration of the mutual agreements herein contained,
the Depositor,
the Master Servicer,
the Securities Administrator, the Sponsor, the Company and the
Trustee agree as follows:
ARTICLE I
Definitions
Whenever used in this Agreement,
the following
words and phrases,
unless
otherwise
expressly
provided or unless the context otherwise requires, shall have the
meanings specified in this Article.
Accepted
Master
Servicing
Practices:
With
respect
to any
Mortgage
Loan,
those
customary
mortgage
servicing
practices of prudent
mortgage
servicing
institutions
that master service mortgage
loans of the same type and quality as such Mortgage Loan in the
jurisdiction
where the related
Mortgaged
Property
is
located,
to the extent
applicable
to the
Trustee in its
capacity
as
successor
Master
Servicer or the Master Servicer (except in its capacity as
successor to a Servicer).
Account:
The
Distribution
Account,
the
Protected
Account,
the Reserve Fund or the Class XP
Reserve Account, as the context may require.
Accrued
Certificate
Interest:
For any Group II
Certificate
for any
Distribution
Date,
the
interest
accrued during the related Interest
Accrual Period at the applicable
Pass-Through
Rate on the
Certificate
Principal
Balance
or
Notional
Amount,
as
applicable,
of
such
Group
II
Certificate
immediately
prior to such
Distribution
Date, on the basis of a 360-day year consisting of twelve 30-day
months,
less
(i) in
the case of a Group II
Senior
Certificate,
such
Certificate's
share of any Net
Interest
Shortfall from the related Group II Mortgage Loans and, after the
Group II Cross-Over
Date, the
interest
portion of any Realized
Losses on the related Group II Mortgage
Loans,
in each case allocated
thereto in accordance with Section 6.04 and (ii) in the case of a
Group II Subordinate
Certificate,
such
Certificate's
share of any Net
Interest
Shortfall
from the
related
Group II
Mortgage
Loans and the
interest
portion of any Realized
Losses on the related Group II Mortgage
Loans,
in each case allocated
thereto in accordance with Section 6.04.
Additional Disclosure:
As defined in Section 3.18(a)(v).
Additional Form 10-D Disclosure:
As defined in Section 3.18(a)(i).
Additional Form 10-K Disclosure:
As defined in Section 3.18(a)(iii).
Affiliate:
As to any
Person,
any
other
Person
controlling,
controlled
by or under
common
control with such Person.
"Control"
means the power to direct the
management
and policies of a Person,
directly or
indirectly,
whether
through
ownership
of voting
securities,
by
contract or
otherwise.
"Controlled" and "Controlling"
have meanings
correlative to the foregoing.
The Trustee may conclusively
presume that a Person is not an Affiliate of another
Person unless a
Responsible
Officer of the Trustee
has actual knowledge to the contrary.
Agreement:
This
Pooling and
Servicing
Agreement
and all
amendments
hereof and
supplements
hereto.
Allocable
Share:
With
respect to any Class of Group II
Subordinate
Certificates
(other than
the Class
II-BX-1
Certificates)
on any
Distribution
Date,
an amount
equal to the product of (i) the
Group II
Subordinate
Optimal
Principal
Amount and (ii) the
fraction,
the
numerator
of which is the
Certificate
Principal
Balance of such Class and the
denominator
of which is the aggregate
Certificate
Principal
Balance of all Classes of the Group II Subordinate
Certificates
(other than the Class II-BX-1
Certificates);
provided,
however,
that no Class of Group II
Subordinate
Certificates
(other than the
outstanding
Class of Group II Subordinate
Certificates with the lowest numerical
designation)
shall be
entitled on any
Distribution
Date to receive
distributions
pursuant to clauses (ii),
(iii) and (v) of
the definition of Group II
Subordinate
Optimal
Principal
Amount,
unless the related Class
Prepayment
Distribution Trigger for such Distribution Date has been satisfied
(any amount
distributable
pursuant to
clauses (ii),
(iii) and (v) of the definition of Group II Subordinate Optimal
Principal Amount,
shall be
distributed
among the related Classes entitled
thereto,
pro rata based on their respective
Certificate
Principal
Balances);
provided,
further,
that if on a
Distribution
Date,
the
Certificate
Principal
Balance
of any
Class of
Group II
Subordinate
Certificates
for
which
the
related
Class Prepayment
Distribution
Trigger has been satisfied is reduced to zero, such Class's
remaining
Allocable Share shall
be
distributed
to the
remaining
Classes of Group II
Subordinate
Certificates
(other
than the Class
II-BX-1
Certificates),
sequentially
beginning with the Class with the lowest
numerical
designation in
reduction of their respective Certificate Principal Balances.
Applicable Credit Rating:
For any long-term
deposit or security,
a credit rating of AAA in the
case of S&P and Fitch or Aaa in the case of
Moody's
(or with
respect
to
investments
in money
market
funds,
a credit
rating of "AAAm" or "AAAm-G" in the case of S&P and Fitch and
the highest
rating
given
by Moody's for money market funds in the case of Moody's).
For any short-term
deposit or security,
or a
rating of A-l+ in the case of S&P and Fitch or Prime-1 in the
case of Moody's.
Applicable
State Law: For purposes of
Section 9.12(d),
the
Applicable
State Law shall be (a)
the law of the
State of New York and (b) such
other
state
law
whose
applicability
shall
have
been
brought to the
attention of the
Securities
Administrator
and the Trustee by either
(i) an
Opinion of
Counsel
reasonably
acceptable to the
Securities
Administrator
and the Trustee
delivered to it by the
Master Servicer or the Depositor,
or (ii) written
notice from the appropriate taxing authority as to the
applicability of such state law.
Applied
Realized
Loss
Amount:
With
respect to any
Distribution
Date and a Class of Group I
Offered
Certificates
and Class I-B-3
Certificates,
the sum of the Realized
Losses with respect to the
Group I Mortgage
Loans,
which are to be applied in reduction
of the
Certificate
Principal
Balance of
such Class of Group I Offered
Certificates
pursuant to this
Agreement in an amount equal to the amount,
if any, by which,
(i) the
aggregate
Certificate
Principal
Balance of all of the Group I
Certificates
(after all
distributions
of principal on such
Distribution
Date)
exceeds
(ii) the
aggregate
Stated
Principal
Balance of all of the Group I Mortgage Loans for such
Distribution
Date. The Applied Realized
Loss Amount shall be allocated first to the Class I-B-3
Certificates,
the Class I-B-2
Certificates,
the
Class I-B-1
Certificates,
the Class I-M-2 Certificates and the Class I-M-1
Certificates,
in that order
(so
long as
their
respective
Certificate
Principal
Balances
have not been
reduced
to
zero),
and
thereafter
the
Applied
Realized
Loss
Amount
with
respect
to the Group I Mortgage
Loans,
shall be
allocated
first to the Class
I-A-2
Certificates
and then to the Class
I-A-1
Certificates,
until the
Certificate Principal Balance of each such Class has been reduced
to zero.
Appraised
Value:
For any Mortgaged
Property
related to a Mortgage
Loan, the amount set forth
as the appraised
value of such
Mortgaged
Property in an appraisal
made for the mortgage
originator in
connection with its origination of the related Mortgage Loan.
Assessment of Compliance:
As defined in Section 3.17.
Assignment
Agreements:
The
agreements
attached
hereto as Exhibit I,
whereby
the
Servicing
Agreements
(as
defined
therein),
if
applicable,
were
assigned to the Trustee for the benefit of the
Certificateholders.
Assumed
Final
Distribution
Date:
With
respect
to each class of
Offered
Certificates,
the
Distribution
Date occurring in December
2046, or if such day is not a Business Day, the next
succeeding
Business Day.
Attestation Report:
As defined in Section 3.17.
Attesting Party:
As defined in Section 3.17.
Available
Funds:
With respect to any
Distribution
Date and each Sub-Loan
Group in Loan Group
II, an amount equal to the aggregate of the following
amounts with respect to the pool of Mortgage
Loans
included in each Sub-Loan
Group in Loan Group II: (a) all
previously
undistributed
payments on account
of principal
(including
the
principal
portion of Scheduled
Payments,
Principal
Prepayments
and the
principal
portion of Net Liquidation
Proceeds) and all previously
undistributed
payments on account of
interest
received
after the Cut-off
Date and on or prior to the
related
Determination
Date,
(b) any
Monthly
Advances and Compensating
Interest
Payments by the Servicer or the Master Servicer with respect
to such
Distribution
Date,
(c) any
reimbursed
amount in
connection
with
losses on
investments
of
deposits in certain
eligible
investments in respect of the Group II Mortgage
Loans,
and (d) any amount
allocated from the Available
Funds of another
Sub-Loan Group in accordance
with Section
6.02(a)(i)(H),
except:
(i)
all payments that were due on or before the Cut-off Date;
(ii)
all
Principal
Prepayments
and
Liquidation
Proceeds
received
after
the
applicable Prepayment Period;
(iii)
all payments,
other than Principal
Prepayments,
that represent early receipt
of Scheduled Payments due on a date or dates subsequent to the
related Due Date;
(iv)
amounts received on particular
Mortgage Loans as late payments of principal or
interest and respecting which, and to the extent that, there are
any unreimbursed Monthly Advances;
(v)
amounts representing Monthly Advances determined to be
Nonrecoverable Advances;
(vi)
any investment
earnings on amounts on deposit in the Distribution
Account and
amounts permitted to be withdrawn from the Distribution Account
pursuant to this Agreement;
(vii)
amounts
needed to pay the
Servicing
Fees or to reimburse any Servicer or the
Master
Servicer
for amounts
due under the
Servicing
Agreement
and the
Agreement
to the extent such
amounts have not been retained by, or paid previously to, such
Servicer or the Master Servicer;
(viii)
amounts
applied
to pay any
fees
with
respect
to any
lender-paid
primary
mortgage insurance policy; and
(ix)
any expenses or other amounts
reimbursable to the Servicers,
the Trustee, the
Securities
Administrator,
the Master
Servicer and any Custodian
pursuant to Section 7.04(c) or Section
9.05.
Back-Up Certification:
As defined in Section 3.18(a)(iii).
Bankruptcy
Code:
The
United
States
Bankruptcy
Code,
as amended
as
codified
in 11 U.S.C.
§§ 101-1330.
Bankruptcy
Loss:
With respect to any Mortgage
Loan,
any
Deficient
Valuation or Debt Service
Reduction related to such Mortgage Loan as reported by the Servicer
to the Master Servicer.
Basis Risk
Shortfall:
With respect to any
Distribution
Date and the Class I-A,
Class I-M and
Class I-B
Certificates
for which the
Pass-Through
Rate is based upon the Net Rate Cap, the excess,
if
any, of (a) the amount of Current
Interest
that such Class
would have been
entitled to receive on such
Distribution
Date had the applicable
Pass-Though
Rate been
calculated at a per annum rate equal to the
lesser of (i)
One-Month
LIBOR plus the
related
Margin and (ii)
11.50% over (b) the amount of Current
Interest on such Class of Offered
Certificates
calculated using a Pass-Though Rate equal to the Net Rate
Cap for such Distribution Date.
Basis Risk Shortfall Carry Forward Amount:
With respect to any
Distribution
Date and the Class
I-A,
Class I-M and Class I-B
Certificates,
the sum of the Basis Risk
Shortfall
for such
Distribution
Date and the Basis
Risk
Shortfall
for all
previous
Distribution
Dates not
previously
paid from any
source including
Excess Cashflow and payments under the Cap Contracts,
together with interest thereon at
a rate equal to the
lesser of (i)
One-Month
LIBOR plus the
related
Margin and
(ii) 11.50%,
for such
Distribution Date.
Book-Entry
Certificates:
Initially,
the
Senior
Certificates
and
Offered
Subordinate
Certificates.
Business
Day:
Any day other than
(i) a
Saturday
or a Sunday,
or (ii) a day on which the New
York Stock Exchange or Federal Reserve is closed or on which
banking
institutions in any
jurisdiction in
which the Trustee,
the Master
Servicer,
Custodian,
any Servicer or the
Securities
Administrator
are
authorized or obligated by law or executive order to be closed.
Cap
Contract:
With respect to any of the Class I-A-1,
Class I-A-2,
Class I-M-1,
Class I-M-2,
Class I-B-1, Class I-B-2 or Class I-B-3
Certificates,
the respective cap contracts,
dated as of October
31,
2006,
between the Trustee,
on behalf of the Trust for the benefit of the Class I-A-1,
Class I-A-2,
Class I-M-1,
Class I-M-2,
Class I-B-1,
Class I-B-2 or Class I-B-3
Certificateholders,
as the case may
be,
and the
Counterparty,
together
with any
scheduling,
confirmations
or other
agreements
related
thereto, attached hereto as Exhibit N.
Cap Contract
Payment
Amount:
With respect to any
Distribution
Date and a Cap
Contract,
the
amounts received from such Cap Contract, if any, on such
Distribution Date.
Certificate:
Any mortgage
pass-through
certificate
evidencing a beneficial ownership interest
in the Trust Fund signed and
countersigned by the Securities
Administrator
in
substantially
the forms
annexed
hereto as Exhibits A-1, A-2, A-3, A-4,
A-5-1,
A-5-2,
A-6, A-7, A-8, A-9,
A-10,
A-11 and A-12
with the blanks therein appropriately completed.
Certificate
Group:
With respect to the Group II
Certificates
and (i) Sub-Loan Group II-1, the
Class
II-1A-1,
Class
II-1A-2 and Class
II-1X-1
Certificates,
(ii)
Sub-Loan
Group
II-2,
the Class
II-2A-1A,
Class II-2A-1B,
Class II-2A-2,
Class II-2X-1, Class II-2X-2, Class II-2X-3, Class II-2X-4 and
Class II-2X-5
Certificates
and (iii) Sub-Loan
Group II-3,
the Class
II-3A-1,
Class II-3A-2 and Class
II-3X-1 Certificates.
Certificate
Owner:
Any Person who is the
beneficial
owner of a Certificate
registered in the
name of the Depository or its nominee.
Certificate
Principal
Balance:
With
respect to any Offered
Certificate
and the Class I-B-3,
Class II-B-4,
Class II-B-5 and Class II-B-6
Certificates
(other than the Interest Only Certificates) as
of any
Distribution
Date,
the
initial
principal
amount
of such
Certificate
plus,
any
Subsequent
Recoveries added to the Certificate
Principal
Balance of such
Certificates
pursuant to Section 6.03 or
Section 6.04
hereof,
and reduced by (i) all amounts
distributed on previous
Distribution Dates on such
Certificate
with respect to principal,
(ii) solely in the case of the Group I Certificates,
any Applied
Realized Loss Amounts
allocated to such Class on previous
Distribution
Dates,
(iii) solely in the case
of the Group II
Certificates,
the principal
portion of all Realized
Losses (other than Realized Losses
resulting from Debt Service
Reductions)
allocated prior to such
Distribution
Date to such Certificate,
taking
account
of the
applicable
Loss
Allocation
Limitation,
and
(iv) in
the
case of a Group
II
Subordinate
Certificate,
such
Certificate's
pro rata
share,
if any,
of the
applicable
Subordinate
Certificate
Writedown
Amount
for
previous
Distribution
Dates.
With
respect
to
any
Class
of
Certificates,
the Certificate
Principal Balance thereof will equal the sum of the Certificate
Principal
Balances of all Certificates in such Class. The initial
Certificate
Principal
Balance (if any) for each
Class of Certificates is set forth in Section 5.01(c)(iv).
Certificate Register:
The register maintained pursuant to Section 5.02.
Certificateholder:
A Holder of a Certificate.
Certification Parties:
As defined in Section 3.18(a)(iii).
Certifying Person:
As defined in Section 3.18(a)(iii).
Class: With respect to the Certificates,
any of Class I-A-1, Class I-A-2,
Class II-1A-1,
Class
II-1A-2,
Class II-1X-1,
Class II-2A-1A,
Class II-2A-1B,
Class II-2A-2,
Class II-2X-1,
Class II-2X-2,
Class II-2X-3,
Class II-2X-4,
Class II-2X-5, Class II-3A-1, Class II-3A-2, Class II-3X-1, Class
R, Class
R-X, Class B-IO and Class XP Certificates.
Class A Certificates:
The Class I-A Certificates and Class II-A Certificates.
Class B Certificates:
The Class I-B Certificates and Class II-B Certificates.
Class B-IO Advances:
As defined in Section 6.01(b).
Class B-IO Distribution
Amount:
With respect to any Distribution Date, the Current Interest for
the Class B-IO Certificates for such Distribution Date (which shall
be deemed
distributable
with respect
to the REMIC IV Regular Interest B-IO-I);
provided,
however,
that on and after the Distribution Date on
which the aggregate
Certificate
Principal
Balance of the Group I Certificates has been reduced to zero,
the Class B-IO Distribution Amount shall include the
Overcollateralization
Amount (which shall be deemed
distributable,
first,
with
respect to the REMIC IV Regular
Interest
B-IO-I in respect of accrued
and
unpaid
interest
thereon
until such
accrued and unpaid
interest
shall have been
reduced to zero and,
thereafter,
with
respect to the REMIC IV Regular
Interest
B-IO-P in respect of the
principal
balance
thereof).
Class B-IO
Pass-Through
Rate: With respect to the Class B-IO
Certificates and any Distribution
Date or REMIC IV
Regular
Interest
B-IO-I,
a per annum
rate equal to the
percentage
equivalent
of a
fraction,
the
numerator
of which is the sum of the amounts
calculated
pursuant to clauses (1) through
(3) below,
and the
denominator
of which is the
aggregate
principal
balance of the REMIC III
Regular
Interests.
For purposes of
calculating
the
Pass-Through
Rate for the Class B-IO-I
Certificates,
the
numerator is equal to the sum of the following components:
1.
the
Uncertificated
Pass-Through
Rate for
REMIC III
Regular
Interest
LT1 minus the
related
Marker
Rate,
applied to a notional
amount
equal to the
Uncertificated
Principal
Balance of
REMIC III Regular Interest LT1;
2.
the
Uncertificated
Pass-Through
Rate for
REMIC III
Regular
Interest
LT2 minus the
related
Marker
Rate,
applied to a notional
amount
equal to the
Uncertificated
Principal
Balance of
REMIC III Regular Interest LT2; and
3.
the
Uncertificated
Pass-Through Rate for REMIC III Regular Interest LT4 minus twice
the related
Marker
Rate,
applied to a notional
amount
equal to the
Uncertificated
Principal
Balance of
REMIC III Regular Interest LT4.
Class I-A Certificates: The Class I-A-1 Certificates and the Class
I-A-2 Certificates.
Class I-A
Principal
Distribution
Amount:
For any
Distribution
Date,
an amount equal to the
excess, if any, of (i) the Certificate
Principal Balance of the Class I-A Certificates
immediately prior
to such
Distribution
Date over (ii) the
excess of (a) the
aggregate
Stated
Principal
Balance of the
Group I
Mortgage
Loans for such
Distribution
Date over (b) the
product
of (1) the
aggregate
Stated
Principal
Balance of the Group I Mortgage Loans for such
Distribution Date and (2) the sum of (x) 13.50%
and (y) the Current Specified Overcollateralization Percentage for
such Distribution Date.
Class I-B Certificates: The Class I-B-1, the Class I-B-2 and the
Class I-B-3 Certificates.
Class I-B-1 Principal
Distribution
Amount:
For any
Distribution
Date, an amount equal to the
excess,
if any, of (i) the
Certificate
Principal
Balance of the Class I-B-1
Certificates
immediately
prior to such
Distribution
Date over (ii) the excess of (a) the
aggregate Stated
Principal
Balance of
the Group I Mortgage Loans for such
Distribution Date over (b) the sum of (1) the
Certificate
Principal
Balance of the Class I-A
Certificates
(after
taking into account the payment of the Class I-A Principal
Distribution Amount on such Distribution Date),
(2) the Certificate
Principal Balance of the Class I-M-1
Certificates
(after taking into account the payment of the Class I-M-1 Principal
Distribution
Amount on
such Distribution
Date),
(3) the
Certificate
Principal Balance of the Class I-M-2 Certificates
(after
taking into
account the payment of the Class I-M-2
Principal
Distribution
Amount on such
Distribution
Date) and (4) the
product of (x) the
aggregate
Stated
Principal
Balance of the Group I Mortgage Loans
for such
Distribution
Date and
(y) the
sum of 2.20% and the
Current
Specified
Overcollateralization
Percentage for such Distribution Date.
Class I-B-2 Principal
Distribution
Amount:
For any
Distribution
Date, an amount equal to the
excess,
if any, of (i) the
Certificate
Principal
Balance of the Class I-B-2
Certificates
immediately
prior to such
Distribution
Date over (ii) the excess of (a) the
aggregate Stated
Principal
Balance of
the Group I Mortgage Loans for such
Distribution Date over (b) the sum of (1) the
Certificate
Principal
Balance of the Class I-A
Certificates
(after
taking into account the payment of the Class I-A Principal
Distribution Amount on such Distribution Date),
(2) the Certificate
Principal Balance of the Class I-M-1
Certificates
(after taking into account the payment of the Class I-M-1 Principal
Distribution
Amount on
such Distribution
Date),
(3) the
Certificate
Principal Balance of the Class I-M-2 Certificates
(after
taking into
account the payment of the Class I-M-2
Principal
Distribution
Amount on such
Distribution
Date),
(4) the
Certificate
Principal Balance of the Class I-B-1 Certificates (after taking
into account
the payment of the Class I-B-1
Principal
Distribution
Amount on such
Distribution
Date),
and (5) the
product
of
(x) the
aggregate
Stated
Principal
Balance
of
the
Group
I
Mortgage
Loans
for
such
Distribution
Date and
(y) the sum of 1.20% and the Current
Specified
Overcollateralization
Percentage
for such Distribution Date.
Class I-B-3 Principal
Distribution
Amount:
For any
Distribution
Date, an amount equal to the
excess,
if any, of (i) the
Certificate
Principal
Balance of the Class I-B-3
Certificates
immediately
prior to such
Distribution
Date over (ii) the excess of (a) the
aggregate Stated
Principal
Balance of
the Group I Mortgage Loans for such
Distribution Date over (b) the sum of (1) the
Certificate
Principal
Balance of the Class I-A
Certificates
(after
taking into account the payment of the Class I-A Principal
Distribution Amount on such Distribution Date),
(2) the Certificate
Principal Balance of the Class I-M-1
Certificates
(after taking into account the payment of the Class I-M-1 Principal
Distribution
Amount on
such Distribution
Date),
(3) the
Certificate
Principal Balance of the Class I-M-2 Certificates
(after
taking into
account the payment of the Class I-M-2
Principal
Distribution
Amount on such
Distribution
Date),
(4) the
Certificate
Principal Balance of the Class I-B-1 Certificates (after taking
into account
the
payment
of the Class
I-B-1
Principal
Distribution
Amount
on such
Distribution
Date),
(5) the
Certificate
Principal Balance of the Class I-B-2
Certificates
(after taking into account the payment of
the Class I-B-2 Principal
Distribution
Amount on such Distribution Date), and (6) the product of (x) the
aggregate Stated Principal
Balance of the Group I Mortgage Loans for such
Distribution
Date and (y) the
Current Specified Overcollateralization Percentage for such
Distribution Date.
Class I-M Certificates: The Class I-M-1 Certificates and the Class
I-M-2 Certificates.
Class I-M-1 Principal
Distribution
Amount:
For any
Distribution
Date, an amount equal to the
excess,
if any, of (i) the
Certificate
Principal
Balance of the Class I-M-1
Certificates
immediately
prior to such
Distribution
Date over (ii) the excess of (a) the
aggregate Stated
Principal
Balance of
the Group I Mortgage Loans for such
Distribution Date over (b) the sum of (1) the
Certificate
Principal
Balance of the Class I-A
Certificates
(after
taking into account the payment of the Class I-A Principal
Distribution
Amount on such Distribution
Date) and (2) the product of (x) the aggregate Stated Principal
Balance
of the Group I
Mortgage
Loans for such
Distribution
Date and
(y) the
sum of
(I) 8.60%
and
(II) the Current Specified Overcollateralization Percentage for
such Distribution Date.
Class I-M-2 Principal
Distribution
Amount:
For any
Distribution
Date, an amount equal to the
excess,
if any, of (i) the
Certificate
Principal
Balance of the Class I-M-2
Certificates
immediately
prior to such
Distribution
Date over (ii) the excess of (a) the
aggregate Stated
Principal
Balance of
the Group I Mortgage Loans for such
Distribution Date over (b) the sum of (1) the
Certificate
Principal
Balance of the Class I-A
Certificates
(after
taking into account the payment of the Class I-A Principal
Distribution Amount on such Distribution Date),
(2) the Certificate
Principal Balance of the Class I-M-1
Certificates
(after taking into account the payment of the Class I-M-1 Principal
Distribution
Amount on
such
Distribution
Date) and (3) the product of (x) the aggregate Stated Principal
Balance of the Group I
Mortgage
Loans for such
Distribution
Date and (y) the sum of (I) 4.80% and (II) the
Current
Specified
Overcollateralization Percentage for such Distribution Date.
Class II-1A Certificates:
The Class II-1A-1 Certificates and Class II-1A-2 Certificates.
Class II-2A Certificates:
The Class II-2A-1A, Class II-2A-1B and Class II-2A-2 Certificates.
Class II-2X
Certificates:
The Class II-2X-1,
Class II-2X-2,
Class II-2X-3,
Class II-2X-4 and
Class II-2X-5 Certificates.
Class II-3A Certificates:
The Class II-3A-1 Certificates and Class II-3A-2 Certificates.
Class II-A Certificates:
The Class II-1A, Class II-2A and Class II-3A Certificates.
Class II-B
Certificates:
The Class II-B-1,
Class II-BX-1,
Class II-B-2,
Class II-B-3,
Class
II-B-4, Class II-B-5 and Class II-B-6 Certificates.
Class II-X Certificates:
The Class II-X-1, Class II-2X-1,
Class II-2X-2,
Class II-2X-3,
Class
II-2X-4, Class II-2X-5, Class II-3X-1 and Class II-BX-1
Certificates.
Class Prepayment
Distribution
Trigger: For a Class of Group II Subordinate
Certificates (other
than the
Class
II-BX-1
Certificates)
for any
Distribution
Date,
the
Class Prepayment
Distribution
Trigger
is
satisfied
if the
fraction
(expressed
as a
percentage),
the
numerator
of
which is the
aggregate
Certificate
Principal
Balance
of
such
Class
and
each
Class of
Group
II
Subordinate
Certificates
subordinate
thereto,
if any, and the denominator of which is the Stated Principal
Balance
of all of the Group II
Mortgage
Loans as of the
related
Due Date,
equals or exceeds
such
percentage
calculated as of the Closing Date.
Class R Certificate:
Any of the Class R
Certificates
substantially
in the form annexed hereto
as Exhibit A-5-1 and
evidencing
ownership of interests
designated
as "residual
interests" in REMIC I,
REMIC
II,
REMIC III and
REMIC IV for
purposes
of the
REMIC
Provisions.
Component I
of the Class R
Certificates
is
designated
as the sole class of
"residual
interest" in REMIC I,
Component II
of the
Class R
Certificates
is designated as the sole class of "residual
interest" in REMIC II,
Component III
of the Class R
Certificates
is
designated
as the sole class of
"residual
interest"
in REMIC III and
Component IV of the Class R Certificates
is designated as the sole class of "residual
interest" in REMIC
IV.
Class R-X
Certificates:
Any of the
Class R-X
Certificates
substantially
in the form annexed
hereto as Exhibit A-5-2 and
evidencing
ownership of the
"residual
interest" in REMIC V for purposes of
the REMIC Provisions.
Class XP
Certificates:
Any of the
Class XP
Certificates
substantially
in the form
attached
hereto as Exhibit A-7.
Class
XP
Reserve
Account:
The
account
established
and
maintained
by
the
Securities
Administrator pursuant to Section 4.07 hereof.
Closing Date:
October 31, 2006.
Combination
Group:
With
respect
to the
Group II
Certificates,
any
group
of
Exchangeable
Certificates set forth in Appendix 1 attached hereto.
Commission:
The U.S. Securities and Exchange Commission.
Compensating Interest Payment:
As defined in Section 6.09.
Corporate
Trust Office:
The designated
office of the Trustee or Securities
Administrator,
as
applicable,
where at any
particular
time its respective
corporate
trust business with respect to this
Agreement
shall be
administered.
The Corporate Trust Office of the Trustee at the date of the
execution
of this Agreement is located at 388 Greenwich
Street,
14th Floor,
New York, New York 10013,
Attention:
Structured
Finance
Agency
&
Trust
BSALTA
2006-7.
The
Corporate
Trust
Office
of
the
Securities
Administrator
at the date of the
execution
of this
Agreement
is located at 9062 Old
Annapolis
Road,
Columbia,
Maryland
21045,
Attention:
Corporate
Trust
Group,
BSALTA
2006-7.
For
the
purpose
of
registration
and transfer and exchange only, the Corporate
Trust Office of the Securities
Administrator
shall
be
located
at Sixth
Street
and
Marquette
Avenue,
Minneapolis,
Minnesota
55479,
Attention:
Corporate Trust Group, BSALTA 2006-7.
Counterparty:
Wachovia Bank,
National
Association and any successor thereto,
or any successor
counterparty under the Cap Contracts.
Countrywide:
Countrywide Home Loans Servicing LP, and its successor in interest.
Countrywide
Servicing Agreement:
The Seller's Warranties and Servicing
Agreement,
dated as of
September 1, 2002, as amended by Amendment
No. 1, dated as of January 1, 2003,
Amendment No. 2, dated as
of September 1, 2004,
and
Amendment
No. 3, dated as of January 1, 2006,
between
Countrywide
and EMC,
attached hereto as Exhibit H-1 and by the related Assignment
Agreement.
Current
Interest:
As of any
Distribution
Date,
with respect to each Class of Group I Offered
Certificates
and the Class I-B-3
Certificates,
(i) the interest
accrued on the
Certificate
Principal
Balance or Notional
Amount,
as applicable,
during the related Interest Accrual Period at the applicable
Pass-Through
Rate plus any amount
previously
distributed
with respect to interest for such Certificate
that has been
recovered as a voidable
preference
by a trustee in
bankruptcy
minus (ii) the sum of (a)
any Prepayment
Interest
Shortfall for such Distribution
Date, to the extent not covered by Compensating
Interest
Payments and (b) any
shortfalls
resulting
from the
application
of the Relief Act during the
related Due Period;
provided,
however,
that for purposes of calculating
Current
Interest for any such
Class,
amounts
specified in clauses (ii)(a) and (ii)(b) hereof for any such
Distribution
Date shall be
allocated
first to the Class B-IO
Certificates
and the Class R
Certificates
in
reduction
of amounts
otherwise
distributable
to such
Certificates
on such
Distribution
Date and then any excess
shall be
allocated
to each other
Class of
Certificates
pro rata
based on the
respective
amounts of
interest
accrued pursuant to clause (i) hereof for each such Class on such
Distribution Date.
Current Specified
Enhancement
Percentage:
For any Distribution Date, a percentage
obtained by
dividing
(x) the sum of (i) the
aggregate
Certificate
Principal
Balance
of the
Group I
Subordinate
Certificates
and (ii) the
Overcollateralization
Amount,
in each case prior to the
distribution of the
Principal
Distribution
Amount on such
Distribution
Date, by (y) the aggregate Stated Principal Balance
of the Group I Mortgage
Loans as of the end of the
related Due Period
(after
reduction
for
Principal
Prepayments
and Realized
Losses on the Group I Mortgage
Loans
incurred
during the related
Prepayment
Period).
Current Specified
Overcollateralization
Percentage:
For any Distribution
Date, the percentage
equivalent
of a fraction,
the numerator of which is the
Overcollateralization
Target
Amount,
and the
denominator
of which is the aggregate
Stated
Principal
Balance of the Group I Mortgage
Loans for such
Distribution Date.
Custodial Agreement:
As applicable,
(i) the custodial agreement,
dated as of the Closing Date,
among the Trustee,
Structured Asset Mortgage Investments II Inc., as company,
Wells Fargo Bank, National
Association,
as
Master
Servicer
and
Securities
Administrator,
and
Wells
Fargo
Bank,
National
Association,
as
Custodian
or (ii) the
custodial
agreement
dated as of the
Closing
Date,
among the
Trustee,
Structured Asset Mortgage Investments II Inc., as company,
Wells Fargo,
National
Association,
as Master
Servicer and
Securities
Administrator,
and Treasury
Bank, A Division of
Countrywide
Bank,
N.A., as Custodian, each substantially in the form of Exhibit G
hereto.
Custodian:
As
applicable,
(i) Wells
Fargo
Bank,
National
Association,
or
any
successor
custodian
appointed
pursuant to the
provisions
hereof and of the
related
Custodial
Agreement,
with
respect
to
the
Mortgage
Loans
set
forth
on
Schedule
I to
the
related
Custodial
Agreement,
or
(ii) Treasury
Bank, a Division of Countrywide Bank, N.A., or any successor
custodian
appointed pursuant
to the provisions
hereof and of the related Custodial
Agreement,
with respect to the Mortgage Loans set
forth on Schedule I to the related Custodial Agreement.
Cut-off Date:
October 1, 2006.
Cut-off Date Balance:
$1,269,924,621.82.
Debt Service
Reduction:
Any reduction of the Scheduled
Payments which a Mortgagor is obligated
to pay with respect to a Mortgage
Loan as a result of any
proceeding
under the
Bankruptcy
Code or any
other similar state law or other proceeding.
Deficient
Valuation:
With respect to any Mortgage
Loan, a valuation of the Mortgaged
Property
by a court of competent
jurisdiction in an amount less than the then outstanding
indebtedness
under the
Mortgage Loan,
which
valuation
results from a proceeding
initiated
under the
Bankruptcy
Code or any
other similar state law or other proceeding.
Delinquent:
A Mortgage Loan is
"Delinquent"
if any payment due thereon is not made pursuant to
the terms of such
Mortgage
Loan by the close of business on the day such payment is scheduled
to be due.
A Mortgage
Loan is "30 days
delinquent"
if such payment has not been
received by the close of business
on the last
day of the
month
immediately
succeeding
the
month in which
such
payment
was due.
For
example,
a
Mortgage
Loan with a
payment
due on
December
1 that
remained
unpaid as of the close of
business on January 31 would then be
considered
to be 30 to 59 days
delinquent.
Similarly for "60 days
delinquent," "90 days delinquent" and so on.
Depositor:
Structured
Asset
Mortgage
Investments
II Inc.,
a
Delaware
corporation,
or its
successors in interest.
Depositor Information:
As defined in Section 3.18(c).
Depository:
The Depository
Trust Company,
the nominee of which is Cede & Co., or any successor
thereto.
Depository Agreement:
The meaning specified in Section 5.01(a) hereof.
Depository
Participant:
A broker,
dealer, bank or other financial
institution or other Person
for whom
from
time to time the
Depository
effects
book-entry
transfers
and
pledges
of
securities
deposited with the Depository.
Designated Depository
Institution:
A depository
institution
(commercial bank, federal savings
bank,
mutual
savings
bank or savings
and loan
association)
or trust
company
(which may include the
Trustee), the deposits of which are fully insured by the FDIC to
the extent provided by law.
Determination
Date:
With respect to each Mortgage
Loan, the
Determination
Date as defined in
the Servicing Agreement.
Disqualified
Organization:
Any
of
the
following:
(i) the
United
States,
any
State
or
political
subdivision
thereof,
any possession of the United States, or any agency or
instrumentality of
any of the foregoing
(other than an
instrumentality
which is a corporation if all of its activities are
subject to tax and,
except for the
Freddie
Mac or any
successor
thereto,
a majority
of its board of
directors is not selected by such
governmental
unit),
(ii) any foreign
government,
any
international
organization,
or any agency or instrumentality
of any of the foregoing,
(iii) any
organization
(other
than certain
farmers'
cooperatives
described in
Section 521
of the Code) which is exempt from the tax
imposed by
Chapter 1 of the Code
(including
the tax
imposed by
Section 511
of the Code on
unrelated
business
taxable
income),
(iv)
rural
electric
and
telephone
cooperatives
described
in
Section 1381(a)(2)(C)
of the Code or (v) any other
Person so
designated
by the
Trustee
based upon an
Opinion of Counsel
that the holding of an
ownership
interest in a Residual
Certificate
by such Person
may cause any 2006-7
REMIC
contained
in the Trust or any Person
having an
ownership
interest
in the
Residual
Certificate
(other than such Person) to incur a liability for any federal tax
imposed under the
Code that would not
otherwise
be imposed
but for the
transfer of an
ownership
interest in a Residual
Certificate to such Person.
The terms "United States,"
"State" and
"international
organization"
shall
have the meanings set forth in Section 7701 of the Code or
successor provisions.
Distribution
Account:
The trust account or accounts
created and
maintained by the
Securities
Administrator
pursuant to
Section 4.04,
which shall be
denominated
"Citibank,
N.A., as Trustee f/b/o
holders of Structured
Asset
Mortgage
Investments
II Inc.,
Bear Stearns
ALT-A Trust 2006-7,
Mortgage
Pass-Through
Certificates,
Series 2006-7 - Distribution
Account." The Distribution
Account shall be an
Eligible Account.
Distribution Account Deposit Date:
The Business Day prior to each Distribution Date.
Distribution
Date: The 25th day of any month,
beginning in the month immediately
following the
month of the Closing
Date,
or, if such 25th day is not a Business
Day,
the
Business
Day
immediately
following.
Distribution
Report:
The
Asset-Backed
Issuer
Distribution
Report
pursuant to Section 13 or
15(d) of the Exchange Act.
DTC
Custodian:
Wells
Fargo
Bank,
National
Association,
or its
successors
in
interest as
custodian for the Depository.
Due Date:
With
respect to each
Mortgage
Loan,
the date in each month on which its
Scheduled
Payment
is due if such due date is the first day of a month and
otherwise
is deemed to be the first day
of the following month or such other date specified in the related
Servicing Agreement.
Due
Period:
With
respect
to
any
Distribution
Date
and
each
Mortgage
Loan,
the
period
commencing on the second day of the month
preceding
the calendar
month in which the
Distribution
Date
occurs 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 3.18.
Eligible Account:
Any of (i) a segregated
account
maintained with a federal or state chartered
depository
institution
(A) the
short-term
obligations
of which are rated A-1 or better by
Standard &
Poor's
and P-1 by Moody's at the time of any
deposit
therein or (B)
insured by the FDIC (to the limits
established
by such
Corporation),
the uninsured
deposits in which
account are otherwise
secured such
that, as evidenced by an Opinion of Counsel
(obtained by the Person
requesting
that the account be held
pursuant to this clause (i))
delivered to the
Securities
Administrator
prior to the
establishment
of
such
account,
the
Certificateholders
will have a claim with respect to the funds in such account and a
perfected first priority
security
interest
against any collateral
(which shall be limited to Permitted
Investments,
each of which
shall
mature not later
than the
Business
Day
immediately
preceding
the
Distribution
Date next following the date of investment in such
collateral or the
Distribution
Date if
such Permitted
Investment is an obligation of the institution
that maintains the
Distribution
Account)
securing
such funds that is
superior
to claims of any other
depositors
or
general
creditors
of the
depository
institution
with which
such
account
is
maintained,
(ii) a
segregated
trust
account or
accounts maintained with a federal or state chartered
depository
institution or trust company with trust
powers
acting in its
fiduciary
capacity
or (iii) a
segregated
account or
accounts
of a
depository
institution
acceptable to the Rating
Agencies (as
evidenced in writing by the Rating
Agencies that use
of any such
account
as the
Distribution
Account
will not have an adverse
effect on the
then-current
ratings
assigned to the Classes of Certificates
then rated by the Rating
Agencies).
Eligible
Accounts
may bear interest.
EMC:
EMC Mortgage Corporation, and any successor thereto.
EMC
Servicing
Agreement:
The
Servicing
Agreement,
dated
as of
October
1,
2006,
between
Structured Asset Mortgage Investments II Inc. and EMC as attached
hereto as Exhibit H-2.
ERISA:
The Employee Retirement Income Security Act of 1974, as amended.
Event of Default:
As defined in Section 8.01.
EverHome:
EverHome Mortgage Company, and any successor thereto.
EverHome
Servicing
Agreement:
The
Subservicing
Agreement,
dated as of
August 1,
2002,
as
amended by Amendment No. 1, dated as of January 1, 2006,
between
EverHome and EMC, as attached hereto as
Exhibit H-3 and by the related Assignment Agreement..
Excess Cashflow:
With respect to any
Distribution
Date, the sum of (i) Remaining Excess Spread
for such
Distribution
Date and (ii)
Overcollateralization
Release Amount for such
Distribution
Date;
provided,
however,
that the Excess Cashflow shall include
Principal Funds on and after the Distribution
Date on which the aggregate
Certificate
Principal Balance of the Class I-A-1,
Class I-A-2, Class I-M-1,
Class I-M-2,
Class I-B-1,
Class I-B-2 and Class I-B-3
Certificates has been reduced to zero (other than
Principal
Funds
otherwise
distributed to the Holders of Class I-A-1,
Class I-A-2,
Class I-M-1,
Class
I-M-2, Class I-B-1, Class I-B-2 and Class I-B-3 Certificates on
such Distribution Date).
Excess
Liquidation
Proceeds:
To the extent that such amount is not
required by law to be paid
to the related Mortgagor,
the amount, if any, by which Liquidation
Proceeds with respect to a Liquidated
Mortgage Loan exceed the sum of (i) the
Outstanding
Principal
Balance of such Mortgage Loan and accrued
but unpaid interest at the related
Mortgage
Interest Rate through the last day of the month in which the
related Liquidation Date occurs, plus (ii) related Liquidation
Expenses.
Excess Spread:
With respect to any
Distribution
Date, the excess,
if any, of (i) the Interest
Funds
for such
Distribution
Date
over
(ii) the sum of the
Current
Interest
on the
Group I Offered
Certificates,
the
Class
I-B-3
Certificates
and
Interest
Carryforward
Amounts
on
the
Class
I-A
Certificates, in each case on such Distribution Date.
Exchange Act:
Securities Exchange Act of 1934, as amended.
Exchange
Act
Reports:
Any reports
required to be filed
pursuant to Sections
3.17,
3.18 and
3.23 of this Agreement.
Exchangeable
Certificates:
Any of the Class
II-2A-1B,
Class
II-2X-2,
Class
II-2X-3,
Class
II-2X-4 and Class II-2X-5 Certificates.
Exchanged
Certificates:
The certificates that may be exchanged for a proportionate
interest in
related Exchangeable Certificates in the combinations set forth in
Appendix 1.
Extra Principal
Distribution
Amount:
With respect to any Distribution
Date, an amount derived
from Excess
Spread
equal to the lesser of (i) the excess,
if any, of the
Overcollateralization
Target
Amount for such
Distribution
Date over the
Overcollateralization
Amount for such Distribution Date and
(ii) the Excess Spread for such Distribution Date.
Fannie Mae:
Federal National Mortgage Association and any successor thereto.
FDIC:
Federal Deposit Insurance Corporation and any successor thereto.
Final
Certification:
The
certification
substantially
in the
form
of
Exhibit Three
to the
related Custodial Agreement.
First Horizon: First Horizon Home Loan Corporation, and its
successor in interest.
First Horizon Servicing Agreement:
The Purchase,
Warranties and Servicing
Agreement,
dated as
of September
1, 2003,
as amended by Amendment
Number 1, dated as of May 14, 2004,
Amendment
Number 2,
dated as of June 16, 2005,
Amendment
Number 3, dated as of August 8, 2005 and Amendment
Number 4, dated
as of December
21,
2005,
between
EMC,
First
Horizon and First
Tennessee
Mortgage
Services,
Inc.,
attached hereto as Exhibit H-4 and by the related Assignment
Agreement.
Fiscal
Quarter:
December 1 through
the last day of
February,
March 1 through
May 31, June 1
through August 31, or September 1 through November 30, as
applicable.
Fitch:
Fitch Ratings, and any successor in interest.
Form 8-K Disclosure Information:
As defined in Section 3.18(a)(ii).
Fractional
Undivided Interest:
With respect to any Class of
Certificates (other than the Class
XP
Certificates),
the
fractional
undivided
interest
evidenced by any
Certificate
of such Class the
numerator of which is the Certificate
Principal
Balance of such Certificate and the denominator of which
is the
Certificate
Principal
Balance of such
Class.
With
respect to the Class XP
Certificates,
the
percentage
interest stated
thereon.
With respect to the
Certificates in the aggregate,
the fractional
undivided
interest
evidenced
by (i) the
Residual
Certificates
will be deemed to equal
1.00% (in the
aggregate),
(ii) the Class B-IO
Certificates
will be deemed to equal 1.00% and (iii) a
Certificate
of
any other
Class will be deemed to equal 98.00%
multiplied
by a fraction,
the numerator of which is the
Certificate
Principal
Balance
of such
Certificate
and
the
denominator
of
which
is the
aggregate
Certificate Principal Balance of all the Certificates other than
the Class B-IO Certificates.
Freddie
Mac:
Freddie
Mac,
formerly
the
Federal
Home
Loan
Mortgage
Corporation,
and any
successor thereto.
Global
Certificate:
Any Private
Certificate
registered
in the name of the
Depository or its
nominee,
beneficial
interests in which are reflected on the books of the Depository or
on the books of a
Person maintaining an account with such Depository
(directly or as an indirect
participant in accordance
with the rules of such depository).
Gross Margin:
As to each Mortgage Loan, the fixed
percentage set forth in the related
Mortgage
Note and indicated on the Mortgage Loan
Schedule
which
percentage is added to the related Index on each
Interest
Adjustment Date to determine
(subject to rounding,
the minimum and maximum
Mortgage
Interest
Rate and the Periodic Rate Cap) the Mortgage Interest Rate until
the next Interest Adjustment Date.
Group I
Certificates:
The Group I Senior
Certificates,
the Group I
Subordinate
Certificates
and the Group I Non-Offered Subordinate Certificates.
Group I Mortgage Loans:
The Mortgage Loans identified as such on the Mortgage Loan
Schedule.
Group
I
Non-Offered
Subordinate
Certificates:
The
Class
I-B-3,
Class
XP and
Class
B-IO
Certificates.
Group I
Offered
Certificates:
The
Group
I
Senior
Certificates
and
the
Group
I
Offered
Subordinate Certificates.
Group I Offered
Subordinate
Certificates:
The Class I-M-1,
Class I-M-2, Class I-B-1 and Class
I-B-2 Certificates.
Group I Senior Certificates: The Class I-A Certificates.
Group I Significance
Estimate:
With respect to any
Distribution
Date, and in accordance
with
Item 1115 of Regulation AB, shall be an amount determined based on
the reasonable
good-faith
estimate by
the Depositor of the aggregate
maximum probable
exposure of the outstanding
Group I Certificates to the
related Cap Contract.
Group I Significance
Percentage:
With respect to any Distribution
Date, and in accordance with
Item 1115 of Regulation AB, shall be an percentage
equal to the Group I Significance
Estimate divided by
the
aggregate
outstanding
Certificate
Principal
Balance
of the
Group I
Certificates,
prior to the
distribution of the related Principal Distribution Amount on such
Distribution Date.
Group I Subordinate
Certificates:
The Group I Offered Subordinate
Certificates and the Group I
Non-Offered Subordinate Certificates.
Group I-A Certificates: The Class I-A-1 Certificates and Class
I-A-2 Certificates.
Group
II
Certificates:
The
Group
II
Senior
Certificates
and
the
Group
II
Subordinate
Certificates.
Group II
Cross-Over
Date:
The
first
Distribution
Date on which
the
aggregate
Certificate
Principal Balance of the Group II Subordinate Certificates has been
reduced to zero.
Group II Mortgage Loans:
The Mortgage Loans identified as such on the Mortgage Loan
Schedule.
Group II Non-Offered
Subordinate
Certificates:
The Class II-B-4, Class II-B-5 and Class II-B-6
Certificates.
Group II
Offered
Certificates:
The
Group II
Senior
Certificates
and the
Group II
Offered
Subordinate Certificates.
Group II Offered
Subordinate
Certificates:
The Class II-B-1,
Class II-BX-1,
Class II-B-2 and
Class II-B-3 Certificates.
Group II Senior Certificates:
The Class II-1A-1,
Class II-1A-2,
Class II-1X-1, Class II-2A-1A,
Class
II-2A-1B,
Class
II-2A-2,
Class
II-2X-1,
Class II-2X-2,
Class
II-2X-3,
Class II-2X-4,
Class
II-2X-5,
Class
II-3A-1,
Class II-3A-2 and Class
II-3X-1
Certificates
or any
Exchanged
Certificates
exchanged therefor.
Group
II
Senior
Optimal
Principal
Amount:
With
respect
to each
Distribution
Date
and a
Sub-Loan
Group,
an amount
equal to the sum,
without
duplication,
of the
following
(but in no event
greater
than the
aggregate
Certificate
Principal
Balances
of the related
Certificate
Group in such
Sub-Loan Group immediately prior to such Distribution Date):
(i)
the
Group II Senior
Percentage
of the
principal
portion
of all
Scheduled
Payments due on each
Outstanding
Mortgage
Loans in the related
Sub-Loan Group on the related Due Date,
as specified in the amortization
schedule at the time applicable
thereto (after adjustments for previous
Principal
Prepayments
but
before
any
adjustment
to
such
amortization
schedule
by
reason
of any
bankruptcy
or similar
proceeding
or any
moratorium
or similar
waiver or grace
period if the related
Distribution Date occurs prior to the Group II Cross-over Date);
(ii)
the Group II Senior
Prepayment
Percentage of the Stated Principal
Balance of
each Mortgage Loan in the related
Sub-Loan Group which was the subject of a Principal
Prepayment in full
received by the Servicers during the related Prepayment Period;
(iii)
the
Group
II
Senior
Prepayment
Percentage
of
amount
of
all
Principal
Prepayments
in part
allocated
to
principal
received by the
Servicers
during the related
Prepayment
Period in respect to the Mortgage Loans in the related Sub-Loan
Group;
(iv)
the lesser of (a) the Group II Senior
Prepayment
Percentage of the sum of (A)
all Net
Liquidation
Proceeds
allocable to principal
received in respect of each
Mortgage
Loan in the
related
Sub-Loan
Group that became a
Liquidated
Mortgage
Loan during the
related
Prepayment
Period
(other
than
Mortgage
Loans
described
in the
immediately
following
clause
(B)) and all
Subsequent
Recoveries
received in respect of each Liquidated
Mortgage Loan in the related Sub-Loan Group during the
related
Prepayment
Period and (B) the Stated Principal Balance of each such Mortgage
Loan in the related
Sub-Loan Group
purchased by an insurer from the Trust during the related
Prepayment
Period
pursuant to
the
related
Primary
Mortgage
Insurance
Policy,
if any,
or
otherwise
and (b) the
Group II
Senior
Percentage of the sum of (A) the Stated
Principal
Balance of each Mortgage Loan in the related
Sub-Loan
Group
which
became a
Liquidated
Mortgage
Loan during the related
Prepayment
Period
(other than the
Mortgage Loans described in the immediately
following clause (B)) and all Subsequent
Recoveries received
in respect of each
Liquidated
Mortgage Loan in the related
Sub-Loan Group during the related Due Period
and (B) the Stated
Principal
Balance of each such
Mortgage
Loan that was
purchased by an insurer from
the Trust
during the
related
Prepayment
Period
pursuant
to the related
Primary
Mortgage
Insurance
Policy, if any or otherwise;
(v)
any amount
allocated
to the
Available
Funds of the related
Sub-Loan
Group
pursuant to Section 6.02 (a)(i)(E); and
(vi)
the
Group
II
Senior
Prepayment
Percentage
of the
sum of (a)
the
Stated
Principal
Balance
of each
Mortgage
Loan in the
related
Sub-Loan
Group that was
repurchased
by the
Sponsor in connection
with such
Distribution
Date and (b) the excess,
if any, of the Stated
Principal
Balance of a Mortgage
Loan in the related
Sub-Loan
Group that has been
replaced by the Sponsor
with a
substitute
Mortgage
Loan
pursuant to the
Mortgage
Loan
Purchase
Agreement in
connection
with such
Distribution Date over the Stated Principal Balance of such
substitute Mortgage Loan.
Group II Senior
Percentage:
With respect to each Certificate
Group related to a Sub-Loan Group
and any
distribution
date,
the
lesser of (a) 100% and (b) the
percentage
obtained
by
dividing
the
Certificate
Principal
Balance of the Group II Senior
Certificates
(other than the Senior Interest Only
Certificates)
in the related
Certificate
Group
immediately
preceding
such
Distribution
Date by the
aggregate
Stated
Principal
Balance of the Group II Mortgage
Loans in the related
Sub-Loan Group as of
the beginning of the
related Due Period.
Group II
Senior
Prepayment
Percentage:
With
respect
to a
Certificate
Group
related
to a
Sub-Loan Group and any Distribution Date occurring during the
periods set forth below, as follows:
Period (dates inclusive)
Group II Senior Prepayment Percentage
November 2006 - October 2013
100%
November 2013 - October 2014
Group
II
Senior
Percentage
for
the
Group
II
Senior
Certificates
plus 70% of the Group II
Subordinate
Percentage
for the related Sub-Loan Group.
November 2014 - October 2015
Group
II
Senior
Percentage
for
the
Group
II
Senior
Certificates
plus 60% of the Group II
Subordinate
Percentage
for the related Sub-Loan Group.
November 2015 - October 2016
Group
II
Senior
Percentage
for
the
Group
II
Senior
Certificates
plus 40% of the Group
II
Subordinate
Percentage
for the related Sub-Loan Group.
November 2016 - October 2017
Group
II
Senior
Percentage
for
the
Group
II
Senior
Certificates
plus 20% of the Group II
Subordinate
Percentage
for the related Sub-Loan Group.
November 2017 and thereafter
Group
II
Senior
Percentage
for
the
Group
II
Senior
Certificates.
In
addition,
no
reduction
of the
Group
II
Senior
Prepayment
Percentage
for the
related
Certificate
Group shall occur on any Distribution
Date unless, as of the last day of the month preceding
such
Distribution
Date, (A) the aggregate Stated Principal Balance of the Group II
Mortgage Loans in all
Sub-Loan
Groups
Delinquent 60 days or more
(including for this purpose any such Group II Mortgage Loans
in foreclosure and Group II Mortgage Loans with respect to which
the related
Mortgaged
Property has been
acquired by the Trust),
averaged
over the last six months,
as a percentage
of the sum of the aggregate
Certificate
Principal
Balance of the Group II
Subordinate
Certificates
does not exceed
50%;
and (B)
cumulative
Realized
Losses on the Group II Mortgage
Loans in all Sub-Loan
Groups do not exceed (a) 30%
of the Original
Group II
Subordinate
Principal
Balance if such
Distribution
Date occurs
between and
including
November 2013 and October 2014, (b) 35% of the Original Group II
Subordinate
Principal Balance
if such
Distribution Date occurs between and including
November 2014
and
October 2015,
(c) 40% of the
Original Group II Subordinate
Principal
Balance if such
Distribution
Date occurs between and including
November 2015 and
October 2016,
(d) 45% of the Original Group II Subordinate
Principal
Balance if such
Distribution
Date
occurs
between
and
including
November 2016
and
October 2017,
and (e) 50% of the
Original
Group II
Subordinate
Principal
Balance
if such
Distribution
Date
occurs
during
or after
November 2017.
In
addition,
if on any
Distribution
Date the
weighted
average
of the Group II
Subordinate
Percentages for such
Distribution
Date is equal to or greater than two times the weighted average of
the
initial Group II Subordinate
Percentages,
and (a) the aggregate Stated Principal Balance of the Group II
Mortgage
Loans for all Sub-Loan
Groups
Delinquent 60 days or more
(including for this purpose any such
Mortgage
Loans in
foreclosure
and such
Group II
Mortgage
Loans
with
respect
to which the
related
Mortgaged
Property has been acquired by the Trust),
averaged
over the last six months,
as a percentage
of the aggregate
Certificate
Principal Balance of the Group II Subordinate
Certificates does not exceed
50% and (b)(i) on or prior to the
Distribution
Date in October 2009,
cumulative
Realized Losses on the
Group II Mortgage
Loans for all
Sub-Loan
Groups as of the end of the related
Prepayment
Period do not
exceed 20% of the Original Group II Subordinate
Principal
Balance and (ii) after the
Distribution
Date
in
October 2009
cumulative
Realized Losses on the Group II Mortgage Loans for all Sub-Loan
Groups as of
the
end of the
related
Prepayment
Period
do not
exceed
30% of the
Original
Group
II
Subordinate
Principal Balance,
then, the Group II Senior Prepayment
Percentage for such Distribution Date will equal
the
Group
II
Senior
Percentage
for the
related
Certificate
Group;
provided,
however,
if on such
Distribution
Date the Group II
Subordinate
Percentage is equal to or greater than two times the initial
Group II
Subordinate
Percentage on or prior to the
Distribution
Date occurring in October 2009 and the
above delinquency and loss tests are met, then the Group II Senior
Prepayment
Percentage for the related
Certificate
Group for such
Distribution
Date will equal the Group II Senior
Percentage plus 50% of the
Group II Subordinate Percentage.
Notwithstanding
the foregoing,
if on any
Distribution
Date the
percentage,
the numerator of
which is the aggregate
Certificate
Principal Balance of the Group II Senior Certificates in any
Sub-Loan
Group immediately
preceding such Distribution
Date, and the denominator of which is the Stated Principal
Balance of the related
Group II Mortgage
Loans as of the
beginning
of the related Due Period,
exceeds
such percentage as of the Cut-off Date, the Group II Senior
Prepayment
Percentage with respect to all of
the Group II Senior Certificates will equal 100%.
Group II Subordinate
Certificates:
The Group II Offered Subordinate
Certificates and the Group
II Non-Offered Subordinate Certificates.
Group II Subordinate
Optimal
Principal
Amount:
With respect to any Distribution
Date and any
Sub-Loan Group in Loan Group II, an amount equal to the sum,
without
duplication,
of the following (but
in no event
greater
than
the
aggregate
Certificate
Principal
Balance
of the
Group II
Subordinate
Certificates immediately prior to such Distribution Date):
(i)
the Group II Subordinate
Percentage of the principal portion of all Scheduled
Payments
due on each
outstanding
Mortgage Loan in the related Sub-Loan Group on the related Due Date
as specified
in the
amortization
schedule at the time
applicable
thereto (after
adjustment for previous
Principal
Prepayments
but before any
adjustment
to such
amortization
schedule
by reason of any
bankruptcy
or
similar proceeding or any moratorium or similar waiver or grace
period);
(ii)
the Group II Subordinate
Prepayment
Percentage of the Stated Principal Balance of each
Group II Mortgage
Loan in the related
Sub-Loan
Group that was the subject of a Principal
Prepayment in
full received by the Servicers during the related Prepayment
Period;
(iii)
the Group II Subordinate
Prepayment
Percentage of the amount of all Partial
Principal
Prepayments
of
principal
received
in respect of the Group II Mortgage
Loans in the
related
Sub-Loan
Group during the applicable Prepayment Period;
(iv)
the excess,
if any,
of (a) all Net
Liquidation
Proceeds
and
Subsequent
Recoveries
allocable
to
principal
received
during the
related
Prepayment
Period in respect of each
Liquidated
Mortgage Loan in the related
Sub-Loan Group over (b) the sum of the amounts
distributable
to the Senior
Certificates
in the related
Certificate
Group
pursuant to clause
(iv) of the
definition
of Group II
Senior Optimal Principal Amount on such Distribution Date;
(v)
the Group II Subordinate
Prepayment
Percentage of the sum of (a) the Stated
Principal
Balance of each Group II Mortgage
Loan in the related
Sub-Loan
Group that was
purchased by the Sponsor
in connection with such
Distribution
Date and (b) the difference,
if any,
between the Stated Principal
Balance of a Group II Mortgage
Loan in the related
Sub-Loan
Group that has been replaced by the Sponsor
with a Substitute
Mortgage Loan pursuant to the Mortgage Loan Purchase
Agreement in connection with such
Distribution Date over the Stated Principal Balance of such
Substitute Mortgage Loan; and
(vi)
on the
Distribution
Date on which the
Certificate
Principal
Balances
of the Senior
Certificates in the related
Certificate
Group have all been reduced to zero, 100% of the Group II Senior
Optimal
Principal
Amount
for
such
Group II
Senior
Certificates.
After
the
aggregate
Certificate
Principal
Balance of the
Subordinate
Certificates
has been reduced to zero,
the Group II
Subordinate
Optimal Principal Amount shall be zero.
Group II
Subordinate
Percentage:
With respect to each Sub-Loan Group included in Loan Group II
on any Distribution Date, 100% minus the Group II Senior Percentage
for the related Certificate Group.
Group II
Subordinate
Prepayment
Percentage:
With respect to each Sub-Loan
Group
included in
Loan Group II on any
Distribution
Date,
100% minus the Senior
Prepayment
Percentage
for the
related
Certificate Group.
Holder:
The
Person in whose name a
Certificate
is
registered
in the
Certificate
Register,
except
that,
subject to Sections
11.02(b)
and
11.05(e),
solely for the purpose of giving any consent
pursuant
to this
Agreement,
any
Certificate
registered
in the
name
of the
Depositor,
the
Master
Servicer,
the Securities
Administrator or the Trustee or any Affiliate thereof shall be
deemed not to be
outstanding and the Fractional
Undivided
Interest
evidenced
thereby shall not be taken into account in
determining
whether the requisite
percentage of Fractional
Undivided
Interests necessary to effect any
such consent has been obtained.
Homebanc:
HomeBanc Mortgage Corporation, and its successor in interest.
Homebanc
Servicing
Agreement:
The Purchase,
Warranties and Servicing
Agreement,
dated as of
January 1, 2004,
as amended by the Amended and
Restated
Amendment
No. 1, dated as of January 27, 2006,
between Homebanc and EMC, attached hereto as Exhibit H-5 and by the
related Assignment Agreement.
HSBC: HSBC Mortgage Corporation (USA), and its successor in
interest.
HSBC
Servicing
Agreement:
The
Amended
and
Restated
Purchase,
Warranties
and
Servicing
Agreement,
dated as of September 1, 2005,
as amended by Amendment
Reg AB, dated as of November 7, 2005,
between HSBC and EMC, attached hereto as Exhibit H-6 and by the
related Assignment Agreement.
Indemnified
Persons:
The
Trustee,
the Master
Servicer,
each
Custodian
and the
Securities
Administrator and their officers,
directors,
agents and employees and, with respect to the Trustee,
any
separate co-trustee and its officers, directors, agents and
employees.
Index:
The
index,
if any,
specified
in a Mortgage
Note by
reference
to which the
related
Mortgage Interest Rate will be adjusted from time to time.
Individual
Certificate:
Any
Private
Certificate
registered
in the name of the Holder
other
than the Depository or its nominee.
Initial
Certification:
The
certification
substantially
in the
form
of
Exhibit
One to the
related Custodial Agreement.
Institutional
Accredited Investor:
Any Person meeting the requirements of Rule 501(a)(l),
(2),
(3) or (7) of
Regulation
D under the
Securities
Act or any entity
all of the equity
holders in which
come within such paragraphs.
Insurance
Policy:
With respect to any Mortgage
Loan,
any standard
hazard
insurance
policy,
flood insurance policy or title insurance policy.
Insurance
Proceeds:
Amounts
paid by the
insurer
under
any
Insurance
Policy
covering
any
Mortgage
Loan or
Mortgaged
Property
other
than
amounts
required
to be paid
over to the
Mortgagor
pursuant to law or the
related
Mortgage
Note or
Security
Instrument
and other than
amounts
used to
repair or restore
the
Mortgaged
Property
or to
reimburse
insured
expenses,
including
the
related
Servicer's costs and expenses
incurred in connection with presenting
claims under the related
Insurance
Policies.
Interest
Accrual
Period:
With respect to each
Distribution
Date,
for each Class of Group II
Certificates,
the
calendar
month
preceding
the month in which
such
Distribution
Date
occurs.
The
Interest
Accrual Period for the Group I Offered
Certificates
and the Class I-B-3
Certificates
will be
the period from and
including the
preceding
Distribution
Date (or from and including the Closing Date,
in the case of the first
Distribution
Date) to and including
the day prior to the current
Distribution
Date.
Interest
Adjustment
Date:
With respect to a Mortgage Loan, the date, if any,
specified in the
related Mortgage Note on which the Mortgage Interest Rate is
subject to adjustment.
Interest
Carryforward
Amount: As of the first
Distribution Date and with respect to each Class
of Group I Offered
Certificates and the Class I-B-3
Certificates,
zero, and for each
Distribution Date
thereafter,
the sum of (i) the excess of (a) the Current
Interest
for such Class with
respect to prior
Distribution
Dates over (b) the amount
actually
distributed to such Class of Group I Certificates
with
respect to interest on or after such prior
Distribution
Dates and (ii)
interest
thereon (to the extent
permitted by applicable law) at the applicable
Pass-Through
Rate for such Class for the related Interest
Accrual Period including the Interest Accrual Period relating to
such Distribution Date.
Interest Funds:
For any Distribution
Date and Loan Group I, (i) the sum,
without
duplication,
of (a) all
scheduled
interest
collected
in respect to the related
Group I Mortgage
Loans
during the
related Due Period less the related
Servicing
Fee, (b) all Monthly
Advances
relating to interest
with
respect to the related Group I Mortgage
Loans
remitted by the related
Servicer or Master
Servicer,
as
applicable,
on or prior to the related Distribution
Account Deposit Date, (c) all Compensating
Interest
Payments
with respect to the Group I Mortgage
Loans and
required to be remitted by the Master
Servicer
pursuant to this
Agreement
or the related
Servicer
pursuant to the related
Servicing
Agreement
with
respect to such Distribution
Date, (d) Liquidation
Proceeds with respect to the related Group I Mortgage
Loans collected during the related
Prepayment
Period (or, in the case of Subsequent
Recoveries,
during
the related
Prepayment
Period) to the extent
such
Liquidation
Proceeds
relate to
interest,
(e) all
amounts
relating to interest with respect to each related Group I Mortgage
Loan
purchased by EMC (on its
own behalf as a Seller
and on behalf of Master
Funding)
pursuant
to
Sections
2.02 and 2.03 or by the
Depositor
pursuant to Section
3.21
during the
related
Due
Period,
and (f) all amounts in respect of
interest
paid by EMC
pursuant
to
Section
10.01 in respect to Loan Group I, in each case to the extent
remitted by EMC or its designee,
as applicable,
to the Distribution
Account pursuant to this Agreement,
and (g) the interest
proceeds received from the exercise of an optional
termination
pursuant to Section
10.01
minus
(ii)
all
amounts
required
to be
reimbursed
pursuant
to
Sections
4.01 and 4.05 or as
otherwise set forth in this Agreement and allocated to Loan Group
I.
Interest Only
Certificates:
Each of the Class
II-1X-1,
Class II-2X-1,
Class
II-2X-2,
Class
II-2X-3, Class II-2X-4, Class II-2X-5, Class II-3X-1 and Class
II-BX-1 Certificates.
Interest
Shortfall:
With respect to any
Distribution
Date and each
Mortgage Loan that during
the related
Prepayment
Period was the
subject of a Principal
Prepayment
or
constitutes
a Relief Act
Mortgage Loan, an amount determined as follows:
(a)
Partial Principal
Prepayments
received during the relevant Prepayment Period:
The
difference
between
(i) one
month's
interest
at the
applicable
Net Rate on the
amount
of such
prepayment
and (ii) the
amount of interest for the calendar
month of such
prepayment
(adjusted to the
applicable Net Rate) received at the time of such prepayment;
(b)
Principal
Prepayments
in full
received
during the relevant
Prepayment
Period:
The
difference
between (i) one month's
interest at the applicable Net Rate on the Stated
Principal
Balance
of such
Mortgage
Loan
immediately
prior to such
prepayment
and
(ii) the
amount of interest for the
calendar
month of such
prepayment
(adjusted to the
applicable
Net Rate)
received at the time of such
prepayment; and
(c)
Relief Act
Mortgage
Loans:
As to any Relief Act Mortgage
Loan,
the excess of (i) 30
days'
interest (or, in the case of a Principal
Prepayment in full,
interest to the date of
prepayment)
on the Stated
Principal
Balance
thereof
(or, in the case of a
Principal
Prepayment
in part,
on the
amount so prepaid) at the related Net Rate over
(ii) 30
days'
interest
(or, in the case of a Principal
Prepayment
in full,
interest to the date of
prepayment)
on such Stated
Principal
Balance (or, in the
case of a Principal
Prepayment
in part,
on the amount so prepaid) at the annual
interest rate required
to be paid by the Mortgagor as limited by application of the Relief
Act.
Interim
Certification:
The
certification
substantially
in the
form
of
Exhibit
Two to the
related Custodial Agreement.
Investment
Letter: The letter to be furnished by each
Institutional
Accredited
Investor which
purchases any of the Private
Certificates
in connection
with such purchase,
substantially
in the form
set forth as Exhibit F-1 hereto.
LIBOR
Business
Day:
Any day
other
than a
Saturday
or a Sunday
or a day on
which
banking
institutions in the city of London, England are required or
authorized by law to be closed.
LIBOR
Determination
Date: With respect to each Class of Offered
Certificates and for the first
Interest
Accrual
Period,
October 27, 2006. With respect to each Class of Offered
Certificates
and any
Interest
Accrual
Period
thereafter,
the second LIBOR Business Day preceding the
commencement
of such
Interest Accrual Period.
Liquidated
Mortgage
Loan:
Any
defaulted
Mortgage Loan as to which the Servicer or the Master
Servicer has
determined
that all amounts it expects to recover from or on account of such
Mortgage Loan
have been recovered.
Liquidation
Date:
With respect to any
Liquidated
Mortgage
Loan, the date on which the Master
Servicer or the Servicer has certified that such Mortgage Loan has
become a Liquidated Mortgage Loan.
Liquidation
Expenses:
With respect to a Mortgage
Loan in
liquidation,
unreimbursed
expenses
paid or incurred
by or for the account of the Master
Servicer
or the
Servicer in
connection
with the
liquidation
of such
Mortgage
Loan and the
related
Mortgage
Property,
such
expenses
including
(a)
property
protection
expenses,
(b) property sales expenses,
(c)
foreclosure and sale costs,
including
court costs and
reasonable
attorneys'
fees,
and (d) similar
expenses
reasonably
paid or incurred in
connection with liquidation.
Liquidation
Proceeds:
Amounts
received
in
connection
with the
liquidation
of a
defaulted
Mortgage Loan,
whether
through
trustee's
sale,
foreclosure
sale,
Insurance
Proceeds,
condemnation
proceeds or otherwise and Subsequent Recoveries.
Loan Group:
Loan Group I or Loan Group II, as applicable.
Loan Group I:
The Mortgage Loans identified as such on the Mortgage Loan
Schedule.
Loan Group II: Sub-Loan Group II-1, Sub-Loan Group II-2 and
Sub-Loan Group II-3.
Loan-to-Value
Ratio:
With
respect
to
any
Mortgage
Loan,
the
fraction,
expressed
as
a
percentage,
the
numerator of which is the original
principal
balance of the related
Mortgage Loan and
the denominator of which is the Original Value of the related
Mortgaged Property.
Loss Allocation Limitation:
The meaning specified in Section 6.04(c) hereof.
Loss Severity
Percentage:
With respect to any Distribution
Date, the percentage
equivalent of
a fraction,
the numerator of which is the amount of Realized
Losses
incurred on a Mortgage Loan and the
denominator
of which is the Stated
Principal
Balance of such
Mortgage
Loan
immediately
prior to the
liquidation of such Mortgage Loan.
Lost Notes:
The original
Mortgage
Notes that have been lost, as indicated on the Mortgage Loan
Schedule.
Margin:
With
respect
to any
Distribution
Date on or prior
to the
first
possible
optional
termination
date for the Group I
Certificates
and (i) the Class I-A-1
Certificates,
0.170% per annum,
(ii) the Class
I-A-2
Certificates,
0.220% per annum,
(iii) the Class
I-M-1
Certificates,
0.310% per
annum, (iv) the Class I-M-2 Certificates,
0.450% per annum, (v) the Class I-B-1 Certificates,
1.150% per
annum,
(vi) the Class
I-B-2
Certificates,
2.150% per annum,
and (vii) the Class
I-B-3
Certificates,
2.150% per annum; and with respect to any distribution date after
the first possible optional
termination
date for the Group I Certificates and (i) the Class I-A-1
Certificates,
0.340% per annum, (ii) the Class
I-A-2
Certificates,
0.440% per annum,
(iii) the Class I-M-1
Certificates,
0.465% per annum,
(iv) the
Class I-M-2 Certificates,
0.675% per annum, (v) the Class I-B-1 Certificates,
1.725% per annum, (vi) the
Class I-B-2 Certificates, 3.225% per annum, and (vii) the Class
I-B-3 Certificates, 3.225% per annum.
Marker Rate:
With respect to the Class B-IO
Certificates
or REMIC IV Regular
Interest
B-IO-I
and any Distribution Date, in relation to the REMIC III Regular
Interests,
a per annum rate equal to two
(2) times the weighted average of the
Uncertificated
REMIC III Pass-Through
Rates for REMIC III Regular
Interest LT2 and REMIC III Regular Interest LT3.
With
respect to REMIC IV Regular
Interest
II-B-1 and any
Distribution
Date,
in
relation to
REMIC II Regular
Interests
LT1,
LT2,
LT3 and LT4, a per annum rate equal to two (2) times the weighted
average of the
Uncertificated
REMIC II Pass-Through Rates for REMIC II Regular Interest LT2 and
REMIC II
Regular Interest LT3.
Master
Servicer:
As
of
the
Closing
Date,
Wells
Fargo
Bank,
National
Association
and,
thereafter,
its
respective
successors
in
interest
that
meet
the
qualifications
of the
Servicing
Agreements and this Agreement.
Master Servicer Information:
As defined in Section 3.18(c).
Master Funding:
Master Funding LLC, a Delaware
limited
liability
company,
and its successors
and assigns, in its capacity as seller of the Master Funding
Mortgage Loans to the Depositor.
Master
Funding
Mortgage
Loans:
The Mortgage
Loans
identified
as such on the Mortgage
Loan
Schedule for which Master Funding is the applicable Seller.
Master Servicing Compensation:
The meaning specified in Section 3.14.
Material Defect:
The meaning specified in Section 2.02(a).
Maximum
Lifetime
Mortgage Rate: The maximum level to which a Mortgage
Interest Rate can adjust
in accordance with its terms, regardless of changes in the
applicable Index.
MERS:
Mortgage
Electronic
Registration
Systems,
Inc., a
corporation
organized and existing
under the laws of the State of Delaware, or any successor thereto.
MERS® System: The system of recording
transfers of Mortgage Loans
electronically
maintained by
MERS.
Mid America: Mid America Bank, fsb, and its successor in interest.
Mid America Servicing Agreement:
The Purchase,
Warranties and Servicing Agreement,
dated as of
February 1, 2006,
as amended by Amendment
No. 1 to the Purchase,
Warranties
and
Servicing
Agreement,
dated as of February 1, 2006,
between
Mid
America
and EMC,
attached
hereto as Exhibit H-7 and by the
related Assignment Agreement.
MIN: The Mortgage
Identification
Number for Mortgage
Loans
registered
with MERS on the MERS®
System.
Minimum
Lifetime
Mortgage Rate: The minimum level to which a Mortgage
Interest Rate can adjust
in accordance with its terms, regardless of changes in the
applicable Index.
MOM Loan:
With
respect to any Mortgage
Loan,
MERS acting 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:
An advance of
principal
or interest
required
to be made by the
applicable
Servicer pursuant to the related Servicing Agreement or the Master
Servicer pursuant to Section 6.08.
Monthly Statement:
The statement delivered to the Certificateholders pursuant to
Section 6.07.
Monthly Delinquency
Percentage:
With respect to a Distribution Date, the percentage
equivalent
of a fraction,
the numerator of which is the aggregate Stated
Principal
Balance of the Group I Mortgage
Loans that are 60 days or more
Delinquent or are in bankruptcy or
foreclosure
or are REO Properties for
such
Distribution
Date and the denominator of which is the aggregate Stated Principal
Balance of Group I
Mortgage Loans for such Distribution Date.
Moody's:
Moody's Investors Service, Inc. or its successor in interest.
Mortgage:
The mortgage,
deed of trust or other instrument
creating a first priority lien on an
estate in fee simple or leasehold interest in real property
securing a Mortgage Loan.
Mortgage
File:
The mortgage
documents
listed in
Section 2.01(b)
pertaining
to a particular
Mortgage
Loan and any
additional
documents
required to be added to the Mortgage
File pursuant to this
Agreement.
Mortgage
Interest
Rate:
The annual
rate at which
interest
accrues
from time to time on any
Mortgage
Loan
pursuant to the related
Mortgage
Note,
which rate is initially
equal to the
"Mortgage
Interest Rate" set forth with respect thereto on the Mortgage Loan
Schedule.
Mortgage
Loan:
A mortgage
loan
transferred
and
assigned to the Trustee
pursuant to Section
2.01,
Section 2.04 or Section 2.07 and held as a part of the Trust Fund,
as
identified
in the Mortgage
Loan Schedule (which shall include,
without limitation,
with respect to each Mortgage Loan, each related
Mortgage
Note,
Mortgage and Mortgage
File and all rights
appertaining
thereto),
including a mortgage
loan the property securing which has become an REO Property.
Mortgage Loan Purchase
Agreement:
The Mortgage Loan Purchase
Agreement dated as of October 31,
2006, among EMC, as a seller,
Master Funding,
as a seller, and Structured Asset Mortgage
Investments II
Inc., as purchaser, and all amendments thereof and supplements
thereto, attached as Exhibit J.
Mortgage
Loan
Schedule:
The
schedule,
attached
hereto
as
Exhibit B
with
respect
to the
Mortgage
Loans,
as amended from time to time to reflect the repurchase or
substitution of Mortgage Loans
pursuant to this Agreement or the Mortgage Loan Purchase Agreement,
as the case may be.
Mortgage
Note:
The
originally
executed
note
or
other
evidence
of the
indebtedness
of a
Mortgagor under the related Mortgage Loan.
Mortgaged
Property:
Land and
improvements
securing the
indebtedness of a Mortgagor under the
related Mortgage Loan or, in the case of REO Property, such REO
Property.
Mortgagor:
The obligor on a Mortgage Note.
Net Interest Shortfall:
With respect to any Distribution Date, the Interest
Shortfall,
if any,
for such
Distribution
Date net of Compensating
Interest Payments made with respect to such Distribution
Date.
Net
Liquidation
Proceeds:
As to any
Liquidated
Mortgage
Loan,
Liquidation
Proceeds net of
(i) Liquidation
Expenses which are payable therefrom to the Servicer or the Master
Servicer in accordance
with the
Servicing
Agreement or this
Agreement
and
(ii) unreimbursed
advances by the Servicer or the
Master Servicer and Monthly Advances.
Net Rate:
With respect to each
Mortgage
Loan,
the Mortgage
Interest Rate in effect from time
to time less the Servicing Fee Rate expressed as a per annum rate.
Net Rate
Cap:
For any
Distribution
Date and the Group I
Offered
Certificates
and the Class
I-B-3
Certificates,
the
weighted
average
of the Net
Rates of the
Group I
Mortgage
Loans as of the
beginning of the related Due Period,
weighted on the basis of the Stated
Principal
Balances
thereof as
of the preceding
Distribution
Date, in each case as adjusted to an effective rate reflecting the
accrual
of interest on the basis of a 360-day year and the actual
number of days elapsed in the related
Interest
Accrual Period.
NIM Issuer:
The entity established as the issuer of the NIM Securities.
NIM
Securities:
Any
debt
securities
secured
or
otherwise
backed
by
some
or
all of the
Certificates, including the Class R-X Certificate.
NIM Trustee:
The trustee for the NIM Securities.
Non-Offered Subordinate
Certificates:
The Group I Non-Offered Subordinate
Certificates and the
Group II Non-Offered Subordinate Certificates.
Nonrecoverable
Advance:
Any advance or Monthly
Advance
(i) which
was
previously
made or is
proposed to be made by the Master
Servicer,
the Trustee (in its capacity as successor
Master
Servicer)
or the
applicable
Servicer
and
(ii) which,
in the good faith
judgment
of the Master
Servicer,
the
Trustee in its capacity as
successor
Master
Servicer or the
applicable
Servicer,
will not or, in the
case of a
proposed
advance or
Monthly
Advance,
would not,
be
ultimately
recoverable
by the Master
Servicer,
the
Trustee (as
successor
Master
Servicer)
or the
applicable
Servicer
from
Liquidation
Proceeds,
Insurance
Proceeds or future
payments on the Mortgage
Loan for which such advance or Monthly
Advance was made or is proposed to be made.
Notional
Amount:
The Notional Amount of (i) the Class II-1X-1
Certificates
immediately
prior
to any
Distribution
Date is equal to the aggregate
Certificate
Principal
Balance of the Class II-1A-1
Certificates and the Class II-1A-2
Certificates,
(ii) the Class II-2X-1
Certificates
immediately prior
to any Distribution
Date is equal to the aggregate
Certificate
Principal
Balance of the Class II-2A-1A
Certificates and the Class II-2A-2
Certificates,
(iii) each of the Class II-2X-2,
Class II-2X-3,
Class
II-2X-4
and
Class
II-2X-5
immediately
prior to any
Distribution
Date is
equal
to the
Certificate
Principal
Balance of the Class II-2A-1B
Certificates,
(iv) the Class II-3X-1
Certificates
immediately
prior to any
Distribution
Date is equal to the
aggregate
Certificate
Principal
Balance
of the Class
II-3A-1 Certificates and the Class II-3A-2
Certificates,
(v) the Class II-BX-1 Certificates
immediately
prior
to any
Distribution
Date is
equal to the
Certificate
Principal
Balance
of the
Class
II-B-1
Certificates and (vi) the Class B-IO
Certificates
immediately prior to any Distribution Date is equal to
the aggregate of the Uncertificated Principal Balances of the REMIC
III Regular Interests.
Offered Certificates:
The Group I Offered Certificates and the Group II Offered
Certificates.
Offered
Subordinate
Certificates:
The Group I Offered
Subordinate
Certificates and the Group
II Offered Subordinate Certificates.
Officer's
Certificate:
A certificate
signed by the Chairman of the Board, the Vice Chairman of
the Board,
the President or a Vice President or Assistant Vice President or
other
authorized
officer of
the Master
Servicer,
the Sellers,
any Servicer or the Depositor,
as
applicable,
and delivered to the
Trustee, as required by this Agreement.
One-Month
LIBOR:
With
respect to any
Interest
Accrual
Period,
the rate
determined
by the
Securities
Administrator
on the
related
LIBOR
Determination
Date on the
basis
of the rate for U.S.
dollar
deposits for one month that appears on Telerate
Screen Page 3750 as of 11:00 a.m.
(London
time)
on such LIBOR
Determination
Date;
provided that the parties hereto acknowledge that One-Month LIBOR
for
the first Interest Accrual Period shall the rate determined by the
Securities
Administrator
two Business
Days
prior to the
Closing
Date.
If such rate does not
appear on such page (or such
other page as may
replace
that page on that
service,
or if such
service is no longer
offered,
such other
service
for
displaying
One-Month
LIBOR
or
comparable
rates
as
may be
reasonably
selected
by
the
Securities
Administrator),
One-Month
LIBOR for the
applicable
Interest
Accrual Period will be the Reference Bank
Rate. If no such
quotations
can be obtained by the Securities
Administrator
and no Reference Bank Rate
is
available,
One-Month
LIBOR will be One-Month
LIBOR
applicable to the
preceding
Interest
Accrual
Period.
Opinion of
Counsel:
A written
opinion of counsel who is or are
acceptable
to the Trustee and
who,
unless
required to be Independent (an "Opinion of Independent
Counsel"),
may be internal
counsel
for the Company, the Master Servicer or the Depositor.
Optional
Termination
Date:
With respect to (i) the Group I Mortgage
Loans,
the
Distribution
Date on which the aggregate
Stated
Principal
Balance of the Group I Mortgage
Loans is less than 20% of
the Cut-off
Date
Balance as of the Closing
Date and (ii) with
respect to the Group II Mortgage
Loans,
the Distribution
Date on which the aggregate
Stated Principal
Balance of the Group II Mortgage Loans is
less than 10% of the Cut-off Date Balance as of the Closing Date.
Original
Group
II
Subordinate
Principal
Balance:
The
sum
of
the
aggregate
Certificate
Principal Balances of each Class of Group II Subordinate
Certificates as of the Closing Date.
Original
Value:
The lesser of (i) the
Appraised
Value or (ii) the
sales price of a Mortgaged
Property at the time of origination of a Mortgage
Loan,
except in instances
where either clauses (i) or
(ii) is
unavailable,
the other may be used to determine the Original
Value,
or if both clauses (i) and
(ii) are
unavailable,
Original Value may be determined from other sources
reasonably
acceptable to the
Depositor.
Outstanding
Mortgage
Loan:
With respect to any Due Date, a Mortgage Loan which,
prior to such
Due Date,
was not the subject of a Principal
Prepayment
in full,
did not become a Liquidated
Mortgage
Loan and was not purchased or replaced.
Outstanding
Principal Balance:
As of the time of any determination,
the principal balance of a
Mortgage Loan
remaining to be paid by the
Mortgagor,
or, in the case of an REO Property,
the principal
balance of the related
Mortgage Loan
remaining to be paid by the Mortgagor at the time such property was
acquired by the Trust Fund less any Net
Liquidation
Proceeds with respect
thereto to the extent applied
to principal.
Overcollateralization
Amount:
With respect to any
Distribution
Date,
the excess,
if any, of
(a) the aggregate Stated Principal
Balance of the Group I Mortgage Loans for such
Distribution Date over
(b) the
aggregate
Certificate
Principal
Balance of the Group I Offered
Certificates,
the Class I-B-3
Certificates
and the Class XP
Certificates
on such
Distribution
Date (after
taking into
account the
payment of principal other than any Extra Principal Distribution
Amount on such Certificates).
Overcollateralization
Release
Amount:
With respect to any
Distribution
Date is the lesser of
(x) the sum of the amounts
described in clauses (1) through (5) in the definition of Principal
Funds for
such
Distribution
Date and (y) the
excess,
if any,
of (i) the
Overcollateralization
Amount for such
Distribution
Date (assuming that 100% of such Principal
Funds is applied as a principal
payment on such
Distribution
Date) over (ii) the
Overcollateralization
Target Amount for such
Distribution
Date (with
the amount
pursuant
to clause (y)
deemed to be $0 if the
Overcollateralization
Amount is less than or
equal to the Overcollateralization Target Amount on that
Distribution Date).
Overcollateralization
Target
Amount:
With
respect to any
Distribution
Date (a) prior to the
Stepdown Date,
0.70% of the aggregate
Stated
Principal
Balance of the Group I Mortgage Loans as of the
Cut-off Date,
(b) on or after the Stepdown
Date and if a Trigger Event is not in effect,
the greater of
(i) the lesser of (1) 0.70% of the aggregate
Stated
Principal
Balance of the Group I Mortgage
Loans as
of the Cut-off Date and (2) 1.40% of the then current
aggregate Stated
Principal
Balance of the Group I
Mortgage
Loans as of such
Distribution
Date and (ii)
$2,879,210
and (c) on or after the Stepdown Date
and if a
Trigger
Event
is in
effect,
the
Overcollateralization
Target
Amount
for the
immediately
preceding Distribution Date.
Party
Participating
in
the
Servicing
Function:
Any
Person
performing
any
of
the
responsibilities set forth in Exhibit K.
Pass-Through
Rate:
As to each
Class of
Certificates,
the
rate
of
interest
determined
as
provided with respect
thereto in
Section 5.01(c).
Any monthly
calculation of interest at a stated rate
shall be based upon annual interest at such rate divided by twelve.
Paying
Agent:
The
Securities
Administrator,
or its
successor in interest,
or any successor
securities administrator appointed as herein provided.
Periodic Rate Cap: With respect to each Mortgage
Loan, the maximum
adjustment
that can be made
to the Mortgage
Interest Rate on each Interest
Adjustment Date in accordance with its terms,
regardless
of changes in the applicable Index.
Permitted
Investments:
Any one or more of the following
obligations or securities
held in the
name of the Trustee for the benefit of the Certificateholders:
(i)
direct
obligations
of, and
obligations the timely payment of which are fully
guaranteed
by the
United
States of America or any
agency or
instrumentality
of the United
States of
America the obligations of which are backed by the full faith and
credit of the United States of America;
(ii)
(a) demand or time deposits,
federal funds or bankers'
acceptances
issued by
any depository
institution or trust company
incorporated
under the laws of the United States of America
or any state thereof
(including the Trustee,
the Securities
Administrator or the Master Servicer or its
Affiliates
acting in its
commercial
banking
capacity) and subject to
supervision
and
examination by
federal and/or state banking
authorities,
provided that the commercial
paper and/or the short-term debt
rating and/or the long-term
unsecured debt
obligations of such
depository
institution or trust company
at the
time of such
investment
or
contractual
commitment
providing
for
such
investment
have
the
Applicable
Credit
Rating or better from each Rating
Agency and (b) any other
demand or time deposit or
certificate of deposit that is fully insured by the Federal Deposit
Insurance Corporation;
(iii)
repurchase
obligations
with respect to (a) any
security
described in clause
(i) above or (b) any other
security
issued or guaranteed by an agency or
instrumentality
of the United
States of America,
the
obligations of which are backed by the full faith and credit of the
United States
of America,
in either
case
entered
into with a
depository
institution
or trust
company
(acting as
principal)
described in clause
(ii)(a) above where the
Securities
Administrator
holds the security in
the name of the Trustee therefor;
(iv)
securities
bearing
interest or sold at a discount
issued by any
corporation
(including
the
Trustee,
the
Securities
Administrator
or
the
Master
Servicer
or
its
Affiliates)
incorporated
under
the
laws of the
United
States
of
America
or any
state
thereof
that
have the
Applicable
Credit Rating or better from each Rating Agency at the time of such
investment or contractual
commitment
providing for such investment;
provided,
however,
that securities
issued by any particular
corporation will not be Permitted
Investments to the extent that investments
therein will cause the then
outstanding
principal
amount of securities
issued by such
corporation and held as part of the Trust to
exceed 10% of the
aggregate
Outstanding
Principal
Balances
of all the
Mortgage
Loans and
Permitted
Investments held as part of the Trust;
(v)
commercial paper (including both non-interest-bearing
discount obligations and
interest-bearing
obligations
payable on demand or on a
specified
date not more than one year after the
date of issuance
thereof)
having the
Applicable
Credit Rating or better from each Rating Agency at the
time of such investment;
(vi)
a
Reinvestment
Agreement
issued
by any
bank,
insurance
company
or other
corporation or entity;
(vii)
any
other
demand,
money
market or time
deposit,
obligation,
security
or
investment
as may be
acceptable
to each Rating
Agency as evidenced in writing by each Rating Agency to
the Trustee and the Securities Administrator; and
(viii)
interests in any money market fund
(including any such fund managed or advised
by the Trustee,
the Securities
Administrator
or the Master Servicer or any affiliate
thereof) which at
the date of
acquisition
of the interests in such fund and throughout the time such
interests are held in
such fund has the highest
applicable
short term rating by each Rating
Agency
rating such funds or such
lower rating as will not result in the
downgrading
or
withdrawal
of the ratings
then
assigned to the
Certificates
by each Rating Agency,
as evidenced in writing;
provided,
however,
that no instrument or
security
shall be a Permitted
Investment
if such
instrument
or security
evidences a right to receive
only interest
payments with respect to the
obligations
underlying
such
instrument or if such security
provides
for payment of both
principal
and
interest
with a yield to maturity in excess of 120% of the
yield to maturity at par or if such instrument or security is
purchased at a price greater than par.
Permitted
Transferee:
Any Person other than a Disqualified
Organization
or an "electing large
partnership" (as defined by Section 775 of the Code).
Person:
Any
individual,
corporation,
partnership,
joint
venture,
association,
limited
liability company,
joint-stock company,
trust,
unincorporated
organization or government or any agency
or political subdivision thereof.
Physical Certificates:
The Residual Certificates and the Private Certificates.
Plan:
The meaning specified in Section 5.07(a).
Prepayment
Charge:
With respect to any Mortgage Loan,
the charges or premiums,
if any, due in
connection
with a full or partial
prepayment of such Mortgage Loan in accordance
with the terms thereof
and described in the Mortgage Loan Schedule.
Prepayment
Charge
Loan:
Any
Group I
Mortgage
Loan
for
which a
Prepayment
Charge
may be
assessed and to which such Prepayment
Charge the Class XP Certificates are entitled,
as indicated on the
Mortgage Loan Schedule.
Prepayment
Interest
Shortfall:
With respect to any
Distribution
Date, for each Mortgage Loan
that was the
subject of a Partial
Principal
Prepayment
or a
Principal
Prepayment
in full during the
related
Prepayment
Period (other than a Principal
Prepayment in full
resulting
from the purchase of a
Group I Mortgage
Loan pursuant to Section
2.02,
2.03,
3.21 or 10.01
hereof),
the amount,
if any, by
which (i) one month's
interest at the applicable Net Rate on the Stated
Principal
Balance of such Group
I Mortgage Loan immediately prior to such prepayment or in the case
of a Partial
Principal
Prepayment on
the amount of such
prepayment
exceeds (ii) the amount of interest paid or collected in
connection
with
such Principal Prepayment less the sum of (a) any Prepayment
Charges and (b) the related Servicing Fee.
Prepayment
Period:
With
respect to the
Mortgage
Loans for which EMC is the Servicer and with
respect to a
Distribution
Date and (i) Principal
Prepayments in full, the period from the sixteenth day
of the calendar
month
preceding the calendar
month in which such
Distribution
Date occurs through the
close of business on the fifteenth day of the calendar month in
which such Distribution
Date occurs,
and
(ii) Liquidation
Proceeds,
Realized Losses,
Subsequent
Recoveries and Partial
Prepayments,
the prior
calendar
month;
and in the case of the Mortgage Loans for which EMC is not the
Servicer,
such period as
is provided in the related Servicing Agreement with respect to the
related Mortgage Loans.
Primary
Mortgage
Insurance
Policy:
Any primary mortgage
guaranty
insurance policy issued in
connection
with a Mortgage
Loan which
provides
compensation
to a Mortgage Note holder in the event of
default
by the
obligor
under such
Mortgage
Note or the
related
Security
Instrument,
if any or any
replacement
policy therefor
through the related
Interest
Accrual Period for such
Class relating
to a
Distribution Date.
Principal
Distribution
Amount:
With respect to each Distribution
Date, an amount equal to the
excess of (i) sum of
(a) the
Principal
Funds
for such
Distribution
Date and (b) any Extra
Principal
Distribution
Amount for such
Distribution
Date over (ii) any
Overcollateralization
Release Amount for
such Distribution Date.
Principal Funds: the sum, without duplication, of
1.
the Scheduled
Principal
collected on the Group I Mortgage Loans during the related Due
Period or advanced on or before the related servicer advance date,
2.
prepayments
in
respect
of the Group I
Mortgage
Loans
exclusive
of any
Prepayment
Charges, collected in the related Prepayment Period,
3.
the Stated
Principal
Balance of each Group I Mortgage Loan that was repurchased by the
Depositor or the related Servicer during the related Due Period,
4.
the amount,
if any, by which the aggregate unpaid
principal
balance of any Substitute
Mortgage
Loans is less than the
aggregate
unpaid
principal
balance
of any
deleted
mortgage loans
delivered by the related
Servicer in connection
with a substitution of
a Group I Mortgage Loan during the related Due Period,
5.
all
Liquidation
Proceeds
collected
during the related
Prepayment
Period (or in the
case of
Subsequent
Recoveries,
during the related
Prepayment
Period) on the Group I
Mortgage Loans, to the extent such
Liquidation
Proceeds relate to principal,
less all
related
Nonrecoverable
Advances
relating to principal
reimbursed
during the related
Due Period, and
6.
the
principal
portion of the
purchase
price of the assets of the Trust
allocated to
Loan
Group I upon the
exercise
by EMC or its
designee
of its
optional
termination
right with respect to the Group I Mortgage Loans, minus
7.
any amounts payable to or required to be reimbursed to EMC, the
Depositor,
any
Servicer,
the
Master
Servicer,
any
Custodian,
the
Trustee
or
the
Securities
Administrator and allocated to Loan Group I, as provided in the
Agreement.
Principal
Prepayment:
Any payment
(whether
partial or full) or other recovery of principal on
a Mortgage
Loan which is
received
in advance
of its
scheduled
Due Date to the extent
that it is not
accompanied by an amount as to interest
representing
scheduled
interest due on any date or dates in any
month or months
subsequent
to the month of
prepayment,
including
Insurance
Proceeds
and
Repurchase
Proceeds,
but
excluding
the
principal
portion
of Net
Liquidation
Proceeds
received
at the time a
Mortgage Loan becomes a Liquidated Mortgage Loan.
Private
Certificates:
The Class I-B-3,
Class B-IO,
Class XP, Class
II-B-4,
Class II-B-5 and
Class II-B-6 Certificates.
Prospectus:
The
prospectus,
dated
October
23,
2006,
as
supplemented
by
the
prospectus
supplement
dated October 30, 2006 (as the same may
be supplemented
from time to time),
relating to the
offering of the Offered Certificates.
Protected Account:
An account
established and maintained for the benefit of
Certificateholders
by each Servicer with respect to the related
Mortgage Loans and with respect to REO Property
pursuant to
the related Servicing Agreement.
QIB: A Qualified
Institutional
Buyer as defined in Rule 144A
promulgated
under the Securities
Act.
Qualified
Insurer:
Any insurance
company duly qualified as such under the laws of the state or
states
in
which
the
related
Mortgaged
Property
or
Mortgaged
Properties
is or are
located,
duly
authorized
and licensed in such state or states to transact
the type of
insurance
business in which it
is engaged and
approved as an insurer by the Master
Servicer,
so long as the claims
paying
ability of
which is acceptable to the Rating
Agencies for
pass-through
certificates
having the same rating as the
Certificates rated by the Rating Agencies as of the Closing Date.
Rating Agencies:
Moody's, Fitch and S&P.
Realized
Loss:
Any
(i) Bankruptcy
Loss or (ii) as to any
Liquidated
Mortgage
Loan, (x) the
Outstanding
Principal
Balance of such Liquidated
Mortgage Loan plus accrued and unpaid interest thereon
at the
Mortgage
Interest
Rate
through
the last day of the
month
of such
liquidation,
less (y) the
related Net
Liquidation
Proceeds with respect to such Mortgage Loan and the related
Mortgaged
Property
that are
allocated to
principal.
In addition,
to the extent the Master
Servicer
receives
Subsequent
Recoveries
with
respect to any
Mortgage
Loan,
the amount of the
Realized
Loss with
respect to that
Mortgage
Loan will be
reduced to the
extent
such
recoveries
are
applied
to reduce the
Certificate
Principal Balance of any Class of Certificates on any Distribution
Date.
Realized
Losses
on the
Group II
Mortgage
Loans
shall be
allocated
to the
REMIC I Regular
Interests as follows:
(1) The interest
portion of Realized
Losses and Net
Interest
Shortfalls
on the
Sub-Loan Group II-1 Loans,
if any, shall be allocated
between REMIC I Regular
Interests Y-1 and Z-1 pro
rata
according
to the amount of interest
accrued but unpaid
thereon,
in
reduction
thereof;
(2) the
interest
portion of Realized
Losses and Net Interest
Shortfalls
on the Sub-Loan
Group II-2 Loans,
if
any,
shall be allocated
between REMIC I Regular
Interests Y-2 and Z-2 pro rata
according to the amount
of interest
accrued but unpaid
thereon,
in
reduction
thereof;
(3) the
interest
portion of Realized
Losses and Net Interest
Shortfalls on the Sub-Loan Group II-3 Loans,
if any, shall be allocated
between
REMIC I Regular
Interests
Y-3 and Z-3 pro rata
according
to the amount of interest
accrued but unpaid
thereon,
in
reduction
thereof
Any
interest
portion of such
Realized
Losses in excess of the amount
allocated
pursuant to the preceding
sentence shall be treated as a principal
portion of Realized Losses
not
attributable
to any specific
Mortgage Loan in such Group and allocated
pursuant to the
succeeding
sentences.
The
principal
portion of Realized
Losses with respect to the Group II Mortgage
Loans shall
be allocated to the REMIC I Regular
Interests as follows:
(1) the principal
portion of Realized
Losses
on the
Sub-Loan
Group II-1 Loans
shall be
allocated,
first,
to REMIC I Regular
Interest
Y-1 to the
extent
of the REMIC I Y-1
Principal
Reduction
Amount
in
reduction
of the
Uncertificated
Principal
Balance of such Regular Interest and,
second,
the remainder,
if any, of such principal
portion of such
Realized
Losses
shall be allocated
to REMIC I Regular
Interest Z-1 in reduction of the
Uncertificated
Principal
Balance thereof;
(2) the principal portion of Realized Losses on the Sub-Loan Group
II-2 Loans
shall be
allocated,
first,
to REMIC I Regular
Interest Y-2 to the extent of the REMIC I Y-2
Principal
Reduction
Amount in reduction of the
Uncertificated
Principal
Balance of such
Regular
Interest
and,
second,
the remainder,
if any, of such principal
portion of such Realized
Losses shall be allocated to
REMIC I Regular
Interest
Z-2 in reduction
of the
Uncertificated
Principal
Balance
thereof;
(3) the
principal
portion of Realized
Losses on the
Sub-Loan
Group II-3 Loans shall be
allocated,
first,
to
REMIC I Regular
Interest Y-3 to the extent of the REMIC I Y-3 Principal
Reduction Amount in reduction of
the
Uncertificated
Principal
Balance of such Regular
Interest and, second,
the remainder,
if any, of
such
principal
portion of such
Realized
Losses shall be
allocated to REMIC I Regular
Interest Z-3 in
reduction of the Uncertificated
Principal Balance thereof.
For any Distribution Date,
reductions in the
Uncertificated
Principal
Balances of each REMIC I Y and Z Regular
Interest
pursuant to this definition
of
Realized
Loss shall be
determined,
and shall be deemed to occur,
prior to any
reductions
of such
Uncertificated Principal Balances by distributions on such
Distribution Date.
Record
Date:
For each Class of Group I Offered
Certificates
and the Class I-B-3
Certificates
and on any
Distribution
Date,
the Business Day preceding the
applicable
Distribution
Date so long as
such Class of Certificates
remains in book-entry
form; and otherwise,
the close of business on the last
Business Day of the month
immediately
preceding the month of such
Distribution
Date. For each Class of
Group II Certificates,
the close of business on the last Business Day of the month
immediately
preceding
the month of such Distribution Date.
Reference
Bank:
A leading
bank
selected by the
Securities
Administrator
that is engaged in
transactions in Eurodollar deposits in the international
Eurocurrency market.
Reference Bank Rate: With respect to any Interest Accrual Period,
the arithmetic
mean,
rounded
upwards, if necessary,
to the nearest whole multiple of 0.03125%,
of the offered rates for United States
dollar
deposits
for one month that are quoted by the
Reference
Banks as of 11:00
a.m.,
New York City
time,
on the related
interest
determination
date to prime banks in the London
interbank
market for a
period of one month in amounts
approximately equal to the aggregate
Certificate Principal Balance of all
Classes
of Group I Offered
Certificates
and the Class
I-B-3
Certificates
for such
Interest
Accrual
Period,
provided
that at least two such
Reference
Banks
provide such rate.
If fewer than two offered
rates appear, the Reference Bank Rate will be the arithmetic mean,
rounded upwards,
if necessary,
to the
nearest
whole
multiple
of
0.03125%,
of the rates
quoted by one or more major banks in New York City,
selected by the
Securities
Administrator,
as of 11:00 a.m.,
New York City time, on such date for loans
in U.S.
dollars to leading
European
banks for a period of one month in amounts
approximately
equal to
the aggregate
Certificate
Principal Balance of all Classes of Group I Offered Certificates
and the Class
I-B-3 Certificates.
Regulation
AB:
Subpart
229.1100
-
Asset
Backed
Securities
(Regulation
AB),
17
C.F.R.
§§229.1100-229.1123,
as such may be amended
from time to time,
and
subject to such
clarification
and
interpretation as have been provided by the Commission in the
adopting release
(Asset-Backed
Securities,
Securities
Act Release No.
33-8518,
70 Fed.
Reg.
1,506,
1,531 (Jan. 7, 2005)) or by the staff of the
Commission, or as may be provided by the Commission or its staff
from time to time.
Reinvestment
Agreements:
One
or
more
reinvestment
agreements,
acceptable
to
the
Rating
Agencies, from a bank, insurance company or other corporation or
entity (including the Trustee).
Related Certificates:
(A)
For each
REMIC II
Regular
Interest
(other
than REMIC II
Regular
Interests
LT1, LT2, LT3 and LT4), the Class or Classes of
Certificates
shown opposite the name
of such REMIC II Regular Interest in the following table:
------------------------------------------------------------
---------------------------------------------------------
REMIC II Regular Interest
Classes of Certificates
------------------------------------------------------------
---------------------------------------------------------
II-1A
II-1A-1; II-1A-2; II-1X-1
------------------------------------------------------------
---------------------------------------------------------
II-2A
II-2A-1A; II-2A-2; II-2X-1
------------------------------------------------------------
---------------------------------------------------------
II-2A-1B
II-2A-1B; II-2X-2; II-2X-3; II-2X-4; II-2X-5
------------------------------------------------------------
---------------------------------------------------------
II-3A
II-3A-1; II-3A-2; II-3X-1
------------------------------------------------------------
---------------------------------------------------------
II-B-2
II-B-2
------------------------------------------------------------
---------------------------------------------------------
II-B-3
II-B-3
------------------------------------------------------------
---------------------------------------------------------
II-B-4
II-B-4
------------------------------------------------------------
---------------------------------------------------------
II-B-5
II-B-5
------------------------------------------------------------
---------------------------------------------------------
II-B-6
II-B-6
------------------------------------------------------------
---------------------------------------------------------
(C) For each REMIC IV Regular
Interest,
the Class or Classes
of
Certificates
shown
opposite
the name of such REMIC IV Regular Interest in the following table:
------------------------------------------------------------
---------------------------------------------------------
REMIC IV Regular Interest
Classes of Certificates
------------------------------------------------------------
---------------------------------------------------------
I-A-1
I-A-1
------------------------------------------------------------
---------------------------------------------------------
I-A-2
I-A-2
------------------------------------------------------------
---------------------------------------------------------
I-M-1
I-M-1
------------------------------------------------------------
---------------------------------------------------------
I-M-2
I-M-2
------------------------------------------------------------
---------------------------------------------------------
I-B-1
I-B-1
------------------------------------------------------------
---------------------------------------------------------
I-B-2
I-B-2
------------------------------------------------------------
---------------------------------------------------------
I-B-3
I-B-3
------------------------------------------------------------
---------------------------------------------------------
B-IO-I and B-IO-P
B-IO
------------------------------------------------------------
---------------------------------------------------------
XP
XP
------------------------------------------------------------
---------------------------------------------------------
II-1A-1
II-1A-1
------------------------------------------------------------
---------------------------------------------------------
II-1A-2
II-1A-2
------------------------------------------------------------
---------------------------------------------------------
II-1X-1
II-1X-1
------------------------------------------------------------
---------------------------------------------------------
II-2A-1A
II-2A-1A
------------------------------------------------------------
---------------------------------------------------------
II-2A-1B
II-2A-1B
------------------------------------------------------------
---------------------------------------------------------
II-2A-2
II-2A-2
------------------------------------------------------------
---------------------------------------------------------
II-2X-1
II-2X-1
------------------------------------------------------------
---------------------------------------------------------
II-2X-2
II-2X-2
------------------------------------------------------------
---------------------------------------------------------
II-2X-3
II-2X-3
------------------------------------------------------------
---------------------------------------------------------
II-2X-4
II-2X-4
------------------------------------------------------------
---------------------------------------------------------
II-2X-5
II-2X-5
------------------------------------------------------------
---------------------------------------------------------
II-3A-1
II-3A-1
------------------------------------------------------------
---------------------------------------------------------
II-3A-2
II-3A-2
------------------------------------------------------------
---------------------------------------------------------
II-3X-1
II-3X-1
------------------------------------------------------------
---------------------------------------------------------
II-B-1
II-B-1
------------------------------------------------------------
---------------------------------------------------------
II-BX-1
II-BX-1
------------------------------------------------------------
---------------------------------------------------------
II-B-2
II-B-2
------------------------------------------------------------
---------------------------------------------------------
II-B-3
II-B-3
------------------------------------------------------------
---------------------------------------------------------
II-B-4
II-B-4
------------------------------------------------------------
---------------------------------------------------------
II-B-5
II-B-5
------------------------------------------------------------
---------------------------------------------------------
II-B-6
II-B-6
------------------------------------------------------------
---------------------------------------------------------
(C)
For the REMIC V Regular Interest, the Class B-IO Certificates.
Relief Act:
The Servicemembers Civil Relief Act, as amended, or similar state
law.
Relief Act Mortgage
Loan: Any Mortgage Loan as to which the Scheduled
Payment
thereof has been
reduced due to the application of the Relief Act.
Remaining
Excess Spread:
With respect to any
Distribution
Date,
the Excess Spread
remaining
after the distribution of the Extra Principal Distribution Amount
for such Distribution Date.
REMIC: A "real estate
mortgage
investment
conduit"
within the meaning of
Section 860D of the
Code.
REMIC Administrator:
The Securities
Administrator;
provided that if the REMIC Administrator is
found by a court of
competent
jurisdiction
to no longer be able to
fulfill
its
obligations
as REMIC
Administrator
under this Agreement the Servicer or Trustee,
in its capacity as successor Master Servicer
shall
appoint
a
successor
REMIC
Administrator,
subject
to
assumption
of the
REMIC
Administrator
obligations under this Agreement.
REMIC Interest:
Any of the REMIC I, REMIC II, REMIC III, REMIC IV and REMIC V
Interests.
REMIC
Opinion:
An Opinion
of
Independent
Counsel,
to the effect
that the
proposed
action
described
therein would not,
under the REMIC
Provisions,
(i) cause any 2006-7 REMIC to fail to qualify
as a REMIC
while any
regular
interest
in such 2006-7
REMIC is
outstanding,
(ii) result
in a tax on
prohibited
transactions with respect to any 2006-7 REMIC or
(iii) constitute
a taxable
contribution to
any 2006-7 REMIC after the Startup Day.
REMIC
Provisions:
The
provisions
of the
federal
income tax law
relating
to REMICs,
which
appear at Sections
860A through 860G of the Code,
and related
provisions
and
regulations
promulgated
thereunder, as the foregoing may be in effect from time to time.
REMIC
Regular
Interest:
Any of the
REMIC I,
REMIC
II,
REMIC
III,
REMIC
IV and
REMIC
V
Regular Interests.
REMIC I:
The
segregated
pool of
assets,
with
respect
to
which a
REMIC
election
is made
pursuant to this Agreement, consisting of:
(a)
the Group II
Mortgage
Loans and the related
Mortgage
Files and
collateral
securing
such Group II Mortgage Loans,
(b)
all
payments on and
collections
in respect of the Group II
Mortgage
Loans due after
the Cut-off Date as shall be on deposit in the
Distribution
Account and
identified
as belonging to the
Trust Fund,
(c)
property
that
secured
a Group II
Mortgage
Loan and that has been
acquired
for the
benefit of the Certificateholders by foreclosure or deed in lieu of
foreclosure,
(d)
the
hazard
insurance
policies
and
Primary
Mortgage
Insurance
Policies,
if
any,
relating to the Group II Mortgage Loans, and
(e)
all proceeds of clauses (a) through (d) above.
REMIC I
Available
Distribution
Amount:
For each of the Sub-Loan
Groups for any
Distribution
Date,
the Available
Funds for such Sub-Loan
Group,
or, if the context so requires the aggregate of the
Available Funds for all Sub-Loan Groups.
REMIC I
Distribution
Amount:
For any
Distribution
Date, the REMIC I
Available
Distribution
Amount shall be
distributed
by REMIC I to REMIC II on account of the REMIC I
Regular
Interests
and to
Holders of the Class R
Certificates
in respect of
Component
I thereof
in the
following
amounts
and
priority:
(a)
To the extent of the REMIC I Available
Distribution
Amount for Sub-Loan Group
II-1:
(i)
first,
to
REMIC
I
Regular
Interests
Y-1
and
Z-1,
concurrently,
the
Uncertificated
Interest for such Classes remaining unpaid from previous
Distribution Dates, pro
rata according to their respective shares of such unpaid amounts;
(ii)
second,
to
REMIC
I
Regular
Interests
Y-1
and
Z-1,
concurrently,
the
Uncertificated
Interest for such Classes for the current
Distribution
Date, pro rata according
to their respective Uncertificated Interest; and
(iii)
third,
to REMIC I Regular
Interests
Y-1 and Z-1,
the REMIC I Y-1
Principal
Distribution Amount and the REMIC I Z-1 Principal Distribution
Amount, respectively.
(b)
To the extent of the REMIC I Available Distribution Amount for
Sub-Loan Group II-2:
(i)
first,
to
REMIC
I
Regular
Interests
Y-2
and
Z-2,
concurrently,
the
Uncertificated
Interest for such Classes remaining unpaid from previous
Distribution Dates, pro
rata according to their respective shares of such unpaid amounts;
(ii)
second,
to
REMIC
I
Regular
Interests
Y-2
and
Z-2,
concurrently,
the
Uncertificated
Interest for such Classes for the current
Distribution
Date, pro rata according
to their respective Uncertificated Interest; and
(iii)
third,
to REMIC I Regular
Interests
Y-2 and Z-2,
the REMIC I Y-2
Principal
Distribution Amount and the REMIC I Z-2 Principal Distribution
Amount, respectively.
(c)
To the extent of the REMIC I Available
Distribution
Amount for Sub-Loan Group
II-3:
(i)
first,
to
REMIC
I
Regular
Interests
Y-3
and
Z-3,
concurrently,
the
Uncertificated
Interest for such Classes remaining unpaid from previous
Distribution Dates, pro
rata according to their respective shares of such unpaid amounts;
(ii)
second,
to
REMIC
I
Regular
Interests
Y-3
and
Z-3,
concurrently,
the
Uncertificated
Interest for such Classes for the current
Distribution
Date, pro rata according
to their respective Uncertificated Interest; and
(iii)
third,
to REMIC I Regular
Interests
Y-3 and Z-3,
the REMIC I Y-3
Principal
Distribution Amount and the REMIC I Z-3 Principal Distribution
Amount, respectively.
(d)
To the extent of the REMIC I
Available
Distribution
Amount for such Distribution Date
remaining
after
payment of the amounts
pursuant to
paragraphs
(a) through (c) of this
definition
of
"REMIC I Distribution Amount":
(i)
first,
to each REMIC I Y and Z Regular
Interest,
pro rata
according
to the
amount of unreimbursed
Realized Losses allocable to principal
previously allocated to each such
Class;
provided,
however,
that any amounts
distributed
pursuant to this paragraph
(d)(i) of
this
definition
of
"REMIC I
Distribution
Amount"
shall
not
cause
a
reduction
in
the
Uncertificated Principal Balances of any of the REMIC I Y and Z
Regular Interests; and
(ii)
second, to Component I of the Class R Certificates, any remaining
amounts.
REMIC I Interests:
The REMIC I Regular Interests and Component I of the Class R
Certificates.
REMIC I Regular Interest:
Any of the separate
non-certificated
beneficial
ownership interests
in REMIC I set forth in
Section 5.01(c)(i)
and issued
hereunder and designated as a "regular
interest"
in REMIC I.
Each REMIC I Regular Interest shall accrue interest at the
Uncertificated
Pass-Through Rate
specified
for such REMIC I
Interest in
Section 5.01(c)(i),
and shall be entitled to
distributions
of
principal,
subject to the terms and
conditions
hereof,
in an
aggregate
amount
equal to its
initial
Uncertificated
Principal
Balance
as
set
forth
in
Section 5.01(c)(i).
The
designations
for
the
respective REMIC I Regular Interests are set forth in Section
5.01(c)(i).
REMIC I Y
Principal
Reduction
Amounts:
For any
Distribution
Date the
amounts
by which the
Uncertificated
Principal
Balances of REMIC I Regular Interests Y-1, Y-2 and Y-3,
respectively,
will be
reduced
on such
Distribution
Date
by the
allocation
of
Realized
Losses
and
the
distribution
of
principal, determined as described in Appendix 2.
REMIC I Y Regular Interests:
REMIC I Regular Interests Y-1, Y-2 and Y-3.
REMIC I Y-1 Principal
Distribution
Amount:
For any Distribution
Date, the excess,
if any, of
the REMIC I Y-1
Principal
Reduction
Amount for such
Distribution
Date over the
principal
portion of
Realized Losses allocated to REMIC I Regular Interest Y-1 on such
Distribution Date.
REMIC I Regular Interest Y-1: The uncertificated
undivided
beneficial interest in REMIC I which
constitutes a REMIC I Regular Interest and is entitled to
distributions as set forth herein.
REMIC I Y-2 Principal
Distribution
Amount:
For any Distribution
Date, the excess,
if any, of
the REMIC I Y-2
Principal
Reduction
Amount for such
Distribution
Date over the
principal
portion of
Realized Losses allocated to REMIC I Regular Interest Y-2 on such
Distribution Date.
REMIC I Regular Interest Y-2: The uncertificated
undivided
beneficial interest in REMIC I which
constitutes a REMIC I Regular Interest and is entitled to
distributions as set forth herein.
REMIC I Y-3 Principal
Distribution
Amount:
For any Distribution
Date, the excess,
if any, of
the REMIC I Y-3
Principal
Reduction
Amount for such
Distribution
Date over the
principal
portion of
Realized Losses allocated to REMIC I Regular Interest Y-3 on such
Distribution Date.
REMIC I Regular Interest Y-3: The uncertificated
undivided
beneficial interest in REMIC I which
constitutes a REMIC I Regular Interest and is entitled to
distributions as set forth herein.
REMIC I Z
Principal
Reduction
Amounts:
For any
Distribution
Date,
the amounts by which the
Uncertificated
Principal
Balances
of
the
REMIC
I
Z
Regular
Interests
will
be
reduced
on
such
Distribution
Date by the allocation of Realized Losses and the distribution of
principal,
which shall be
in each case the
excess of (A) the sum of (x) the
excess of the REMIC I
Available
Distribution
Amount
for the related Group (i.e.
the "related
Group" for REMIC I Regular
Interest Z-1 is the Sub-Loan
Group
II-1 Loans,
the "related
Group" for REMIC I Regular
Interest
Z-2 is the Sub-Loan
Group II-2 Loans and
the "related
Group" for REMIC I Regular
Interest Z-3 is the Sub-Loan
Group II-3 Loans ) over the sum of
the amounts thereof
distributable
(i) in respect of interest on such REMIC I Z Regular
Interest and the
related REMIC I Y Regular
Interest and (ii) to such REMIC I Z Regular
Interest and the related REMIC I Y
Regular
Interest
pursuant to clause (d)(i) of the
definition of "REMIC I
Distribution
Amount" and (y)
the
amount of
Realized
Losses
allocable
to
principal
for the
related
Group over (B) the REMIC I Y
Principal Reduction Amount for the related Group.
REMIC I Z Regular Interests: REMIC I Regular Interests Z-1, Z-2 and
Z-3.
REMIC I Z-1 Principal
Distribution
Amount:
For any Distribution
Date, the excess,
if any, of
the REMIC I Z-1
Principal
Reduction
Amount for such
Distribution
Date over the
principal
portion of
Realized Losses allocated to REMIC I Regular Interest Z-1 on such
Distribution Date.
REMIC I Regular
Interest
Z-1:
The
uncertificated
undivided
beneficial
interest
in REMIC I
which constitutes a REMIC I Regular Interest and is entitled to
distributions as set forth herein.
REMIC I Z-2 Principal
Distribution
Amount:
For any Distribution
Date, the excess,
if any, of
the REMIC I Z-2
Principal
Reduction
Amount for such
Distribution
Date over the
principal
portion of
Realized Losses allocated to REMIC I Regular Interest Z-2 on such
Distribution Date.
REMIC I Regular
Interest
Z-2:
The
uncertificated
undivided
beneficial
interest
in REMIC I
which constitutes a REMIC I Regular Interest and is entitled to
distributions as set forth herein.
REMIC I Z-3 Principal
Distribution
Amount:
For any Distribution
Date, the excess,
if any, of
the REMIC I Z-3
Principal
Reduction
Amount for such
Distribution
Date over the
principal
portion of
Realized Losses allocated to REMIC I Regular Interest Z-3 on such
Distribution Date.
REMIC I Regular
Interest
Z-3:
The
uncertificated
undivided
beneficial
interest
in REMIC I
which constitutes a REMIC I Regular Interest and is entitled to
distributions as set forth herein.
REMIC II: That group of assets
contained in the Trust Fund
designated as a REMIC
consisting of
the REMIC I Regular Interests and any proceeds thereof.
REMIC
II
Available
Distribution
Amount:
For
any
Distribution
Date,
the
amounts
deemed
distributed with respect to the REMIC I Regular Interests pursuant
to Section 6.10.
REMIC II Distribution
Amount:
For any
Distribution
Date, the REMIC II Available
Distribution
Amount shall be deemed
distributed
by REMIC II to REMIC IV on account of the REMIC II Regular
Interests
and to the Class R Certificates in respect of Component II thereof,
as follows:
(a) to each REMIC II Regular
Interest
(other than REMIC II Regular
Interests LT1, LT2, LT3 and
LT4) in respect of Uncertificated
Interest thereon and the Uncertificated
Principal Balance thereof, the
amount
distributed
in respect of interest and principal on the Related Class or
Classes of
Certificates
(with such
amounts
having the same
character
as interest
or
principal
with
respect to the REMIC II
Regular Interest as they have with respect to the Related
Certificate or Certificates);
(b)
to REMIC II Regular Interests LT1, LT2, LT3 and LT4, allocated as
follows:
(1)
to REMIC II Regular
Interests
LT1,
LT2, LT3 and LT4, pro rata,
in an amount equal to
(A) their
Uncertificated
Accrued
Interest for such
Distribution
Date, plus (B) any amounts in respect
thereof remaining unpaid from previous Distribution Dates; and
(2)
(A)
to REMIC II Regular
Interest LT2, REMIC II Regular
Interest LT3 and REMIC II Regular Interest LT4, their
respective Principal Distribution Amounts;
(B)
to REMIC II Regular
Interest LT1 any remainder
until the
Uncertificated
Principal
Balance
thereof is
reduced to zero; and
(C)
any
remainder
to
REMIC
II
Regular
Interest
LT2,
REMIC II Regular
Interest LT3 and REMIC II Regular
Interest
LT4, pro rata
according to
their respective
Uncertificated
Principal Balances as reduced by the distributions
deemed made pursuant
to (A) above, until their respective Uncertificated Principal
Balances are reduced to zero; and
(c) any remaining
amount of the REMIC II Available
Distribution
Amount shall be distributed to
the holders of the Class R Certificates in respect of Component II
thereof.
REMIC
II
Interests:
The
REMIC
II
Regular
Interests
and
Component
II
of
the
Class
R
Certificates.
REMIC II
Principal
Reduction
Amounts:
For any
Distribution
Date,
the
amounts by which the
principal balances of REMIC II Regular Interests LT1, LT2, LT3 and
LT4,
respectively,
will be reduced on
such
Distribution
Date
by the
allocation
of
Realized
Losses
and
the
distribution
of
principal,
determined as follows:
For purposes of the succeeding
formulas the following
symbols shall have the meanings set forth
below:
Y1 =
the principal
balance of the REMIC II Regular
Interest LT1 after
distributions on the
prior Distribution Date.
Y2 =
the principal
balance of the REMIC II Regular
Interest LT2 after
distributions on the
prior Distribution Date.
Y3 =
the principal
balance of the REMIC II Regular
Interest LT3 after
distributions on the
prior Distribution Date.
Y4 =
the principal
balance of the REMIC II Regular
Interest LT4 after
distributions on the
prior Distribution Date (note:
Y3 = Y4).
ΔY1 =
the REMIC II Regular Interest LT1 Principal Reduction Amount.
ΔY2 =
the REMIC II Regular Interest LT2 Principal Reduction Amount.
ΔY3 =
the REMIC II Regular Interest LT3 Principal Reduction Amount.
ΔY4 =
the REMIC II Regular Interest LT4 Principal Reduction Amount.
P0 =
the
aggregate
principal
balance of REMIC II Regular
Interests
LT1, LT2, LT3 and LT4
after distributions and the allocation of Realized Losses on the
prior Distribution Date.
P1 =
the
aggregate
principal
balance of REMIC II Regular
Interests
LT1, LT2, LT3 and LT4
after distributions and the allocation of Realized Losses to be
made on such Distribution Date.
ΔP =P0 - P1 = the aggregate of the Class LT1, LT2, LT3 and LT4
Principal Reduction Amounts,
which
=the aggregate of the principal portions of Realized Losses to be
allocated to, and the
principal distributions to be made on, the Class II-B-1
Certificates on such Distribution Date.
R0 =the weighted average of the interest rates on REMIC I Regular
Interests Y-1, Y-2 and Y-3
(stated as a monthly rate) applicable for distributions to be made
on such Distribution Date
after
giving effect to amounts distributed and Realized Losses allocated
on the prior Distribution Date.
R1 =the weighted average of the interest rates on REMIC I Regular
Interests Y-1, Y-2 and Y-3
(stated as a monthly rate) applicable for distributions to be made
on the next succeeding Distribution
Date after giving effect to amounts to be distributed and Realized
Losses to be allocated on such
Distribution Date.
α =(Y2 + Y3)/P0.
The initial value of α on the Closing Date for use on the
first Distribution
Date shall be 0.0001.
γ0 =the product of (i) the interest rate for the Class II-B-1
Certificates applicable for
distributions to be made on such Distribution Date (stated as a
monthly rate) and (ii) the aggregate
Certificate Principal Balance for the Class II-B-1 Certificates
after distributions and the allocation
of Realized Losses on the prior Distribution Date.
γ1
=the product of (i) the interest rate for the Class II-B-1
Certificates applicable for
distributions to be made on the next succeeding Distribution Date
(stated as a monthly rate) and (ii)
the aggregate Certificate Principal Balance for the Class II-B-1
Certificates after distributions and
the allocation of Realized Losses on the such Distribution Date.
Then, based on the foregoing definitions:
ΔY1 =ΔP - ΔY2 - ΔY3 - ΔY4;
ΔY2 =(α/2){( γ0R1 - γ1R0)/R0R1};
ΔY3 =αΔP - ΔY2; and
ΔY4 =ΔY3.
if both ΔY2 and ΔY3, as so determined, are non-negative
numbers.
Otherwise:
(1)If ΔY2, as so determined, is negative, then
ΔY2 = 0;
ΔY3 = α{γ1R0P0 - γ0R1P1}/{γ1R0};
ΔY4 = ΔY3; and
ΔY1 = ΔP - ΔY2 - ΔY3 - ΔY4.
(2)If ΔY3, as so determined, is negative, then
ΔY3 = 0;
ΔY2 = α{ γ0R1P1 - γ1R0P0}/{2R1R0P1 -
γ1R0};
ΔY4 = ΔY3; and
ΔY1 = ΔP - ΔY2 - ΔY3 - ΔY4.
REMIC II Regular Interest:
Any of the separate
non-certificated
beneficial ownership interests
in REMIC II set forth in
Section 5.01(c)(ii)
and issued hereunder and designated as a "regular interest"
in REMIC II. Each REMIC II Regular
Interest
shall
accrue
interest at the
Uncertificated
Pass-Through
Rate specified for such REMIC II Interest in
Section 5.01(c)(ii),
and shall be entitled to distributions
of principal,
subject to the terms and
conditions
hereof,
in an aggregate
amount equal to its initial
Uncertificated
Principal
Balance
as
set
forth
in
Section 5.01(c)(ii).
The
designations
for
the
respective REMIC II Regular Interests are set forth in Section
5.01(c)(ii).
REMIC II Regular
Interest LT1: A regular
interest in REMIC II that is held as an asset of REMIC
IV, that has an initial
principal balance equal to the related
Uncertificated
Principal
Balance,
that
bears
interest
at the related
Uncertificated
Pass-Through
Rate,
and that has such other terms as are
described herein.
REMIC II Regular
Interest LT1 Principal
Distribution
Amount:
For any
Distribution
Date, the
excess,
if any, of the REMIC II Regular
Interest LT1 Principal
Reduction
Amount for such
Distribution
Date over the Realized Losses allocated to the REMIC II Regular
Interest LT1 on such Distribution Date.
REMIC II Regular
Interest LT2: A regular
interest in REMIC II that is held as an asset of REMIC
IV, that has an initial
principal balance equal to the related
Uncertificated
Principal
Balance,
that
bears
interest
at the related
Uncertificated
Pass-Through
Rate,
and that has such other terms as are
described herein.
REMIC II Regular
Interest LT2 Principal
Distribution
Amount:
For any
Distribution
Date, the
excess,
if any, of the REMIC II Regular
Interest LT2 Principal
Reduction
Amount for such
Distribution
Date over the Realized Losses allocated to the REMIC II Regular
Interest LT2 on such Distribution Date.
REMIC II Regular
Interest LT3: A regular
interest in REMIC II that is held as an asset of REMIC
IV, that has an initial
principal balance equal to the related
Uncertificated
Principal
Balance,
that
bears
interest
at the related
Uncertificated
Pass-Through
Rate,
and that has such other terms as are
described herein.
REMIC II Regular
Interest LT3 Principal
Distribution
Amount:
For any
Distribution
Date, the
excess,
if any, of the REMIC II Regular
Interest LT3 Principal
Reduction
Amount for such
Distribution
Date over the Realized Losses allocated to the REMIC II Regular
Interest LT3 on such Distribution Date.
REMIC II Regular
Interest LT4: A regular
interest in REMIC II that is held as an asset of REMIC
IV, that has an initial
principal balance equal to the related
Uncertificated
Principal
Balance,
that
bears
interest
at the related
Uncertificated
Pass-Through
Rate,
and that has such other terms as are
described herein.
REMIC II Regular
Interest LT4 Principal
Distribution
Amount:
For any
Distribution
Date, the
excess,
if any, of the REMIC II Regular
Interest LT4 Principal
Reduction
Amount for such
Distribution
Date over the Realized Losses allocated to the REMIC II Regular
Interest LT4 on such Distribution Date.
REMIC
II-LT
Realized
Losses:
For any
Distribution
Date,
Realized
Losses
on the
Group II
Mortgage
Loans
for
the
related
Due
Period
allocated
to
the
Class
II-B-1
and
Class
II-BX-1
Certificates shall
be allocated among REMIC II Regular
Interests LT1, LT2, LT3 and LT4, as follows:
(i)
the interest
portion of such
Realized
Losses,
if any, shall be allocated pro rata to accrued
interest
on such
REMIC II
Regular
Interests
to the
extent of such
accrued
interest,
and (ii) any
remaining
interest
portions
of such
Realized Losses and any principal
portions
of such Realized Losses shall be
treated as principal
portions
of such
Realized
Losses and allocated
(i) to REMIC II Regular
Interest
LT2,
REMIC II Regular
Interest
LT3 and REMIC II
Regular
Interest
LT4,
pro rata
according
to their
respective
Principal
Reduction
Amounts,
provided that such
allocation to each of the REMIC II Regular
Interest
LT2,
REMIC II Regular
Interest
LT3 and REMIC II Regular
Interest
LT4 shall not exceed their
respective
Principal
Reduction Amounts for such Distribution Date, and (ii) any such
Realized Losses not
allocated
to any of REMIC II Regular
Interest
LT2,
REMIC II Regular
Interest
LT3 or REMIC II Regular
Interest LT4
pursuant to the proviso of clause (i) above shall be allocated to
REMIC II Regular
Interest
LT1.
REMIC
III:
The
segregated
pool of assets,
with
respect
to which a REMIC
election
is made
pursuant to this Agreement,
consisting of: (a) the Group I Mortgage Loans and the related
Mortgage Files
and collateral
securing such Group I Mortgage
Loans,
(b) all payments on and
collections in respect of
the Group I Mortgage Loans due after the Cut off Date as shall be
on deposit in the
Distribution
Account
and
identified
as belonging to the Trust Fund,
(c)
property
that secured a Group I Mortgage
Loan and
that has been
acquired
for the
benefit
of the
Certificateholders
by
foreclosure
or deed in lieu of
foreclosure,
(d) the hazard insurance policies and Primary Mortgage Insurance
Policies,
if any, related
to the Group I Mortgage Loans and (e) all proceeds of clauses (a)
through (d) above.
REMIC III Available
Distribution
Amount:
For any
Distribution
Date, the Available
Funds for
Loan Group I.
REMIC III Distribution
Amount: For any Distribution
Date, the REMIC III Available
Distribution
Amount shall be
distributed
by REMIC III to REMIC IV on account of the REMIC III Regular
Interests
and
to the Class R Certificates in respect of Component III thereof, in
the following order of priority:
1.
to REMIC IV as the holder of the REMIC III
Regular
Interests,
pro rata,
in an amount
equal to (A) their
Uncertificated
Accrued Interest for such
Distribution
Date, plus (B) any amounts in
respect thereof remaining unpaid from previous Distribution Dates;
and
2.
to REMIC IV as the
holder of the REMIC III
Regular
Interests,
in an amount
equal to
the
remainder of the REMIC III Available
Distribution
Amount after the
distributions
made pursuant to
clause (1) above, allocated as follows:
(A)
in respect of REMIC III Regular
Interest LT2, REMIC III Regular
Interest LT3 and REMIC
III Regular Interest LT4, their respective Principal Distribution
Amounts;
(B)
in respect of REMIC III Regular
Interest
LT1 any
remainder
until the
Uncertificated
Principal Balance thereof is reduced to zero; and
(C)
any remainder in respect of REMIC III Regular
Interest LT2, REMIC III Regular
Interest
LT3 and REMIC III Regular
Interest LT4, pro rata according to their respective
Uncertificated
Principal
Balances as reduced by the
distributions
deemed
made
pursuant
to (i) above,
until
their
respective
Uncertificated Principal Balances are reduced to zero; and
3.
any
remaining
amounts
to the
Holders
of the
Class R
Certificates
in
respect
of
Component III thereof.
REMIC
III
Interests:
The
REMIC
III
Regular
Interests
and
Component
III of the
Class
R
Certificates.
REMIC III
Principal
Reduction
Amounts:
For any
Distribution
Date,
the amounts by which the
principal
balances
of the REMIC III Regular
Interests
LT1,
LT2,
LT3 and LT4,
respectively,
will be
reduced
on such
Distribution
Date
by the
allocation
of
Realized
Losses
and
the
distribution
of
principal, determined as follows:
For purposes of the succeeding
formulas the following
symbols shall have the meanings set forth
below:
Y1 =
the principal
balance of the REMIC III Regular Interest LT1 after
distributions on the
prior Distribution Date.
Y2 =
the principal
balance of the REMIC III Regular Interest LT2 after
distributions on the
prior Distribution Date.
Y3 =
the principal
balance of the REMIC III Regular Interest LT3 after
distributions on the
prior Distribution Date.
Y4 =
the principal
balance of the REMIC III Regular Interest LT4 after
distributions on the
prior Distribution Date (note:
Y3 = Y4).
ΔY1 =
the REMIC III Regular Interest LT1 Principal Reduction Amount.
ΔY2 =
the REMIC III Regular Interest LT2 Principal Reduction Amount.
ΔY3 =
the REMIC III Regular Interest LT3 Principal Reduction Amount.
ΔY4 =
the REMIC III Regular Interest LT4 Principal Reduction Amount.
P0 =
the aggregate
principal
balance of the REMIC III Regular
Interests
LT1, LT2, LT3 and
LT4 after distributions and the allocation of Realized Losses on
the prior Distribution Date.
P1 =
the aggregate
principal
balance of the REMIC III Regular
Interests
LT1, LT2, LT3 and
LT4 after distributions and the allocation of Realized Losses to be
made on such Distribution Date.
ΔP =
P0 - P1 = the
aggregate
of the REMIC
III
Regular
Interests
LT1,
LT2,
LT3 and LT4
Principal Reduction Amounts.
=the
aggregate
of the
principal
portions
of
Realized
Losses to be
allocated
to,
and the
principal
distributions
to be made on, the Group I Certificates
on such
Distribution
Date
(including
distributions
of
accrued
and unpaid
interest
on the Class SB-I
Certificates
for prior
Distribution
Dates).
R0 =
the Net Rate Cap (stated as a monthly rate) after giving
effect to amounts
distributed
and Realized Losses allocated on the prior Distribution Date.
R1 =
the Net Rate Cap
(stated
as a monthly
rate)
after
giving
effect to
amounts
to be
distributed and Realized Losses to be allocated on such
Distribution Date.
α =
(Y2 +
Y3)/P0.
The
initial
value
of α on the
Closing
Date
for
use
on the
first
Distribution Date shall be 0.0001.
γ0 =
the
lesser
of (A) the sum for all
Classes
of Group I
Certificates,
other
than the
Class B-IO
Certificates,
of the product for each Class of (i) the monthly
interest
rate (as limited by
the
Net
Rate
Cap,
if
applicable)
for
such
Class applicable
for
distributions
to be made on such
Distribution
Date
and
(ii)
the
aggregate
Certificate
Principal
Balance
for
such
Class after
distributions and the allocation of Realized Losses on the prior
Distribution Date and (B) R0*P0.
