FIRST HORIZON ASSET SECURITIES INC. Depositor FIRST HORIZON HOME LOAN CORPORATION Master Servicer and THE BANK OF NEW YORK, Trustee POOLING AND SERVICING AGREEMENT Dated as of March 1, 2006 FIRST HORIZON ALTERNATIVE MORTGAGE SECURITIES TRUST 2006-AA2...
FIRST
HORIZON ASSET SECURITIES INC.
Depositor
FIRST
HORIZON HOME LOAN CORPORATION
Master
Servicer
and
THE
BANK
OF NEW YORK,
Trustee
_____________________________________________________
Dated
as
of March 1, 2006
_____________________________________________________
FIRST
HORIZON ALTERNATIVE MORTGAGE SECURITIES TRUST 2006-AA2
MORTGAGE
PASS-THROUGH CERTIFICATES, SERIES 2006-AA2
TABLE
OF
CONTENTS
|
ARTICLE
I DEFINITIONS
|
5
|
|
|
ARTICLE
II CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND
WARRANTIES
|
36
|
|
|
SECTION
2.1
|
Conveyance
of Mortgage Loans.
|
36
|
|
SECTION
2.2
|
Acceptance
by Trustee of the Mortgage Loans.
|
40
|
|
SECTION
2.3
|
Representations
and Warranties of the Master Servicer; Covenants of the
Seller.
|
42
|
|
SECTION
2.4
|
Representations
and Warranties of the Depositor as to the Mortgage Loans.
|
44
|
|
SECTION
2.5
|
Delivery
of Opinion of Counsel in Connection with Substitutions.
|
44
|
|
SECTION
2.6
|
Execution
and Delivery of Certificates.
|
45
|
|
SECTION
2.7
|
REMIC
Matters.
|
45
|
|
SECTION
2.8
|
Covenants
of the Master Servicer.
|
48
|
|
ARTICLE
III ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
|
48
|
|
|
SECTION
3.1
|
Master
Servicer to Service Mortgage Loans.
|
48
|
|
SECTION
3.2
|
Subservicing;
Enforcement of the Obligations of Servicers.
|
50
|
|
SECTION
3.3
|
Rights
of the Depositor and the Trustee in Respect of the Master
Servicer.
|
50
|
|
SECTION
3.4
|
Trustee
to Act as Master Servicer.
|
51
|
|
SECTION
3.5
|
Collection
of Mortgage Loan Payments; Certificate Account; Distribution
Account.
|
51
|
|
SECTION
3.6
|
Collection
of Taxes, Assessments and Similar Items; Escrow Accounts.
|
54
|
|
SECTION
3.7
|
Access
to Certain Documentation and Information Regarding the Mortgage
Loans.
|
55
|
|
SECTION
3.8
|
Permitted
Withdrawals from the Certificate Account and Distribution
Account.
|
55
|
|
SECTION
3.9
|
Maintenance
of Hazard Insurance; Maintenance of Primary Insurance
Policies.
|
57
|
|
SECTION
3.10
|
Enforcement
of Due-on-Sale Clauses; Assumption Agreements.
|
59
|
|
SECTION
3.11
|
Realization
Upon Defaulted Mortgage Loans; Repurchase of Certain Mortgage
Loans.
|
60
|
|
SECTION
3.12
|
Trustee
to Cooperate; Release of Mortgage Files.
|
62
|
|
SECTION
3.13
|
Documents
Records and Funds in Possession of Master Servicer to be Held for
the
Trustee.
|
63
|
|
SECTION
3.14
|
Master
Servicing Compensation.
|
63
|
|
SECTION
3.15
|
Access
to Certain Documentation.
|
64
|
|
SECTION
3.16
|
Annual
Statement as to Compliance.
|
64
|
|
SECTION
3.17
|
Errors
and Omissions Insurance; Fidelity Bonds.
|
65
|
|
SECTION
3.18
|
Notification
of Adjustments.
|
65
|
|
ARTICLE
IV DISTRIBUTIONS AND ADVANCES BY THE MASTER SERVICER
|
65
|
|
|
SECTION
4.1
|
Advances.
|
65
|
|
SECTION
4.2
|
Priorities
of Distribution.
|
66
|
i
|
SECTION
4.3
|
Method
of Distribution.
|
70
|
|
SECTION
4.4
|
Allocation
of Losses.
|
71
|
|
SECTION
4.5
|
[RESERVED]
|
73
|
|
SECTION
4.6
|
Monthly
Statements to Certificateholders.
|
73
|
|
ARTICLE
V THE CERTIFICATES
|
75
|
|
|
SECTION
5.1
|
The
Certificates.
|
75
|
|
SECTION
5.2
|
Certificate
Register; Registration of Transfer and Exchange of
Certificates
|
75
|
|
SECTION
5.3
|
Mutilated,
Destroyed, Lost or Stolen Certificates.
|
82
|
|
SECTION
5.4
|
Persons
Deemed Owners.
|
82
|
|
SECTION
5.5
|
Access
to List of Certificateholders’ Names and Addresses.
|
82
|
|
SECTION
5.6
|
Maintenance
of Office or Agency.
|
82
|
|
ARTICLE
VI THE DEPOSITOR AND THE MASTER SERVICER
|
83
|
|
|
SECTION
6.1
|
Respective
Liabilities of the Depositor and the Master Servicer.
|
83
|
|
SECTION
6.2
|
Merger
or Consolidation of the Depositor or the Master Servicer.
|
83
|
|
SECTION
6.3
|
Limitation
on Liability of the Depositor, the Master Servicer and
Others.
|
83
|
|
SECTION
6.4
|
Limitation
on Resignation of Master Servicer.
|
84
|
|
ARTICLE
VII DEFAULT
|
84
|
|
|
SECTION
7.1
|
Events
of Default.
|
84
|
|
SECTION
7.2
|
Trustee
to Act; Appointment of Successor.
|
86
|
|
SECTION
7.3
|
Notification
to Certificateholders.
|
88
|
|
ARTICLE
VIII CONCERNING THE TRUSTEE
|
88
|
|
|
SECTION
8.1
|
Duties
of Trustee.
|
88
|
|
SECTION
8.2
|
Certain
Matters Affecting the Trustee.
|
90
|
|
SECTION
8.3
|
Trustee
Not Liable for Certificates or Mortgage Loans.
|
91
|
|
SECTION
8.4
|
Trustee
May Own Certificates.
|
92
|
|
SECTION
8.5
|
Trustee’s
Fees and Expenses.
|
92
|
|
SECTION
8.6
|
Eligibility
Requirements for Trustee.
|
92
|
|
SECTION
8.7
|
Resignation
and Removal of Trustee.
|
93
|
|
SECTION
8.8
|
Successor
Trustee.
|
94
|
|
SECTION
8.9
|
Merger
or Consolidation of Trustee.
|
94
|
|
SECTION
8.10
|
Appointment
of Co-Trustee or Separate Trustee.
|
95
|
|
SECTION
8.11
|
Tax
Matters.
|
96
|
|
ARTICLE
IX TERMINATION
|
98
|
|
|
SECTION
9.1
|
Termination
upon Liquidation or Purchase of all Mortgage Loans.
|
98
|
|
SECTION
9.2
|
Final
Distribution on the Certificates.
|
98
|
|
SECTION
9.3
|
Additional
Termination Requirements.
|
100
|
|
ARTICLE
X EXCHANGE ACT REPORTING
|
100
|
|
|
SECTION
10.1
|
Filing
Obligations.
|
100
|
|
SECTION
10.2
|
Form
D Filings.
|
101
|
|
SECTION
10.3
|
Form
8-K Filings.
|
102
|
|
SECTION
10.4
|
Form
10-K Filings.
|
102
|
ii
|
SECTION
10.5
|
▇▇▇▇▇▇▇▇-▇▇▇▇▇
Certification.
|
103
|
|
SECTION
10.6
|
Form
15 Filing.
|
103
|
|
SECTION
10.7
|
Report
on Assessment of Compliance and Attestation.
|
103
|
|
SECTION
10.8
|
Use
of Subservicers and Subcontractors.
|
105
|
|
SECTION
10.9
|
Amendments.
|
106
|
|
ARTICLE
XI MISCELLANEOUS PROVISIONS
|
106
|
|
|
SECTION
11.1
|
Amendment.
|
106
|
|
SECTION
11.2
|
Recordation
of Agreement; Counterparts.
|
107
|
|
SECTION
11.3
|
Governing
Law.
|
108
|
|
SECTION
11.4
|
Intention
of Parties.
|
108
|
|
SECTION
11.5
|
Notices.
|
108
|
|
SECTION
11.6
|
Severability
of Provisions.
|
109
|
|
SECTION
11.7
|
Assignment.
|
110
|
|
SECTION
11.8
|
Limitation
on Rights of Certificateholders.
|
110
|
|
SECTION
11.9
|
Inspection
and Audit Rights.
|
110
|
|
SECTION
11.10
|
Certificates
Nonassessable and Fully Paid.
|
111
|
|
SECTION
11.11
|
Limitations
on Actions; No Proceedings.
|
111
|
|
SECTION
11.12
|
Acknowledgment
of Seller.
|
111
|
|
SCHEDULES
|
||
|
Schedule
I:
|
Mortgage
Loan Schedule
|
S-I-1
|
|
Schedule
II:
|
Representations
and Warranties of the Master Servicer
|
S-II-1
|
|
Schedule
III:
|
Form
of Monthly Master Servicer Report
|
S-III-1
|
|
EXHIBITS
|
||
|
Exhibit
A:
|
Form
of Senior Certificate
|
A-1
|
|
Exhibit
B:
|
Form
of Subordinated Certificate
|
B-1
|
|
Exhibit
C:
|
Form
of Residual Certificate
|
C-1
|
|
Exhibit
D:
|
Form
of Reverse of Certificates
|
D-1
|
|
Exhibit
E:
|
Form
of Initial Certification
|
E-1
|
|
Exhibit
F:
|
Form
of Delay Delivery Certification
|
F-1
|
|
Exhibit
G:
|
Form
of Subsequent Certification of Custodian
|
G-1
|
|
Exhibit
H:
|
Transfer
Affidavit
|
H-1
|
|
Exhibit
I:
|
Form
of Transferor Certificate
|
I-1
|
|
Exhibit
J:
|
Form
of Investment Letter [Non-Rule 144A]
|
J-1
|
|
Exhibit
K:
|
Form
of Rule 144A Letter
|
K-1
|
|
Exhibit
L:
|
Request
for Release (for Trustee)
|
L-1
|
|
Exhibit
M:
|
Request
for Release (Mortgage Loan)
|
M-1
|
|
Exhibit
N-1:
|
Form
of Annual Certification (Subservicer)
|
N-1-1
|
|
Exhibit
N-2:
|
Form
of Annual Certification (Trustee)
|
N-2-1
|
|
Exhibit
O:
|
Form
of Servicing Criteria to be Addressed in Assessment of
Compliance
|
O-1
|
|
Exhibit
P:
|
List
of Item 1119 Parties
|
P-1
|
|
Exhibit
Q:
|
Form
of ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Certification
|
Q-1
|
iii
THIS
POOLING AND SERVICING AGREEMENT, dated as of March 1, 2006, among FIRST HORIZON
ASSET SECURITIES INC., a Delaware corporation, as depositor (the “Depositor”),
FIRST HORIZON HOME LOAN CORPORATION, a Kansas corporation, as master servicer
(the “Master Servicer”), and THE BANK OF NEW YORK, a banking corporation
organized under the laws of the State of New York, as trustee (the
“Trustee”).
WITNESSETH
THAT
In
consideration of the mutual agreements herein contained, the parties hereto
agree as follows:
PRELIMINARY
STATEMENT
The
Depositor is the owner of the Trust Fund that is hereby conveyed to the Trustee
in return for the Certificates. The Trust Fund for federal income tax purposes
will consist of two separate REMICs. The Certificates will represent the entire
beneficial ownership interest in the Trust Fund. The Regular Certificates will
represent “regular interests” in the Upper REMIC. The Class II-A-R Certificates
will represent the residual interests in the Lower REMIC and Upper REMIC, as
described in Section 2.7. The “latest possible maturity date” for federal income
tax purposes of all REMIC regular interests created hereby will be the Latest
Possible Maturity Date.
The
following table sets forth characteristics of the Certificates, together with
the minimum denominations and integral multiples in excess thereof in which
such
Classes shall be issuable (except that one Certificate of each Class of
Certificates may be issued in a different amount and, in addition, one Residual
Certificate representing the Tax Matters Person Certificate may be issued in
a
different amount):
[Remainder
of Page Intentionally Left Blank]
1
|
Class
Designation
|
Initial
Class
Certificate
Balance
|
Initial
Pass
Through
Rate
|
Minimum
Denomination
|
Integral
Multiples
in
Excess
Minimum
|
|||||||||
|
Class
I-A-1
|
$
|
11,644,000.00
|
6.2782%(1)
|
|
$
|
25,000
|
$
|
1,000
|
|||||
|
Class
I-A-2
|
$
|
671,000.00
|
6.2782%(1)
|
|
$
|
25,000
|
$
|
1,000
|
|||||
|
Class
II-A-1
|
$
|
232,527,000.00
|
6.2888%(2)
|
|
$
|
25,000
|
$
|
1,000
|
|||||
|
Class
II-A-2
|
$
|
13,403,000.00
|
6.2888%(2)
|
|
$
|
25,000
|
$
|
1,000
|
|||||
|
Class
II-A-R
|
$
|
100.00
|
6.2888%(2)
|
|
$
|
100
|
$
|
N/A
|
|||||
|
Class
B-1
|
$
|
7,101,000.00
|
6.2883%(3)
|
|
$
|
100,000
|
$
|
1,000
|
|||||
|
Class
B-2
|
$
|
2,595,000.00
|
6.
2883%(3)
|
|
$
|
100,000
|
$
|
1,000
|
|||||
|
Class
B-3
|
$
|
1,912,000.00
|
6.
2883%(3)
|
|
$
|
100,000
|
$
|
1,000
|
|||||
|
Class
B-4
|
$
|
1,366,000.00
|
6.
2883%(3)
|
|
$
|
100,000
|
$
|
1,000
|
|||||
|
Class
B-5
|
$
|
1,092,000.00
|
6.
2883%(3)
|
|
$
|
100,000
|
$
|
1,000
|
|||||
|
Class
B-6
|
$
|
820,220.73
|
6.
2883%(3)
|
|
$
|
100,000
|
$
|
1,000
|
|||||
(1)
The
Pass-Through Rates for the Class I-A-1 and Class I-A-2 Certificates for each
subsequent Distribution Date will equal the Weighted Average Adjusted Net
Mortgage Rate for Pool I, as of the first day of the month immediately prior
to
the month in which the relevant Distribution Date occurs, after taking into
account scheduled payments of principal on that date and any Principal
Prepayments received on or after such date and distributed to Certificateholders
on the prior Distribution Date.
(2)
The
Pass-Through Rates for the Class II-A-1, Class II-A-2 and Class II-A-R
Certificates for each subsequent Distribution Date will equal the Weighted
Average Adjusted Net Mortgage Rate for Pool II, as of the first day of the
month
immediately prior to the month in which the relevant Distribution Date occurs,
after taking into account scheduled payments of principal on that date and
any
Principal Prepayments received on or after such date and distributed to
Certificateholders on the prior Distribution Date.
(3)
The
Pass-Through Rates for the Subordinated Certificates for each subsequent
Distribution Date will equal the weighted average of the Weighted Average
Adjusted Net Mortgage Rates for each Mortgage Pool, weighted on the basis of
the
Group Subordinate Amount for each Mortgage Pool, as of the first day of the
month immediately prior to the month in which the relevant Distribution Date
occurs, after taking into account scheduled payments of principal on that date
and any Principal Prepayments received on or after such date and distributed
to
Certificateholders on the prior Distribution Date.
|
Accretion
Directed Certificates
|
None.
|
|
Accrual
Certificates
|
None.
|
|
Accrual
Components
|
None.
|
|
Book-Entry
Certificates
|
All
Classes of Certificates other than the Physical
Certificates.
|
|
Certificate
Group
|
With
respect to Pool I, the Group I Senior Certificates, and with respect
to
Pool II, the Group II Senior Certificates. The Subordinated Certificates
correspond to both of the Mortgage Pools.
|
|
COFI
Certificates
|
None.
|
2
|
Component
Certificates
|
None.
|
|
Components
|
None.
|
|
Delay
Certificates
|
All
interest-bearing Classes of Certificates other than the Non-Delay
Certificates, if any.
|
|
ERISA-Restricted
Certificates
|
The
Residual Certificates, Private Certificates and Certificates of any
Class
that no longer satisfy the applicable rating requirement of the
Underwriters’ Exemption.
|
|
Floating
Rate Certificates
|
None.
|
|
Group
I Senior Certificates
|
The
Class I-A-1 and Class I-A-2 Certificates.
|
|
Group
II Senior Certificates
|
The
Class II-A-1, Class II-A-2 and Class II-A-R
Certificates.
|
|
Insured
Retail Certificates
|
None.
|
|
Inverse
Floating Rate Certificates
|
None.
|
|
LIBOR
Certificates
|
None.
|
|
Non-Delay
Certificates
|
None.
|
|
Notional
Amount Components
|
None.
|
|
Notional
Amount Certificates
|
None.
|
|
Offered
Certificates
|
All
Classes of the Certificates other than the Private
Certificates.
|
|
Physical
Certificates
|
The
Residual Certificates and the Private Certificates.
|
|
Planned
Principal Classes
|
None.
|
|
Principal
Only Certificates
|
None.
|
|
Private
Certificates
|
The
Class B-4, Class B-5 and Class B-6 Certificates.
|
|
Rating
Agencies
|
Fitch
and ▇▇▇▇▇’▇; except that, for the purposes of the Class B-1, Class B-2,
Class B-3, Class B-4 and Class B-5 Certificates, Fitch shall be the
sole
Rating Agency. The Class B-6 Certificates will not be
rated.
|
|
Regular
Certificates
|
All
Classes of Certificates, other than the Residual
Certificates.
|
|
Residual
Certificates
|
The
Class II-A-R Certificates.
|
|
Scheduled
Principal Classes
|
None.
|
|
Senior
Certificates
|
The
Group I Senior Certificates and the Group II Senior Certificates,
collectively.
|
|
Senior
Mezzanine Certificates
|
The
Class I-A-2 and Class II-A-2 Certificates.
|
|
Subordinated
Certificates
|
The
Class B-1, Class B-2, Class B-3, Class B-4, Class B-5 and Class B-6
Certificates.
|
|
Super
Senior Certificates
|
The
Class I-A-1 and Class II-A-1 Certificates.
|
|
Support
Classes
|
None.
|
|
Targeted
Principal Classes
|
None.
|
|
Underwriter
|
Credit
Suisse Securities (USA) LLC
|
3
With
respect to any of the foregoing designations as to which the corresponding
reference is “None,” all defined terms and provisions herein relating solely to
such designations shall be of no force or effect, and any calculations herein
incorporating references to such designations shall be interpreted without
reference to such designations and amounts. Defined terms and provisions herein
relating to statistical rating agencies not designated above as Rating Agencies
shall be of no force or effect.
4
ARTICLE
I
DEFINITIONS
Whenever
used in this Agreement, the following words and phrases, unless the context
otherwise requires, shall have the following meanings:
Accrued
Certificate Interest: For any Class of Certificates for any Distribution Date,
the interest accrued during the related Interest Accrual Period at the
applicable Pass-Through Rate on the Class Certificate Balance of such Class
of
Certificates immediately prior to such Distribution Date, less such Class’ share
of any Net Interest Shortfall, allocable among the outstanding Classes of Senior
Certificates of the related Certificate Group based on the Accrued Certificate
Interest otherwise distributable thereto, and allocable to the Subordinated
Certificates based on interest accrued on their related Apportioned Principal
Balances.
Additional
Designated Information: As defined in Section 10.2.
Adjusted
Mortgage Rate: As to each Mortgage Loan, and at any time, the per annum rate
equal to the Mortgage Rate less the Master Servicing Fee Rate.
Adjusted
Net Mortgage Rate: As to each Mortgage Loan, and at any time, the per annum
rate
equal to the Mortgage Rate less the related Expense Fee Rate.
Adjustment
Date: A date specified in each Mortgage Note as a date on which the Mortgage
Rate on the related Mortgage Loan will be adjusted.
Advance:
The payment required to be made by the Master Servicer with respect to any
Distribution Date pursuant to Section 4.1, the amount of any such payment being
equal to the aggregate of payments of principal and interest (net of the Master
Servicing Fee and net of any net income in the case of any REO Property) on
the
Mortgage Loans that were due on the related Due Date and not received as of
the
close of business on the related Determination Date, less the aggregate amount
of any such delinquent payments that the Master Servicer has determined would
constitute a Nonrecoverable Advance if advanced.
Aggregate
Senior Percentage: For any Distribution Date, the percentage (carried to eight
places) equal to (x) the sum of the Class Certificate Balances of the Senior
Certificates of both Certificate Groups immediately preceding such Distribution
Date, divided by (y) the aggregate Pool Principal Balance for both Mortgage
Pools on such Distribution Date.
Aggregate
Subordinated Percentage: For any Distribution Date, the percentage (carried
to
eight places) equal to (x) the sum of the Class Certificate Balances of the
Subordinated Certificates immediately preceding such Distribution Date, divided
by (y) the aggregate Pool Principal Balance for both Mortgage Pools on such
Distribution Date.
Agreement:
This Pooling and Servicing Agreement and all amendments or supplements
hereto.
Allocable
Share: With respect to any Class of Subordinated Certificates on any
Distribution Date, such Class’ pro
rata
share
(based on the Class Certificate Balance of each Class entitled thereto) of
the
Subordinated Optimal Principal Amount for each Mortgage Pool; provided, that,
except as provided in this Agreement, no Subordinated Certificates (other than
the Class of Subordinated Certificates with the highest priority of
distribution) shall be entitled on any Distribution Date to receive
distributions pursuant to clauses (2), (3) and (5) of the definition of
Subordinated Optimal Principal Amount unless the Class Prepayment Distribution
Trigger for such Class is satisfied for such Distribution Date.
5
Alternative
Title Product: Any
one
of the following: (i) Lien Protection Insurance issued by Integrated Loan
Services or ATM Corporation of America, (ii) a Mortgage Lien Report issued
by
EPN Solutions/ACRAnet, (iii) a Property Plus Report issued by Rapid Refinance
Service through ▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, or (iv) such other alternative title
insurance product that the Seller utilizes in connection with its then current
underwriting criteria.
Amount
Held for Future Distribution: As to any Distribution Date, the aggregate amount
held in the applicable subaccount of the Certificate Account at the close of
business on the related Determination Date on account of (i) Principal
Prepayments on the related Mortgage Pool received after the related Prepayment
Period and Liquidation Proceeds in the related Mortgage Pool received in the
month of such Distribution Date and (ii) all Scheduled Payments in the related
Mortgage Pool due after the related Due Date.
Apportioned
Principal Balance: For any Class of Subordinated Certificates and any
Distribution Date, an amount equal to the Class Certificate Balance of such
Class immediately prior to that Distribution Date multiplied by a fraction,
the
numerator of which is the applicable Group Subordinate Amount for such
Distribution Date and the denominator of which is the sum of the Group
Subordinate Amounts for such Distribution Date.
Appraised
Value: With respect to any Mortgage Loan, the Appraised Value of the related
Mortgaged Property shall be: (i) with respect to a Mortgage Loan other than
a
Refinancing Mortgage Loan, the lesser of (a) the value of the Mortgaged Property
based upon the appraisal made at the time of the origination of such Mortgage
Loan and (b) the sales price of the Mortgaged Property at the time of the
origination of such Mortgage Loan; (ii) with respect to a Refinancing Mortgage
Loan other than a Streamlined Documentation Mortgage Loan, the value of the
Mortgaged Property based upon the appraisal made at the time of the origination
of such Refinancing Mortgage Loan; and (iii) with respect to a Streamlined
Documentation Mortgage Loan, (a) if the loan-to-value ratio with respect to
the
Original Mortgage Loan at the time of the origination thereof was 90% or less,
the value of the Mortgaged Property based upon the appraisal made at the time
of
the origination of the Original Mortgage Loan and (b) if the loan-to-value
ratio
with respect to the Original Mortgage Loan at the time of the origination
thereof was greater than 90%, the value of the Mortgaged Property based upon
the
appraisal (which may be a drive-by appraisal) made at the time of the
origination of such Streamlined Documentation Mortgage Loan.
Available
Funds: For each Mortgage Pool, with respect to any Distribution Date, an amount
equal to the sum of:
| · |
all
scheduled installments of interest, net of the Master Servicing Fee,
the
Trustee Fee, any expenses, reimbursements and indemnities payable to
the
Trustee, and all scheduled installments of principal due in respect
of the
Mortgage Loans in such Mortgage Pool on the Due Date in the month in
which
the Distribution Date occurs and received before the related Determination
Date, together with any Advances in respect
thereof;
|
6
| · |
all
Insurance Proceeds, Liquidation Proceeds and Unanticipated Recoveries
received in respect of the Mortgage Loans in such Mortgage Pool during
the
calendar month before the Distribution Date, which in each case is
net of
unreimbursed expenses incurred in connection with a liquidation or
foreclosure and unreimbursed Advances, if
any;
|
| · |
all
Principal Prepayments received in respect of the Mortgage Loans in
such
Mortgage Pool during the related Prepayment Period, plus interest received
thereon, net of any Prepayment Interest
Excess;
|
| · |
any
Compensating Interest in respect of Principal Prepayments in Full received
in respect of the Mortgage Loans in such Mortgage Pool during the related
Prepayment Period (or, in the case of the first Distribution Date,
from
the Cut-off Date); and
|
| · |
any
Substitution Adjustment Amount or the Purchase Price for any Deleted
Mortgage Loan in the related Mortgage Pool or a Mortgage Loan in the
related Mortgage Pool repurchased by the Seller or the Master Servicer
as
of such Distribution Date, reduced by amounts in reimbursement for
Advances previously made and other amounts that the Master Servicer
is
entitled to be reimbursed for out of the Certificate Account pursuant
to
this Agreement.
|
Bankruptcy
Code: The United States Bankruptcy Reform Act of 1978, as amended.
Bankruptcy
Coverage Termination Date: The date on which the Bankruptcy Loss Coverage Amount
is reduced to zero.
Bankruptcy
Loss: With respect to any Mortgage Loan, a Deficient Valuation or Debt Service
Reduction; provided, however, that a Bankruptcy Loss shall not be deemed a
Bankruptcy Loss hereunder so long as the Master Servicer has notified the
Trustee in writing that the Master Servicer is diligently pursuing any remedies
that may exist in connection with the related Mortgage Loan and either (A)
the
related Mortgage Loan is not in default with regard to payments due thereunder
or (B) delinquent payments of principal and interest under the related Mortgage
Loan and any related escrow payments in respect of such Mortgage Loan are being
advanced on a current basis by the Master Servicer, in either case without
giving effect to any Debt Service Reduction or Deficient Valuation.
Bankruptcy
Loss Coverage Amount: As of any Determination Date, the Bankruptcy Loss Coverage
Amount shall equal the Initial Bankruptcy Coverage Amount as reduced by (i)
the
aggregate amount of Bankruptcy Losses allocated to the Certificates since the
Cut-off Date and (ii) any permissible reductions in the Bankruptcy Loss Coverage
Amount as evidenced by a letter of each Rating Agency to the Trustee to the
effect that any such reduction will not result in a downgrading of the then
current ratings assigned to the Classes of Certificates rated by it. As of
any
Distribution Date on or after the Cross-over Date, the Bankruptcy Loss Coverage
Amount will be zero.
7
Blanket
Mortgage: The mortgage or mortgages encumbering the Cooperative
Property.
Book-Entry
Certificates: As specified in the Preliminary Statement.
Business
Day: Any day other than (i) a Saturday or a Sunday, or (ii) a day on which
banking institutions in the City of Dallas, or the State of Texas or the city
in
which the Corporate Trust Office of the Trustee is located are authorized or
obligated by law or executive order to be closed.
Certificate:
Any one of the Certificates executed by the Trustee in substantially the forms
attached hereto as exhibits.
Certificate
Account: The separate Eligible Account or Accounts created and maintained by
the
Master Servicer pursuant to Section 3.5 with a depository institution in the
name of the Trustee for the benefit of the Trustee on behalf of
Certificateholders and designated “First Horizon Home Loan Corporation in trust
for the registered holders of First Horizon Asset Securities Inc. Mortgage
Pass-Through Certificates, Series 2006-AA2.”
Certificate
Group: As specified in the Preliminary Statement.
Certificate
Owner: With respect to a Book-Entry Certificate, the Person who is the
beneficial owner of such Book-Entry Certificate.
Certificate
Principal Balance: With respect to any Certificate and as of any Distribution
Date, the Certificate Principal Balance on the date of the initial issuance
of
such Certificate, as reduced by:
(a) all
amounts distributed on previous Distribution Dates on such Certificate on
account of principal,
(b) the
principal portion of all Realized Losses previously allocated to such
Certificate, and
(c) in
the
case of a Subordinated Certificate, such Certificate’s pro
rata
share,
if any, of the Subordinated Certificate Writedown Amount for previous
Distribution Dates.
Certificate
Register: The register maintained pursuant to Section 5.2 hereof.
Certificateholder
or Holder: The person in whose name a Certificate is registered in the
Certificate Register, except that, solely for the purpose of giving any consent
pursuant to this Agreement, any Certificate registered in the name of the
Depositor or the Seller or any affiliate or agent of the Depositor or the Seller
shall be deemed not to be Outstanding and the Percentage Interest evidenced
thereby shall not be taken into account in determining whether the requisite
amount of Percentage Interests necessary to effect such consent has been
obtained; provided, however, that if any such Person (including the Depositor)
owns 100% of the Percentage Interests evidenced by a Class of Certificates,
such
Certificates shall be deemed to be Outstanding for purposes of any provision
hereof that requires the consent of the Holders of Certificates of a particular
Class as a condition to the taking of any action hereunder. The Trustee is
entitled to rely conclusively on a certification of the Depositor or any
affiliate of the Depositor in determining which Certificates are registered
in
the name of an affiliate of the Depositor.
8
Certification
Party: As defined in Section 10.5.
Certifying
Person: As defined in Section 10.5.
Class:
All Certificates bearing the same class designation as set forth in the
Preliminary Statement.
Class
Certificate Balance: With respect to any Class of Certificates and as of any
Distribution Date the aggregate of the Certificate Principal Balances of all
Certificates of such Class as of such date, plus the amount of any Unanticipated
Recoveries added to the Class Certificate Balance of such Class of Certificate
pursuant to Section 4.2(g).
Class
Prepayment Distribution Trigger: For a Class of Subordinated Certificates (other
than the Class of Subordinated Certificates with the highest priority of
distribution), a trigger that is satisfied on any Distribution Date on which
a
fraction (expressed as a percentage), the numerator of which is the aggregate
Class Certificate Balance of such Class and each Class subordinate thereto,
if
any, and the denominator of which is the aggregate Pool Principal Balance for
all the Mortgage Pools with respect to such Distribution Date, equals or exceeds
such percentage calculated as of the Closing Date.
Closing
Date: March 30, 2006.
Code:
The
Internal Revenue Code of 1986, including any successor or amendatory
provisions.
COFI:
Not
applicable.
COFI
Certificates: Not applicable.
Compensating
Interest: As to any Distribution Date and any Principal Prepayment in respect
of
a Mortgage Loan that is received during the period from the sixteenth day of
the
month (or, in the case of the first Distribution Date, from the Cut-off Date)
prior to the month of such Distribution Date through the last day of such month,
an additional payment to the related Mortgage Pool made by the Master Servicer,
to the extent funds are available from the Master Servicing Fee, equal to the
amount of interest at the Adjusted Net Mortgage Rate for that Mortgage Loan
from
the date of the prepayment to the related Due Date; provided that the aggregate
of all such payments as to the Mortgage Loans in a Mortgage Pool shall not
exceed 0.0083% of the Pool Principal Balance of such Mortgage Pool as of the
related Determination Date, and provided further that if a partial Principal
Prepayment is applied on or after the first day of the month following the
month
of receipt, no additional payment is required for such Principal
Prepayment.
9
Component:
Not applicable.
Component
Balance: Not applicable.
Component
Certificates: Not applicable.
Cooperative
Corporation: The entity that holds title (fee or an acceptable leasehold estate)
to the real property and improvements constituting the Cooperative Property
and
which governs the Cooperative Property, which Cooperative Corporation must
qualify as a Cooperative Housing Corporation under Section 216 of the
Code.
Coop
Shares: Shares issued by a Cooperative Corporation.
Cooperative
Loan: Any Mortgage Loan secured by Coop Shares and a Proprietary
Lease.
Cooperative
Property: The real property and improvements owned by the Cooperative
Corporation, including the allocation of individual dwelling units to the
holders of the Coop Shares of the Cooperative Corporation.
Cooperative
Unit: A single family dwelling located in a Cooperative Property.
Corporate
Trust Office: The designated office of the Trustee in the State of New York
at
which at any particular time its corporate trust business with respect to this
Agreement shall be administered, which office at the date of the execution
of
this Agreement is located at The Bank of New York, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇,
▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (Attn: Corporate Trust Administration—First Horizon Asset
Securities Inc. Series 2006-AA2), facsimile no. (▇▇▇) ▇▇▇-▇▇▇▇, and which is
the
address to which notices to and correspondence with the Trustee should be
directed.
Corresponding
Classes: As to any Lower REMIC Interest identified in Section 2.7, the
Class or Classes that are identified in Section 2.7 as corresponding to
such Lower REMIC Interest.
Cross-over
Date: The Distribution Date on which the respective Class Certificate Balances
of each Class of Subordinated Certificates have been reduced to
zero.
Custodial
Agreement: The Custodial Agreement dated as of March 30, 2006 by and among
the
Trustee, the Master Servicer and the Custodian.
Custodian:
First Tennessee Bank National Association, a national banking association,
and
its successors and assigns, as custodian under the Custodial
Agreement.
Cut-off
Date: March 1, 2006.
Cut-off
Date Pool Principal Balance: With respect to Pool I, $13,025,093.39; and with
respect to Pool II, $260,106,227.34.
10
Cut-off
Date Principal Balance: As to any Mortgage Loan, the Stated Principal Balance
thereof as of the close of business on the Cut-off Date.
Debt
Service Reduction: With respect to any Mortgage Loan, a reduction by a court
of
competent jurisdiction in a proceeding under the Bankruptcy Code in the
Scheduled Payment for such Mortgage Loan which became final and non-appealable,
except such a reduction resulting from a Deficient Valuation or any reduction
that results in a permanent forgiveness of principal.
Defective
Mortgage Loan: Any Mortgage Loan which is required to be repurchased pursuant
to
Section 2.2 or 2.3.
Deficient
Valuation: With respect to any Mortgage Loan, a valuation by a court of
competent jurisdiction of the Mortgaged Property in an amount less than the
then-outstanding indebtedness under the Mortgage Loan, or any reduction in
the
amount of principal to be paid in connection with any Scheduled Payment that
results in a permanent forgiveness of principal, which valuation or reduction
results from an order of such court which is final and non-appealable in a
proceeding under the Bankruptcy Code.
Definitive
Certificates: Any Certificate evidenced by a Physical Certificate and any
Certificate issued in lieu of a Book-Entry Certificate pursuant to Section
5.2(e).
Delay
Certificates: As specified in the Preliminary Statement.
Delay
Delivery Mortgage Loans: The Mortgage Loans for which all or a portion of a
related Mortgage File is not delivered to Trustee on the Closing Date. The
number of Delay Delivery Mortgage Loans shall not exceed 25% of the aggregate
number of Mortgage Loans as of the Closing Date.
Deleted
Mortgage Loan: As defined in Section 2.3(b) hereof.
Denomination:
With respect to each Certificate, the amount set forth on the face thereof
as
the “Initial Certificate Balance of this Certificate” or the Percentage Interest
appearing on the face thereof.
Depositor:
First Horizon Asset Securities Inc., a Delaware corporation, or its successor
in
interest.
Depository:
The initial Depository shall be The Depository Trust Company, the nominee of
which is CEDE & Co., as the registered Holder of the Book-Entry
Certificates. The Depository shall at all times be a “clearing corporation” as
defined in Section 8-102(a)(5) of the Uniform Commercial Code of the State
of
New York.
Depository
Participant: A broker, dealer, bank or other financial institution or other
Person for whom from time to time a Depository effects book-entry transfers
and
pledges of securities deposited with the Depository.
11
Determination
Date: As to any Distribution Date, the earlier of (i) the third Business Day
after the 15th day of each month, and (ii) the second Business Day prior to
the
related Distribution Date.
Distribution
Account: The separate Eligible Account created and maintained by the Trustee
pursuant to Section 3.5 in the name of the Trustee for the benefit of the
Certificateholders and designated “The Bank of New York, in trust for registered
Holders of First Horizon Asset Securities Inc. Mortgage Pass-Through
Certificates, Series 2006-AA2.” Funds in the Distribution Account shall be held
in trust for the Certificateholders for the uses and purposes set forth in
this
Agreement.
Distribution
Account Deposit Date: As to any Distribution Date, 1:30 p.m. Central time on
the
Business Day immediately preceding such Distribution Date.
Distribution
Date: The 25th day of each calendar month after the initial issuance of the
Certificates, or if such 25th day is not a Business Day, the next succeeding
Business Day, commencing in April 2006.
Due
Date:
With respect to any Distribution Date, the first day of the month in which
the
related Distribution Date occurs.
▇▇▇▇▇:
The SEC’s Electronic Data Gathering, Analysis and Retrieval system.
Eligible
Account: Any of (i) an account or accounts maintained with a federal or state
chartered depository institution or trust company the short-term unsecured
debt
obligations of which (or, in the case of a depository institution or trust
company that is the principal subsidiary of a holding company, the debt
obligations of such holding company) have the highest short-term ratings of
each
Rating Agency at the time any amounts are held on deposit therein, or (ii)
an
account or accounts in a depository institution or trust company in which such
accounts are insured by the FDIC or the SAIF (to the limits established by
the
FDIC or the SAIF, as applicable) and the uninsured deposits in which accounts
are otherwise secured such that, as evidenced by an Opinion of Counsel delivered
to the Trustee and to each Rating Agency, the Certificateholders have a claim
with respect to the funds in such account or a perfected first priority security
interest against any collateral (which shall be limited to Permitted
Investments) securing such funds that is superior to claims of any other
depositors or creditors of the depository institution or trust company in which
such account is maintained, or (iii) a trust account or accounts maintained
with
(a) the trust department of a federal or state chartered depository institution
or (b) a trust company, acting in its fiduciary capacity or (iv) any other
account acceptable to each Rating Agency. Eligible Accounts may bear interest,
and may include, if otherwise qualified under this definition, accounts
maintained with the Trustee.
ERISA:
The Employee Retirement Income Security Act of 1974, as amended.
ERISA-Qualifying
Underwriting: With respect to any ERISA-Restricted Certificate, a best efforts
or firm commitment underwriting or private placement that meets the requirements
of the Underwriters’ Exemption.
ERISA-Restricted
Certificate: As specified in the Preliminary Statement.
12
Escrow
Account: The Eligible Account or Accounts established and maintained pursuant
to
Section 3.6(a) hereof.
Event
of
Default: As defined in Section 7.1 hereof.
Excess
Loss: The amount of any (i) Fraud Loss realized after the Fraud Loss Coverage
Termination Date, (ii) Special Hazard Loss realized after the Special Hazard
Coverage Termination Date or (iii) Deficient Valuation realized after the
Bankruptcy Coverage Termination Date.
Excess
Proceeds: With respect to any Liquidated Mortgage Loan, the amount, if any,
by
which the sum of any Liquidation Proceeds, Insurance Proceeds and/or
Unanticipated Recoveries in respect of such Mortgage Loan received in the
calendar month in which such Mortgage Loan became a Liquidated Mortgage Loan,
net of any amounts previously reimbursed to the Master Servicer as
Nonrecoverable Advance(s) with respect to such Mortgage Loan pursuant to Section
3.8(a)(iii), exceeds (i) the unpaid principal balance of such Liquidated
Mortgage Loan as of the Due Date in the month in which such Mortgage Loan became
a Liquidated Mortgage Loan plus (ii) accrued interest at the Mortgage Rate
from
the Due Date as to which interest was last paid or advanced (and not reimbursed)
to Certificateholders up to the Due Date applicable to the Distribution Date
immediately following the calendar month during which such liquidation
occurred.
Exchange
Act: The Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.
Exchange
Act Reports: Any reports on Form 10-D, Form 8-K and Form 10-K required to be
filed by the Depositor with respect to the Trust Fund under the Exchange
Act.
Expense
Fee Rate: As to each Mortgage Loan, the sum of the related Master Servicing
Fee
Rate and the Trustee Fee Rate.
FDIC:
The
Federal Deposit Insurance Corporation, or any successor thereto.
FHLMC:
The Federal Home Loan Mortgage Corporation, a corporate instrumentality of
the
United States created and existing under Title III of the Emergency Home Finance
Act of 1970, as amended, or any successor thereto.
FIRREA:
The Financial Institutions Reform, Recovery, and Enforcement Act of
1989.
First
Horizon: First Horizon Home Loan Corporation, a Kansas corporation and an
indirect wholly owned subsidiary of First Horizon National Corporation, a
Tennessee corporation.
Fitch:
Fitch Ratings and its successors and/or assigns. If Fitch is designated as
a
Rating Agency in the Preliminary Statement, for purposes of Section 11.5(b)
the
address for notices to Fitch shall be Fitch, Inc., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Residential Mortgage Surveillance Group, or
such other address as Fitch may hereafter furnish to the Depositor and the
Master Servicer.
13
FNMA:
The
Federal National Mortgage Association, a federally chartered and privately
owned
corporation organized and existing under the Federal National Mortgage
Association Charter Act, or any successor thereto.
Form
10-D
Disclosure Item: With respect to any Person, any material litigation or
governmental proceedings pending against such Person, or against any of the
Trust Fund, the Depositor, the Trustee, the Co-Trustee, the Master Servicer
or
any Subservicer if such Person has actual knowledge thereof.
Form
10-K
Disclosure Item: With respect to any Person, (a) any Form 10-D Disclosure Item,
and (b) any affiliations or relationships between such Person and any Item
1119
Party.
Fraud
Loan: A Liquidated Mortgage Loan as to which a Fraud Loss has
occurred.
Fraud
Loss Coverage Amount: As of the Closing Date, $5,462,626. As of any Distribution
Date from the first anniversary of the Cut-off Date and prior to the fifth
anniversary of the Cut-off Date, the Fraud Loss Coverage Amount shall equal
$2,731,313 minus the aggregate amount of Fraud Losses that would have been
allocated to the Subordinated Certificates in the absence of the Loss Allocation
Limitation since the Cut-off Date. As of any Distribution Date on or after
the
earlier of the Cross-over Date or the fifth anniversary
of the Cut-off Date, the Fraud Loss Coverage Amount shall be zero.
Fraud
Loss Coverage Termination Date: The date on which the Fraud Loss Coverage Amount
is reduced to zero.
Fraud
Losses: Realized Losses on Mortgage Loans as to which a loss is sustained by
reason of a default arising from fraud, dishonesty or misrepresentation in
connection with the related Mortgage Loan, including a loss by reason of the
denial of coverage under any related Primary Insurance Policy because of such
fraud, dishonesty or misrepresentation.
Group
I
Senior Certificates: As specified in the Preliminary Statement.
Group
II
Senior Certificates: As specified in the Preliminary Statement.
Group
Subordinate Amount: For a Mortgage Pool and any Distribution Date; the excess
of
(a) the Pool Principal Balance of such Mortgage Pool for such Distribution
Date,
over (b) the aggregate Class Certificate Balance of the Senior Certificates
of
the related Certificate Group immediately prior to that Distribution
Date.
Index:
Not applicable.
Indirect
Participant: A broker, dealer, bank or other financial institution or other
Person that clears through or maintains a custodial relationship with a
Depository Participant.
Initial
Bankruptcy Coverage Amount: $150,000.
Initial
Component Balance: Not applicable.
14
Insurance
Policy: With respect to any Mortgage Loan included in the Trust Fund, any
insurance policy, including all riders and endorsements thereto in effect,
including any replacement policy or policies for any Insurance
Policies.
Insurance
Proceeds: Proceeds paid by an insurer pursuant to any Insurance Policy, in
each
case other than any amount included in such Insurance Proceeds in respect of
Insured Expenses.
Insured
Expenses: Expenses covered by an Insurance Policy or any other insurance policy
with respect to the Mortgage Loans.
Insured
Retail Certificates: Not applicable.
Interest
Accrual Period: With respect to each Class of Delay Certificates and any
Distribution Date, the calendar month prior to the month of such Distribution
Date. With respect to any Non-Delay Certificates and any Distribution Date,
the
one month period commencing on the 25th day of the month preceding the month
in
which such Distribution Date occurs and ending on the 24th day of the month
in
which such Distribution Date occurs.
Interest
Determination Date: Not applicable.
Item
1119
Party: The Depositor, the Seller, the Master Servicer, the Trustee, any
Subservicer, any originator identified in the Prospectus Supplement and any
other material transaction party, as identified in Exhibit P hereto, as updated
pursuant to Section 10.4.
Latest
Possible Maturity Date: As to each Class of Subordinated Certificates, each
Class of Senior Certificates in Pool I and each Lower REMIC Interest, the
Distribution Date following the third anniversary of the scheduled maturity
date
of the Mortgage Loan in Pool I having the latest scheduled maturity date as
of
the Cut-off Date. As to each Class of Senior Certificates in Pool II, the
Distribution Date following the third anniversary of the scheduled maturity
date
of the Mortgage Loan in Pool II having the latest scheduled maturity date as
of
the Cut-off Date.
Lender
PMI Mortgage Loan: Not applicable.
LIBOR:
Not applicable.
LIBOR
Certificates: Not applicable.
Limited
Exchange Act Reporting Obligations: The obligations of the Master Servicer
under
Section 3.16(b), Section 8.7 and Section 8.9 with respect to notice and
information to be provided to the Depositor and Article X (except Section
10.7(a)(i) and (ii)).
Liquidated
Mortgage Loan: With respect to any Distribution Date, a defaulted Mortgage
Loan
(including any REO Property) which was liquidated in the calendar month
preceding the month of such Distribution Date and as to which the Master
Servicer has determined (in accordance with this Agreement) that it has received
all amounts it expects to receive in connection with the liquidation of such
Mortgage Loan, including the final disposition of an REO Property.
15
Liquidation
Proceeds: All cash amounts, other than Insurance Proceeds and Unanticipated
Recoveries, received in connection with the partial or complete liquidation
of
defaulted Mortgage Loans, whether through trustee’s sale, foreclosure sale or
otherwise or amounts received in connection with any condemnation or partial
release of a Mortgaged Property and any other proceeds received in connection
with an REO Property, less the sum of related unreimbursed Master Servicing
Fees, Servicing Advances and Advances.
Loan-to-Value
Ratio: With respect to any Mortgage Loan and as to any date of determination,
the fraction (expressed as a percentage) the numerator of which is the principal
balance of the related Mortgage Loan at such date of determination and the
denominator of which is the Appraised Value of the related Mortgaged
Property.
Loss
Allocation Limitation: As defined in Section 4.4(g).
Lost
Mortgage Note: Any Mortgage Note the original of which was permanently lost
or
destroyed and has not been replaced.
Lower
REMIC: The segregated pool of assets consisting of the Trust Fund but excluding
the Lower REMIC Interests, the RL Interest and the RU Interest.
Lower
REMIC Interests: The REMIC regular interests, within the meaning of the REMIC
Provisions, issued by the Lower REMIC as set forth in Section 2.7.
Maintenance:
With respect to any Cooperative Unit, the rent paid by the Mortgagor to the
Cooperative Corporation pursuant to the Proprietary Lease.
Majority
in Interest: As to any Class of Regular Certificates, the Holders of
Certificates of such Class evidencing, in the aggregate, at least 51% of the
Percentage Interests evidenced by all Certificates of such Class.
Master
Servicer: First Horizon Home Loan Corporation, a Kansas corporation, and its
successors and assigns, in its capacity as master servicer
hereunder.
Master
Servicer Advance Date: As to any Distribution Date, 1:30 p.m. Central time
on
the Business Day immediately preceding such Distribution Date.
Master
Servicing Fee: As to each Mortgage Loan and any Distribution Date, an amount
payable out of each full payment of interest received on such Mortgage Loan
and
equal to one-twelfth of the Master Servicing Fee Rate multiplied by the Stated
Principal Balance of such Mortgage Loan as of the Due Date in the month of
such
Distribution Date (prior to giving effect to any Scheduled Payments due on
such
Mortgage Loan on such Due Date), subject to reduction as provided in Section
3.14.
Master
Servicing Fee Rate: A per annum rate equal to 0.369%.
MERS:
Mortgage Electronic Registration Systems, Inc., a corporation organized and
existing under the laws of the State of Delaware, or any successor
thereto.
16
MERS
Mortgage Loan: Any Mortgage Loan registered with MERS on the MERS
System.
MERS®
System: The system of recording transfers of mortgages electronically maintained
by MERS.
MIN:
The
Mortgage Identification Number for any MERS Mortgage Loan.
MLPA:
The
Mortgage Loan Purchase Agreement dated as of March 30, 2006, by and between
First Horizon Home Loan Corporation, as seller, and First Horizon Asset
Securities Inc., as purchaser, as related to the transfer, sale and conveyance
of the Mortgage Loans.
MOM
Loan:
Any Mortgage Loan as to which MERS is acting as mortgagee, solely as nominee
for
the originator of such Mortgage Loan and its successors and
assigns.
Monthly
Statement: The statement delivered to the Certificateholders pursuant to Section
4.6.
Moody’s:
▇▇▇▇▇’▇ Investors Service, Inc., and its successors and/or assigns. If ▇▇▇▇▇’▇
is designated as a Rating Agency in the Preliminary Statement, for purposes
of
Section 11.5(b) the address for notices to Moody’s shall be ▇▇▇▇▇’▇ Investors
Service, Inc., ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
Residential Pass-Through Monitoring, or such other address as Moody’s may
hereafter furnish to the Depositor or the Master Servicer.
Mortgage:
The mortgage, deed of trust or other instrument creating a first lien on an
estate in fee simple or leasehold interest in real property securing a Mortgage
Note.
Mortgage
File: The mortgage documents listed in Section 2.1(b) hereof pertaining to
a
particular Mortgage Loan and any additional documents delivered to the Trustee
to be added to the Mortgage File pursuant to this Agreement.
Mortgage
Loan Schedule: The list of Mortgage Loans (as from time to time amended by
the
Master Servicer to reflect the addition of Substitute Mortgage Loans and the
deletion of Deleted Mortgage Loans pursuant to the provisions of this Agreement)
transferred to the Trustee as part of the Trust Fund and from time to time
subject to this Agreement, attached hereto as Schedule I, setting forth the
following information with respect to each Mortgage Loan:
(1) the
loan
number;
(2) the
Mortgagor’s name and the street address of the Mortgaged Property, including the
zip code;
(3) the
maturity date;
(4) the
original principal balance;
(5) the
Cut-off Date Principal Balance;
17
(6) the
first
payment date of the Mortgage Loan;
(7) the
Scheduled Payment in effect as of the Cut-off Date;
(8) the
Loan-to-Value Ratio at origination;
(9) a
code
indicating whether the residential dwelling at the time of origination was
represented to be owner-occupied;
(10) a
code
indicating whether the residential dwelling is either (a) a detached single
family dwelling (b) a dwelling in a de minimis PUD, (c) a condominium unit
or
PUD (other than a de minimis PUD), (d) a two-to-four unit residential property
or (e) a Cooperative Unit;
(11) the
Mortgage Rate;
(12) the
purpose for the Mortgage Loan;
(13) the
type
of documentation program pursuant to which the Mortgage Loan was originated;
(14) the
Master Servicing Fee for the Mortgage Loan; and
(15) a
code
indicating whether the Mortgage Loan is a MERS Mortgage Loan.
Such
schedule shall also set forth the total of the amounts described under (4)
and
(5) above for all of the Mortgage Loans.
Mortgage
Loans: Such of the mortgage loans transferred and assigned to the Trustee
pursuant to the provisions hereof as from time to time are held as a part of
the
Trust Fund (including any REO Property), the mortgage loans so held being
identified in the Mortgage Loan Schedule, notwithstanding foreclosure or other
acquisition of title of the related Mortgaged Property.
Mortgage
Note: The original executed note or other evidence of indebtedness evidencing
the indebtedness of a Mortgagor under a Mortgage Loan.
Mortgage
Pool: Either Pool I or Pool II.
Mortgage
Rate: The annual rate of interest borne by a Mortgage Note from time to time,
net of any insurance premium charged by the mortgagee to obtain or maintain
any
Primary Insurance Policy.
Mortgaged
Property: The underlying property securing a Mortgage Loan, which, with respect
to a Cooperative Loan, is the related Coop Shares and Proprietary
Lease.
Mortgagor:
The obligor(s) on a Mortgage Note.
18
National
Cost of Funds Index: The National Monthly Median Cost of Funds Ratio to
SAIF-Insured Institutions published by the Office of Thrift
Supervision.
Net
Interest Shortfall: For any Distribution Date and each Mortgage Pool, the sum
of
(a) the amount of interest which would otherwise have been received for any
Mortgage Loan in such Mortgage Pool that was the subject of (x) a Relief Act
Reduction or (y) a Special Hazard Loss, Fraud Loss, or Deficient Valuation,
after the exhaustion of the respective amounts of coverage for those types
of
losses provided by the Subordinated Certificates; and (b) any Net Prepayment
Interest Shortfalls in respect of such Mortgage Pool.
Net
Prepayment Interest Shortfalls: As to any Distribution Date and each Mortgage
Pool, the amount by which the aggregate of Prepayment Interest Shortfalls in
respect of the Mortgage Loans or such Mortgage Pool during the related
Prepayment Period exceeds an amount equal to the Compensating Interest paid
in
respect of such Mortgage Loans, if any, for such Distribution Date.
Non-Delay
Certificates: As specified in the Preliminary Statement.
Non-Excess
Loss: Any Realized Loss other than an Excess Loss.
Nonrecoverable
Advance: Any portion of an Advance previously made or proposed to be made by
the
Master Servicer that, in the good faith judgment of the Master Servicer, will
not be ultimately recoverable by the Master Servicer from the related Mortgagor,
related Liquidation Proceeds or otherwise.
Notice
of
Final Distribution: The notice to be provided pursuant to Section 9.2 to the
effect that final distribution on any of the Certificates shall be made only
upon presentation and surrender thereof.
Notional
Amount: Not applicable.
Notional
Amount Component: Not applicable.
Notional
Amount Certificates: Not applicable.
Offered
Certificates: As specified in the Preliminary Statement.
Officer’s
Certificate: A Certificate (i) signed by the Chairman of the Board, the Vice
Chairman of the Board, the President, a Managing Director, a Vice President
(however denominated), an Assistant Vice President, the Treasurer, the
Secretary, or one of the Assistant Treasurers or Assistant Secretaries of the
Depositor or the Master Servicer, or (ii), if provided for in this Agreement,
signed by a Servicing Officer, as the case may be, and delivered to the
Depositor and the Trustee, as the case may be, as required by this
Agreement.
Opinion
of Counsel: A written opinion of counsel, who may be counsel for the Depositor
or the Master Servicer, including, in-house counsel, reasonably acceptable
to
the Trustee; provided, however, that with respect to the interpretation or
application of the REMIC Provisions, such counsel must (i) in fact be
independent of the Depositor and the Master Servicer, (ii) not have any direct
financial interest in the Depositor or the Master Servicer or in any affiliate
of either, and (iii) not be connected with the Depositor or the Master Servicer
as an officer, employee, promoter, underwriter, trustee, partner, director
or
person performing similar functions.
19
Optional
Termination: The termination of the trust created hereunder in connection with
the purchase of the Mortgage Loans pursuant to Section 9.1(a)
hereof.
Original
Subordinated Principal Balance: The aggregate Class Certificate Balance of
the
Subordinated Certificates as of the Closing Date.
Original
Mortgage Loan: The Mortgage Loan refinanced in connection with the origination
of a Refinancing Mortgage Loan.
OTS:
The
Office of Thrift Supervision.
Outside
Reference Date: Not applicable.
Outstanding:
With respect to the Certificates as of any date of determination, all
Certificates theretofore executed and authenticated under this Agreement
except:
(i) Certificates
theretofore canceled by the Trustee or delivered to the Trustee for
cancellation; and
(ii) Certificates
in exchange for which or in lieu of which other Certificates have been executed
and delivered by the Trustee pursuant to this Agreement.
Outstanding
Mortgage Loan: As of any Due Date, a Mortgage Loan with a Stated Principal
Balance greater than zero which was not the subject of a Principal Prepayment
in
Full prior to such Due Date and which did not become a Liquidated Mortgage
Loan
prior to such Due Date.
Ownership
Interest: As to any Residual Certificate, any ownership interest in such
Certificate including any interest in such Certificate as the Holder thereof
and
any other interest therein, whether direct or indirect, legal or
beneficial.
Pass-Through
Rate: For any Class of Certificates, the per annum rate set forth or calculated
in the manner described in the Preliminary Statement.
Percentage
Interest: As to any Certificate, the percentage interest evidenced thereby
in
distributions required to be made on the related Class, such percentage interest
being set forth on the face thereof or equal to the percentage obtained by
dividing the Denomination of such Certificate by the aggregate of the
Denominations of all Certificates of the same Class.
Performance
Certification: As defined in Section 10.5.
20
Permitted
Investments: At any time, any one or more of the following obligations and
securities:
(i) obligations
of the United States or any agency thereof, provided such obligations are backed
by the full faith and credit of the United States;
(ii) general
obligations of or obligations guaranteed by any state of the United States
or
the District of Columbia receiving the highest long-term debt rating of each
Rating Agency;
(iii) commercial
or finance company paper which is then receiving the highest commercial or
finance company paper rating of each Rating Agency;
(iv) certificates
of deposit, demand or time deposits, or bankers’ acceptances issued by any
depository institution or trust company incorporated under the laws of the
United States or of any state thereof and subject to supervision and examination
by federal and/or state banking authorities, provided that the commercial paper
and/or long term unsecured debt obligations of such depository institution
or
trust company (or in the case of the principal depository institution in a
holding company system, the commercial paper or long-term unsecured debt
obligations of such holding company, but only if ▇▇▇▇▇’▇ is not a Rating Agency)
are then rated one of the two highest long-term and/or the highest short-term
ratings of each Rating Agency for such securities;
(v) demand
or
time deposits or certificates of deposit issued by any bank or trust company
or
savings institution to the extent that such deposits are fully insured by the
FDIC and receiving the highest short-term debt rating of each Rating
Agency;
(vi) guaranteed
reinvestment agreements issued by any bank, insurance company or other
corporation and receiving the highest short-term debt rating of each Rating
Agency and containing, at the time of the issuance of such agreements, such
terms and conditions as will not result in the downgrading or withdrawal of
the
rating then assigned to the Certificates by either Rating Agency;
(vii) repurchase
obligations with respect to any security described in clauses (i) and (ii)
above, in either case entered into with a depository institution or trust
company (acting as principal) described in clause (iv) above;
(viii) securities
(other than stripped bonds, stripped coupons or instruments sold at a purchase
price in excess of 115% of the face amount thereof) bearing interest or sold
at
a discount issued by any corporation incorporated under the laws of the United
States or any state thereof which, at the time of such investment, have one
of
the two highest ratings of each Rating Agency (except if the Rating Agency
is
Moody’s or S&P, such rating shall be the highest commercial paper rating of
Moody’s or S&P, as applicable, for any such securities);
21
(ix) units
of
a taxable money-market portfolio having the highest rating assigned by each
Rating Agency (except if Fitch is a Rating Agency and has not rated the
portfolio, the highest rating assigned by Moody’s) and restricted to obligations
issued or guaranteed by the United States of America or entities whose
obligations are backed by the full faith and credit of the United States of
America and repurchase agreements collateralized by such obligations;
and
(x) such
other investments bearing interest or sold at a discount acceptable to each
Rating Agency as will not result in the downgrading or withdrawal of the rating
then assigned to the Certificates by either Rating Agency, as evidenced by
a
signed writing delivered by each Rating Agency;
provided that
no such
instrument shall be a Permitted Investment if such instrument evidences the
right to receive interest only payments with respect to the obligations
underlying such instrument.
Permitted
Transferee: Any person other than (i) the United States, any State or political
subdivision thereof, or any agency or instrumentality of any of the foregoing,
(ii) a foreign government, International Organization or any agency or
instrumentality of either of the foregoing, (iii) an organization (except
certain farmers’ cooperatives described in section 521 of the Code) which is
exempt from tax imposed by Chapter 1 of the Code (including the tax imposed
by
section 511 of the Code on unrelated business taxable income) on any excess
inclusions (as defined in section 860E(c)(l) of the Code) with respect to any
Residual Certificate, (iv) rural electric and telephone cooperatives described
in section 1381(a)(2)(C) of the Code, (v) an “electing large partnership” as
defined in section 775 of the Code, (vi) a Person that is not (a) a citizen
or
resident of the United States, (b) a corporation, partnership, or other entity
created or organized in or under the laws of the United States, any state
thereof or the District of Columbia, (c) an estate whose income from sources
without the United States is includible in gross income for United States
federal income tax purposes regardless of its connection with the conduct of
a
trade or business within the United States or (d) a trust if a court within
the
United States is able to exercise primary supervision over the administration
of
the trust and one or more United States persons have the authority to control
all substantial decisions of the trust, unless such Person has furnished the
transferor and the Trustee with a duly completed Internal Revenue Service Form
W-8ECI or any applicable successor form, and (vii) any other Person so
designated by the Depositor based upon an Opinion of Counsel that the Transfer
of an Ownership Interest in a Residual Certificate to such Person may cause
any
REMIC created hereunder to fail to qualify as a REMIC at any time that the
Certificates are outstanding; provided, however, that if a person is classified
as a partnership under the Code, such person shall only be a Permitted
Transferee if all of its beneficial owners are described in subclauses (a),
(b),
(c) or (d) of clause (vi) and the governing documents of such person prohibits
a
transfer of any interest in such person to any person described in clause (vi).
The terms “United States,” “State” and “International Organization” shall have
the meanings set forth in section 7701 of the Code or successor provisions.
A
corporation will not be treated as an instrumentality of the United States
or of
any State or political subdivision thereof for these purposes if all of its
activities are subject to tax and, with the exception of the Federal Home Loan
Mortgage Corporation, a majority of its board of directors is not selected
by
such government unit.
22
Person:
Any individual, corporation, partnership, joint venture, association,
joint-stock company, trust, unincorporated organization or government, or any
agency or political subdivision thereof.
Physical
Certificate: As specified in the Preliminary Statement.
Plan:
An
employee benefit plan or other retirement arrangement which is subject to
Section 406 of ERISA and/or Section 4975 of the Code or any entity whose
underlying assets include such plan’s or arrangement’s assets by reason of their
investment in the entity.
Planned
Balance: Not applicable.
Planned
Principal Classes: Not applicable.
Pool
I:
The aggregate of the Mortgage Loans identified on the Mortgage Loan Schedule
as
being included in Pool I.
Pool
II:
The aggregate of the Mortgage Loans identified on the Mortgage Loan Schedule
as
being included in Pool II.
Pool
Principal Balance: For a Mortgage Pool, with respect to any Distribution Date,
the aggregate of the Stated Principal Balances of the Mortgage Loans in such
Mortgage Pool which were Outstanding Mortgage Loans on the Due Date in the
month
preceding the month of such Distribution Date, and for the first Distribution
Date, as of the Closing Date, less any Principal Prepayments received on or
after such Due Date and distributed to Certificateholders on the prior
Distribution Date.
Prepayment
Interest Excess: As to any Principal Prepayment received by the Master Servicer
from the first day through the fifteenth day of any calendar month (other than
the calendar month in which the Cut-off Date occurs), all amounts paid by the
related Mortgagor in respect of interest on such Principal Prepayment. All
Prepayment Interest Excess shall be paid to the Master Servicer as additional
master servicing compensation.
Prepayment
Interest Shortfall: As to any Distribution Date, Mortgage Loan and Principal
Prepayment received (a) during the period from the sixteenth day of the month
preceding the month of such Distribution Date (or, in the case of the first
Distribution Date, from the Cut-off Date) through the last day of such month,
in
the case of a Principal Prepayment in Full, or (b) during the month preceding
the month of such Distribution Date, in the case of a partial Principal
Prepayment, the amount, if any, by which one month’s interest at the related
Adjusted Mortgage Rate on such Principal Prepayment exceeds the amount of
interest actually paid by the Mortgagor in connection with such Principal
Prepayment.
Prepayment
Period: (a) With respect to any Principal Prepayments in Full and any
Distribution Date, the period from the sixteenth day of the month preceding
the
month of such Distribution Date (or, in the case of the first Distribution
Date,
from the Cut-off Date) through the fifteenth day of the month of such
Distribution Date, and (b) with respect to any other Principal Prepayments
and
any Distribution Date, the month preceding the month of such Distribution
Date.
23
Primary
Insurance Policy: Each policy of primary mortgage guaranty insurance or any
replacement policy therefor with respect to any Mortgage Loan.
Principal
Balance Schedules: Not applicable.
Principal
Prepayment: Any payment of principal by a Mortgagor on a Mortgage Loan that
is
received in advance of its scheduled Due Date and is not accompanied by an
amount representing scheduled interest due on any date or dates in any month
or
months subsequent to the month of prepayment. Partial Principal Prepayments
shall be applied by the Master Servicer in accordance with the terms of the
related Mortgage Note.
Principal
Prepayment in Full: Any Principal Prepayment made by a Mortgagor of the entire
principal balance of a Mortgage Loan.
Private
Certificate: As specified in the Preliminary Statement.
Proprietary
Lease: With respect to any Cooperative Unit, a lease or occupancy agreement
between a Cooperative Corporation and a holder of related Coop
Shares.
Prospectus:
The Prospectus dated July 29, 2005 generally relating to mortgage pass-through
certificates to be sold by the Depositor.
Prospectus
Supplement: The Prospectus Supplement, dated March 24, 2006, relating to the
Offered Certificates.
PUD:
Planned Unit Development.
Purchase
Price: With respect to any Mortgage Loan required to be purchased by the Seller
pursuant to Section 2.2 or 2.3 hereof or purchased at the option of the Master
Servicer pursuant to Section 3.11, an amount equal to the sum of (i) 100% of
the
unpaid principal balance of the Mortgage Loan on the date of such purchase,
(ii)
accrued interest thereon at the applicable Mortgage Rate (or at the applicable
Adjusted Mortgage Rate if the purchaser is the Master Servicer) from the date
through which interest was last paid by the Mortgagor to the Due Date in the
month in which the Purchase Price is to be distributed to Certificateholders,
and (iii) any costs and damages incurred by the Trust in connection with the
noncompliance of such Mortgage Loan with any specifically applicable predatory
or abusive lending law.
Qualified
Insurer: A mortgage guaranty insurance company duly qualified as such under
the
laws of the state of its principal place of business and each state having
jurisdiction over such insurer in connection with the insurance policy issued
by
such insurer, duly authorized and licensed in such states to transact a mortgage
guaranty insurance business in such states and to write the insurance provided
by the insurance policy issued by it, approved as a FNMA-approved mortgage
insurer and having a claims paying ability rating of at least “AA” or equivalent
rating by a nationally recognized statistical rating organization. Any
replacement insurer with respect to a Mortgage Loan must have at least as high
a
claims paying ability rating as the insurer it replaces had on the Closing
Date.
24
Rating
Agency: Each of the Rating Agencies specified in the Preliminary Statement.
If
any such organization or a successor is no longer in existence, “Rating Agency”
shall be such nationally recognized statistical rating organization, or other
comparable Person, as is designated by the Depositor, notice of which
designation shall be given to the Trustee. References herein to a given rating
category of a Rating Agency shall mean such rating category without giving
effect to any modifiers.
Realized
Loss: With respect to each Liquidated Mortgage Loan, an amount (not less than
zero or more than the Stated Principal Balance of the Mortgage Loan) as of
the
date of such liquidation, equal to (i) the Stated Principal Balance of the
Liquidated Mortgage Loan as of the date of such liquidation, plus (ii) interest
at the Adjusted Net Mortgage Rate from the Due Date as to which interest was
last paid or advanced (and not reimbursed) to Certificateholders up to the
Due
Date in the month in which Liquidation Proceeds are required to be distributed
on the Stated Principal Balance of such Liquidated Mortgage Loan from time
to
time, minus (iii) any Liquidation Proceeds, Insurance Proceeds and/or
Unanticipated Recoveries received during the month in which such liquidation
occurred (or during the calendar month preceding the related Distribution Date,
as applicable), to the extent applied as recoveries of interest at the Adjusted
Net Mortgage Rate and to principal of the Liquidated Mortgage Loan. With respect
to each Mortgage Loan which has become the subject of a Deficient Valuation,
if
the principal amount due under the related Mortgage Note has been reduced,
the
difference between the principal balance of the Mortgage Loan outstanding
immediately prior to such Deficient Valuation and the principal balance of
the
Mortgage Loan as reduced by the Deficient Valuation.
Recognition
Agreement: With respect to any Cooperative Loan, an agreement between the
Cooperative Corporation and the originator of such Mortgage Loan which
establishes the rights of such originator in the Cooperative
Property.
Record
Date: With respect to any Distribution Date, the close of business on the last
Business Day of the month preceding the month in which such Distribution Date
occurs.
Reference
Bank: Not applicable.
Refinancing
Mortgage Loan: Any Mortgage Loan originated in connection with the refinancing
of an existing mortgage loan.
Regular
Certificates: As specified in the Preliminary Statement.
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 SEC 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 SEC, or as
may
be provided by the SEC or its staff from time to time.
Relief
Act: The Servicemembers Civil Relief Act, or any similar state or local
legislation or regulations.
Relief
Act Reductions: With respect to any Distribution Date and any Mortgage Loan
as
to which there has been a reduction in the amount of interest collectible
thereon for the most recently ended calendar month as a result of the
application of the Relief Act, the amount, if any, by which interest collectible
on such Mortgage Loan for the most recently ended calendar month is less than
interest accrued thereon for such month pursuant to the Mortgage
Note.
25
REMIC:
A
“real estate mortgage investment conduit” within the meaning of section 860D of
the Code.
REMIC
Change of Law: Any proposed, temporary or final regulation, revenue ruling,
revenue procedure or other official announcement or interpretation relating
to
REMICs and the REMIC Provisions issued after the Closing Date.
REMIC
Pool: Either the Lower REMIC or the Upper REMIC.
REMIC
Provisions: Provisions of the federal income tax law relating to real estate
mortgage investment conduits, which appear at sections 860A through 860G of
Subchapter M of Chapter 1 of the Code, and related provisions, and regulations
promulgated thereunder, as the foregoing may be in effect from time to time
as
well as provisions of applicable state laws.
REO
Property: A Mortgaged Property acquired by the Trust Fund through foreclosure
or
deed-in-lieu of foreclosure in connection with a defaulted Mortgage
Loan.
Reportable
Event: Any event required to be reported on Form 8-K, and in any event, the
following:
(a) entry
into a definitive agreement related to the Trust Fund, the Certificates or
the
Mortgage Loans, or an amendment to a Transaction Document, even if the Depositor
is not a party to such agreement (e.g., a servicing agreement with a servicer
contemplated by Item 1108(a)(3) of Regulation AB);
(b) termination
of this Agreement or any other document entered into in connection with the
Trust Fund, the Certificates or the Mortgage Loans (other than by expiration
of
the applicable agreement on its stated termination date or as a result of all
parties completing their obligations under such agreement), even if the
Depositor is not a party to such agreement (e.g., a servicing agreement with
a
servicer contemplated by Item 1108(a)(3) of Regulation AB);
(c) with
respect to the Master Servicer only, if the Master Servicer becomes aware of
any
bankruptcy or receivership with respect to First Horizon, the Depositor, the
Master Servicer, any Subservicer, the Trustee, the Co-Trustee, any enhancement
or support provider contemplated by Items 1114(b) or 1115 of Regulation AB,
or
any other material party contemplated by Item 1101(d)(1) of Regulation
AB;
(d) with
respect to the Trustee, the Master Servicer and the Depositor only, the
occurrence of an early amortization, performance trigger or other event,
including an Event of Default under this Agreement;
(e) the
resignation, removal, replacement, substitution of the Trustee, the Master
Servicer, any Subservicer, the Trustee or any Co-Trustee;
26
(f) with
respect to the Master Servicer only, if the Master Servicer becomes aware that
(i) any material enhancement or support specified in Item 1114(a)(1) through
(3)
of Regulation AB or Item 1115 of Regulation AB that was previously applicable
regarding one or more classes of the Certificates has terminated other than
by
expiration of the contract on its stated termination date or as a result of
all
parties completing their obligations under such agreement; (ii) any material
enhancement specified in Item 1114(a)(1) through (3) of Regulation AB or Item
1115 of Regulation AB has been added with respect to one or more classes of
the
Certificates; or (iii) any existing material enhancement or support specified
in
Item 1114(a)(1) through (3) of Regulation AB or Item 1115 of Regulation AB
with
respect to one or more classes of the Certificates has been materially amended
or modified; and
(g) with
respect to the Trustee, the Master Servicer and the Depositor only, a required
distribution to Holders of the Certificates is not made as of the required
Distribution Date under this Agreement.
Reporting
Subcontractor: With respect to the Master Servicer or the Trustee, any
Subcontractor determined by such Person pursuant to Section 10.8(b) to be
“participating in the servicing function” within the meaning of Item 1122 of
Regulation AB. References to a Reporting Subcontractor shall refer only to
the
Subcontractor of such Person and shall not refer to Subcontractors
generally.
Request
for Release: The Request for Release submitted by the Master Servicer to the
Trustee, substantially in the form of Exhibits L and M, as
appropriate.
Required
Insurance Policy: With respect to any Mortgage Loan, any insurance policy that
is required to be maintained from time to time under this
Agreement.
Required
Recordation States: The states of Florida, Maryland and
Mississippi.
Residual
Certificates: As specified in the Preliminary Statement.
Responsible
Officer: When used with respect to the Trustee, any Vice President, any
Assistant Vice President, the Secretary, any Assistant Secretary, any Trust
Officer or any other officer of the Trustee customarily performing functions
similar to those performed by any of the above designated officers and having
direct responsibility for the administration of this Agreement and also to
whom,
with respect to a particular matter, such matter is referred because of such
officer’s knowledge of and familiarity with the particular subject.
RL
Interest: The REMIC residual interest, within the meaning of the REMIC
Provisions, issued by the Lower REMIC, which shall be represented by the Class
II-A-R Certificate.
RU
Interest: The REMIC residual interest, within the meaning of the REMIC
Provisions, issued by the Upper REMIC, which shall be represented by the Class
II-A-R Certificate.
▇▇▇▇▇▇▇▇-▇▇▇▇▇
Certification: As defined in Section 10.5.
Scheduled
Balances: Not applicable.
27
Scheduled
Certificates: Not applicable.
Scheduled
Payment: The scheduled monthly payment on a Mortgage Loan due on any Due Date
allocable to principal and/or interest on such Mortgage Loan which, unless
otherwise specified herein, shall give effect to any related Debt Service
Reduction and any Deficient Valuation that affects the amount of the monthly
payment due on such Mortgage Loan.
Scheduled
Principal Classes: Not applicable.
SEC:
The
U.S. Securities and Exchange Commission.
Securities
Act: The Securities Act of 1933, as amended.
Security
Agreement: The security agreement with respect to a Cooperative
Loan.
Seller:
First Horizon Home Loan Corporation, a Kansas corporation, and its successors
and assigns, in its capacity as seller of the Mortgage Loans pursuant to the
MLPA.
Senior
Certificates: As specified in the Preliminary Statement.
Senior
Final Distribution Date: For each Certificate Group, the Distribution Date
on
which the Class Certificate Balance of each Class of related Senior Certificates
has been reduced to zero.
Senior
Mezzanine Certificates: As specified in the Preliminary Statement.
Senior
Optimal Principal Amount: As to a Mortgage Pool and with respect to each
Distribution Date, an amount equal to the sum of:
(1) the
related Senior Percentage of all Scheduled Payments of principal due on each
Mortgage Loan in such Mortgage Pool on the first day of the month in which
the
Distribution Date occurs, as specified in the amortization schedule at the
time
applicable thereto after adjustment for previous principal prepayments and
the
principal portion of Debt Service Reductions after the Bankruptcy Loss Coverage
Amount has been reduced to zero, but before any adjustment to such amortization
schedule by reason of any other bankruptcy or similar proceeding or any
moratorium or similar waiver or grace period;
(2) the
related Senior Prepayment Percentage of the Stated Principal Balance of each
Mortgage Loan in such Mortgage Pool which was the subject of a Principal
Prepayment in Full received by the Master Servicer during the applicable
Prepayment Period;
(3) the
related Senior Prepayment Percentage of the sum of (a) all partial Principal
Prepayments in respect of each Mortgage Loan in such Mortgage Pool received
during the applicable Prepayment Period and (b) all Unanticipated Recoveries
received in respect of each Mortgage Loan in the related Mortgage Pool during
the calendar month prior to such Distribution Date;
(4) the
lesser of:
28
(a)
the
related Senior Prepayment Percentage of the sum of (x) the Liquidation Proceeds
allocable to principal on each Mortgage Loan in such Mortgage Pool which became
a Liquidated Mortgage Loan during the related Prepayment Period, other than
Mortgage Loans described in clause (y), and (y) the principal balance of each
Mortgage Loan in such Mortgage Pool that was purchased by a private mortgage
insurer during the related Prepayment Period as an alternative to paying a
claim
under the related Insurance Policy; and
(b)(i)
the related Senior Percentage of the sum of (x) the Stated Principal Balance
of
each Mortgage Loan in such Mortgage Pool which became a Liquidated Mortgage
Loan
during the related Prepayment Period, other than Mortgage Loans described in
clause (y), and (y) the Stated Principal Balance of each Mortgage Loan in such
Mortgage Pool that was purchased by a private mortgage insurer during the
related Prepayment Period as an alternative to paying a claim under the related
Insurance Policy minus (ii) the related Senior Percentage of the principal
portion of Excess Losses (other than Debt Service Reductions) for such Mortgage
Pool during the related Prepayment Period; and
(5) the
related Senior Prepayment Percentage of the sum of (a) the Stated Principal
Balance of each Mortgage Loan in such Mortgage Pool which was repurchased by
the
seller in connection with such Distribution Date and (b) the difference, if
any,
between the Stated Principal Balance of a Mortgage Loan in such Mortgage Pool
that has been replaced by the seller with a Substitute Mortgage Loan pursuant
to
this Agreement in connection with such Distribution Date and the Stated
Principal Balance of such Substitute Mortgage Loan.
Senior
Percentage: On any Distribution Date for a Certificate Group, the lesser of
100%
and the percentage (carried to six places rounded up) obtained by dividing
the
aggregate Class Certificate Balances of all Classes of Senior Certificates
of
such Certificate Group immediately preceding such Distribution Date by the
Pool
Principal Balance of the related Mortgage Pool for the immediately preceding
Distribution Date.
Senior
Prepayment Percentage: On any Distribution Date occurring during the periods
set
forth below, and as to each Certificate Group, the Senior Prepayment
Percentages, described below:
|
Period
(Dates Inclusive)
|
Senior
Prepayment Percentage
|
|
April
2006 - March 2013
|
100%
|
|
April
2013 - March 2014
|
The
related Senior Percentage plus 70% of the related Subordinated
Percentage.
|
|
April
2014 - March 2015
|
The
related Senior Percentage plus 60% of the related Subordinated
Percentage.
|
|
April
2015 - March 2016
|
The
related Senior Percentage plus 40% of the related Subordinated
Percentage.
|
|
April
2016 - March 2017
|
The
related Senior Percentage plus 20% of the related Subordinated
Percentage.
|
|
April
2017 and thereafter
|
The
related Senior Percentage.
|
provided
however,
(i) if
on any Distribution Date, the Aggregate Senior Percentage exceeds such
percentage calculated as of the Closing Date, then the Senior Prepayment
Percentage for all Certificate Groups for such Distribution Date will equal
100%, (ii) if on any Distribution Date prior to the April 2009 Distribution
Date, the Aggregate Subordinated Percentage is greater than or equal to twice
such percentage calculated as of the Closing Date, then the Senior Prepayment
Percentage for each Certificate Group for such Distribution Date will equal
the
Senior Percentage for such Certificate Group plus 50% of the Subordinated
Percentage for such Certificate Group and (iii) if on or after the April 2009
Distribution Date, the Aggregate Subordinated Percentage is greater than or
equal to twice such percentage calculated as of the Closing Date, then the
Senior Prepayment Percentage for each Certificate Group for such Distribution
Date will equal the Senior Percentage for such Certificate Group.
29
The
reductions in the Senior Prepayment Percentage for each Certificate Group
described above will not occur, and the Senior Prepayment Percentage or each
Certificate Group for such prior period will be calculated without regard to
clause (ii) or (iii) of the paragraph above, unless both of the following
step-down conditions are satisfied with respect to each Mortgage Pool as of
the
last day of the month preceding the Distribution Date:
| (1) |
the
aggregate Stated Principal Balance of Mortgage Loans in all the Mortgage
Pools delinquent 60 days or more (including for this purpose any
Mortgage
Loans in foreclosure or subject to bankruptcy proceedings and Mortgage
Loans with respect to which the related Mortgaged Property, including
REO
Property, has been acquired by the Trust Fund) does not exceed 50%
of the
aggregate Class Certificate Balances of the Subordinated Certificates
as
of that date; and
|
| (2) |
cumulative
Realized Losses on the Mortgage Loans in all the Mortgage Pools do
not
exceed:
|
| (a) |
20%
of the Original Subordinated Principal Balance if such Distribution
Date
occurs between and including April 2006 and March 2009; and
|
| (b) |
30%
of the Original Subordinated Principal Balance if such Distribution
Date
occurs on or after April 2009.
|
Servicing
Advances: All customary, reasonable and necessary “out of pocket” costs and
expenses incurred in the performance by the Master Servicer of its servicing
obligations, including, but not limited to, the cost of (i) the preservation,
restoration and protection of a Mortgaged Property, (ii) any expenses
reimbursable to the Master Servicer pursuant to Section 3.11 and any enforcement
or judicial proceedings, including foreclosures, (iii) the management and
liquidation of any REO Property and (iv) compliance with the obligations under
Section 3.9.
Servicing
Agreement: The servicing agreement, dated as of November 26, 2002 by and
between First Horizon Asset Securities Inc. and its assigns, as owner, and
First
Tennessee Mortgage Services, Inc., as servicer, as the same may be amended
from
time to time in accordance with its terms.
Servicing
Criteria: The “servicing criteria” set forth in Item 1122(d) of Regulation
AB.
Servicing
Officer: Any officer of the Master Servicer involved in, or responsible for,
the
administration and servicing of the Mortgage Loans whose name and facsimile
signature appear on a list of servicing officers furnished to the Trustee by
the
Master Servicer on the Closing Date pursuant to this Agreement, as such list
may
from time to time be amended.
30
Servicing
Rights Transfer and Subservicing Agreement: The servicing rights transfer and
subservicing agreement, dated as of November 26, 2002, by and between First
Horizon Home Loan Corporation, as transferor and subservicer, and First
Tennessee Mortgage Services, Inc., as transferee and servicer, as the same
may
be amended from time to time in accordance with its terms.
Special
Hazard Coverage Termination Date: The date on which the Special Hazard Loss
Coverage Amount is reduced to zero.
Special
Hazard Loss: Any Realized Loss suffered by a Mortgaged Property on account
of
direct physical loss but not including (i) any loss of a type covered by a
hazard insurance policy or a flood insurance policy required to be maintained
with respect to such Mortgaged Property pursuant to Section 3.9 to the extent
of
the amount of such loss covered thereby, or (ii) any loss caused by or resulting
from:
(1) normal
wear and tear;
(2) fraud,
conversion or other dishonest act on the part of the Trustee, the Master
Servicer or any of their agents or employees (without regard to any portion
of
the loss not covered by any errors and omissions policy);
(3) errors
in
design, faulty workmanship or faulty materials, unless the collapse of the
property or a part thereof ensues and then only for the ensuing
loss;
(4) nuclear
or chemical reaction or nuclear radiation or radioactive or chemical
contamination, all whether controlled or uncontrolled, and whether such loss
be
direct or indirect, proximate or remote or be in whole or in part caused by,
contributed to or aggravated by a peril covered by the definition of the term
“Special Hazard Loss”;
(5) hostile
or warlike action in time of peace and war, including action in hindering,
combating or defending against an actual, impending or expected
attack:
(i) by
any
government or sovereign power, de jure or de facto, or by any authority
maintaining or using military, naval or air forces;
(ii) by
military, naval or air forces; or
(iii) by
an
agent of any such government, power, authority or forces;
(6) any
weapon of war employing nuclear fission, fusion or other radioactive force,
whether in time of peace or war; or
(7) insurrection,
rebellion, revolution, civil war, usurped power or action taken by governmental
authority in hindering, combating or defending against such an occurrence,
seizure or destruction under quarantine or customs regulations, confiscation
by
order of any government or public authority or risks of contraband or illegal
transportation or trade.
31
Special
Hazard Loss Coverage Amount: Upon the initial issuance of the Certificates,
$2,731,313. As of any Distribution Date, the Special Hazard Loss Coverage Amount
shall equal the greater of
(a) 1.00%
(or
if greater than 1.00%, the highest percentage of Mortgage Loans by principal
balance secured by Mortgaged Properties in any single California zip code)
of
the outstanding principal balance of all the Mortgage Loans as of the related
Determination Date; and
(b) twice
the
outstanding principal balance of the Mortgage Loan which has the largest
outstanding principal balance as of the related Determination Date,
less,
in
each case, the aggregate amount of Special Hazard Losses that would have been
previously allocated to the Subordinated Certificates in the absence of the
Loss
Allocation Limitation. As of any Distribution Date on or after the Cross-over
Date, the Special Hazard Loss Coverage Amount shall be zero.
Special
Hazard Mortgage Loan: A Liquidated Mortgage Loan as to which a Special Hazard
Loss has occurred.
S&P:
Standard & Poor’s, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., and its
successors and/or assigns. If S&P is designated as a Rating Agency in the
Preliminary Statement, for purposes of Section 11.5(b) the address for notices
to S&P shall be Standard & Poor’s, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Mortgage Surveillance Monitoring, or such
other
address as S&P may hereafter furnish to the Depositor and the Master
Servicer.
Startup
Day: The Closing Date.
Stated
Principal Balance: As to any Mortgage Loan and Due Date, the unpaid principal
balance of such Mortgage Loan as of such Due Date as specified in the
amortization schedule at the time relating thereto (before any adjustment to
such amortization schedule by reason of any moratorium or similar waiver or
grace period) after giving effect to any previous partial Principal Prepayments
and Liquidation Proceeds allocable to principal (other than with respect to
any
Liquidated Mortgage Loan) and to the payment of principal due on such Due Date
and irrespective of any delinquency in payment by the related
Mortgagor.
Streamlined
Documentation Mortgage Loan: Any Mortgage Loan originated pursuant to the
Seller’s Streamlined Loan Documentation Program then in effect.
Subcontractor:
Any vendor, subcontractor or other Person that is not responsible for the
overall servicing (as “servicing” is commonly understood by participants in the
mortgage-backed securities market) of Mortgage Loans but performs one or more
discrete functions identified in Item 1122(d) of Regulation AB with respect
to
the Mortgage Loans under the direction or authority of the Master Servicer,
a
Subservicer or the Trustee, as the case may be.
32
Subordinated
Certificates: As specified in the Preliminary Statement.
Subordinated
Certificate Writedown Amount: As of any Distribution Date, the amount by which
(a) the sum of the Class Certificate Balances of all of the Certificates, after
giving effect to the distribution of principal and the allocation of Realized
Losses in reduction of the Class Certificate Balances of all of the Certificates
on such Distribution Date, exceeds (b) the aggregate of the Pool Principal
Balances for each Mortgage Pool on the first day of the month of such
Distribution Date, less any Deficient Valuations occurring before the Bankruptcy
Loss Coverage Amount has been reduced to zero.
Subordinated
Optimal Principal Amount: With respect to each Mortgage Pool and each
Distribution Date, an amount equal to the sum of the following (but in no event
greater than the aggregate Class Certificate Balances of the Subordinated
Certificates immediately prior to such Distribution Date):
(1) the
related Subordinated Percentage of all Scheduled Payments of principal due
on
each outstanding Mortgage Loan in the related Mortgage Pool on the first day
of
the month in which the Distribution Date occurs, as specified in the
amortization schedule at the time applicable thereto, after adjustment for
previous principal prepayments and the principal portion of Debt Service
Reductions after the Bankruptcy Loss Coverage Amount has been reduced to zero,
but before any adjustment to such amortization schedule by reason of any other
bankruptcy or similar proceeding or any moratorium or similar waiver or grace
period;
(2) the
related Subordinated Prepayment Percentage of the Stated Principal Balance
of
each Mortgage Loan in the related Mortgage Pool which was the subject of a
Principal Prepayment in Full received by the Master Servicer during the related
Prepayment Period;
(3) the
related Subordinated Prepayment Percentage of the sum of (a) all partial
Principal Prepayments received in respect of each Mortgage Loan in the related
Mortgage Pool during the related Prepayment Period, (b) all Unanticipated
Recoveries received in respect of each Mortgage Loan in the related Mortgage
Pool during the calendar month prior to such Distribution Date, and (c) on
the
Senior Final Distribution Date, 100% of any related Senior Optimal Principal
Amount remaining undistributed on such date;
(4) the
amount, if any, by which the sum of (a) the net Liquidation Proceeds allocable
to principal received during the related Prepayment Period in respect of each
Liquidated Mortgage Loan in the related Mortgage Pool, other than Mortgage
Loans
described in clause (b), and (b) the principal balance of each Mortgage Loan
in
the related Mortgage Pool that was purchased by a private mortgage insurer
during the related Prepayment Period as an alternative to paying a claim under
the related Insurance Policy exceeds (c) the sum of the amounts distributable
to
the Senior Certificateholders under clause (4) of the definition of applicable
Senior Optimal Principal Amount on such Distribution Date; and
(5) the
related Subordinated Prepayment Percentage of the sum of (a) the Stated
Principal Balance of each Mortgage Loan in the related Mortgage Pool which
was
repurchased by the seller in connection with such Distribution Date and (b)
the
difference, if any, between the Stated Principal Balance of each Mortgage Loan
in the related Mortgage Pool that has been replaced by the seller with a
Substitute Mortgage Loan pursuant to this Agreement in connection with such
Distribution Date and the Stated Principal Balance of each such Substitute
Mortgage Loan.
33
Subordinated
Percentage: For any Distribution Date and each Certificate Group, 100% minus
the
related Senior Percentage.
Subordinated
Prepayment Percentage: For any Distribution Date, 100% minus the Senior
Prepayment Percentage.
Subservicer:
Any person to whom the Master Servicer has contracted for the servicing of
all
or a portion of the Mortgage Loans pursuant to Section 3.2 hereof.
Substitute
Mortgage Loan: A Mortgage Loan substituted by the Seller for a Deleted Mortgage
Loan which must, on the date of such substitution, as confirmed in a Request
for
Release, substantially in the form of Exhibit L, (i) have a Stated Principal
Balance, after deduction of the principal portion of the Scheduled Payment
due
in the month of substitution, not in excess of, and not more than 10% less
than
the Stated Principal Balance of the Deleted Mortgage Loan; (ii) have an Adjusted
Net Mortgage Rate not lower than the Adjusted Net Mortgage Rate of the Deleted
Mortgage Loan, provided that the Master Servicing Fee for the Substitute
Mortgage Loan shall be equal to or greater than that of the Deleted Mortgage
Loan; (iii) have a maximum mortgage rate not more than 1% per annum higher
or
lower than the maximum mortgage rate of the Deleted Mortgage Loan; (iv) have
a
minimum mortgage rate specified in its related Mortgage Note not more than
1%
per annum higher or lower than the minimum mortgage rate of the Deleted Mortgage
Loan; (v) have the same mortgage index, reset period and periodic rate as the
Deleted Mortgage Loan and a gross margin not more than 1% per annum higher
or
lower than that of the Deleted Mortgage Loan (vi) be accruing interest at a
rate
no lower than and not more than 1% per annum higher than, that of the Deleted
Mortgage Loan; (iv) have a Loan-to-Value Ratio no higher than that of the
Deleted Mortgage Loan; (vii) have a remaining term to maturity no greater than
(and not more than one year less than that of) the Deleted Mortgage Loan; (viii)
not be a Cooperative Loan unless the Deleted Mortgage Loan was a Cooperative
Loan and (ix) comply with each representation and warranty set forth in Section
2.3 hereof.
Substitution
Adjustment Amount: The meaning ascribed to such term pursuant to Section
2.3.
Super
Senior Certificates: As specified in the Preliminary Statement.
Super
Senior Support Certificates: Not applicable.
Support
Classes: Not applicable.
Targeted
Balances: Not applicable.
Targeted
Principal Classes: Not applicable.
34
Tax
Matters Person: The person designated as “tax matters person” in the manner
provided under Treasury regulation § 1.860F-4(d) and Treasury regulation §
301.6231(a)(7)-1. Initially, the Tax Matters Person shall be the
Trustee.
Tax
Matters Person Certificate: The Class II-A-R Certificates with a Denomination
of
$0.01.
Transfer:
Any direct or indirect transfer or sale of any Ownership Interest in a Residual
Certificate.
Trust
Fund: The corpus of the trust created hereunder consisting of (i) the Mortgage
Loans and all interest and principal received on or with respect thereto after
the Cut-off Date to the extent not applied in computing the Cut-off Date
Principal Balance thereof; (ii) all of the Depositor’s rights as purchaser under
the MLPA; (iii) the Certificate Account and the Distribution Account and all
amounts deposited therein pursuant to the applicable provisions of this
Agreement; (iv) property that secured a Mortgage Loan and has been acquired
by
foreclosure, deed-in-lieu of foreclosure or otherwise; and (v) all proceeds
of
the conversion, voluntary or involuntary, of any of the foregoing.
Trustee:
The Bank of New York and its successors and, if a successor trustee is appointed
hereunder, such successor.
Trustee
Fee: As to any Distribution Date and a Mortgage Pool, an amount equal to
one-twelfth of the Trustee Fee Rate multiplied by the applicable Pool Principal
Balance with respect to such Distribution Date.
Trustee
Fee Rate: With respect to each Mortgage Loan, the per annum rate agreed upon
in
writing on or prior to the Closing Date by the Trustee and the
Depositor.
Unanticipated
Recovery: As defined in Section 4.2(g).
Undercollateralization
Distribution: As defined in Section 4.2(h).
Undercollateralized
Group: With respect to any Distribution Date, the Senior Certificates of any
Certificate Group as to which the aggregate Certificate Principal Balance
thereof, after giving effect to distributions pursuant to Section 4.2(a) on
such
date, is greater than the Pool Principal Balance of the related Mortgage Pool
for such Distribution Date.
Underwriter:
As specified in the Preliminary Statement.
Underwriters’
Exemption: An individual administrative exemption granted by the U.S. Department
of Labor to the Underwriter providing exceptions from some of the prohibited
transaction rules of ERISA with respect to the initial purchase, the holding
and
the subsequent resale by employee benefit plans in certificates in pass-through
trusts having assets and meeting conditions described therein, as amended by
Prohibited Transaction Exemption 2000-58 (65 Fed. Reg. 67765, November 13,
2000), as amended, and Prohibited Transaction Exemption 2002-41 (67 Fed. Reg.
54487, August 22, 2002), as amended (or any successor thereto), or any
substantially similar administrative exemption granted by the U.S. Department
of
Labor.
35
Upper
REMIC: The segregated pool of assets consisting of the Lower REMIC
Interests.
Voting
Rights: The portion of the voting rights of all of the Certificates which is
allocated to any Certificate. As of any date of determination, (a) 99.0% of
all
Voting Rights will be allocated among all Holders of the Certificates, other
than the Class II-A-R Certificates, in proportion to their then outstanding
Class Certificate Balance; and (b) 1.0% of all Voting Rights will be allocated
to the Holders of the Class II-A-R Certificates (such Voting Rights to be
allocated among the Holders of Certificates of each such Class in accordance
with their respective Percentage Interests).
Weighted
Average Adjusted Net Mortgage Rate: For a Mortgage Pool, the average of the
Adjusted Net Mortgage Rates of the Mortgage Loans in the related Loan Group,
weighted on the basis of the Stated Principal Balances thereof.
ARTICLE
II
CONVEYANCE
OF MORTGAGE LOANS;
REPRESENTATIONS
AND WARRANTIES
SECTION
2.1 Conveyance
of Mortgage Loans.
(a) The
Depositor, concurrently with the execution and delivery hereof, hereby sells,
transfers, assigns, sets over and otherwise conveys to the Trustee for the
benefit of the Certificateholders, without recourse, all the right, title and
interest of the Depositor in and to the Trust Fund together with (i) the
Depositor’s right to (A) require the Seller to cure any breach of a
representation or warranty made by the Seller pursuant to the MLPA, or (B)
repurchase or substitute for any affected Mortgage Loan in accordance herewith,
and (ii) all right, title and interest of the Depositor in, to and under
the Servicing Agreement, which right has been assigned to the Depositor pursuant
to the MLPA.
(b) In
connection with the transfer and assignment set forth in clause (a) above,
the
Depositor has delivered or caused to be delivered to the Trustee or the
Custodian on its behalf (or, in the case of the Delay Delivery Mortgage Loans,
will deliver or cause to be delivered to the Trustee or the Custodian on its
behalf within thirty (30) days following the Closing Date) for the benefit
of
the Certificateholders the following documents or instruments with respect
to
each Mortgage Loan so assigned:
(i) (A)
the
original Mortgage Note endorsed by manual or facsimile signature in blank in
the
following form: “Pay to the order of ,
without
recourse,” with all intervening endorsements showing a complete chain of
endorsement from the originator to the Person endorsing the Mortgage Note (each
such endorsement being sufficient to transfer all right, title and interest
of
the party so endorsing, as noteholder or assignee thereof, in and to that
Mortgage Note); or
36
(B)
with
respect to any Lost Mortgage Note, a lost note affidavit from the Seller
stating that the original Mortgage Note was lost or destroyed, together
with a copy of such Mortgage Note;
(ii) except
as
provided below and for each Mortgage Loan that is not a MERS Mortgage Loan,
the
original recorded Mortgage or a copy of such Mortgage certified by the Seller
as
being a true and complete copy of the Mortgage, and in the case of each MERS
Mortgage Loan, the original recorded Mortgage, noting the presence of the MIN
of
the Mortgage Loans and either language indicating that the Mortgage Loan is
a
MOM Loan if the Mortgage Loan is a MOM Loan or if the Mortgage Loan was not
a
MOM Loan at origination, the original Mortgage and the assignment thereof to
MERS, with evidence of recording indicated thereon, or a copy of the Mortgage
certified by the Seller as being a true and complete copy of the
Mortgage;
(iii) in
the
case of a Mortgage Loan that is not a MERS Mortgage Loan, a
duly
executed assignment of the Mortgage, or a copy of such assignment certified
by
the Seller as being a true and complete copy of the assignment, in blank (which
may be included in a blanket assignment or assignments), together with, except
as provided below, all interim recorded assignments, or copies of such interim
assignments certified by the Seller as being true and complete copies of the
interim assignments, of such Mortgage (each such assignment, when duly and
validly completed, to be in recordable form and sufficient to effect the
assignment of and transfer to the assignee thereof, under the Mortgage to which
the assignment relates); provided that, if the related Mortgage has not been
returned from the applicable public recording office, such assignment of the
Mortgage may exclude the information to be provided by the recording
office;
(iv) the
original or copies of each assumption, modification, written assurance or
substitution agreement, if any;
(v) either
the original or duplicate original title policy, or a copy of such title policy
certified by the Seller as being a true and complete copy of the title policy
(including all riders thereto), with respect to the related Mortgaged Property,
if available, provided that the title policy (including all riders thereto)
will
be delivered as soon as it becomes available, and if the title policy is not
available, and to the extent required pursuant to the second paragraph below
or
otherwise in connection with the rating of the Certificates, a written
commitment or interim binder or preliminary report of the title issued by the
title insurance or escrow company with respect to the Mortgaged Property, or
in
lieu
thereof,
an Alternative Title Product or a copy of such Alternative Title Product
certified by the Seller as being a true and complete copy of the Alternative
Title Product;
and
(vi) in
the
case of a Cooperative Loan, the originals of the following documents or
instruments:
| (A) |
The
Coop Shares, together with a stock power in
blank;
|
| (B) |
The
executed Security Agreement;
|
| (C) |
The
executed Proprietary Lease;
|
37
| (D) |
The
executed Recognition Agreement;
|
| (E) |
The
executed UCC-1 financing statement with evidence of recording thereon
which have been filed in all places required to perfect the Seller’s
interest in the Coop Shares and the Proprietary Lease;
and
|
| (F) |
Executed
UCC-3 financing statements or other appropriate UCC financing statements
required by state law, evidencing a complete and unbroken line from
the
mortgagee to the Trustee with evidence of recording thereon (or in
a form
suitable for recordation).
|
In
the
event that in connection with any Mortgage Loan that is not a MERS Mortgage
Loan
the Depositor cannot deliver (a) the original recorded Mortgage or (b) all
interim recorded assignments satisfying the requirements of clause (ii) or
(iii)
above, respectively, concurrently with the execution and delivery hereof because
such document or documents have not been returned from the applicable public
recording office, the Depositor shall promptly deliver or cause to be delivered
to the Trustee or the Custodian on its behalf such original Mortgage or such
interim assignment, as the case may be, with evidence of recording indicated
thereon upon receipt thereof from the public recording office, or a copy
thereof, certified, if appropriate, by the relevant recording office, but in
no
event shall any such delivery of the original Mortgage and each such interim
assignment or a copy thereof, certified, if appropriate, by the relevant
recording office, be made later than one year following the Closing Date;
provided, however, in the event the Depositor is unable to deliver or cause
to
be delivered by such date each Mortgage and each such interim assignment by
reason of the fact that any such documents have not been returned by the
appropriate recording office, or, in the case of each such interim assignment,
because the related Mortgage has not been returned by the appropriate recording
office, the Depositor shall deliver or cause to be delivered such documents
to
the Trustee or the Custodian on its behalf as promptly as possible upon receipt
thereof and, in any event, within 720 days following the Closing Date. The
Depositor shall forward or cause to be forwarded to the Trustee or the Custodian
on its behalf (a) from time to time additional original documents evidencing
an
assumption or modification of a Mortgage Loan and (b) any other documents
required to be delivered by the Depositor or the Master Servicer to the Trustee.
In the event that the original Mortgage is not delivered and in connection
with
the payment in full of the related Mortgage Loan and the public recording office
requires the presentation of a “lost instruments affidavit and indemnity” or any
equivalent document, because only a copy of the Mortgage can be delivered with
the instrument of satisfaction or reconveyance, the Master Servicer shall
execute and deliver or cause to be executed and delivered such a document to
the
public recording office. In the case where a public recording office retains
the
original recorded Mortgage or in the case where a Mortgage is lost after
recordation in a public recording office, the Depositor shall deliver or cause
to be delivered to the Trustee or the Custodian on its behalf a copy of such
Mortgage certified by such public recording office to be a true and complete
copy of the original recorded Mortgage.
In
addition, in the event that in connection with any Mortgage Loan the Depositor
cannot deliver or cause to be delivered the original or duplicate original
lender’s title policy (together with all riders thereto), satisfying the
requirements of clause (v) above, concurrently with the execution and delivery
hereof because the related Mortgage has not been returned from the applicable
public recording office, the Depositor shall promptly deliver or cause to be
delivered to the Trustee or the Custodian on its behalf such original or
duplicate original lender’s title policy (together with all riders thereto) upon
receipt thereof from the applicable title insurer, but in no event shall any
such delivery of the original or duplicate original lender’s title policy be
made later than one year following the Closing Date; provided, however, in
the
event the Depositor is unable to deliver or cause to be delivered by such date
the original or duplicate original lender’s title policy (together with all
riders thereto) because the related Mortgage has not been returned by the
appropriate recording office, the Depositor shall deliver or cause to be
delivered such documents to the Trustee or the Custodian on its behalf as
promptly as possible upon receipt thereof and, in any event, within 720 days
following the Closing Date; provided further, however, that the Depositor shall
not be required to deliver an original or duplicate lender’s title policy
(together with all riders thereto) if the Depositor delivers an Alternative
Title Product in lieu thereof. Notwithstanding the preceding, in connection
with
any Mortgage Loan for which either the original or duplicate original title
policy has not been delivered to the Trust, if at any time during the term
of
this Agreement the parent company of the Seller does not have a long term senior
debt rating of A- or higher from S&P and A- or higher from Fitch (if rated
by Fitch), then the Depositor shall within 30 days deliver or cause to be
delivered to the Trustee or the Custodian on its behalf (if it has not
previously done so) a written commitment or interim binder or preliminary report
of the title issued by the title insurance or escrow company with respect to
the
Mortgaged Property.
38
Subject
to the immediately following sentence, as promptly as practicable subsequent
to
such transfer and assignment, and in any event, within thirty (30) days
thereafter, the Master Servicer shall (i) complete each assignment of Mortgage,
as follows: “First Horizon Mortgage Pass-Through Certificates, Series 2006-AA2,
The Bank of New York, as trustee for the holders of the Certificates”, (ii)
cause such assignment to be in proper form for recording in the appropriate
public office for real property records and (iii) cause to be delivered for
recording in the appropriate public office for real property records the
assignments of the Mortgages to the Trustee, except that, with respect to any
assignments of Mortgage as to which the Master Servicer has not received the
information required to prepare such assignment in recordable form, the Master
Servicer’s obligation to do so and to deliver the same for such recording shall
be as soon as practicable after receipt of such information and in any event
within thirty (30) days after receipt thereof. Notwithstanding the foregoing,
the Master Servicer need not cause to be recorded any assignment which relates
to a Mortgage Loan in any state other than the Required Recordation
States.
In
the
case of Mortgage Loans that have been prepaid in full as of the Closing Date,
the Depositor, in lieu of delivering the above documents to the Trustee or
the
Custodian on its behalf, will deposit in the Certificate Account the portion
of
such payment that is required to be deposited in the Certificate Account
pursuant to Section 3.8 hereof.
Notwithstanding
anything to the contrary in this Agreement, within thirty days after the Closing
Date, the Depositor shall either (i) deliver or cause to be delivered to the
Trustee or the Custodian on its behalf the Mortgage File as required pursuant
to
this Section 2.1 for each Delay Delivery Mortgage Loan or (ii) (A) substitute
or
cause to be substituted a Substitute Mortgage Loan for the Delay Delivery
Mortgage Loan or (B) repurchase or cause to be repurchased the Delay Delivery
Mortgage Loan, which substitution or repurchase shall be accomplished in the
manner and subject to the conditions set forth in Section 2.3 (treating each
Delay Delivery Mortgage Loan as a Deleted Mortgage Loan for purposes of such
Section 2.3), provided, however, that if the Depositor fails to deliver a
Mortgage File for any Delay Delivery Mortgage Loan within the thirty-day period
provided in the prior sentence, the Depositor shall use its best reasonable
efforts to effect or cause to be effected a substitution, rather than a
repurchase of, such Deleted Mortgage Loan and provided further that the cure
period provided for in Section 2.2 or in Section 2.3 shall not apply to the
initial delivery of the Mortgage File for such Delay Delivery Mortgage Loan,
but
rather the Depositor shall have five (5) Business Days to cure or cause to
be
cured such failure to deliver. At the end of such thirty-day period, the Trustee
or the Custodian, on its behalf shall send a Delay Delivery Certification for
the Delay Delivery Mortgage Loans delivered during such thirty-day period in
accordance with the provisions of Section 2.2. Notwithstanding anything to
the
contrary contained in this Agreement, none of the Mortgage Loans in the Trust
Fund is or will be Delay Delivery Mortgage Loans.
39
SECTION
2.2 Acceptance
by Trustee of the Mortgage Loans.
The
Trustee or the Custodian, on behalf of the Trustee, acknowledges receipt of
the
documents identified in the Initial Certification in the form annexed hereto
as
Exhibit E and declares that it or the Custodian holds and will hold such
documents and the other documents delivered to it or the Custodian, as
applicable, constituting the Mortgage Files, and that it or the Custodian,
as
applicable, holds or will hold such other assets as are included in the Trust
Fund, in trust for the exclusive use and benefit of all present and future
Certificateholders. The Trustee acknowledges that the Custodian will maintain
possession of the Mortgage Notes in the State of Texas, unless otherwise
permitted by the Rating Agencies.
The
Trustee agrees to execute and deliver or to cause the Custodian to execute
and
deliver on the Closing Date to the Depositor and the Master Servicer an Initial
Certification in the form annexed hereto as Exhibit E. Based on its or the
Custodian’s review and examination, and only as to the documents identified in
such Initial Certification, the Custodian, on behalf of the Trustee,
acknowledges that such documents appear regular on their face and relate to
such
Mortgage Loan. Neither the Trustee nor the Custodian shall be under any duty
or
obligation to inspect, review or examine said documents, instruments,
certificates or other papers to determine that the same are genuine, enforceable
or appropriate for the represented purpose or that they have actually been
recorded in the real estate records or that they are other than what they
purport to be on their face.
On
or
about the thirtieth (30th) day after the Closing Date, the Trustee shall deliver
or shall cause the Custodian to deliver to the Depositor and the Master Servicer
a Delay Delivery Certification in the form annexed hereto as Exhibit F, with
any
applicable exceptions noted thereon. Notwithstanding anything to the contrary
contained in this Agreement, none of the Mortgage Loans in the Trust Fund is
or
will be Delay Delivery Mortgage Loans.
Not
later
than 90 days after the Closing Date, the Trustee shall deliver or shall cause
the Custodian to deliver to the Depositor and the Master Servicer a Subsequent
Certification in the form annexed hereto as Exhibit G, with any applicable
exceptions noted thereon.
40
If,
in
the course of such review, the Trustee or the Custodian, on behalf of the
Trustee, finds any document constituting a part of a Mortgage File which does
not meet the requirements of Section 2.1, the Trustee shall list or shall cause
the Custodian to list such as an exception in the Subsequent Certification;
provided, however that neither the Trustee nor the Custodian shall make any
determination as to whether (i) any endorsement is sufficient to transfer all
right, title and interest of the party so endorsing, as noteholder or assignee
thereof, in and to that Mortgage Note or (ii) any assignment is in recordable
form or is sufficient to effect the assignment of and transfer to the assignee
thereof under the mortgage to which the assignment relates. The Seller shall
promptly correct or cure such defect within 90 days from the date it was so
notified of such defect and, if the Seller does not correct or cure such defect
within such period, the Seller shall either (a) substitute for the related
Mortgage Loan a Substitute Mortgage Loan, which substitution shall be
accomplished in the manner and subject to the conditions set forth in Section
2.3, or (b) purchase such Mortgage Loan from the Trustee within 90 days from
the
date the Seller was notified of such defect in writing at the Purchase Price
of
such Mortgage Loan; provided, however, that in no event shall such substitution
or purchase occur more than 540 days from the Closing Date, except that if
the
substitution or purchase of a Mortgage Loan pursuant to this provision is
required by reason of a delay in delivery of any documents by the appropriate
recording office, and there is a dispute between either the Master Servicer
or
the Seller and the Trustee over the location or status of the recorded document,
then such substitution or purchase shall occur within 720 days from the Closing
Date. The Trustee shall deliver or shall cause the Custodian to deliver written
notice to each Rating Agency within 270 days from the Closing Date indicating
each Mortgage Loan (a) which has not been returned by the appropriate recording
office or (b) as to which there is a dispute as to location or status of such
Mortgage Loan. Such notice shall be delivered every 90 days thereafter until
the
related Mortgage Loan is returned to the Trustee or the Custodian on its behalf.
Any such substitution pursuant to (a) above or purchase pursuant to (b) above
shall not be effected prior to the delivery to the Trustee of the Opinion of
Counsel required by Section 2.5 hereof, if any, and any substitution pursuant
to
(a) above shall not be effected prior to the additional delivery to the Trustee
of a Request for Release substantially in the form of Exhibit L. No substitution
is permitted to be made in any calendar month after the Determination Date
for
such month. The Purchase Price for any such Mortgage Loan shall be deposited
by
the Seller in the Certificate Account on or prior to the Distribution Account
Deposit Date for the Distribution Date in the month following the month of
repurchase and, upon receipt of such deposit and certification with respect
thereto in the form of Exhibit M hereto, the Trustee shall cause the Custodian
to release the related Mortgage File to the Seller and shall execute and deliver
at the Seller’s request such instruments of transfer or assignment prepared by
the Seller, in each case without recourse, as shall be necessary to vest in
the
Seller, or a designee, the Trustee’s interest in any Mortgage Loan released
pursuant hereto. If pursuant to the foregoing provisions the Seller repurchases
a Mortgage Loan that is a MERS Mortgage Loan, the Master Servicer shall either
(i) cause MERS to execute and deliver an assignment of the Mortgage in
recordable form to transfer the Mortgage from MERS to the Seller and shall
cause
such Mortgage to be removed from registration on the MERS® System in accordance
with MERS’ rules and regulations or (ii) cause MERS to designate on the MERS®
System the Seller as the beneficial holder of such Mortgage Loan.
The
Trustee shall retain or shall cause the Custodian to retain possession and
custody of each Mortgage File in accordance with and subject to the terms and
conditions set forth herein. The Master Servicer shall promptly deliver to
the
Trustee or the Custodian on its behalf, upon the execution or receipt thereof,
the originals of such other documents or instruments constituting the Mortgage
File as come into the possession of the Master Servicer from time to
time.
41
It
is
understood and agreed that the obligation of the Seller to substitute for or
to
purchase any Mortgage Loan which does not meet the requirements of Section
2.1
above shall constitute the sole remedy respecting such defect available to
the
Trustee, the Depositor and any Certificateholder against the
Seller.
The
mortgage loans permitted by the terms of this Agreement to be included in the
Trust Fund are limited to (i) the Mortgage Loans (which the Depositor acquired
pursuant to the MLPA, which contains, among other representations and
warranties, a representation and warranty of the Seller that no Mortgage Loan
is
a “high cost loan” as defined by the specific applicable local, state or federal
predatory and abusive lending laws, and (ii) Substitute Mortgage Loans (which,
by definition as set forth in this Agreement and referred to in the MLPA, are
required to conform to, among other representations and warranties, a
representation and warranty of the Seller set forth in the MLPA that no
Substitute Mortgage Loan is a “high cost loan” as defined by the specific
applicable local, state or federal predatory and abusive lending laws). It
is
therefore understood and agreed by the parties hereto that it is not intended
that any Mortgage Loan be included in the Trust Fund that is a “high cost loan”
as defined by the specific applicable local, state or federal predatory and
abusive lending laws.
SECTION
2.3 Representations
and Warranties of the Master Servicer; Covenants of the Seller.
(a) The
Master Servicer hereby makes the representations and warranties set forth in
Schedule II hereto and by this reference incorporated herein, to the Depositor
and the Trustee, as of the Closing Date, or if so specified therein, as of
the
Cut-off Date.
(b) Upon
discovery by any of the parties hereto of a breach of a representation or
warranty made pursuant to Schedule B to the MLPA that materially and adversely
affects the interests of the Certificateholders in any Mortgage Loan, the party
discovering such breach shall give prompt notice thereof to the other parties.
The Seller hereby covenants that within 90 days of the earlier of its discovery
or its receipt of written notice from any party of a breach of any
representation or warranty made pursuant to Schedule B to the MLPA which
materially and adversely affects the interests of the Certificateholders in
any
Mortgage Loan, it shall cure such breach in all material respects, and if such
breach is not so cured, shall, (i) if such 90-day period expires prior to the
second anniversary of the Closing Date, remove such Mortgage Loan (a “Deleted
Mortgage Loan”) from the Trust Fund and substitute in its place a Substitute
Mortgage Loan, in the manner and subject to the conditions set forth in this
Section; or (ii) repurchase the affected Mortgage Loan or Mortgage Loans from
the Trustee at the Purchase Price in the manner set forth below; provided,
however, that any such substitution pursuant to (i) above shall not be effected
prior to the delivery to the Trustee of the Opinion of Counsel required by
Section 2.5 hereof, if any, and any such substitution pursuant to (i) above
shall not be effected prior to the additional delivery to the Trustee or the
Custodian on its behalf of a Request for Release substantially in the form
of
Exhibit M and the Mortgage File for any such Substitute Mortgage Loan. The
Seller shall promptly reimburse the Master Servicer and the Trustee for any
expenses reasonably incurred by the Master Servicer or the Trustee in respect
of
enforcing the remedies for such breach. With respect to the representations
and
warranties described in this Section which are made to the best of the Seller’s
knowledge, if it is discovered by either the Depositor, the Seller or the
Trustee that the substance of such representation and warranty is inaccurate
and
such inaccuracy materially and adversely affects the value of the related
Mortgage Loan or the interests of the Certificateholders therein,
notwithstanding the Seller’s lack of knowledge with respect to the substance of
such representation or warranty, such inaccuracy shall be deemed a breach of
the
applicable representation or warranty.
42
With
respect to any Substitute Mortgage Loan or Loans, the Seller shall deliver
to
the Trustee or the Custodian on its behalf for the benefit of the
Certificateholders the Mortgage Note, the Mortgage, the related assignment
of
the Mortgage, and such other documents and agreements as are required by Section
2.1, with the Mortgage Note endorsed and the Mortgage assigned as required
by
Section 2.1. No substitution is permitted to be made in any calendar month
after
the Determination Date for such month. Scheduled Payments due with respect
to
Substitute Mortgage Loans in the month of substitution shall not be part of
the
Trust Fund and will be retained by the Seller on the next succeeding
Distribution Date. For the month of substitution, distributions to
Certificateholders will include the monthly payment due on any Deleted Mortgage
Loan for such month and thereafter the Seller shall be entitled to retain all
amounts received in respect of such Deleted Mortgage Loan. The Master Servicer
shall amend the Mortgage Loan Schedule for the benefit of the Certificateholders
to reflect the removal of such Deleted Mortgage Loan and the substitution of
the
Substitute Mortgage Loan or Loans and the Master Servicer shall deliver the
amended Mortgage Loan Schedule to the Trustee. Upon such substitution, the
Substitute Mortgage Loan or Loans shall be subject to the terms of this
Agreement in all respects, and the Seller shall be deemed to have made with
respect to such Substitute Mortgage Loan or Loans, as of the date of
substitution, the representations and warranties made pursuant to Schedule
B to
the MLPA with respect to such Mortgage Loan. Upon any such substitution and
the
deposit to the Certificate Account of the amount required to be deposited
therein in connection with such substitution as described in the following
paragraph, the Trustee shall release or shall cause the Custodian to release
the
Mortgage File held for the benefit of the Certificateholders relating to such
Deleted Mortgage Loan to the Seller and shall execute and deliver at the
Seller’s direction such instruments of transfer or assignment prepared by the
Seller, in each case without recourse, as shall be necessary to vest title
in
the Seller, or its designee, the Trustee’s interest in any Deleted Mortgage Loan
substituted for pursuant to this Section 2.3.
For
any
month in which the Seller substitutes one or more Substitute Mortgage Loans
for
one or more Deleted Mortgage Loans, the Master Servicer will determine the
amount (if any) by which the aggregate principal balance of all such Substitute
Mortgage Loans as of the date of substitution is less than the aggregate Stated
Principal Balance of all such Deleted Mortgage Loans (after application of
the
scheduled principal portion of the monthly payments due in the month of
substitution). The amount of such shortage (the “Substitution Adjustment
Amount”) plus an amount equal to the aggregate of any unreimbursed Advances with
respect to such Deleted Mortgage Loans shall be deposited in the Certificate
Account by the Seller on or before the Distribution Account Deposit Date for
the
Distribution Date in the month succeeding the calendar month during which the
related Mortgage Loan became required to be purchased or replaced
hereunder.
43
In
the
event that the Seller shall have repurchased a Mortgage Loan, the Purchase
Price
therefor shall be deposited in the Certificate Account pursuant to Section
3.5
on or before the Distribution Account Deposit Date for the Distribution Date
in
the month following the month during which the Seller became obligated hereunder
to repurchase or replace such Mortgage Loan and upon such deposit of the
Purchase Price, the delivery of the Opinion of Counsel required by Section
2.5
and receipt of a Request for Release in the form of Exhibit M hereto, the
Trustee shall release or shall cause the Custodian to release the related
Mortgage File held for the benefit of the Certificateholders to such Person,
and
the Trustee shall execute and deliver or shall cause the Custodian to execute
and deliver at such Person’s direction such instruments of transfer or
assignment prepared by such Person, in each case without recourse, as shall
be
necessary to transfer title from the Trustee. It is understood and agreed that
the obligation under this Agreement of the Seller to cure, repurchase or replace
any Mortgage Loan as to which a breach has occurred and is continuing shall
constitute the sole remedy against the Seller respecting such breach available
to Certificateholders, the Depositor or the Trustee on their
behalf.
After
giving effect to the sale of the Certificates by the Depositor to the
Underwriter, and thereafter, so long as any Certificates remain outstanding,
the
Seller, its affiliates and agents, collectively, shall not beneficially own
Certificates the aggregate fair value of which would represent 90% or more
of
the beneficial interests in the Trust Fund.
The
representations and warranties made pursuant to this Section 2.3 shall survive
delivery of the respective Mortgage Files to the Trustee or the Custodian for
the benefit of the Certificateholders.
SECTION
2.4 Representations
and Warranties of the Depositor as to the Mortgage Loans.
The
Depositor hereby represents and warrants to the Trustee with respect to each
Mortgage Loan as of the date hereof or such other date set forth herein that
as
of the Closing Date, and following the transfer of the Mortgage Loans to it
pursuant to the MLPA and immediately prior to the conveyance of the Mortgage
Loans by it to the Trustee pursuant to Section 2.1(a) hereof, the Depositor
had
good title to the Mortgage Loans and the Mortgage Notes were subject to no
offsets, defenses or counterclaims.
It
is
understood and agreed that the representations and warranties set forth in
this
Section 2.4 shall survive delivery of the Mortgage Files to the Trustee. Upon
discovery by the Depositor or the Trustee of a breach of any of the foregoing
representations and warranties set forth in this Section 2.4 (referred to herein
as a “breach”), which breach materially and adversely affects the interest of
the Certificateholders, the party discovering such breach shall give prompt
written notice to the others and to each Rating Agency.
SECTION
2.5 Delivery
of Opinion of Counsel in Connection with Substitutions.
(a) Notwithstanding
any contrary provision of this Agreement, no substitution pursuant to Section
2.2 or Section 2.3 shall be made more than 90 days after the Closing Date unless
the Depositor delivers to the Trustee an Opinion of Counsel, which Opinion
of
Counsel shall not be at the expense of either the Trustee or the Trust Fund,
addressed to the Trustee, to the effect that such substitution will not (i)
result in the imposition of the tax on “prohibited transactions” on the Trust
Fund or contributions after the Startup Date, as defined in Sections 860F(a)(2)
and 860G(d) of the Code, respectively, or (ii) cause any REMIC created hereunder
to fail to qualify as a REMIC at any time that any Certificates are
outstanding.
44
(b) Upon
discovery by the Depositor, the Master Servicer or the Trustee that any Mortgage
Loan does not constitute a “qualified mortgage” within the meaning of Section
860G(a)(3) of the Code, the party discovering such fact shall promptly (and
in
any event within five (5) Business Days of discovery) give written notice
thereof to the other parties. In connection therewith, the Trustee shall require
the Depositor to cause the Seller, pursuant to the MLPA and at the Seller’s
option, to either (i) substitute, if the conditions in Section 2.3(b) with
respect to substitutions are satisfied, a Substitute Mortgage Loan for the
affected Mortgage Loan, or (ii) repurchase the affected Mortgage Loan within
90
days of such discovery in the same manner as it would a Mortgage Loan for a
breach of representation or warranty made pursuant to Section 2.3. The Trustee
shall reconvey or shall cause the Custodian to reconvey to the Seller the
Mortgage Loan to be released pursuant hereto in the same manner, and on the
same
terms and conditions, as it would a Mortgage Loan repurchased for breach of
a
representation or warranty contained in Section 2.3.
SECTION
2.6 Execution
and Delivery of Certificates.
The
Trustee acknowledges the transfer and assignment to it of the Trust Fund and,
concurrently with such transfer and assignment, has executed and delivered
to or
upon the order of the Depositor, the Certificates in authorized denominations
evidencing directly or indirectly the entire ownership of the Trust Fund. The
Trustee agrees to hold the Trust Fund and exercise the rights referred to above
for the benefit of all present and future Holders of the Certificates and to
perform the duties set forth in this Agreement to the best of its ability,
to
the end that the interests of the Holders of the Certificates may be adequately
and effectively protected.
SECTION
2.7 REMIC
Matters.
The
Preliminary Statement sets forth the “latest possible maturity date” for federal
income tax purposes of all REMIC regular interests created hereby.
The
assets of the Lower REMIC shall be as set forth in the definition thereof.
Each
interest identified in the first table below by a designation beginning with
“L”
shall be a “regular interest” in the Lower REMIC and a Lower REMIC Interest, and
the RL Interests shall be the sole class of residual interest in the Lower
REMIC. The Lower REMIC Interests shall be uncertificated and shall be held
by
the Trustee as assets of the Upper REMIC.
The
assets of the Upper REMIC shall be as set forth in the definition thereof.
The
Regular Certificates shall represent “regular interests” in the Upper REMIC. The
RU Interest shall be the sole class of residual interest in the Upper REMIC.
The
Class II-A-R Certificate shall represent ownership of the RL Interest and RU
Interest.
45
The
“Startup Day” for purposes of the REMIC Provisions for each REMIC hereunder
shall be the Closing Date. The Tax Matters Person with respect to each REMIC
hereunder shall be the Trustee and the Trustee shall hold the Tax Matters Person
Certificate. Each REMIC’s taxable year shall be the calendar year and its
accounts shall be maintained using the accrual method.
|
Corresponding
Class of Upper REMIC Interests
|
|||||||||||||
|
Lower
REMIC
Interest
or
Residual
|
Lower
REMIC
Interest
Balance
|
Lower
REMIC
Interest
Rate
|
Interest
|
Principal
|
|||||||||
|
L-I-A-1
|
$
|
6,390.84
|
(2)
|
|
(1)
|
|
(1)
|
|
|||||
|
L-I-A-2
|
$
|
710.09
|
(2)
|
|
(1)
|
|
(1)
|
|
|||||
|
L-I-A-ZZZ
|
$
|
13,017,992.46
|
(2)
|
|
(1)
|
|
(1)
|
|
|||||
|
RL
|
$
|
0.00
|
N/A
|
N/A
|
N/A
|
||||||||
|
L-II-A-1
|
$
|
127,585.15
|
(3)
|
|
(1)
|
|
(1)
|
|
|||||
|
L-II-A-2
|
$
|
14,176.13
|
(3)
|
|
(1)
|
|
(1)
|
|
|||||
|
L-II-A-ZZZ
|
$
|
259,964,466.06
|
(3)
|
|
(1)
|
|
(1)
|
|
|||||
|
Total
|
$
|
273,131,320.73
|
|||||||||||
(1) The
Lower
REMIC Interest L-I-A-1, Lower REMIC Interest L-I-A-2 and Lower REMIC Interest
L-I-A-ZZZ shall be Corresponding Classes to these Classes of Certificates:
▇-▇-▇, ▇-▇-▇, ▇-▇, ▇-▇, ▇-▇, ▇-▇, B-5 and B-6 (provided that with respect to
▇-▇, ▇-▇, ▇-▇, ▇-▇, B-5 and B-6, such Lower REMIC Interests shall only
correspond to the portion supported by Pool I). The Lower REMIC Interest
L-II-A-1, Lower REMIC L-II-A-2 and Lower REMIC Interest L-II-A-ZZZ shall be
Corresponding Classes to these Classes of Certificates: II-A-1, II-A-2, II-A-R,
▇-▇, ▇-▇, ▇-▇, ▇-▇, B-5 and B-6 (provided that with respect to ▇-▇, ▇-▇, ▇-▇,
▇-▇, B-5 and B-6, such Lower REMIC Interests shall only correspond to the
portion supported by Pool II).
(2) The
Lower
REMIC Interest Rate for the Lower REMIC Interest L-I-A-1, L-I-A-2 and L-I-A-ZZZ
will equal the Weighted Average Adjusted Net Mortgage Rate for Pool
I.
(3) The
Lower
REMIC Interest Rate for the Lower REMIC Interest L-II-A-1, L-II-A-2 and
L-II-A-ZZZ will equal the Weighted Average Adjusted Net Mortgage Rate for Pool
II.
“L1
Interests” refers to the L-I-A-1 Lower REMIC Interest and L-II-A-1 Lower REMIC
Interests. “L2 Interests” refers to the L-I-A-2 Lower REMIC Interest and
L-II-A-2 Lower REMIC Interest. “LZZZ Interests” refers to L-I-A-ZZZ Lower REMIC
Interest and L-II-A-ZZZ Lower REMIC Interest. Each L1 Interest shall have a
principal balance initially equal to 0.9% of the Group Subordinate Amount of
its
corresponding Mortgage Pool. Each L2 Interest shall have a principal balance
initially equal to 0.1% of the Group Subordinate Amount of its corresponding
Mortgage Pool. The initial principal balance of each LZZZ Interest shall
equal the excess of the Pool Principal Balance of its corresponding Mortgage
Pool over the sum of the initial principal balances of the L1 Interests and
L2
Interests corresponding to such Mortgage Pool.
Unless
a
Cross-over Situation (as defined below) exists, principal and Realized Losses
arising with respect to each Mortgage Pool shall be allocated first to cause
the
L1 and L2 Interests corresponding to such Mortgage Pool to equal 0.9% and 0.1%
of the Group Subordinate Amount of such Mortgage Pool as of such Distribution
Date (after distributions of principal and allocation of Realized Losses are
made) and all excess principal and Realized Losses shall be allocated to the
LZZZ Interest corresponding to such Mortgage Pool. A L1, L2 or LZZZ Interest
that is allocated principal on any Distribution Date shall receive such
principal, and have its principal balance reduced by the amount of such
principal, on such Distribution Date. Similarly, a L1, L2 or LZZZ Interest
that
is allocated a Realized Loss on any Distribution Date shall have its principal
balance reduced by the amount of such Realized Loss on such Distribution Date.
46
A
“Cross-over Situation” exists if on any Distribution Date (after taking into
account distributions of principal and allocations of Realized Losses on such
Distribution Date) the L1 and L2 Interests corresponding to any Mortgage Pool
are in the aggregate less than 1% of the Group Subordinate Amount of the
corresponding Mortgage Pool. If a Cross-over Situation exists on any
Distribution Date, and the weighted average interest rate of the outstanding
L1
and L2 Interests is less than the Pass-Through Rate for any Class of Subordinate
Certificates for the following Distribution Date, a Principal Reallocation
Payment (as defined below) shall be made proportionately to the outstanding
L1
Interests prior to any other distributions of principal from each such Mortgage
Pool so that the Calculation Rate equals the Pass-Through Rate for each Class
of
Subordinate Certificates. If a Cross-over Situation exists on any Distribution
Date, and the weighted average rate of the outstanding L1 and L2 Interests
is
greater than the Pass-Through Rate for any Class of Subordinate Certificates
for
the following Distribution Date, a Principal Reallocation Payment shall be
made
proportionately to the outstanding L2 Interests prior to any other distributions
of principal from each such Mortgage Pool so that the Calculation Rate equals
the Pass-Through Rate for each Class of Subordinate Certificates. A “Principal
Reallocation Payment” is a distribution of the minimum amount of principal that
causes the Calculation Rate (as defined below) with respect to the outstanding
L1 and L2 Interests to equal the Pass-Through Rate for each Class of Subordinate
Certificates. The “Calculation Rate” shall equal the product of (i) 10 and (ii)
the weighted average interest rate of the outstanding L1 and L2 Interests,
treating each L1 Interest as capped at zero or reduced by a fixed percentage
of
100% of the interest accruing on such class. Principal Reallocation Payments
shall be made from principal received on the Mortgage Loans from a Mortgage
Pool
and shall also consist of a proportionate allocation of Realized Losses from
the
Mortgage Loans of a Mortgage Pool. For purposes of making Principal Reallocation
Payments, to the extent that the principal received during the applicable
collection period from the related Mortgage Pool and related Realized Losses
are
insufficient to make the necessary reduction of principal, then interest shall
accrue on the LZZZ Interest (and be added to its principal balance) of the
related Mortgage Pool to allow the necessary Principal Reallocation Payment
to
be made. The Calculation Rate is designed to always equal the Pass-Through
Rate
of each Class of Subordinated Certificates.
If
a
Cross-over Situation exists, the aggregate principal balances of the outstanding
L1 and L2 Interests of all of the Mortgage Pools shall not be reduced below
one
percent of the aggregate Pool Principal Balance of all of the Mortgage Pools
for
the following Distribution Date in excess of the Senior Certificates as of
the
related Distribution Date (after taking into account distributions of principal
and allocations of Realized Losses on such Distribution Date). To the extent
this limitation prevents the distribution of principal to the L1 and L2
Interests of a Mortgage Pool and the related LZZZ Interest has already been
reduced to zero, such excess principal from such Mortgage Pool shall be paid
proportionately to the LZZZ Interests of the Mortgage Pool or Pools whose
aggregate L1 and L2 Interests are less than one percent of the Group Subordinate
Amount. Any such shortfall as a result of the Mortgage Pool receiving the extra
payment having a Weighted Average Adjusted Net Mortgage Rate lower than the
Weighted Average Adjusted Net Mortgage Rate of the Mortgage Pool from which
the
payment was reallocated shall be treated as a Realized Loss and if excess arises
as result of the Mortgage Pool receiving the extra payment having a Weighted
Average Adjusted Net Mortgage Rate higher than the Mortgage Pool from which
the
payment was reallocated it shall reimburse the Upper REMIC for prior Realized
Losses. If on any Distribution Date, the L1 Interest or L2 Interest remains
outstanding after the related Pool Principal Balance is at zero as of the
beginning of the Accrual Period corresponding to such Distribution Date, their
Lower REMIC Interest Rate shall be the Weighted Average Adjusted Net Mortgage
Rate of the Mortgage Pool with the lowest Weighted Average Adjusted Net Mortgage
Rate that remains outstanding and the excess of interest at the Pass-Through
Rate for the Subordinated Certificates over interest at such Weighted Average
Adjusted Net Mortgage Rate shall be treated as paid from Lower REMIC to the
Upper REMIC as reimbursement for prior Realized Losses.
47
The
foregoing REMIC structure is intended to cause all of the cash from the Mortgage
Loans to flow through to the Upper REMIC as cash flow on a REMIC regular
interest, without creating any shortfall-actual or potential (other than for
credit losses) to any REMIC regular interest. To the extent that the structure
is believed to diverge from such intention the Trustee shall resolve ambiguities
to accomplish such result and shall to the extent necessary rectify any drafting
errors or seek clarification to the structure without Certificateholder approval
(but with guidance of counsel) to accomplish such intention.
SECTION
2.8 Covenants
of the Master Servicer.
The
Master Servicer hereby covenants to the Depositor and the Trustee as
follows:
(a) the
Master Servicer shall comply in the performance of its obligations under this
Agreement with all reasonable rules and requirements of the insurer under each
Required Insurance Policy; and
(b) no
written information, certificate of an officer, statement furnished in writing
or written report delivered to the Depositor, any affiliate of the Depositor
or
the Trustee and prepared by the Master Servicer pursuant to this Agreement
will
contain any untrue statement of a material fact or omit to state a material
fact
necessary to make such information, certificate, statement or report not
misleading.
ARTICLE
III
ADMINISTRATION
AND SERVICING OF MORTGAGE LOANS
SECTION
3.1 Master
Servicer to Service Mortgage Loans.
48
For
and
on behalf of the Certificateholders, the Master Servicer shall service and
administer the Mortgage Loans in accordance with the terms of (i) the
Servicing Rights Transfer and Subservicing Agreement, pursuant to which First
Tennessee Mortgage Services, Inc. engaged the Master Servicer to subservice
the
Mortgage Loans, (ii) this Agreement and (iii) the customary and usual standards
of practice of prudent mortgage loan servicers;
provided that if there is a conflict between the terms of the Servicing
Agreement and the Servicing Rights Transfer and Subservicing Agreement, on
the
one hand, and this Agreement, on the other hand, the terms of this Agreement
shall prevail.
In
connection with such servicing and administration, the Master Servicer shall
have full power and authority, acting alone and/or through Subservicers as
provided in Section 3.2 hereof, to do or cause to be done any and all things
that it may deem necessary or desirable in connection with such servicing and
administration, including but not limited to, the power and authority, subject
to the terms hereof (i) to execute and deliver, on behalf of the
Certificateholders and the Trustee, customary consents or waivers and other
instruments and documents, (ii) to consent to transfers of any Mortgaged
Property and assumptions of the Mortgage Notes and related Mortgages (but only
in the manner provided in this Agreement), (iii) to collect any Insurance
Proceeds and other Liquidation Proceeds, and (iv) to effectuate foreclosure
or
other conversion of the ownership of the Mortgaged Property securing any
Mortgage Loan; provided that the Master Servicer shall not take any action
that
is inconsistent with or prejudices the interests of the Trust Fund or the
Certificateholders in any Mortgage Loan or the rights and interests of the
Depositor, the Trustee and the Certificateholders under this Agreement. The
Master Servicer shall represent and protect the interests of the Trust Fund
in
the same manner as it protects its own interests in mortgage loans in its own
portfolio in any claim, proceeding or litigation regarding a Mortgage Loan,
and
shall not make or permit any modification, waiver or amendment of any Mortgage
Loan which would cause any REMIC created hereunder to fail to qualify as a
REMIC
or result in the imposition of any tax under Section 860F(a) or Section 860G(d)
of the Code. Without limiting the generality of the foregoing, the Master
Servicer, in its own name or in the name of the Depositor and the Trustee,
is
hereby authorized and empowered by the Depositor and the Trustee, when the
Master Servicer believes it appropriate in its reasonable judgment, to execute
and deliver, on behalf of the Trustee, the Depositor, the Certificateholders
or
any of them, any and all instruments of satisfaction or cancellation, or of
partial or full release or discharge and all other comparable instruments,
with
respect to the Mortgage Loans, and with respect to the Mortgaged Properties
held
for the benefit of the Certificateholders. The Master Servicer shall prepare
and
deliver to the Depositor and/or the Trustee such documents requiring execution
and delivery by either or both of them as are necessary or appropriate to enable
the Master Servicer to service and administer the Mortgage Loans to the extent
that the Master Servicer is not permitted to execute and deliver such documents
pursuant to the preceding sentence. Upon receipt of such documents, the
Depositor and/or the Trustee shall execute such documents and deliver them
to
the Master Servicer. The Master Servicer further is authorized and empowered
by
the Trustee, on behalf of the Certificateholders and the Trustee, in its own
name or in the name of the Subservicer, when the Master Servicer or the
Subservicer as the case may be, believes it appropriate in its best judgment
to
register any Mortgage Loan on the MERS® System, or cause the removal from the
registration of any Mortgage Loan on the MERS® System, to execute and deliver,
on behalf of the Trustee and the Certificateholders or any of them, any and
all
instruments of assignment and other comparable instruments with respect to
such
assignment or re-recording of a Mortgage in the name of MERS, solely as nominee
for the Trustee and its successors and assigns.
In
accordance with the standards of the preceding paragraph, the Master Servicer
shall advance or cause to be advanced funds as necessary for the purpose of
effecting the payment of taxes and assessments on the Mortgaged Properties,
which advances shall be reimbursable in the first instance from related
collections from the Mortgagors pursuant to Section 3.6, and further as provided
in Section 3.8. The costs incurred by the Master Servicer, if any, in effecting
the timely payments of taxes and assessments on the Mortgaged Properties and
related insurance premiums shall not, for the purpose of calculating monthly
distributions to the Certificateholders, be added to the Stated Principal
Balances of the related Mortgage Loans, notwithstanding that the terms of such
Mortgage Loans so permit.
49
SECTION
3.2 Subservicing;
Enforcement of the Obligations of Servicers.
(a) The
Master Servicer may arrange for the subservicing of any Mortgage Loan by a
Subservicer pursuant to a subservicing agreement; provided, however, that such
subservicing arrangement and the terms of the related subservicing agreement
must provide for the servicing of such Mortgage Loans in a manner consistent
with the servicing arrangements contemplated hereunder. Unless the context
otherwise requires, references in this Agreement to actions taken or to be
taken
by the Master Servicer in servicing the Mortgage Loans include actions taken
or
to be taken by a Subservicer on behalf of the Master Servicer. Notwithstanding
the provisions of any subservicing agreement, any of the provisions of this
Agreement relating to agreements or arrangements between the Master Servicer
and
a Subservicer or reference to actions taken through a Subservicer or otherwise,
the Master Servicer shall remain obligated and liable to the Depositor, the
Trustee and the Certificateholders for the servicing and administration of
the
Mortgage Loans in accordance with the provisions of this Agreement without
diminution of such obligation or liability by virtue of such subservicing
agreements or arrangements or by virtue of indemnification from the Subservicer
and to the same extent and under the same terms and conditions as if the Master
Servicer alone were servicing and administering the Mortgage Loans. All actions
of each Subservicer performed pursuant to the related subservicing agreement
shall be performed as an agent of the Master Servicer with the same force and
effect as if performed directly by the Master Servicer.
(b) For
purposes of this Agreement, the Master Servicer shall be deemed to have received
any collections, recoveries or payments with respect to the Mortgage Loans
that
are received by a Subservicer regardless of whether such payments are remitted
by the Subservicer to the Master Servicer.
SECTION
3.3 Rights
of
the Depositor and the Trustee in Respect of the Master Servicer.
The
Depositor may, but is not obligated to, enforce the obligations of the Master
Servicer hereunder and may, but is not obligated to, perform, or cause a
designee to perform, any defaulted obligation of the Master Servicer hereunder
and in connection with any such defaulted obligation to exercise the related
rights of the Master Servicer hereunder; provided that the Master Servicer
shall
not be relieved of any of its obligations hereunder by virtue of such
performance by the Depositor or its designee. Neither the Trustee nor the
Depositor shall have any responsibility or liability for any action or failure
to act by the Master Servicer nor shall the Trustee or the Depositor be
obligated to supervise the performance of the Master Servicer hereunder or
otherwise.
50
SECTION
3.4 Trustee
to Act as Master Servicer.
In
the
event that the Master Servicer shall for any reason no longer be the Master
Servicer hereunder (including by reason of an Event of Default), the Trustee
or
its successor shall thereupon assume all of the rights and obligations of the
Master Servicer hereunder arising thereafter (except that the Trustee shall
not
be (i) liable for losses of the Master Servicer pursuant to Section 3.9 hereof
or any acts or omissions of the predecessor Master Servicer hereunder), (ii)
obligated to make Advances if it is prohibited from doing so by applicable
law,
(iii) obligated to effectuate repurchases or substitutions of Mortgage Loans
hereunder including, but not limited to, repurchases or substitutions of
Mortgage Loans pursuant to Section 2.2 or 2.3 hereof, (iv) responsible for
expenses of the Master Servicer pursuant to Section 2.3 or (v) deemed to have
made any representations and warranties of the Master Servicer hereunder).
Any
such assumption shall be subject to Section 7.2 hereof. If the Master Servicer
shall for any reason no longer be the Master Servicer (including by reason
of
any Event of Default), the Trustee or its successor shall succeed to any rights
and obligations of the Master Servicer under each subservicing
agreement.
The
Master Servicer shall, upon request of the Trustee, but at the expense of the
Master Servicer, deliver to the assuming party all documents and records
relating to each subservicing agreement or substitute subservicing agreement
and
the Mortgage Loans then being serviced thereunder and an accounting of amounts
collected or held by it and otherwise use its best efforts to effect the orderly
and efficient transfer of the substitute subservicing agreement to the assuming
party.
SECTION
3.5 Collection
of Mortgage Loan Payments; Certificate Account; Distribution
Account.
(a) The
Master Servicer shall make reasonable efforts in accordance with the customary
and usual standards of practice of prudent mortgage servicers to collect all
payments called for under the terms and provisions of the Mortgage Loans to
the
extent such procedures shall be consistent with this Agreement and the terms
and
provisions of any related Required Insurance Policy. Consistent with the
foregoing, the Master Servicer may in its discretion (i) waive any late payment
charge or any prepayment charge or penalty interest in connection with the
prepayment of a Mortgage Loan and (ii) extend the due dates for payments due
on
a Mortgage Note for a period not greater than 180 days; provided, however,
that
the Master Servicer cannot extend the maturity of any such Mortgage Loan past
the date on which the final payment is due on the latest maturing Mortgage
Loan
as of the Cut-off Date. In the event of any such arrangement, the Master
Servicer shall make Advances on the related Mortgage Loan in accordance with
the
provisions of Section 4.1 during the scheduled period in accordance with the
amortization schedule of such Mortgage Loan without modification thereof by
reason of such arrangements. The Master Servicer shall not be required to
institute or join in litigation with respect to collection of any payment
(whether under a Mortgage, Mortgage Note or otherwise or against any public
or
governmental authority with respect to a taking or condemnation) if it
reasonably believes that enforcing the provision of the Mortgage or other
instrument pursuant to which such payment is required is prohibited by
applicable law.
51
(b) The
Master Servicer shall establish and maintain the Certificate Account. The
Certificate Account shall consist of two separate subaccounts, each of which
shall relate to a particular Mortgage Pool. The Master Servicer shall deposit
or
cause to be deposited into the appropriate subaccount of the Certificate Account
no later than two (2) Business Days after receipt, except as otherwise
specifically provided herein, the following payments and collections remitted
by
Subservicers or received by it in respect of the Mortgage Loans subsequent
to
the Cut-off Date (other than in respect of principal and interest due on the
Mortgage Loans on or before the Cut-off Date) and the following amounts required
to be deposited hereunder:
(i) all
payments on account of principal on the Mortgage Loans in the related Mortgage
Pool, including Principal Prepayments;
(ii) all
payments on account of interest on the Mortgage Loans in the related Mortgage
Pool, net of the related Master Servicing Fee and any Prepayment Interest
Excess;
(iii) all
Insurance Proceeds and Liquidation Proceeds in respect of the related Mortgage
Loans in the related Mortgage Pool, other than proceeds to be applied to the
restoration or repair of the Mortgaged Property or released to the Mortgagor
in
accordance with the Master Servicer’s normal servicing procedures;
(iv) any
amount required to be deposited by the Master Servicer in respect of the related
Mortgage Pool pursuant to Section 3.5(c) in connection with any losses on
Permitted Investments;
(v) any
amounts required to be deposited by the Master Servicer in respect of the
related Mortgage Pool pursuant to Section 3.9(b) and 3.9(d);
(vi) all
Substitution Adjustment Amounts in respect of the related Mortgage
Pool;
(vii) all
Advances in respect of the related Mortgage Pool made by the Master Servicer
pursuant to Section 4.1; and
(viii) any
other
amounts required to be deposited hereunder in respect of the related Mortgage
Pool.
In
addition, with respect to any Mortgage Loan that is subject to a buydown
agreement, on each Due Date for such Mortgage Loan, in addition to the monthly
payment remitted by the Mortgagor, the Master Servicer shall cause funds to
be
deposited into the applicable subaccount of the Certificate Account in an amount
required to cause an amount of interest to be paid with respect to such Mortgage
Loan equal to the amount of interest that has accrued on such Mortgage Loan
from
the preceding Due Date at the related Adjusted Mortgage Rate on such
date.
The
foregoing requirements for remittance by the Master Servicer shall be exclusive,
it being understood and agreed that, without limiting the generality of the
foregoing, payments in the nature of prepayment penalties, late payment charges,
assumption fees or amounts attributable to reimbursements of Advances, if
collected, need not be remitted by the Master Servicer. In the event that the
Master Servicer shall remit any amount not required to be remitted, it may
at
any time withdraw or direct the institution maintaining the Certificate Account
to withdraw such amount from the Certificate Account, any provision herein
to
the contrary notwithstanding. Such withdrawal or direction may be accomplished
by delivering written notice thereof to the Trustee or such other institution
maintaining the Certificate Account which describes the amounts deposited in
error in the Certificate Account. The Master Servicer shall maintain adequate
records with respect to all withdrawals made pursuant to this Section. All
funds
deposited in the Certificate Account shall be held in trust for the
Certificateholders until withdrawn in accordance with Section 3.8.
52
(c) The
Trustee shall establish and maintain, on behalf of the Certificateholders,
the
Distribution Account. The Distribution Account shall consist of two separate
subaccounts, each of which shall relate to a particular Mortgage Pool. The
Trustee shall, promptly upon receipt, deposit in the Distribution Account and
retain therein the following:
(i) the
aggregate amount remitted by the Master Servicer to the Trustee in respect
of a
Mortgage Pool pursuant to Section 3.8(a)(ix);
(ii) any
amount deposited by the Master Servicer pursuant to this Section 3.5(c) in
connection with any losses on Permitted Investments; and
(iii) any
other
amounts deposited hereunder which are required to be deposited in the
Distribution Account.
In
the
event that the Master Servicer shall remit any amount not required to be
remitted, it may at any time direct the Trustee to withdraw such amount from
the
applicable subaccount of the Distribution Account, any provision herein to
the
contrary notwithstanding. Such direction may be accomplished by delivering
an
Officer’s Certificate to the Trustee which describes the amounts deposited in
error in the Distribution Account. All funds deposited in the Distribution
Account shall be held by the Trustee in trust for the related Certificateholders
until disbursed in accordance with this Agreement or withdrawn in accordance
with Section 3.8. In no event shall the Trustee incur liability for withdrawals
from the Distribution Account at the direction of the Master
Servicer.
(iv) The
institutions at which the Certificate Account and the Distribution Account
are
maintained shall invest funds as directed by the Master Servicer in Permitted
Investments which in both cases shall mature not later than (i) in the case
of
the Certificate Account, the second Business Day next preceding the related
Distribution Account Deposit Date (except that if such Permitted Investment
is
an obligation of the institution that maintains such account, then such
Permitted Investment shall mature not later than the Business Day next preceding
such Distribution Account Deposit Date) and (ii) in the case of the Distribution
Account, the Business Day next preceding the Distribution Date (except that
if
such Permitted Investment is an obligation of the institution that maintains
such fund or account, then such Permitted Investment shall mature not later
than
such Distribution Date) and, in each case, shall not be sold or disposed of
prior to its maturity. If the Master Servicer does not provide such prior
written investment direction, the funds in such accounts will be held
uninvested. All such Permitted Investments shall be made in the name of the
Trustee, for the benefit of the Certificateholders. All income and gain net
of
any losses realized from any such investment of funds on deposit in the
Certificate Account shall be for the benefit of the Master Servicer as servicing
compensation and all income and gain net of any losses realized from any such
investment of funds on deposit in the Distribution Account shall be for the
benefit of the Trustee. The amount of any Realized Losses in the Certificate
Account in respect of any such investments shall promptly be deposited by the
Master Servicer in the Certificate Account and the amount of any Realized Losses
in the Distribution Account in respect of any such investments shall promptly
be
deposited by the Trustee into the Distribution Account. All reinvestment income
earned on amounts on deposit in the Distribution Account shall be for the
benefit of the Trustee. The Trustee in its fiduciary capacity shall not be
liable for the amount of any loss incurred in respect of any investment or
lack
of investment of funds held in the Certificate Account and made in accordance
with this Section 3.5.
53
(v) The
Master Servicer shall give notice to the Trustee, the Seller, each Rating Agency
and the Depositor of any proposed change of the location of the Certificate
Account prior to any change thereof. The Trustee shall give notice to the Master
Servicer, the Seller, each Rating Agency and the Depositor of any proposed
change of the location of the Distribution Account prior to any change
thereof.
SECTION
3.6 Collection
of Taxes, Assessments and Similar Items; Escrow Accounts.
(a) To
the
extent required by the related Mortgage Note and not violative of current law,
the Master Servicer shall establish and maintain one or more accounts (each,
an
“Escrow Account”) and deposit and retain therein all collections from the
Mortgagors (or advances by the Master Servicer) for the payment of taxes,
assessments, hazard insurance premiums or comparable items for the account
of
the Mortgagors. Nothing herein shall require the Master Servicer to compel
a
Mortgagor to establish an Escrow Account in violation of applicable
law.
(b) Withdrawals
of amounts so collected from the Escrow Accounts may be made only to effect
timely payment of taxes, assessments, hazard insurance premiums, condominium
or
PUD association dues, or comparable items, to reimburse the Master Servicer
out
of related collections for any payments made pursuant to Sections 3.1 hereof
(with respect to taxes and assessments and insurance premiums) and 3.9 hereof
(with respect to hazard insurance), to refund to any Mortgagors any sums
determined to be overages, to pay interest, if required by law or the terms
of
the related Mortgage or Mortgage Note, to Mortgagors on balances in the Escrow
Account or to clear and terminate the Escrow Account at the termination of
this
Agreement in accordance with Section 9.1 hereof. The Escrow Accounts shall
not
be a part of the Trust Fund.
54
(c) The
Master Servicer shall advance any payments referred to in Section 3.6(a) that
are not timely paid by the Mortgagors on the date when the tax, premium or
other
cost for which such payment is intended is due, but the Master Servicer shall
be
required so to advance only to the extent that such advances, in the good faith
judgment of the Master Servicer, will be recoverable by the Master Servicer
out
of Insurance Proceeds, Liquidation Proceeds or otherwise.
SECTION
3.7 Access
to
Certain Documentation and Information Regarding the Mortgage Loans.
The
Master Servicer shall afford the Depositor and the Trustee reasonable access
to
all records and documentation regarding the Mortgage Loans and all accounts,
insurance information and other matters relating to this Agreement, such access
being afforded without charge, but only upon reasonable request and during
normal business hours at the office designated by the Master
Servicer.
Upon
reasonable advance notice in writing, the Master Servicer will provide to each
Certificateholder or Certificate Owner which is a savings and loan association,
bank or insurance company certain reports and reasonable access to information
and documentation regarding the Mortgage Loans sufficient to permit such
Certificateholder or Certificate Owner to comply with applicable regulations
of
the OTS or other regulatory authorities with respect to investment in the
Certificates; provided that the Master Servicer shall be entitled to be
reimbursed by each such Certificateholder or Certificate Owner for actual
expenses incurred by the Master Servicer in providing such reports and
access.
SECTION
3.8 Permitted
Withdrawals from the Certificate Account and Distribution Account.
(a) The
Master Servicer may from time to time, or shall (in the case of Section
3.8(a)(ix)), make withdrawals from the applicable subaccount of the Certificate
Account for the following purposes:
(i) to
the
extent not previously retained by the Master Servicer, to pay to the Master
Servicer the master servicing compensation to which it is entitled pursuant
to
Section 3.14, and earnings on or investment income with respect to funds in
or
credited to the Certificate Account as additional master servicing
compensation;
(ii) to
the
extent not previously retained by the Master Servicer, to reimburse the Master
Servicer for unreimbursed Advances made by it in respect of the related Mortgage
Pool, such right of reimbursement pursuant to this subclause (ii) being limited
to amounts received on the Mortgage Loan(s) in respect of which any such Advance
was made;
55
(iii) to
reimburse the Master Servicer for any Nonrecoverable Advance previously made
in
respect of the related Mortgage Pool;
(iv) to
reimburse the Master Servicer for Insured Expenses from the related Insurance
Proceeds in respect of the related Mortgage Pool;
(v) to
reimburse the Master Servicer for (a) unreimbursed Servicing Advances in respect
of the related Mortgage Pool, the Master Servicer’s right to reimbursement
pursuant to this clause (a) with respect to any Mortgage Loan being limited
to
amounts received on such Mortgage Loan(s) which represent late recoveries of
the
payments for which such advances were made pursuant to Section 3.1 or Section
3.6 and (b) for unpaid Master Servicing Fees as provided in Section 3.11
hereof;
(vi) to
pay to
the Seller or Master Servicer, as applicable, with respect to each Mortgage
Loan
in respect of the related Mortgage Pool or property acquired in respect thereof
that has been purchased pursuant to Section 2.2, 2.3 or 3.11, all amounts
received thereon after the date of such purchase;
(vii) to
reimburse the Seller, the Master Servicer or the Depositor for expenses incurred
by any of them and reimbursable pursuant to Section 6.3 hereof;
(viii) to
withdraw any amount deposited in the Certificate Account and not required to
be
deposited therein;
(ix) on
or
prior to the Distribution Account Deposit Date, to withdraw an amount equal
to
the related Available Funds and the Trustee Fee for such Distribution Date
and
remit such amount to the Trustee for deposit in the Distribution Account;
and
(x) to
clear
and terminate the Certificate Account upon termination of this Agreement
pursuant to Section 9.1 hereof.
The
Master Servicer shall keep and maintain separate accounting, on a Mortgage
Loan-by-Mortgage Loan basis and on a Mortgage Pool-by-Mortgage Pool basis,
for
the purpose of justifying any withdrawal from the Certificate Account pursuant
to such subclauses (i), (ii), (iv), (v) and (vi). Prior to making any withdrawal
from the Certificate Account pursuant to subclause (iii), the Master Servicer
shall deliver to the Trustee an Officer’s Certificate of a Servicing Officer
indicating the amount of any previous Advance determined by the Master Servicer
to be a Nonrecoverable Advance and identifying the related Mortgage Loans(s),
and their respective portions of such Nonrecoverable Advance.
(b) The
Trustee shall withdraw funds from the applicable subaccount of the Distribution
Account for distributions to the related Certificateholders in the manner
specified in this Agreement (and to withhold from the amounts so withdrawn,
the
amount of any taxes that it is authorized to withhold pursuant to the last
paragraph of Section 8.11). In addition, the Trustee may (and with respect
to
clauses (i) and (ii) below, shall), prior to making the distribution pursuant
to
Section 4.2 from time to time make withdrawals from the Distribution Account
for
the following purposes:
56
(i) to
pay to
itself the Trustee Fee for the related Distribution Date;
(ii) to
pay to
itself earnings on or investment income with respect to funds in the
Distribution Account;
(iii) to
withdraw and return to the Master Servicer any amount deposited in the
Distribution Account and not required to be deposited therein; and
(iv) to
clear
and terminate the Distribution Account upon termination of the Agreement
pursuant to Section 9.1 hereof.
SECTION
3.9 Maintenance
of Hazard Insurance; Maintenance of Primary Insurance Policies.
(a) The
Master Servicer shall cause to be maintained, for each Mortgage Loan, hazard
insurance with extended coverage in an amount that is at least equal to the
lesser of (i) the maximum insurable value of the improvements securing such
Mortgage Loan or (ii) the greater of (y) the outstanding principal balance
of
the Mortgage Loan and (z) an amount such that the proceeds of such policy shall
be sufficient to prevent the Mortgagor and/or the mortgagee from becoming a
co-insurer. Each such policy of standard hazard insurance shall contain, or
have
an accompanying endorsement that contains, a standard mortgagee clause. Any
amounts collected by the Master Servicer under any such policies (other than
the
amounts to be applied to the restoration or repair of the related Mortgaged
Property or amounts released to the Mortgagor in accordance with the Master
Servicer’s normal servicing procedures) shall be deposited in the applicable
subaccount of the Certificate Account. Any cost incurred by the Master Servicer
in maintaining any such insurance shall not, for the purpose of calculating
monthly distributions to the Certificateholders or remittances to the Trustee
for their benefit, be added to the principal balance of the Mortgage Loan,
notwithstanding that the terms of the Mortgage Loan so permit. Such costs shall
be recoverable by the Master Servicer out of late payments by the related
Mortgagor or out of Liquidation Proceeds to the extent permitted by Section
3.8
hereof. It is understood and agreed that no earthquake or other additional
insurance is to be required of any Mortgagor or maintained on property acquired
in respect of a Mortgage other than pursuant to such applicable laws and
regulations as shall at any time be in force and as shall require such
additional insurance. If the Mortgaged Property is located at the time of
origination of the Mortgage Loan in a federally designated special flood hazard
area and such area is participating in the national flood insurance program,
the
Master Servicer shall cause flood insurance to be maintained with respect to
such Mortgage Loan. Such flood insurance shall be in an amount equal to the
least of (i) the original principal balance of the related Mortgage Loan, (ii)
the replacement value of the improvements which are part of such Mortgaged
Property, and (iii) the maximum amount of such insurance available for the
related Mortgaged Property under the national flood insurance
program.
57
(b) In
the
event that the Master Servicer shall obtain and maintain a blanket policy
insuring against hazard losses on all of the Mortgage Loans, it shall
conclusively be deemed to have satisfied its obligations as set forth in the
first sentence of this Section, it being understood and agreed that such policy
may contain a deductible clause on terms substantially equivalent to those
commercially available and maintained by comparable servicers. If such policy
contains a deductible clause, the Master Servicer shall, in the event that
there
shall not have been maintained on the related Mortgaged Property a policy
complying with the first sentence of this Section, and there shall have been
a
loss that would have been covered by such policy, deposit in the applicable
subaccount of the Certificate Account the amount not otherwise payable under
the
blanket policy because of such deductible clause. In connection with its
activities as Master Servicer of the Mortgage Loans, the Master Servicer agrees
to present, on behalf of itself, the Depositor, and the Trustee for the benefit
of the Certificateholders, claims under any such blanket policy.
(c) The
Master Servicer shall not take any action which would result in non-coverage
under any applicable Primary Insurance Policy of any loss which, but for the
actions of the Master Servicer, would have been covered thereunder. The Master
Servicer shall not cancel or refuse to renew any such Primary Insurance Policy
that is in effect at the date of the initial issuance of the Certificates and
is
required to be kept in force hereunder unless the replacement Primary Insurance
Policy for such canceled or non-renewed policy is maintained with a Qualified
Insurer.
The
Master Servicer shall not be required to maintain any Primary Insurance Policy
(i) with respect to any Mortgage Loan with a Loan-to-Value Ratio less than
or
equal to 80% as of any date of determination or, based on a new appraisal,
the
principal balance of such Mortgage Loan represents 80% or less of the new
appraised value or (ii) if maintaining such Primary Insurance Policy is
prohibited by applicable law.
The
Master Servicer agrees to effect the timely payment of the premiums on each
Primary Insurance Policy, and such costs not otherwise recoverable shall be
recoverable by the Master Servicer from the related liquidation
proceeds.
(d) In
connection with its activities as Master Servicer of the Mortgage Loans, the
Master Servicer agrees to present on behalf of itself, the Trustee and
Certificateholders, claims to the insurer under any Primary Insurance Policies
and, in this regard, to take such reasonable action as shall be necessary to
permit recovery under any Primary Insurance Policies respecting defaulted
Mortgage Loans. Any amounts collected by the Master Servicer under any Primary
Insurance Policies shall be deposited in the applicable subaccount of the
Certificate Account.
58
SECTION
3.10 Enforcement
of Due-on-Sale Clauses; Assumption Agreements.
(a) Except
as
otherwise provided in this Section, when any property subject to a Mortgage
has
been conveyed by the Mortgagor, the Master Servicer shall to the extent that
it
has knowledge of such conveyance, enforce any due-on-sale clause contained
in
any Mortgage Note or Mortgage, to the extent permitted under applicable law
and
governmental regulations, but only to the extent that such enforcement will
not
adversely affect or jeopardize coverage under any Required Insurance Policy.
Notwithstanding the foregoing, the Master Servicer is not required to exercise
such rights with respect to a Mortgage Loan if the Person to whom the related
Mortgaged Property has been conveyed or is proposed to be conveyed satisfies
the
terms and conditions contained in the Mortgage Note and Mortgage related thereto
and the consent of the mortgagee under such Mortgage Note or Mortgage is not
otherwise so required under such Mortgage Note or Mortgage as a condition to
such transfer. In the event that the Master Servicer is prohibited by law from
enforcing any such due-on-sale clause, or if coverage under any Required
Insurance Policy would be adversely affected, or if nonenforcement is otherwise
permitted hereunder, the Master Servicer is authorized, subject to Section
3.10(b), to take or enter into an assumption and modification agreement from
or
with the person to whom such property has been or is about to be conveyed,
pursuant to which such person becomes liable under the Mortgage Note and, unless
prohibited by applicable state law, the Mortgagor remains liable thereon,
provided that the Mortgage Loan shall continue to be covered (if so covered
before the Master Servicer enters such agreement) by the applicable Required
Insurance Policies. The Master Servicer, subject to Section 3.10(b), is also
authorized with the prior approval of the insurers under any Required Insurance
Policies to enter into a substitution of liability agreement with such Person,
pursuant to which the original Mortgagor is released from liability and such
Person is substituted as Mortgagor and becomes liable under the Mortgage Note.
Notwithstanding the foregoing, the Master Servicer shall not be deemed to be
in
default under this Section by reason of any transfer or assumption which the
Master Servicer reasonably believes it is restricted by law from preventing,
for
any reason whatsoever.
(b) Subject
to the Master Servicer’s duty to enforce any due-on-sale clause to the extent
set forth in Section 3.10(a) hereof, in any case in which a Mortgaged Property
has been conveyed to a Person by a Mortgagor, and such Person is to enter into
an assumption agreement or modification agreement or supplement to the Mortgage
Note or Mortgage that requires the signature of the Trustee, or if an instrument
of release signed by the Trustee is required releasing the Mortgagor from
liability on the Mortgage Loan, the Master Servicer shall prepare and deliver
or
cause to be prepared and delivered to the Trustee for signature and shall
direct, in writing, the Trustee to execute the assumption agreement with the
Person to whom the Mortgaged Property is to be conveyed and such modification
agreement or supplement to the Mortgage Note or Mortgage or other instruments
as
are reasonable or necessary to carry out the terms of the Mortgage Note or
Mortgage or otherwise to comply with any applicable laws regarding assumptions
or the transfer of the Mortgaged Property to such Person. In connection with
any
such assumption, no material term of the Mortgage Note may be changed. In
addition, the substitute Mortgagor and the Mortgaged Property must be acceptable
to the Master Servicer in accordance with its underwriting standards as then
in
effect. Together with each such substitution, assumption or other agreement
or
instrument delivered to the Trustee for execution by it, the Master Servicer
shall deliver an Officer’s Certificate signed by a Servicing Officer stating
that the requirements of this subsection have been met in connection therewith.
The Master Servicer shall notify the Trustee that any such substitution or
assumption agreement has been completed by forwarding to the Trustee the
original of such substitution or assumption agreement, which in the case of
the
original shall be added to the related Mortgage File and shall, for all
purposes, be considered a part of such Mortgage File to the same extent as
all
other documents and instruments constituting a part thereof. Any fee collected
by the Master Servicer for entering into an assumption or substitution of
liability agreement will be retained by the Master Servicer as additional
servicing compensation.
59
SECTION
3.11 Realization
Upon Defaulted Mortgage Loans; Repurchase of Certain Mortgage
Loans.
The
Master Servicer shall use reasonable efforts to foreclose upon or otherwise
comparably convert the ownership of properties securing such of the Mortgage
Loans as come into and continue in default and as to which no satisfactory
arrangements can be made for collection of delinquent payments. In connection
with such foreclosure or other conversion, the Master Servicer shall follow
such
practices and procedures as it shall deem necessary or advisable and as shall
be
normal and usual in its general mortgage servicing activities and meet the
requirements of the insurer under any Required Insurance Policy; provided,
however, that the Master Servicer shall not be required to expend its own funds
in connection with any foreclosure or towards the restoration of any property
unless it shall determine (i) that such restoration and/or foreclosure will
increase the proceeds of liquidation of the Mortgage Loan after reimbursement
to
itself of such expenses and (ii) that such expenses will be recoverable to
it
through Liquidation Proceeds (respecting which it shall have priority for
purposes of withdrawals from the Certificate Account). The Master Servicer
shall
be responsible for all other costs and expenses incurred by it in any such
proceedings; provided, however, that it shall be entitled to reimbursement
thereof from the liquidation proceeds with respect to the related Mortgaged
Property, as provided in the definition of Liquidation Proceeds. If the Master
Servicer has knowledge that a Mortgaged Property which the Master Servicer
is
contemplating acquiring in foreclosure or by deed in lieu of foreclosure is
located within a 1 mile radius of any site listed in the Expenditure Plan for
the Hazardous Substance Clean Up Bond Act of 1984 or other site with
environmental or hazardous waste risks known to the Master Servicer, the Master
Servicer will, prior to acquiring the Mortgaged Property, consider such risks
and only take action in accordance with its established environmental review
procedures.
With
respect to any REO Property, the deed or certificate of sale shall be taken
in
the name of the Trust Fund for the benefit of the Certificateholders, or its
nominee, on behalf of the Certificateholders. The Master Servicer shall ensure
that the title to such REO Property references the Pooling and Servicing
Agreement and the Trust Fund’s capacity thereunder. Pursuant to its efforts to
sell such REO Property, the Master Servicer shall either itself or through
an
agent selected by the Master Servicer protect and conserve such REO Property
in
the same manner and to such extent as is customary in the locality where such
REO Property is located. The Master Servicer shall perform the tax reporting
and
withholding required by Sections 1445 and 6050J of the Code with respect to
foreclosures and abandonments, the tax reporting required by Section 6050H
of
the Code with respect to the receipt of mortgage interest from individuals
and
any tax reporting required by Section 6050P of the Code with respect to the
cancellation of indebtedness by certain financial entities, by preparing such
tax and information returns as may be required, in the form required, and
delivering the same to the Trustee for filing.
60
In
the
event that the Trust Fund acquires any Mortgaged Property as aforesaid or
otherwise in connection with a default or imminent default on a Mortgage Loan,
the Master Servicer shall dispose of such Mortgaged Property prior to the close
of the third taxable year after the taxable year of its acquisition by the
Trust
Fund unless the Trustee shall have been supplied with an Opinion of Counsel
to
the effect that the holding by the Trust Fund of such Mortgaged Property
subsequent to such three-year period will not result in the imposition of taxes
on “prohibited transactions” of any REMIC hereunder as defined in Section 860F
of the Code or cause any REMIC created hereunder to fail to qualify as a REMIC
at any time that any Certificates are outstanding, in which case the Trust
Fund
may continue to hold such Mortgaged Property (subject to any conditions
contained in such Opinion of Counsel). Notwithstanding any other provision
of
this Agreement, no Mortgaged Property acquired by the Trust Fund shall be rented
(or allowed to continue to be rented) or otherwise used for the production
of
income by or on behalf of the Trust Fund in such a manner or pursuant to any
terms that would (i) cause such Mortgaged Property to fail to qualify as
“foreclosure property” within the meaning of Section 860G(a)(8) of the Code or
(ii) subject any REMIC hereunder to the imposition of any federal, state or
local income taxes on the income earned from such Mortgaged Property under
Section 860G(c) of the Code or otherwise, unless the Master Servicer has agreed
to indemnify and hold harmless the Trust Fund with respect to the imposition
of
any such taxes.
In
the
event of a default on a Mortgage Loan one or more of whose obligor is not a
United States Person, as that term is defined in Section 7701(a)(30) of the
Code, in connection with any foreclosure or acquisition of a deed in lieu of
foreclosure (together, “foreclosure”) in respect of such Mortgage Loan, the
Master Servicer will cause compliance with the provisions of Treasury Regulation
Section 1.1445-2(d)(3) (or any successor thereto) necessary to assure that
no
withholding tax obligation arises with respect to the proceeds of such
foreclosure except to the extent, if any, that proceeds of such foreclosure
are
required to be remitted to the obligors on such Mortgage Loan.
The
decision of the Master Servicer to foreclose on a defaulted Mortgage Loan shall
be subject to a determination by the Master Servicer that the proceeds of such
foreclosure would exceed the costs and expenses of bringing such a proceeding.
The income earned from the management of any REO Properties, net of
reimbursement to the Master Servicer for expenses incurred (including any
property or other taxes) in connection with such management and net of
unreimbursed Master Servicing Fees, Advances and Servicing Advances, shall
be
applied to the payment of principal of and interest on the related defaulted
Mortgage Loans (with interest accruing as though such Mortgage Loans were still
current) and all such income shall be deemed, for all purposes in this
Agreement, to be payments on account of principal and interest on the related
Mortgage Notes and shall be deposited into the applicable subaccount of the
Certificate Account. To the extent the net income received during any calendar
month is in excess of the amount attributable to amortizing principal and
accrued interest at the related Mortgage Rate on the related Mortgage Loan
for
such calendar month, such excess shall be considered to be a partial prepayment
of principal of the related Mortgage Loan.
61
The
proceeds from any liquidation of a Mortgage Loan, as well as any income from
an
REO Property, will be applied in the following order of priority: first, to
reimburse the Master Servicer for any related unreimbursed Servicing Advances
and Master Servicing Fees; second, to reimburse the Master Servicer for any
unreimbursed Advances; third, to reimburse the applicable subaccount of the
Certificate Account for any Nonrecoverable Advances (or portions thereof) that
were previously withdrawn by the Master Servicer pursuant to Section 3.8(a)(iii)
that related to such Mortgage Loan; fourth, to accrued and unpaid interest
(to
the extent no Advance has been made for such amount or any such Advance has
been
reimbursed) on the Mortgage Loan or related REO Property, at the Adjusted Net
Mortgage Rate to the Due Date occurring in the month in which such amounts
are
required to be distributed; and fifth, as a recovery of principal of the
Mortgage Loan. Excess Proceeds, if any, from the liquidation of a Liquidated
Mortgage Loan will be retained by the Master Servicer as additional servicing
compensation pursuant to Section 3.14.
The
Master Servicer, with the consent of the Trustee, shall have the right to
purchase for its own account from the Trust Fund any Mortgage Loan which is
91
days or more delinquent at a price equal to the Purchase Price. The Purchase
Price for any Mortgage Loan purchased hereunder shall be deposited in the
applicable subaccount of the Certificate Account and the Trustee, upon receipt
of a certificate from the Master Servicer in the form of Exhibit M hereto,
shall
release or cause to be released to the purchaser of such Mortgage Loan the
related Mortgage File and shall execute and deliver such instruments of transfer
or assignment prepared by the purchaser of such Mortgage Loan, in each case
without recourse, as shall be necessary to vest in the purchaser of such
Mortgage Loan any Mortgage Loan released pursuant hereto and the purchaser
of
such Mortgage Loan shall succeed to all the Trustee’s right, title and interest
in and to such Mortgage Loan and all security and documents related thereto.
Such assignment shall be an assignment outright and not for security. The
purchaser of such Mortgage Loan shall thereupon own such Mortgage Loan, and
all
security and documents, free of any further obligation to the Trustee or the
Certificateholders with respect thereto.
SECTION
3.12 Trustee
to Cooperate; Release of Mortgage Files.
Upon
the
payment in full of any Mortgage Loan, or the receipt by the Master Servicer
of a
notification that payment in full will be escrowed in a manner customary for
such purposes, the Master Servicer will immediately notify the Trustee by
delivering, or causing to be delivered a “Request for Release” substantially in
the form of Exhibit M. Upon receipt of such request, the Trustee shall or shall
cause the Custodian to promptly release the related Mortgage File to the Master
Servicer, and the Trustee shall at the Master Servicer’s direction execute and
deliver to the Master Servicer the request for reconveyance, deed of
reconveyance or release or satisfaction of mortgage or such instrument releasing
the lien of the Mortgage in each case provided by the Master Servicer, together
with the Mortgage Note with written evidence of cancellation thereon. Expenses
incurred in connection with any instrument of satisfaction or deed of
reconveyance shall be chargeable to the related Mortgagor. From time to time
and
as shall be appropriate for the servicing or foreclosure of any Mortgage Loan,
including for such purpose, collection under any policy of flood insurance,
any
fidelity bond or errors or omissions policy, or for the purposes of effecting
a
partial release of any Mortgaged Property from the lien of the Mortgage or
the
making of any corrections to the Mortgage Note or the Mortgage or any of the
other documents included in the Mortgage File, the Trustee shall, upon delivery
to the Trustee of a Request for Release in the form of Exhibit L signed by
a
Servicing Officer, release the Mortgage File to the Master Servicer. Subject
to
the further limitations set forth below, the Master Servicer shall cause the
Mortgage File or documents so released to be returned to the Trustee or its
Custodian when the need therefor by the Master Servicer no longer exists, unless
the Mortgage Loan is liquidated and the proceeds thereof are deposited in the
applicable subaccount of the Certificate Account, in which case the Master
Servicer shall deliver to the Trustee a Request for Release in the form of
Exhibit M, signed by a Servicing Officer.
62
If
the
Master Servicer at any time seeks to initiate a foreclosure proceeding in
respect of any Mortgaged Property as authorized by this Agreement, the Master
Servicer shall deliver or cause to be delivered to the Trustee, for signature,
as appropriate, any court pleadings, requests for trustee’s sale or other
documents necessary to effectuate such foreclosure or any legal action brought
to obtain judgment against the Mortgagor on the Mortgage Note or the Mortgage
or
to obtain a deficiency judgment or to enforce any other remedies or rights
provided by the Mortgage Note or the Mortgage or otherwise available at law
or
in equity.
SECTION
3.13 Documents
Records and Funds in Possession of Master Servicer to be Held for the
Trustee.
Notwithstanding
any other provisions of this Agreement, the Master Servicer shall transmit
to
the Trustee as required by this Agreement all documents and instruments in
respect of a Mortgage Loan coming into the possession of the Master Servicer
from time to time and shall account fully to the Trustee for any funds received
by the Master Servicer or which otherwise are collected by the Master Servicer
as Liquidation Proceeds or Insurance Proceeds in respect of any Mortgage Loan.
All Mortgage Files and funds collected or held by, or under the control of,
the
Master Servicer in respect of any Mortgage Loans, whether from the collection
of
principal and interest payments or from Liquidation Proceeds, including but
not
limited to, any funds on deposit in the Certificate Account, shall be held
by
the Master Servicer for and on behalf of the Trustee and shall be and remain
the
sole and exclusive property of the Trustee, subject to the applicable provisions
of this Agreement. The Master Servicer also agrees that it shall not create,
incur or subject any Mortgage File or any funds that are deposited in the
Certificate Account, Distribution Account or any Escrow Account, or any funds
that otherwise are or may become due or payable to the Trustee for the benefit
of the Certificateholders, to any claim, lien, security interest, judgment,
levy, writ of attachment or other encumbrance, or assert by legal action or
otherwise any claim or right of setoff against any Mortgage File or any funds
collected on, or in connection with, a Mortgage Loan, except, however, that
the
Master Servicer shall be entitled to set off against and deduct from any such
funds any amounts that are properly due and payable to the Master Servicer
under
this Agreement.
SECTION
3.14 Master
Servicing Compensation.
As
compensation for its activities as Master Servicer hereunder and as a
subservicer pursuant to the Servicing Rights Transfer and Subservicing
Agreement, the Master Servicer shall be entitled to retain or withdraw from
the
Certificate Account an amount equal to the Master Servicing Fee for each
Mortgage Loan, provided that the aggregate Master Servicing Fee with respect
to
any Distribution Date shall be reduced (i) by the amount of any Compensating
Interest paid by the Master Servicer with respect to such Distribution Date,
and
(ii) with respect to the first Distribution Date, an amount equal to any amount
to be deposited into the Distribution Account by the Depositor pursuant to
Section 2.1(a) and not so deposited.
63
Additional
servicing compensation in the form of (i) Excess Proceeds, Prepayment Interest
Excess and all income and gain net of any losses realized from Permitted
Investments and (ii) prepayment penalties, assumption fees and late payment
charges in each case under the circumstances and in the manner set forth in
the
applicable Mortgage Note or Mortgage shall be retained by the Master Servicer
to
the extent not required to be deposited in the Certificate Account pursuant
to
Section 3.5 hereof. The Master Servicer shall be required to pay all expenses
incurred by it in connection with its master servicing activities hereunder
(including payment of any premiums for hazard insurance and any Primary
Insurance Policy and maintenance of the other forms of insurance coverage
required by this Agreement) and shall not be entitled to reimbursement therefor
except as specifically provided in this Agreement.
SECTION
3.15 Access
to
Certain Documentation.
The
Master Servicer shall provide to the OTS and the FDIC and to comparable
regulatory authorities supervising Holders of Certificates or Certificate Owners
and the examiners and supervisory agents of the OTS, the FDIC and such other
authorities, access to the documentation regarding the Mortgage Loans required
by applicable regulations of the OTS and the FDIC. Such access shall be afforded
without charge, but only upon reasonable and prior written request and during
normal business hours at the offices designated by the Master Servicer. Nothing
in this Section shall limit the obligation of the Master Servicer to observe
any
applicable law prohibiting disclosure of information regarding the Mortgagors
and the failure of the Master Servicer to provide access as provided in this
Section as a result of such obligation shall not constitute a breach of this
Section.
SECTION
3.16 Annual
Statement as to Compliance.
(a) The
Master Servicer shall deliver to the Depositor and the Trustee on or before
March 15 of each year, commencing in 2007, an Officer’s Certificate stating, as
to the signer thereof, that (i) a review of the activities of the Master
Servicer during the preceding calendar year (or applicable portion thereof)
and
of the performance of the Master Servicer under this Agreement has been made
under such officer’s supervision and (ii) to the best of such officer’s
knowledge, based on such review, the Master Servicer has fulfilled all its
obligations under this Agreement in all material respects throughout such year
(or applicable portion thereof), or, if there has been a failure to fulfill
any
such obligation in any material respect, specifying each such failure known
to
such officer and the status thereof.
(b) The
Master Servicer shall cause each Subservicer that is a reporting Subcontractor
to deliver to the Depositor and the Trustee on or before March 15 of each year,
commencing in 2007, an Officer’s Certificate stating, as to the signer thereof,
that (i) a review of the activities of such Subservicer during the preceding
calendar year (or applicable portion thereof) and of the performance of the
Subservicer under the applicable Subservicing Agreement or primary servicing
agreement, has been made under such officer’s supervision and (ii) to the best
of such officer’s knowledge, based on such review, such Subservicer has
fulfilled all its obligations under the applicable Subservicing Agreement or
primary servicing agreement, in all material respects throughout such year
(or
applicable portion thereof), or, if there has been a failure to fulfill any
such
obligation in any material respect, specifying each such failure known to such
officer and the nature and status thereof.
64
SECTION
3.17 Errors
and Omissions Insurance; Fidelity Bonds.
The
Master Servicer shall for so long as it acts as master servicer under this
Agreement, obtain and maintain in force (a) a policy or policies of insurance
covering errors and omissions in the performance of its obligations as Master
Servicer hereunder and (b) a fidelity bond in respect of its officers, employees
and agents. Each such policy or policies and bond shall, together, comply with
the requirements from time to time of FNMA or FHLMC for persons performing
servicing for mortgage loans purchased by FNMA or FHLMC. In the event that
any
such policy or bond ceases to be in effect, the Master Servicer shall obtain
a
comparable replacement policy or bond from an insurer or issuer, meeting the
requirements set forth above as of the date of such replacement.
SECTION
3.18 Notification
of Adjustments.
On
each
Adjustment Date, the Master Servicer shall make interest rate adjustments for
each Mortgage Loan in compliance with the requirements of the related Mortgage
and Mortgage Note and applicable regulations. The Master Servicer shall execute
and deliver the notices required by each Mortgage and Mortgage Note and
applicable regulations regarding interest rate adjustments. The Master Servicer
also shall provide timely notification to the Trustee of all applicable data
and
information regarding such interest rate adjustments and the Master Servicer’s
methods of implanting such interest rate adjustments. Upon the discovery by
the
Master Servicer or the Trustee that the Master Servicer has failed to adjust
or
has incorrectly adjusted a Mortgage Rate or a monthly payment pursuant to the
terms of the related Mortgage Note and Mortgage, the Master Servicer shall
immediately deposit in the Certificate Account from its own funds the amount
of
any interest loss caused thereby without reimbursement therefor; provided,
however, the Master Servicer shall be held harmless with respect to any interest
rate adjustments made by any servicer prior to the Master Servicer.
ARTICLE
IV
DISTRIBUTIONS
AND ADVANCES BY THE MASTER SERVICER
SECTION
4.1 Advances.
The
Master Servicer shall determine on the Business Day prior to each Master
Servicer Advance Date whether it is required to make an Advance pursuant to
the
definition thereof. If the Master Servicer determines it is required to make
an
Advance, it shall, on or before the Master Servicer Advance Date, either (i)
deposit into the applicable subaccount of the Certificate Account an amount
equal to the Advance or (ii) make an appropriate entry in its records relating
to the applicable subaccount of the Certificate Account that any Amount Held
for
Future Distribution has been used by the Master Servicer in discharge of its
obligation to make any such Advance. Any funds so applied shall be replaced
by
the Master Servicer by deposit in the applicable subaccount of the Certificate
Account no later than the close of business on the Business Day preceding the
next Master Servicer Advance Date. The Master Servicer shall be entitled to
be
reimbursed from the applicable subaccount of the Certificate Account for all
Advances of its own funds made pursuant to this Section as provided in Section
3.8. The obligation to make Advances with respect to any Mortgage Loan shall
continue until the ultimate disposition of the REO Property or Mortgaged
Property relating to such Mortgage Loan. As to any Distribution Date, the Master
Servicer shall inform the Trustee in writing of the amount of the Advance to
be
made by the Master Servicer on each Master Servicer Advance Date no later 1:30
p.m. Central time on the second Business Day immediately preceding such
Distribution Date.
65
The
Master Servicer shall deliver to the Trustee on the related Master Servicer
Advance Date an Officer’s Certificate of a Servicing Officer indicating the
amount of any proposed Advance determined by the Master Servicer to be a
Nonrecoverable Advance.
SECTION
4.2 Priorities
of Distribution.
(a) On
each
Distribution Date, the Trustee shall withdraw the Available Funds for each
Certificate Group from the applicable subaccount of the Distribution Account
and
apply such funds to distributions on the Certificates of the related Certificate
Group in the following order and priority and, in each case, to the extent
of
Available Funds remaining:
(i) to
the
Classes of Senior Certificates of the related Certificate Group, the Accrued
Certificate Interest on each such Class for such Distribution Date;
(ii) to
the
Classes of Senior Certificates of the related Certificate Group, any Accrued
Certificate Interest thereon remaining undistributed from previous Distribution
Dates, to the extent of remaining Available Funds from the related Mortgage
Pool;
(iii) to
the
Classes of Senior Certificates of the related Certificate Group entitled to
distributions of principal, to the extent of remaining Available Funds from
the
related Mortgage Pool, the related Senior Optimal Principal Amount for such
Distribution Date and, in the case of the Group I and Group II Senior
Certificates, in the order of priority set forth below in Sections 4.2(b) and
(c), respectively, until the respective Class Certificate Balances thereof
have
been reduced to zero;
(iv) to
the
Class B-1 Certificates, to the extent of remaining Available Funds for the
Mortgage Pools, but subject to the prior payment of amounts described under
Section 4.2(h), in the following order: (1) the Accrued Certificate Interest
thereon for such Distribution Date, (2) any Accrued Certificate Interest thereon
remaining undistributed from previous Distribution Dates and (3) such Class’
Allocable Share for such Distribution Date;
66
(v) to
the
Class B-2 Certificates, to the extent of remaining Available Funds for the
Mortgage Pools, but subject to the prior payment of amounts described under
Section 4.2(h), in the following order: (1) the Accrued Certificate Interest
thereon for such Distribution Date, (2) any Accrued Certificate Interest thereon
remaining undistributed from previous Distribution Dates and (3) such Class’
Allocable Share for such Distribution Date;
(vi) to
the
Class B-3 Certificates, to the extent of remaining Available Funds for the
Mortgage Pools, but subject to the prior payment of amounts described under
Section 4.2(h), in the following order: (1) the Accrued Certificate Interest
thereon for such Distribution Date, (2) any Accrued Certificate Interest thereon
remaining undistributed from previous Distribution Dates and (3) such Class’
Allocable Share for such Distribution Date;
(vii) to
the
Class B-4 Certificates, to the extent of remaining Available Funds for the
Mortgage Pools, but subject to the prior payment of amounts described under
Section 4.2(h), in the following order: (1) the Accrued Certificate Interest
thereon for such Distribution Date, (2) any Accrued Certificate Interest thereon
remaining undistributed from previous Distribution Dates and (3) such Class’
Allocable Share for such Distribution Date;
(viii) to
the
Class B-5 Certificates, to the extent of remaining Available Funds for the
Mortgage Pools, but subject to the prior payment of amounts described under
Section 4.2(h), in the following order: (1) the Accrued Certificate Interest
thereon for such Distribution Date, (2) any Accrued Certificate Interest thereon
remaining undistributed from previous Distribution Dates and (3) such Class’
Allocable Share for such Distribution Date; and
(ix) to
the
Class B-6 Certificates, to the extent of remaining Available Funds for the
Mortgage Pools, but subject to the prior payment of amounts described under
Section 4.2(h), in the following order: (1) the Accrued Certificate Interest
thereon for such Distribution Date, (2) any Accrued Certificate Interest thereon
remaining undistributed from previous Distribution Dates and (3) such Class’
Allocable Share for such Distribution Date.
(b) Amounts
allocated to the Group I Senior Certificates pursuant to Section 4.2(a)(iii)
above will be distributed concurrently to the Class I-A-1 and Class I-A-2
Certificates, pro
rata, until
their respective Class Certificate Balances have each been reduced to
zero.
(c) Amounts
allocated to the Group II Senior Certificates pursuant to Section 4.2(a)(iii)
above will be distributed in the following order of priority:
(i) to
the
Class II-A-R Certificates, until the Class Certificate Balance thereof has
been
reduced to zero; and
67
(ii) concurrently
to the Class II-A-1 and Class II-A-2 Certificates, pro
rata, until
their respective Class Certificate Balances have each been reduced to
zero.
(d) On
each
Distribution Date, the Trustee shall distribute to the Holders of the Class
II-A-R Certificates representing the RL Interest and RU Interest, any Available
Funds remaining in the related REMIC created hereunder for such Distribution
Date after application of all amounts described in clauses (a), (b) and (c)
of
this Section 4.2. Any distributions pursuant to this subsection (d) shall not
reduce the Class Certificate Balance of the Class II-A-R
Certificates.
(e) On
and
after the Cross-Over Date, the amount distributable to the Senior Certificates
of the related Certificate Group pursuant to Section 4.2(a)(iii) for the related
Distribution Date shall be allocated among the related Classes of Senior
Certificates, pro
rata,
on the
basis of their respective Class Certificate Balances immediately prior to such
Distribution Date, regardless of the priorities and amounts set forth in Section
4.2.
(f) If
on any
Distribution Date (i) the Class Certificate Balance of any Class of Subordinated
Certificates (other than the Class of Subordinated Certificates with the highest
priority of distribution) for which the related Class Prepayment Distribution
Trigger was satisfied on such Distribution Date is reduced to zero and (ii)
amounts distributable to such Class or Classes of Subordinated Certificates
pursuant to clauses (2), (3) and (5) of the applicable Subordinated Optimal
Principal Amount remain undistributed on such Distribution Date after all
amounts otherwise distributable on such date pursuant to clauses (iv) through
(ix) of Section 4.2(a) have been distributed, such amounts, to the extent of
such Class’ remaining Allocable Share, shall be distributed on such Distribution
Date to the remaining Classes of Subordinated Certificates on a pro
rata
basis,
subject to the priority of payments described in Section 4.2(a).
(g) In
the
event that in any calendar month the Master Servicer recovers an amount (an
“Unanticipated Recovery”) in respect of principal of a Mortgage Loan which had
previously been allocated as a Realized Loss to any Class of Certificates
pursuant to Section 4.4, on the Distribution Date in the next succeeding
calendar month, the Trustee shall withdraw the Unanticipated Recovery from
the
Distribution Account and sequentially increase, in order of payment priority,
the Class Certificate Balance of each Class of Certificates to which such
Realized Losses were previously allocated by the amount of such Unanticipated
Recovery, but not to exceed the amount of Realized Losses previously allocated
to such Class pursuant to Section 4.4, and shall distribute the amount of such
Unanticipated Recovery to each such Class of Certificates in the order of
payment priority described in Section 4.2(a) of this Agreement. Holders of
any
Class of Certificates for which the Class Certificate Balance has been increased
by the amount of any Unanticipated Recovery will not be entitled to any payment
in respect of Accrued Certificate Interest on the amount of any such increase
for any Interest Accrual Period preceding the Distribution Date on which such
increase occurs. When the Class Certificate Balance of a Class of Certificates
has been reduced to zero, the Holders of such Class shall not be entitled to
any
share of an Unanticipated Recovery, and such Unanticipated Recovery shall be
allocated among all outstanding Classes of Certificates entitled thereto in
accordance with the preceding sentence, subject to the remainder of this
subsection (g). In the event that (i) any Unanticipated Recovery remains
undistributed in accordance with the preceding sentence or (ii) the amount
of an
Unanticipated Recovery exceeds the amount of the Realized Loss previously
allocated to any outstanding Classes with respect to the related Mortgage Loan,
on the applicable Distribution Date the Trustee shall distribute such
Unanticipated Recoveries in accordance with the priorities set forth in Section
4.2(a).
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For
purposes of the preceding paragraph, the share of an Unanticipated Recovery
allocable to any Class of Certificates with respect to a Mortgage Loan shall
be
based on its pro
rata
share
(in proportion to the Class Certificate Balances thereof with respect to such
Distribution Date) of the principal portion of any such Realized Loss previously
allocated with respect to such Mortgage Loan (or Loans).
(h) On
any
Distribution Date on which any Certificate Group constitutes an
Undercollateralized Group, all amounts otherwise distributable as principal
on
the Subordinated Certificates, in reverse order of priority (or, following
the
Cross-over Date, such other amounts described in the immediately following
sentence), will be distributed as principal to the Senior Certificates of such
Undercollateralized Group in accordance with the priorities set forth in
Sections 4.2(b) and (c) until the total Class Certificate Balance of such Senior
Certificates (after giving effect to distributions to be made on that
Distribution Date) equals the Stated Principal Balance of the related Mortgage
Pool (such distribution, an “Undercollateralization Distribution”). If the
Senior Certificates of a Certificate Group constitute an Undercollateralized
Group on any Distribution Date following the Cross-over Date,
Undercollateralization Distributions will be made from the excess of the
Available Funds for the Mortgage Pools not related to an Undercollateralized
Group remaining after all required amounts for that Distribution Date have
been
distributed to the Senior Certificates of such other Certificate Group. In
addition, the amount of any unpaid Accrued Certificate Interest with respect
to
any Undercollateralized Group on any Distribution Date (including any Accrued
Certificate Interest for the related Distribution Date) will be distributed
to
the Senior Certificates of such Undercollateralized Group prior to the payment
of any Undercollateralization Distributions from amounts otherwise distributable
as principal on the Subordinated Certificates, in reverse order of priority
(or,
following the Cross-over Date, as provided in the preceding sentence). Except
as
provided otherwise in this Section 4.2(h), no distribution of principal will
be
made to any Class of Subordinated Certificates until an Undercollateralized
Group is no longer undercollateralized. If more than one Undercollateralized
Group on any Distribution Date is entitled to an Undercollateralization
Distribution, such Undercollateralization Distribution shall be allocated among
the Undercollateralized Groups, pro
rata,
on the
basis of the amount by which the aggregate Class Certificate Balance of the
related Senior Certificates is greater than the aggregate Stated Principal
Balance of the Mortgage Loans in the related Undercollateralized
Groups.
In
addition, if on any Distribution Date the total Class Certificate Balance of
the
Senior Certificates of a Certificate Group (after giving effect to distributions
to be made on that Distribution Date) has been reduced to zero, all amounts
otherwise distributable as prepayments of principal to the Subordinated
Certificates, in reverse order of priority, will instead be distributed as
principal to the Senior Certificates of the other Certificate Groups
pro
rata,
on the
basis of the aggregate Class Certificate Balance of the related Senior
Certificates, unless (a) the Aggregate Subordinated Percentage for such
Distribution Date is at least two times the Aggregate Subordinated Percentage
as
of the Closing Date, (b) the aggregate Stated Principal Balance of all the
Mortgage Loans in the Mortgage Pools delinquent 60 days or more (including
for
this purpose any Mortgage Loans in foreclosure or subject to bankruptcy
proceedings and Mortgage Loans with respect to which the related Mortgaged
Property has been acquired by the Trust Fund), averaged over the preceding
six
month period, as a percentage of the then current aggregate Class Certificate
Balance of the Subordinated Certificates, is less than 50%, and (c) the
cumulative Realized Losses in the Mortgage Pools do not exceed (i) 20% of the
Original Subordinated Principal Balance if such Distribution Date occurs between
and including March 2006 and February 2009, and 30% of the Original Subordinated
Principal Balance if such Distribution Date occurs on or after March 2009.
Except as provided otherwise in this Section 4.2(h), all distributions described
above will be made in accordance with the priorities set forth in Section
4.2(a), (b) and (c).
69
SECTION
4.3 Method
of
Distribution.
(a) All
distributions with respect to each Class of Certificates on each Distribution
Date shall be made pro
rata
among
the outstanding Certificates of such Class, based on the Percentage Interest
in
such Class represented by each Certificate. Payments to the Certificateholders
on each Distribution Date will be made by the Trustee to the Certificateholders
of record on the related Record Date by check or money order mailed to a
Certificateholder at the address appearing in the Certificate Register, or
upon
written request by such Certificateholder to the Trustee made not later than
the
applicable Record Date, by wire transfer to a U.S. depository institution
acceptable to the Trustee, or by such other means of payment as such
Certificateholder and the Trustee shall agree.
(b) Each
distribution with respect to a Book-Entry Certificate shall be paid to the
Depository, which shall credit the amount of such distribution to the accounts
of its Depository Participants in accordance with its normal procedures. Each
Depository Participant shall be responsible for disbursing such distribution
to
the Certificate Owners that it represents and to each financial intermediary
for
which it acts as agent. Each such financial intermediary shall be responsible
for disbursing funds to the Certificate Owners that it represents. All such
credits and disbursements with respect to a Book-Entry Certificate are to be
made by the Depository and the Depository Participants in accordance with the
provisions of the applicable Certificates. Neither the Trustee nor the Master
Servicer shall have any responsibility therefor except as otherwise provided
by
applicable law.
(c) The
Trustee shall withhold or cause to be withheld such amounts as it reasonably
determines are required by the Code (giving full effect to any exemptions from
withholding and related certifications required to be furnished by
Certificateholders or Certificate Owners and any reductions to withholding
by
virtue of any bilateral tax treaties and any applicable certification required
to be furnished by Certificateholders or Certificate Owners with respect
thereto) from distributions to be made to Non-U.S. Persons. If the Trustee
reasonably determines that a more accurate determination of the amount required
to be withheld for a distribution can be made within a reasonable period after
the scheduled date for such distribution, it may hold such distribution in
trust
for a Holder of a Residual Certificate until such determination can be made.
For
the purposes of this paragraph, a “Non-U.S. Person” is (i) an individual other
than a citizen or resident of the United States, (ii) a partnership, corporation
or entity treated as a partnership or corporation for U.S. federal income tax
purposes not formed under the laws of the United States, any state thereof
or
the District of Columbia (unless, in the case of a partnership, Treasury
regulations provide otherwise), (iii) any estate, the income of which is not
subject to U.S. federal income taxation, regardless of source, and (iv) any
trust, other than a trust that a court within the United States is able to
exercise primary supervision over the administration of the trust and one or
more U.S. Persons have the authority to control all substantial decisions of
the
trust.
70
SECTION
4.4 Allocation
of Losses.
(a) On
or
prior to each Determination Date, the Master Servicer shall determine the amount
of any Realized Loss in respect of each Mortgage Loan that occurred during
the
immediately preceding calendar month.
(b) With
respect to any Distribution Date, the principal portion of each Realized Loss
(other than any Excess Loss) with respect to a Mortgage Pool shall be allocated
in the following order of priority:
(i) to
the
Class B-6 Certificates until the Class Certificate Balance thereof has been
reduced to zero;
(ii) to
the
Class B-5 Certificates until the Class Certificate Balance thereof has been
reduced to zero;
(iii) to
the
Class B-4 Certificates until the Class Certificate Balance thereof has been
reduced to zero;
(iv) to
the
Class B-3 Certificates until the Class Certificate Balance thereof has been
reduced to zero;
(v) to
the
Class B-2 Certificates until the Class Certificate Balance thereof has been
reduced to zero;
(vi) to
the
Class B-1 Certificates until the Class Certificate Balance thereof has been
reduced to zero; and
(vii) to
the
Classes of Senior Certificates of the related Certificate Group,
pro
rata,
in
accordance with their Class Certificate Balances; provided,
that
(a) the principal portion of Realized Losses (other than Excess Losses) on
the
Mortgage Loans allocable to the Class I-A-1 Certificates will instead be borne
first by the Class I-A-2 Certificates until its Class Certificate Balance is
reduced to zero (in addition to other Realized Losses allocable to the Class
I-A-2 Certificates), and not by the Class I-A-1 Certificates, for so long as
the
Class Certificate Balance of the Class I-A-2 Certificates is greater than zero,
and (b) the principal portion of Realized Losses (other than Excess Losses)
on
the Mortgage Loans allocable to the Class II-A-1 Certificates will instead
be
borne first by the Class II-A-2 Certificates until its Class Certificate Balance
is reduced to zero (in addition to other Realized Losses allocable to the Class
II-A-2 Certificates), and not by the Class II-A-1 Certificates, for so long
as
the Class Certificate Balance of the Class II-A-2 Certificates is greater than
zero.
71
(c) With
respect to any Distribution Date, the principal portion of any Excess Loss
with
respect to a Mortgage Pool (other than Excess Bankruptcy Losses attributable
to
Debt Service Reductions) shall be allocated pro
rata
to each
Class of Certificates of the related Certificate Group based on their respective
Class Certificate Balances (in the case of the Senior Certificates) or
Apportioned Principal Balances (in the case of the Subordinated
Certificates).
(d) Any
Realized Losses allocated to a Class of Certificates pursuant to Section 4.4(b)
or (c) shall be allocated among the Certificates of such Class in proportion
to
their respective Certificate Principal Balances. Any allocation of Realized
Losses pursuant to this paragraph (d) shall be accomplished by reducing the
Certificate Principal Balances of the related Certificates on the related
Distribution Date in accordance with Section 4.4(e).
(e) Realized
Losses allocated in accordance with this Section 4.4 shall be allocated on
the
Distribution Date in the month following the month in which such loss was
incurred and, in the case of the principal portion thereof, after giving effect
to the distributions made on such Distribution Date.
(f) On
each
Distribution Date, the Master Servicer shall determine the Subordinated
Certificate Writedown Amount, if any. Any such Subordinated Certificate
Writedown Amount shall effect, without duplication of any other provision in
this Section 4.4 that provides for a reduction in the Class Certificate Balance
of the Subordinated Certificates, a corresponding reduction in the Class
Certificate Balance of the Subordinated Certificates, which reduction shall
occur on such Distribution Date after giving effect to distributions made on
such Distribution Date.
(g) Notwithstanding
the foregoing, no such allocation of any Realized Loss shall be made on a
Distribution Date to a Class of Certificates to the extent that such allocation
would result in the reduction of the aggregate Class Certificate Balances of
all
the Senior Certificates of a related Certificate Group as of such Distribution
Date plus the Apportioned Principal Balances of the Subordinated Certificates
of
such Certificate Group as of such Distribution Date, after giving effect to
all
distributions and prior allocations of Realized Losses on such date, to an
amount less than the aggregate Stated Principal Balance of the Mortgage Loans
in
the related Mortgage Pool as of the first day of the month of such Distribution
Date, less any Deficient Valuations occurring on or prior to the Bankruptcy
Coverage Termination Date (such limitation, the “Loss Allocation
Limitation”).
72
SECTION
4.5 [RESERVED]
SECTION
4.6 Monthly
Statements to Certificateholders.
(a) Not
later
than each Distribution Date, the Trustee shall prepare and cause to be forwarded
by first class mail to each Certificateholder, the Master Servicer, the
Depositor and each Rating Agency a statement, that complies with Item 1121
of
Regulation AB, setting forth, among other things, with respect to the related
distribution and/or may post such statement on its website located at
▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇:
(i) the
amount thereof allocable to principal, separately identifying the aggregate
amount of any Principal Prepayments and Liquidation Proceeds included
therein;
(ii) the
amount thereof allocable to interest, the amount of any Compensating Interest
included in such distribution and any remaining Net Interest Shortfalls after
giving effect to such distribution;
(iii) if
the
distribution to the Holders of such Class of Certificates is less than the
full
amount that would be distributable to such Holders if there were sufficient
funds available therefor, the amount of the shortfall and the allocation thereof
as between principal and interest;
(iv) the
Class
Certificate Balance of each Class of Certificates after giving effect to the
distribution of principal on such Distribution Date;
(v) the
Pool
Principal Balance for each Mortgage Pool for the following Distribution
Date;
(vi) the
Senior Percentage and Subordinated Percentage for each Certificate Group for
the
following Distribution Date;
(vii) the
amount of the Master Servicing Fees paid to or retained by the Master Servicer
with respect to such Distribution Date;
(viii) the
Pass-Through Rate for each such Class of Certificates with respect to such
Distribution Date;
(ix) the
amount of Advances for each Mortgage Pool included in the distribution on such
Distribution Date and the aggregate amount of Advances for each Mortgage Pool
outstanding as of the close of business on such Distribution Date;
(x) the
number and aggregate principal amounts of Mortgage Loans (A) delinquent
(exclusive of Mortgage Loans in foreclosure) (1) 1 to 30 days (2) 31 to 60
days
(3) 61 to 90 days and (4) 91 or more days and (B) in foreclosure and delinquent
(1) 1 to 30 days (2) 31 to 60 days (3) 61 to 90 days and (4) 91 or more days,
as
of the close of business on the last day of the calendar month preceding such
Distribution Date;
73
(xi) with
respect to any Mortgage Loan in a Mortgage Pool that became an REO Property
during the preceding calendar month, the loan number and Stated Principal
Balance of such Mortgage Loan as of the close of business on the Determination
Date preceding such Distribution Date and the date of acquisition
thereof;
(xii) the
total
number and principal balance of any REO Properties (and market value, if
available) in each Mortgage Pool as of the close of business on the
Determination Date preceding such Distribution Date;
(xiii) the
Senior Prepayment Percentage for each Certificate Group for the following
Distribution Date;
(xiv) the
aggregate amount of Realized Losses incurred in respect of each Mortgage Pool
during the preceding calendar month;
(xv) the
cumulative amount of Realized Losses applied in reduction of the principal
balance of each class of Certificates since the Closing Date;
(xvi) the
Special Hazard Loss Coverage Amount, the Fraud Loss Coverage Amount and the
Bankruptcy Loss Coverage Amount, in each case as of the related Determination
Date; and
(xvii) with
respect to the second Distribution Date, the number and aggregate balance of
any
Delay Delivery Mortgage Loans not delivered within thirty days after the Closing
Date.
(b) The
Trustee’s responsibility for disbursing the above information to the
Certificateholders is limited to the availability, timeliness and accuracy
of
the information provided by the Master Servicer.
(c) On
or
before the fifth Business Day following the end of each Prepayment Period (but
in no event later than the third Business Day prior to the related Distribution
Date), the Master Servicer shall deliver to the Trustee (which delivery may
be
by electronic data transmission) a report in substantially the form set forth
as
Schedule III hereto.
(d) Within
a
reasonable period of time after the end of each calendar year, the Trustee
shall
cause to be furnished to each Person who at any time during the calendar year
was a Certificateholder, a statement containing the information set forth in
clauses (a)(i), (a)(ii) and (a)(vii) of this Section 4.6 aggregated for such
calendar year or applicable portion thereof during which such Person was a
Certificateholder. Such obligation of the Trustee shall be deemed to have been
satisfied to the extent that substantially comparable information shall be
provided by the Trustee pursuant to any requirements of the Code as from time
to
time in effect.
74
ARTICLE
V
THE
CERTIFICATES
SECTION
5.1 The
Certificates.
The
Certificates shall be substantially in the forms attached hereto as exhibits.
The Certificates shall be issuable in registered form, in the minimum
denominations, integral multiples in excess thereof (except that one Certificate
in each Class may be issued in a different amount which must be in excess of
the
applicable minimum denomination) and aggregate denominations per Class set
forth
in the Preliminary Statement.
Subject
to Section 9.2 hereof respecting the final distribution on the Certificates,
on
each Distribution Date the Trustee shall make distributions to each
Certificateholder of record on the preceding Record Date either (x) by wire
transfer in immediately available funds to the account of such Holder at a
bank
or other entity having appropriate facilities therefor, if (i) such Holder
has
so notified the Trustee at least five Business Days prior to the related Record
Date and (ii) such Holder shall hold (A) 100% of the Class Certificate Balance
of any Class of Certificates or (B) Certificates of any Class with aggregate
principal Denominations of not less than $1,000,000 or (y) by check mailed
by
first class mail to such Certificateholder at the address of such Holder
appearing in the Certificate Register.
The
Certificates shall be executed by manual or facsimile signature on behalf of
the
Trustee by an authorized officer. Certificates bearing the manual or facsimile
signatures of individuals who were, at the time when such signatures were
affixed, authorized to sign on behalf of the Trustee shall bind the Trustee,
notwithstanding that such individuals or any of them have ceased to be so
authorized prior to the countersignature and delivery of such Certificates
or
did not hold such offices at the date of such Certificate. No Certificate shall
be entitled to any benefit under this Agreement, or be valid for any purpose,
unless countersigned by the Trustee by manual signature, and such
countersignature upon any Certificate shall be conclusive evidence, and the
only
evidence, that such Certificate has been duly executed and delivered hereunder.
All Certificates shall be dated the date of their countersignature. On the
Closing Date, the Trustee shall countersign the Certificates to be issued at
the
direction of the Depositor, or any affiliate thereof.
The
Depositor shall provide, or cause to be provided, to the Trustee on a continuous
basis, an adequate inventory of Certificates to facilitate
transfers.
SECTION
5.2 Certificate
Register; Registration of Transfer and Exchange of Certificates.
(a) The
Trustee shall maintain, or cause to be maintained in accordance with the
provisions of Section 5.6 hereof, a Certificate Register for the Trust Fund
in
which, subject to the provisions of subsections (b) and (c) below and to such
reasonable regulations as it may prescribe, the Trustee shall provide for the
registration of Certificates and of transfers and exchanges of Certificates
as
herein provided. Upon surrender for registration of transfer of any Certificate,
the Trustee shall execute and deliver, in the name of the designated transferee
or transferees, one or more new Certificates of the same Class and aggregate
Percentage Interest.
75
At
the
option of a Certificateholder, Certificates may be exchanged for other
Certificates of the same Class in authorized denominations and evidencing the
same aggregate Percentage Interest upon surrender of the Certificates to be
exchanged at the office or agency of the Trustee. Whenever any Certificates
are
so surrendered for exchange, the Trustee shall execute, authenticate, and
deliver the Certificates which the Certificateholder making the exchange is
entitled to receive. Every Certificate presented or surrendered for registration
of transfer or exchange shall be accompanied by a written instrument of transfer
in form satisfactory to the Trustee duly executed by the Holder thereof or
his
attorney duly authorized in writing.
No
service charge to the Certificateholders shall be made for any registration
of
transfer or exchange of Certificates, but payment of a sum sufficient to cover
any tax or governmental charge that may be imposed in connection with any
transfer or exchange of Certificates may be required.
All
Certificates surrendered for registration of transfer or exchange shall be
cancelled and subsequently destroyed by the Trustee in accordance with the
Trustee’s customary procedures.
(b) No
transfer of a Private Certificate shall be made unless such transfer is made
pursuant to an effective registration statement under the Securities Act and
any
applicable state securities laws or is exempt from the registration requirements
under said Act and such state securities laws. In the event that a transfer
is
to be made in reliance upon an exemption from the Securities Act and such laws,
in order to assure compliance with the Securities Act and such laws, any Holder
of a Private Certificate (other than a Private Certificate that is a Book-Entry
Certificate) desiring to effect such transfer and such Certificateholder’s
prospective transferee shall each certify to the Trustee in writing the facts
surrounding the transfer in substantially the forms set forth in Exhibit I
(the
“Transferor Certificate”) and (i) deliver a letter in substantially the form of
either Exhibit J (the “Investment Letter”) or Exhibit K (the “Rule 144A Letter”)
or (ii) there shall be delivered to the Trustee at the expense of the transferor
an Opinion of Counsel that such transfer may be made pursuant to an exemption
from the Securities Act.
Each
Holder of a Private Certificate that is a Book-Entry Certificate, by its
acquisition thereof (or a beneficial interest therein), shall be deemed to
have
represented and warranted for the benefit of the Depositor, the Servicer and
the
Trustee that (a) it understands that the Private Certificates are not being
registered under the Securities Act, or any state securities laws and are being
transferred to it in a transaction that is exempt from the registration
requirements of the Securities Act and any such laws, (b) it has such knowledge
and experience in financial and business matters that it is capable of
evaluating the merits and risks of investments in the Private Certificates,
(c)
it has had the opportunity to ask questions of and receive answers from the
Depositor concerning the purchase of the Private Certificates and all matters
relating thereto or any additional information deemed necessary to its decision
to purchase the Private Certificates, (d) neither it, nor any anyone acting
on
its behalf, has offered, transferred, pledged, sold or otherwise disposed of
the
Private Certificates or any interest therein, or solicited any offer to buy
or
accept a transfer, pledge or other disposition of the Private Certificates
or
any interest therein from, or otherwise approached or negotiated with respect
to
the Private Certificates or any interest therein with, any person in any manner,
or made any general solicitation by means of general advertising or in any
other
manner, or taken any other action, that would constitute a distribution of
the
Private Certificates under the Securities Act or that would render the
disposition of the Private Certificates a violation of Section 5 of the
Securities Act or require registration pursuant thereto, nor will it act, nor
has it authorized or will authorize any person to act, in such manner with
respect to the Private Certificates, (e) it is a “qualified institutional buyer”
as that term is defined in Rule 144A under the Securities Act (“Rule 144A”), (f)
it is aware that the sale of the Private Certificates to it is being made in
reliance on Rule 144A, (g) it is acquiring the Private Certificates for its
own
account or for resale pursuant to Rule 144A and it understands that the Private
Certificates may be resold, pledged or transferred only (A) to a person whom
it
reasonably believes to be a qualified institutional buyer that purchases for
its
own account or for the account of a qualified institutional buyer to whom notice
is given that the resale, pledge or transfer is being made in reliance on Rule
144A, or (B) pursuant to another exemption from registration under the
Securities Act; and (h) it understands that no representation is made as to
the
availability of the exemption provided by Rule 144A for resales of the Private
Certificates.
76
The
Depositor shall provide to any Holder of a Private Certificate and any
prospective transferee designated by any such Holder, information regarding
the
related Certificates and the Mortgage Loans and such other information as shall
be necessary to satisfy the condition to eligibility set forth in Rule
144A(d)(4) for transfer of any such Certificate without registration thereof
under the Securities Act pursuant to the registration exemption provided by
Rule
144A. The Trustee and the Master Servicer shall cooperate with the Depositor
in
providing the Rule 144A information referenced in the preceding sentence,
including providing to the Depositor such information regarding the
Certificates, the Mortgage Loans and other matters regarding the Trust Fund
as
the Depositor shall reasonably request to meet its obligation under the
preceding sentence. Each Holder of a Private Certificate desiring to effect
such
transfer shall, and by its acceptance of a Private Certificate does hereby
agree
to, indemnify the Trustee and the Depositor, the Seller and the Master Servicer
against any liability that may result if the transfer is not so exempt or is
not
made in accordance with such federal and state laws.
No
transfer of an ERISA-Restricted Certificate in the form of a Definitive
Certificate shall be made unless the Trustee shall have received a Transferor
Certificate from the related transferor and either (i) a representation from
the
transferee of such Certificate acceptable to and in form and substance
satisfactory to the Trustee (in the event such Certificate is a Private
Certificate, such requirement is satisfied only by the Trustee’s receipt of a
representation letter from the transferee substantially in the form of Exhibit
J
or Exhibit K), to the effect that such transferee is not an employee benefit
plan or arrangement subject to Section 406 of ERISA or a plan or arrangement
subject to Section 4975 of the Code, nor a person acting on behalf of any such
plan or arrangement, nor using the assets of any such plan or arrangement to
effect such transfer, (ii) in the case of a Private Certificate (that has been
subject to an ERISA-Qualified Underwriting), if the purchaser is an insurance
company, a representation that the purchaser is an insurance company which
is
purchasing such Certificates with funds contained in an “insurance company
general account” (as such term is defined in Section V(e) of Prohibited
Transaction Class Exemption 95-60 (“PTCE 95-60”)) and that the purchase and
holding of such Certificates are covered under Sections I and III of PTCE 95-60
or (iii) in the case of any such ERISA-Restricted Certificate presented for
registration in the name of an employee benefit plan subject to ERISA, or a
plan
or arrangement subject to Section 4975 of the Code (or comparable provisions
of
any subsequent enactments), or a trustee of any such plan or any other person
acting on behalf of any such plan or arrangement, or using such plan’s or
arrangement’s assets, an Opinion of Counsel satisfactory to the Trustee, which
Opinion of Counsel shall not be an expense of either the Trustee, the Depositor,
the Master Servicer or the Trust Fund, addressed to the Trustee to the effect
that the purchase or holding of such ERISA-Restricted Certificate will not
result in prohibited transactions under Title I of ERISA and Section 4975 of
the
Code and will not subject the Trustee, the Depositor or the Master Servicer
to
any obligation in addition to those expressly undertaken in this Agreement
or to
any liability. Notwithstanding anything else to the contrary herein, any
purported transfer of an ERISA-Restricted Certificate to or on behalf of an
employee benefit plan subject to ERISA or to the Code without the delivery
to
the Trustee of an Opinion of Counsel satisfactory to the Trustee as described
above shall be void and of no effect.
77
To
the
extent permitted under applicable law (including, but not limited to, ERISA),
the Trustee shall be under no liability to any Person for any registration
of
transfer of any ERISA-Restricted Certificate that is in fact not permitted
by
this Section 5.2(b) or for making any payments due on such Certificate to the
Holder thereof or taking any other action with respect to such Holder under
the
provisions of this Agreement so long as the transfer was registered by the
Trustee in accordance with the foregoing requirements.
Each
Holder of a Private Certificate that is a Book-Entry Certificate, by its
acquisition thereof (or a beneficial interest therein) shall be deemed to have
represented and warranted for the benefit of the Depositor, the Servicer, the
Trustee and the other Certificateholders, that (a) it is not an employee benefit
plan or arrangement that is subject to Section 406 of ERISA, or a plan or
arrangement that is subject to Section 4975 of the Internal Revenue Code of
1986, as amended, nor is it acting on behalf of any such plan or arrangement
or
using the assets of any such plan or arrangement to effect such acquisition,
or
(b) if it is an insurance company, in the case of Private Certificates that
have
been the subject of an ERISA-Qualifying Underwriting, it is purchasing the
Private Certificates with funds contained in an “insurance company general
account” (as defined in Section V(e) of Prohibited Transaction Class Exemption
95-60 (“PTCE 95-60”)) and its purchase and holding of the Private Certificates
are covered under Sections I and III of PTCE 95-60. To the extent permitted
under applicable law (including, but not limited to, ERISA), the Trustee shall
be under no liability to any Person for any registration of transfer of any
ERISA-Restricted Certificate that is in fact not permitted by this Section
5.2(b) or for making any payments due on such Certificate to the Holder thereof
or taking any other action with respect to such Holder under the provisions
of
this Agreement so long as the transfer was registered by the Trustee in
accordance with the foregoing requirements. The Trustee shall be entitled,
but
not obligated, to recover from any Holder of any ERISA-Restricted Certificate
that was in fact a Plan or a Person acting on behalf of any such Plan any
payments made on such ERISA-Restricted Certificate at and after either such
time. Any such payments so recovered by the Trustee shall be paid and delivered
by the Trustee to the last preceding Holder of such Certificate that is not
such
a Plan or Person acting on behalf of a Plan.
78
Notwithstanding
the foregoing, no opinion or certificate shall be required for the initial
issuance of any ERISA-Restricted Certificate or ERISA-Restricted Yield
Supplement Certificate that is registered in the name of the Depository or
its
nominee
(c) Each
Person who has or who acquires any Ownership Interest in a Residual Certificate
shall be deemed by the acceptance or acquisition of such Ownership Interest
to
have agreed to be bound by the following provisions, and the rights of each
Person acquiring any Ownership Interest in a Residual Certificate are expressly
subject to the following provisions:
(i) Each
Person holding or acquiring any Ownership Interest in a Residual Certificate
shall be a Permitted Transferee and shall promptly notify the Trustee of any
change or impending change in its status as a Permitted Transferee.
(ii) No
Ownership Interest in a Residual Certificate may be registered on the Closing
Date or thereafter transferred, and the Trustee shall not register the Transfer
of any Residual Certificate unless, in addition to the certificates required
to
be delivered to the Trustee under subparagraph (b) above, the Trustee shall
have
been furnished with an affidavit (a “Transfer Affidavit”) of the initial owner
or the proposed transferee in the form attached hereto as Exhibit H and with
a
certificate of the proposed transferor in the form attached hereto as Exhibit
I.
(iii) Each
Person holding or acquiring any Ownership Interest in a Residual Certificate
shall agree (A) to obtain a Transfer Affidavit from any other Person to whom
such Person attempts to Transfer its Ownership Interest in a Residual
Certificate, (B) to obtain a Transfer Affidavit from any Person for whom such
Person is acting as nominee, trustee or agent in connection with any Transfer
of
a Residual Certificate and (C) not to Transfer its Ownership Interest in a
Residual Certificate or to cause the Transfer of an Ownership Interest in a
Residual Certificate to any other Person if it has actual knowledge that such
Person is not a Permitted Transferee.
(iv) Any
attempted or purported Transfer of any Ownership Interest in a Residual
Certificate in violation of the provisions of this Section 5.2(c) shall be
absolutely null and void and shall vest no rights in the purported Transferee.
If any purported transferee shall become a Holder of a Residual Certificate
in
violation of the provisions of this Section 5.2(c), then the last preceding
Permitted Transferee shall be restored to all rights as Holder thereof
retroactive to the date of registration of Transfer of such Residual
Certificate. The Trustee shall be under no liability to any Person for any
registration of Transfer of a Residual Certificate that is in fact not permitted
by Section 5.2(b) and this Section 5.2(c) or for making any payments due on
such
Certificate to the Holder thereof or taking any other action with respect to
such Holder under the provisions of this Agreement so long as the Transfer
was
registered after receipt of the related Transfer Affidavit, Transferor
Certificate and, in the case of a Residual Certificate which is also a Private
Certificate, either the Rule 144A Letter or the Investment Letter. The Trustee
shall be entitled but not obligated to recover from any Holder of a Residual
Certificate that was in fact not a Permitted Transferee at the time it became
a
Holder or, at such subsequent time as it became other than a Permitted
Transferee, all payments made on such Residual Certificate at and after either
such time. Any such payments so recovered by the Trustee shall be paid and
delivered by the Trustee to the last preceding Permitted Transferee of such
Certificate.
79
(v) The
Depositor shall use its best efforts to make available, upon receipt of written
request from the Trustee, all information necessary to compute any tax imposed
under Section 860E(e) of the Code as a result of a Transfer of an Ownership
Interest in a Residual Certificate to any Holder who is not a Permitted
Transferee.
The
restrictions on Transfers of a Residual Certificate set forth in this Section
5.2(c) shall cease to apply (and the applicable portions of the legend on a
Residual Certificate may be deleted) with respect to Transfers occurring after
delivery to the Trustee of an Opinion of Counsel, which Opinion of Counsel
shall
not be an expense of the Trust Fund, the Trustee, the Seller or the Master
Servicer, to the effect that the elimination of such restrictions will not
cause
any REMIC created hereunder to fail to qualify as a REMIC at any time that
the
Certificates are outstanding or result in the imposition of any tax on the
Trust
Fund, a Certificateholder or another Person. Each Person holding or acquiring
any Ownership Interest in a Residual Certificate hereby consents to any
amendment of this Agreement which, based on an Opinion of Counsel furnished
to
the Trustee, is reasonably necessary (a) to ensure that the record ownership
of,
or any beneficial interest in, a Residual Certificate is not transferred,
directly or indirectly, to a Person that is not a Permitted Transferee and
(b)
to provide for a means to compel the Transfer of a Residual Certificate which
is
held by a Person that is not a Permitted Transferee to a Holder that is a
Permitted Transferee.
(d) The
preparation and delivery of all certificates and opinions referred to above
in
this Section 5.2 in connection with transfer shall be at the expense of the
parties to such transfers.
(e) Except
as
provided below, the Book-Entry Certificates shall at all times remain registered
in the name of the Depository or its nominee and at all times: (i) registration
of the Certificates may not be transferred by the Trustee except to another
Depository; (ii) the Depository shall maintain book-entry records with respect
to the Certificate Owners and with respect to ownership and transfers of such
Book-Entry Certificates; (iii) ownership and transfers of registration of the
Book-Entry Certificates on the books of the Depository shall be governed by
applicable rules established by the Depository; (iv) the Depository may collect
its usual and customary fees, charges and expenses from its Depository
Participants; (v) the Trustee shall deal with the Depository, Depository
Participants and indirect participating firms as representatives of the
Certificate Owners of the Book-Entry Certificates for purposes of exercising
the
rights of holders under this Agreement, and requests and directions for and
votes of such representatives shall not be deemed to be inconsistent if they
are
made with respect to different Certificate Owners; and (vi) the Trustee may
rely
and shall be fully protected in relying upon information furnished by the
Depository with respect to its Depository Participants and furnished by the
Depository Participants with respect to indirect participating firms and persons
shown on the books of such indirect participating firms as direct or indirect
Certificate Owners.
80
All
transfers by Certificate Owners of Book-Entry Certificates shall be made in
accordance with the procedures established by the Depository Participant or
brokerage firm representing such Certificate Owner. Each Depository Participant
shall only transfer Book-Entry Certificates of Certificate Owners it represents
or of brokerage firms for which it acts as agent in accordance with the
Depository’s normal procedures.
If
(x)
(i) the Depository or the Depositor advises the Trustee in writing that the
Depository is no longer willing or able to properly discharge its
responsibilities as Depository, and (ii) the Trustee or the Depositor is unable
to locate a qualified successor, (y) the Depositor at its option advises the
Trustee in writing that it elects to terminate the book-entry system through
the
Depository or (z) after the occurrence of an Event of Default, Certificate
Owners representing at least 51% of the Class Certificate Balance of the
Book-Entry Certificates together advise the Trustee and the Depository through
the Depository Participants in writing that the continuation of a book-entry
system through the Depository is no longer in the best interests of the
Certificate Owners, the Trustee shall notify all Certificate Owners, through
the
Depository, of the occurrence of any such event and of the availability of
definitive, fully-registered Certificates (the “Definitive Certificates”) to
Certificate Owners requesting the same. Upon surrender to the Trustee of the
related Class of Certificates by the Depository, accompanied by the instructions
from the Depository for registration, the Trustee shall issue the Definitive
Certificates. Neither the Master Servicer, the Depositor nor the Trustee shall
be liable for any delay in delivery of such instruction and each may
conclusively rely on, and shall be protected in relying on, such instructions.
The Master Servicer shall provide the Trustee with an adequate inventory of
certificates to facilitate the issuance and transfer of Definitive Certificates.
Upon the issuance of Definitive Certificates all references herein to
obligations imposed upon or to be performed by the Depository shall be deemed
to
be imposed upon and performed by the Trustee, to the extent applicable with
respect to such Definitive Certificates and the Trustee shall recognize the
Holders of the Definitive Certificates as Certificateholders hereunder; provided
that the Trustee shall not by virtue of its assumption of such obligations
become liable to any party for any act or failure to act of the
Depository.
81
SECTION
5.3 Mutilated,
Destroyed, Lost or Stolen Certificates.
If
(a)
any mutilated Certificate is surrendered to the Trustee, or the Trustee receives
evidence to its satisfaction of the destruction, loss or theft of any
Certificate and (b) there is delivered to the Master Servicer and the Trustee
such security or indemnity as may be required by them to save each of them
harmless, then, in the absence of notice to the Trustee that such Certificate
has been acquired by a bona fide purchaser, the Trustee shall execute,
countersign and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of like Class, tenor
and Percentage Interest. In connection with the issuance of any new Certificate
under this Section 5.3, the Trustee may require the payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Trustee)
connected therewith. Any replacement Certificate issued pursuant to this Section
5.3 shall constitute complete and indefeasible evidence of ownership, as if
originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time.
SECTION
5.4 Persons
Deemed Owners.
The
Master Servicer, the Trustee and any agent of the Master Servicer or the Trustee
may treat the Person in whose name any Certificate is registered as the owner
of
such Certificate for the purpose of receiving distributions as provided in
this
Agreement and for all other purposes whatsoever, and neither the Master
Servicer, the Trustee nor any agent of the Master Servicer or the Trustee shall
be affected by any notice to the contrary.
SECTION
5.5 Access
to
List of Certificateholders’ Names and Addresses.
If
three
or more Certificateholders or Certificate Owners (a) request such information
in
writing from the Trustee, (b) state that such Certificateholders or Certificate
Owners desire to communicate with other Certificateholders with respect to
their
rights under this Agreement or under the Certificates, and (c) provide a copy
of
the communication which such Certificateholders or Certificate Owners propose
to
transmit, or if the Depositor or Master Servicer shall request such information
in writing from the Trustee, then the Trustee shall, within ten Business Days
after the receipt of such request, provide the Depositor, the Master Servicer
or
such Certificateholders or Certificate Owners at such recipients’ expense the
most recent list of the Certificateholders of such Trust Fund held by the
Trustee, if any. The Depositor and every Certificateholder or Certificate Owner,
by receiving and holding a Certificate, agree that the Trustee shall not be
held
accountable by reason of the disclosure of any such information as to the list
of the Certificateholders hereunder, regardless of the source from which such
information was derived.
SECTION
5.6 Maintenance
of Office or Agency.
The
Trustee will maintain or cause to be maintained at its expense an office or
offices or agency or agencies in New York City where Certificates may be
surrendered for registration of transfer or exchange. The Trustee initially
designates its Corporate Trust Office for such purposes. The Trustee will give
prompt written notice to the Certificateholders of any change in such location
of any such office or agency.
82
ARTICLE
VI
THE
DEPOSITOR AND THE MASTER SERVICER
SECTION
6.1 Respective
Liabilities of the Depositor and the Master Servicer.
The
Depositor and the Master Servicer shall each be liable in accordance herewith
only to the extent of the obligations specifically and respectively imposed
upon
and undertaken by them herein.
SECTION
6.2 Merger
or
Consolidation of the Depositor or the Master Servicer.
The
Depositor and the Master Servicer will each keep in full effect its existence,
rights and franchises as a corporation under the laws of the United States
or
under the laws of one of the states thereof and will each obtain and preserve
its qualification to do business as a foreign corporation in each jurisdiction
in which such qualification is or shall be necessary to protect the validity
and
enforceability of this Agreement, or any of the Mortgage Loans and to perform
its respective duties under this Agreement.
Any
Person into which the Depositor or the Master Servicer may be merged or
consolidated, or any Person resulting from any merger or consolidation to which
the Depositor or the Master Servicer shall be a party, or any person succeeding
to the business of the Depositor or the Master Servicer, shall be the successor
of the Depositor or the Master Servicer, as the case may be, hereunder, without
the execution or filing of any paper or any further act on the part of any
of
the parties hereto, anything herein to the contrary notwithstanding; provided,
however, that the successor or surviving Person to the Master Servicer shall
be
qualified to sell mortgage loans to, and to service mortgage loans on behalf
of,
FNMA or FHLMC.
SECTION
6.3 Limitation
on Liability of the Depositor, the Master Servicer and Others.
None
of
the Depositor, the Master Servicer or any of the directors, officers, employees
or agents of the Depositor or the Master Servicer shall be under any liability
to the Certificateholders for any action taken or for refraining from the taking
of any action in good faith pursuant to this Agreement, or for errors in
judgment; provided, however, that this provision shall not protect the
Depositor, the Master Servicer or any such Person against any breach of
representations or warranties made by it herein or protect the Depositor, the
Master Servicer or any such Person from any liability which would otherwise
be
imposed by reasons of willful misfeasance, bad faith or gross negligence in
the
performance of duties or by reason of reckless disregard of obligations and
duties hereunder. The Depositor, the Master Servicer and any director, officer,
employee or agent of the Depositor or the Master Servicer may rely in good
faith
on any document of any kind prima facie properly executed and submitted by
any
Person respecting any matters arising hereunder. The Depositor, the Master
Servicer and any director, officer, employee or agent of the Depositor or the
Master Servicer shall be indemnified by the Trust Fund and held harmless against
any loss, liability or expense incurred in connection with any audit,
controversy or judicial proceeding relating to a governmental taxing authority
or any legal action relating to this Agreement or the Certificates, other than
any loss, liability or expense related to any specific Mortgage Loan or Mortgage
Loans (except as any such loss, liability or expense shall be otherwise
reimbursable pursuant to this Agreement) and any loss, liability or expense
incurred by reason of willful misfeasance, bad faith or gross negligence in
the
performance of duties hereunder or by reason of reckless disregard of
obligations and duties hereunder. Neither the Depositor nor the Master Servicer
shall be under any obligation to appear in, prosecute or defend any legal action
that is not incidental to its respective duties hereunder and which in its
opinion may involve it in any expense or liability; provided, however, that
either the Depositor, or the Master Servicer may in its discretion undertake
any
such action that it may deem necessary or desirable in respect of this Agreement
and the rights and duties of the parties hereto and interests of the Trustee
and
the Certificateholders hereunder. In such event, the legal expenses and costs
of
such action and any liability resulting therefrom shall be expenses, costs
and
liabilities of the Trust Fund, and the Depositor, and the Master Servicer shall
be entitled to be reimbursed therefor out of the applicable subaccount of the
Certificate Account.
83
SECTION
6.4 Limitation
on Resignation of Master Servicer.
The
Master Servicer shall not resign from the obligations and duties hereby imposed
on it except (a) upon appointment of a successor servicer and receipt by the
Trustee of a letter from each Rating Agency that such a resignation and
appointment will not result in a downgrading of the rating of any of the
Certificates, or (b) upon determination that its duties hereunder are no longer
permissible under applicable law. Any such determination under clause (b)
permitting the resignation of the Master Servicer shall be evidenced by an
Opinion of Counsel to such effect delivered to the Trustee. No such resignation
shall become effective until the Trustee or other successor master servicer
shall have assumed the Master Servicer’s responsibilities, duties, liabilities
and obligations hereunder.
ARTICLE
VII
DEFAULT
SECTION
7.1 Events
of
Default.
“Event
of
Default,” wherever used herein, means any one of the following
events:
(i) any
failure by the Master Servicer to deposit in the applicable subaccount of the
Certificate Account or remit to the Trustee any payment required to be made
under the terms of this Agreement, which failure shall continue unremedied
for
five days after the date upon which written notice of such failure shall have
been given to the Master Servicer by the Trustee or the Depositor or to the
Master Servicer and the Trustee by the Holders of Certificates having not less
than 25% of the Voting Rights evidenced by the Certificates; or
(ii) any
failure by the Master Servicer to observe or perform in any material respect
any
other of the covenants or agreements on the part of the Master Servicer
contained in this Agreement (except with respect to failure related to a Limited
Exchange Act Reporting Obligation), which failure materially affects the rights
of Certificateholders, which failure continues unremedied for a period of 60
days after the date on which written notice of such failure shall have been
given to the Master Servicer by the Trustee or the Depositor, or to the Master
Servicer and the Trustee by the Holders of Certificates evidencing not less
than
25% of the Voting Rights evidenced by the Certificates; provided, however,
that
the 60-day cure period shall not apply to the initial delivery of the Mortgage
File for Delay Delivery Mortgage Loans nor the failure to substitute or
repurchase in lieu thereof; or
84
(iii) a
decree
or order of a court or agency or supervisory authority having jurisdiction
in
the premises for the appointment of a receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings, or for the winding-up or liquidation of its affairs, shall have
been entered against the Master Servicer and such decree or order shall have
remained in force undischarged or unstayed for a period of 60 consecutive days;
or
(iv) the
Master Servicer shall consent to the appointment of a receiver or liquidator
in
any insolvency, readjustment of debt, marshalling of assets and liabilities
or
similar proceedings of or relating to the Master Servicer or all or
substantially all of the property of the Master Servicer; or
(v) the
Master Servicer shall admit in writing its inability to pay its debts generally
as they become due, file a petition to take advantage of, or commence a
voluntary case under, any applicable insolvency or reorganization statute,
make
an assignment for the benefit of its creditors, or voluntarily suspend payment
of its obligations; or
(vi) the
failure of the Master Servicer to remit any Advance required to be remitted
by
the Master Servicer pursuant to Section 4.1 which failure continues unremedied
at 11:00 a.m., Central time, on the related Distribution Date.
If
an
Event of Default described in clauses (i) to (v) of this Section shall occur,
then, and in each and every such case, so long as such Event of Default shall
not have been remedied, the Trustee may, or at the direction of the Holders
of
Certificates evidencing not less than 66 2/3% of the Voting Rights evidenced
by
the Certificates, the Trustee shall by notice in writing to the Master Servicer
(with a copy to each Rating Agency), terminate all of the rights and obligations
of the Master Servicer under this Agreement and in and to the Mortgage Loans
and
the proceeds thereof, other than its rights as a Certificateholder hereunder.
If
an Event of Default described in clause (vi) of this Section shall occur, the
Trustee shall immediately, by notice in writing to the Master Servicer (with
a
copy to each Rating Agency), terminate all of the rights and obligations of
the
Master Servicer under this Agreement and in and to the Mortgage Loans and
proceeds thereof, other than its rights as a Certificateholder hereunder. In
addition, if during the period that the Depositor is required to file Exchange
Act Reports with respect to the Trust Fund, the Master Servicer shall fail
to
observe or perform any of the obligations set forth in Section 3.16(a) or
Section 10.1(a)(i) and (ii), and such failure continues for the lesser of ten
(10) calendar days or such period in which the applicable Exchange Act Report
can be filed timely (without taking into account any extensions), so long as
such failure shall not have been remedied, the Trustee shall, but only at the
direction of the Depositor, terminate all of the rights and obligations of
the
Master Servicer under this Agreement and in and to the Mortgage Loans and the
proceeds thereof, other than its rights as a Certificateholder hereunder. The
Depositor shall not be entitled to terminate the rights and obligations of
the
Master Servicer if a failure of the Master Servicer to identify a Subcontractor
“participating in the servicing function” within the meaning of Item 1122 of
Regulation AB was attributable solely to the role or functions of such
Subcontractor with respect to mortgage loans other than the Mortgage Loans.
On
and after the receipt by the Master Servicer of such written notice, all
authority and power of the Master Servicer hereunder, whether with respect
to
the Mortgage Loans or otherwise, shall pass to and be vested in the
Trustee or
another successor to the Master Servicer appointed by the Trustee pursuant
to
Section 7.2. The Trustee, in its capacity as successor to the Master Servicer,
shall thereupon make any Advance which the Master Servicer failed to make
subject to Section 4.1 hereof. The Trustee is hereby authorized and empowered
to
execute and deliver, on behalf of the Master Servicer, as attorney-in-fact
or
otherwise, any and all documents and other instruments, and to do or accomplish
all other acts or things necessary or appropriate to effect the purposes of
such
notice of termination, whether to complete the transfer and endorsement or
assignment of the Mortgage Loans and related documents, or otherwise. Unless
expressly provided in such written notice, no such termination shall affect
any
obligation of the Master Servicer to pay amounts owed pursuant to Article VIII.
The Master Servicer agrees to cooperate with the Trustee in effecting the
termination of the Master Servicer’s responsibilities and rights hereunder,
including, without limitation, the transfer to the Trustee of all cash amounts
which shall at the time be credited to the Certificate Account, or thereafter
be
received with respect to the Mortgage Loans. All expenses incurred in the
transferring of the servicing duties from the Master Servicer to a Successor
Servicer shall be paid by the Master Servicer, and if not paid by the Master
Servicer, shall be paid from amounts on deposit in the Certificate Account.
85
Notwithstanding
any termination of the activities of the Master Servicer hereunder, the Master
Servicer shall be entitled to receive, out of any late collection of a Scheduled
Payment on a Mortgage Loan which was due prior to the notice terminating such
Master Servicer’s rights and obligations as Master Servicer hereunder and
received after such notice, that portion thereof to which such Master Servicer
would have been entitled pursuant to Sections 3.8(a)(i) through (viii),and
any
other amounts payable to such Master Servicer hereunder the entitlement to
which
arose prior to the termination of its activities hereunder. Any termination
of
the activities of the Master Servicer hereunder will simultaneously result
in
the termination of the Master Servicer’s duties as a subservicer pursuant to the
Servicing Rights Transfer and Subservicing Agreement.
If
the
Master Servicer is terminated, the Trustee shall provide the Depositor in
writing and in form and substance reasonably satisfactory to the Depositor,
all
information reasonably requested by the Depositor in order to comply with its
reporting obligation under Item 6.02 of Form 8-K with respect to a successor
master servicer in the event the Trustee should succeed to the duties of the
Master Servicer as set forth herein.
SECTION
7.2 Trustee
to Act; Appointment of Successor.
On
and
after the time the Master Servicer receives a notice of termination pursuant
to
Section 7.1 hereof, the Trustee shall, subject to and to the extent provided
in
Section 3.4, be the successor to the Master Servicer under this Agreement and
the transactions set forth or provided for herein and shall be subject to all
the responsibilities, duties and liabilities relating thereto placed on the
Master Servicer by the terms and provisions hereof and applicable law including
the obligation to make Advances pursuant to Section 4.1. As compensation
therefor, the Trustee shall be entitled to all funds relating to the Mortgage
Loans that the Master Servicer would have been entitled to charge to the
Certificate Account or Distribution Account if the Master Servicer had continued
to act hereunder. Notwithstanding the foregoing, if the Trustee has become
the
successor to the Master Servicer in accordance with Section 7.1 hereof, the
Trustee may, if it shall be unwilling to so act, or shall, if it is prohibited
by applicable law from making Advances pursuant to Section 4.1 hereof or if
it
is otherwise unable to so act appoint, or petition a court of competent
jurisdiction to appoint, any established mortgage loan servicing institution
the
appointment of which does not adversely affect the then current rating of the
Certificates by each Rating Agency as the successor to the Master Servicer
hereunder in the assumption of all or any part of the responsibilities, duties
or liabilities of the Master Servicer hereunder. Any successor to the Master
Servicer shall be an institution which is a FNMA and FHLMC approved
seller/servicer in good standing, which has a net worth of at least $10,000,000,
and which is willing to service the Mortgage Loans and executes and delivers
to
the Depositor and the Trustee an agreement accepting such delegation and
assignment, which contains an assumption by such Person of the rights, powers,
duties, responsibilities, obligations and liabilities of the Master Servicer
(other than liabilities of the Master Servicer under Section 6.3 hereof incurred
prior to termination of the Master Servicer under Section 7.1), with like effect
as if originally named as a party to this Agreement; and provided further that
each Rating Agency acknowledges that its rating of the Certificates in effect
immediately prior to such assignment and delegation will not be qualified or
reduced, as a result of such assignment and delegation. The Trustee shall
provide written notice to the Depositor of such successor pursuant to this
Section. The successor to the Master Servicer shall provide to the Depositor
in
writing, fifteen (15) days prior to the effective date of such appointment,
and
in form and substance reasonably satisfactory to the Depositor, all information
reasonably requested by the Depositor in order to comply with its reporting
obligation under Item 6.02 of Form 8-K with respect to a replacement master
servicer. The Trustee shall not resign as servicer until a successor servicer
has been appointed and has accepted such appointment. Pending appointment of
a
successor to the Master Servicer hereunder, the Trustee, unless the Trustee
is
prohibited by law from so acting, shall, subject to Section 3.4 hereof, act
in
such capacity as provided above. In connection with such appointment and
assumption, the Trustee may make such arrangements for the compensation of
such
successor out of payments on Mortgage Loans as it and such successor shall
agree; provided, however, that no such compensation shall be in excess of the
Master Servicing Fee permitted the Master Servicer hereunder. The Trustee and
such successor shall take such action, consistent with this Agreement, as shall
be necessary to effectuate any such succession. Neither the Trustee nor any
other successor master servicer shall be deemed to be in default hereunder
by
reason of any failure to make, or any delay in making, any distribution
hereunder or any portion thereof or any failure to perform, or any delay in
performing, any duties or responsibilities hereunder, in either case caused
by
the failure of the Master Servicer to deliver or provide, or any delay in
delivering or providing, any cash, information, documents or records to
it.
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Any
successor to the Master Servicer as master servicer shall give notice to the
Mortgagors of such change of servicer and shall, during the term of its service
as master servicer maintain in force the policy or policies that the Master
Servicer is required to maintain pursuant to Section 3.17.
In
connection with the termination or resignation of the Master Servicer hereunder,
either (i) the successor Master Servicer, including the Trustee if the Trustee
is acting as successor Master Servicer, shall represent and warrant that it
is a
member of MERS in good standing and shall agree to comply in all material
respects with the rules and procedures of MERS in connection with the servicing
of the Mortgage Loans that are registered with MERS, or (ii) the predecessor
Master Servicer shall cooperate with the successor Master Servicer either (x)
in
causing MERS to execute and deliver an assignment of Mortgage in recordable
form
to transfer the Mortgage from MERS to the Trustee and to execute and deliver
such other notices, documents and other instruments as may be necessary or
desirable to effect a transfer of such Mortgage Loan or servicing of such
mortgage Loan on the MERS® System to the successor Master Servicer or (y) in
causing MERS to designate on the MERS® System the successor Master Servicer as
the servicer of such Mortgage Loan. The predecessor Master Servicer shall file
or cause to be filed any such assignment in the appropriate recording office.
The successor Master Servicer shall cause such assignment to be delivered to
the
Trustee promptly upon receipt of the original with evidence of recording thereon
or a copy certified by the public recording office in which such assignment
was
recorded.
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SECTION
7.3 Notification
to Certificateholders.
(a) Upon
any
termination of or appointment of a successor to the Master Servicer, the Trustee
shall give prompt written notice thereof to Certificateholders and to each
Rating Agency.
(b) Within
60
days after the occurrence of any Event of Default, the Trustee shall transmit
by
mail to all Certificateholders notice of each such Event of Default hereunder
known to the Trustee, unless such Event of Default shall have been cured or
waived.
ARTICLE
VIII
CONCERNING
THE TRUSTEE
SECTION
8.1 Duties
of
Trustee.
The
Trustee, prior to the occurrence of an Event of Default of which a Responsible
Officer of the Trustee has actual knowledge and after the curing of all Events
of Default that may have occurred, shall undertake to perform such duties and
only such duties as are specifically set forth in this Agreement. In case an
Event of Default of which a Responsible Officer of the Trustee has actual
knowledge has occurred and remains uncured, the Trustee shall exercise such
of
the rights and powers vested in it by this Agreement, and use the same degree
of
care and skill in their exercise as a prudent person would exercise or use
under
the circumstances in the conduct of such person’s own affairs.
The
Trustee, upon receipt of all resolutions, certificates, statements, opinions,
reports, documents, orders or other instruments furnished to the Trustee that
are specifically required to be furnished pursuant to any provision of this
Agreement shall examine them to determine whether they are in the form required
by this Agreement; provided, however, that the Trustee shall not be responsible
for the accuracy or content of any such resolution, certificate, statement,
opinion, report, document, order or other instrument. If any such instrument
is
found not to conform in any material respect to the requirements of this
Agreement, the Trustee shall notify the Certificateholders of such instrument
in
the event that the Trustee, after so requesting, does not receive a
satisfactorily corrected instrument.
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The
Trustee is hereby directed to execute and deliver to The Depository Trust
Company the Issuer Letter of Representations dated as of the Closing Date on
behalf of the trust created hereunder. The Depositor and the Master Servicer
acknowledge and agree that the Trustee is executing and delivering the Issuer
Letter of Representations on behalf of the trust created hereunder and shall
do
so solely in its capacity as Trustee and not in its individual
capacity.
No
provision of this Agreement shall be construed to relieve the Trustee from
liability for its own negligent action, its own negligent failure to act or
its
own willful misconduct; provided, however, that:
DAL:530004.1
(i) unless
an
Event of Default of which a Responsible Officer of the Trustee has actual
knowledge shall have occurred and be continuing, the duties and obligations
of
the Trustee shall be determined solely by the express provisions of this
Agreement, the Trustee shall not be liable except for the performance of such
duties and obligations as are specifically set forth in this Agreement, no
implied covenants or obligations shall be read into this Agreement against
the
Trustee and the Trustee may conclusively rely, as to the truth of the statements
and the correctness of the opinions expressed therein, upon any certificates
or
opinions furnished to the Trustee and conforming to the requirements of this
Agreement which it believed in good faith to be genuine and to have been duly
executed by the proper authorities respecting any matters arising
hereunder;
(ii) the
Trustee shall not be liable for an error of judgment made in good faith by
a
Responsible Officer or Responsible Officers of the Trustee, unless it shall
be
finally proven that the Trustee was negligent in ascertaining the pertinent
facts;
(iii) the
Trustee shall not be liable with respect to any action taken, suffered or
omitted to be taken by it in good faith in accordance with the direction of
Holders of Certificates evidencing not less than 25% of the Voting Rights of
Certificates relating to the time, method and place of conducting any proceeding
for any remedy available to the Trustee, or exercising any trust or power
conferred upon the Trustee under this Agreement;
(iv) the
Trustee shall not be required to expend or risk its own funds or otherwise
incur
financial liability in the performance of any of its duties hereunder or the
exercise of any of its rights or powers if there is reasonable ground for
believing that the repayment of such funds or adequate indemnity against such
risk or liability is not assured to it, and none of the provisions contained
in
this Agreement shall in any event require the Trustee to perform, or be
responsible for the manner of performance of, any of the obligations of the
Master Servicer under this Agreement except during such time, if any, as the
Trustee shall be the successor to, and be vested with the rights, duties, powers
and privileges of, the Master Servicer; and
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(v) without
limiting the generality of this Section 8.1, the Trustee shall have no duty
(A)
to see to any recording, filing, or depositing of this Agreement or any
agreement referred to herein or any financing statement or continuation
statement evidencing a security interest, or to see to the maintenance of any
such recording or filing or deposit or to any rerecording, refiling or
redepositing of any thereof, (B) to see to any insurance, (C) to see to the
payment or discharge of any tax, assessment, or other governmental charge or
any
lien or encumbrance of any kind owing with respect to, assessed or levied
against, any part of the Trust Fund other than from funds available in the
Distribution Account (D) to confirm or verify the contents of any reports or
certificates of the Servicer delivered to the Trustee pursuant to this Agreement
believed by the Trustee to be genuine and to have been signed or presented
by
the proper party or parties.
SECTION
8.2 Certain
Matters Affecting the Trustee.
Except
as
otherwise provided in Section 8.1:
(i) the
Trustee may request and rely upon and shall be protected in acting or refraining
from acting upon any resolution, Officers’ Certificate, certificate of auditors
or any other certificate, statement, instrument, opinion, report, notice,
request, consent, order, appraisal, bond or other paper or document believed
by
it to be genuine and to have been signed or presented by the proper party or
parties and the Trustee shall have no responsibility to ascertain or confirm
the
genuineness of any signature of any such party or parties;
(ii) the
Trustee may consult with counsel, financial advisers or accountants and the
advice of any such counsel, financial advisers or accountants and any Opinion
of
Counsel shall be full and complete authorization and protection in respect
of
any action taken or suffered or omitted by it hereunder in good faith and in
accordance with such Opinion of Counsel;
(iii) the
Trustee shall not be liable for any action taken, suffered or omitted by it
in
good faith and believed by it to be authorized or within the discretion or
rights or powers conferred upon it by this Agreement;
(iv) the
Trustee shall not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, order, approval, bond or other paper or document,
unless requested in writing so to do by Holders of Certificates evidencing
not
less than 25% of the Voting Rights allocated to each Class of Certificates;
provided, however, that if the payment within a reasonable time to the Trustee
of the costs, expenses or liabilities likely to be incurred by it in the making
of such investigation is, in the opinion of the Trustee, not assured to the
Trustee by the security afforded to it by the terms of this Agreement, the
Trustee may require indemnity satisfactory to the Trustee against such cost,
expense or liability as a condition to taking any such action. The reasonable
expense of every such examination shall be paid by the Master Servicer or,
if
paid by the Trustee, shall be repaid by the Master Servicer upon demand from
the
Servicer’s own funds.
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(v) the
Trustee may execute any of the trusts or powers hereunder or perform any duties
hereunder either directly or by or through agents, accountants or attorneys
and
the Trustee shall not be responsible for any misconduct or negligence on the
part of such agent, accountant or attorney appointed by the Trustee with due
care;
(vi) the
Trustee shall not be required to risk or expend its own funds or otherwise
incur
any financial liability in the performance of any of its duties or in the
exercise of any of its rights or powers hereunder if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk or liability is not assured to it;
(vii) the
Trustee shall not be liable for any loss on any investment of funds pursuant
to
this Agreement (other than as issuer of the investment security);
(viii) the
Trustee shall not be deemed to have knowledge of an Event of Default until
a
Responsible Officer of the Trustee shall have received written notice thereof
and in the absence of such notice, the Trustee may conclusively assume that
there is no Event of Default;
(ix) the
Trustee shall be under no obligation to exercise any of the trusts, rights
or
powers vested in it by this Agreement or to institute, conduct or defend any
litigation hereunder or in relation hereto at the request, order or direction
of
any of the Certificateholders, pursuant to the provisions of this Agreement,
unless such Certificateholders shall have offered to the Trustee reasonable
security or indemnity satisfactory to the Trustee against the costs, expenses
and liabilities which may be incurred therein or thereby;
(x) the
right
of the Trustee to perform any discretionary act enumerated in this Agreement
shall not be construed as a duty, and the Trustee shall not be answerable for
other than its negligence or willful misconduct in the performance of such
act;
and
(xi) the
Trustee shall not be required to give any bond or surety in respect of the
execution of the Trust Fund created hereby or the powers granted
hereunder.
SECTION
8.3 Trustee
Not Liable for Certificates or Mortgage Loans.
The
recitals contained herein and in the Certificates shall be taken as the
statements of the Depositor and the Trustee assumes no responsibility for their
correctness. The Trustee makes no representations as to the validity or
sufficiency of this Agreement or of the Certificates or of any Mortgage Loan
or
related document or of MERS or the MERS® System other than with respect to the
Trustee’s execution and counter-signature of the Certificates. The Trustee shall
not be accountable for the use or application by the Depositor or the Master
Servicer of any funds paid to the Depositor or the Master Servicer in respect
of
the Mortgage Loans or deposited in or withdrawn from the Certificate Account
by
the Depositor or the Master Servicer.
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SECTION
8.4 Trustee
May Own Certificates.
The
Trustee in its individual or any other capacity may become the owner or pledgee
of Certificates with the same rights as it would have if it were not the
Trustee.
SECTION
8.5 Trustee’s
Fees and Expenses.
The
Trustee, as compensation for its activities prior to making the distributions
pursuant to Section 4.2 hereunder, shall be entitled to withdraw from the
Distribution Account on each Distribution Date an amount equal to the Trustee
Fee for such Distribution Date. The Trustee and any director, officer, employee
or agent of the Trustee shall be indemnified by the Master Servicer and held
harmless against any loss, liability or expense (including reasonable attorney’s
fees) (i) incurred in connection with any claim or legal action relating to
(a)
this Agreement, (b) the Certificates or (c) in connection with the performance
of any of the Trustee’s duties hereunder, other than any loss, liability or
expense incurred by reason of willful misfeasance, bad faith or negligence
in
the performance of any of the Trustee’s duties hereunder or incurred by reason
of any action of the Trustee taken at the direction of the Certificateholders
and (ii) resulting from any error in any tax or information return prepared
by
the Master Servicer. Such indemnity shall survive the termination of this
Agreement or the resignation or removal of the Trustee hereunder. Without
limiting the foregoing, the Master Servicer covenants and agrees, except as
otherwise agreed upon in writing by the Depositor and the Trustee, and except
for any such expense, disbursement or advance as may arise from the Trustee’s
negligence, bad faith or willful misconduct, to pay or reimburse the Trustee,
for all reasonable expenses, disbursements and advances incurred or made by
the
Trustee in accordance with any of the provisions of this Agreement with respect
to: (A) the reasonable compensation and the expenses and disbursements of its
counsel not associated with the closing of the issuance of the Certificates,
(B)
the reasonable compensation, expenses and disbursements of any accountant,
engineer or appraiser that is not regularly employed by the Trustee, to the
extent that the Trustee must engage such persons to perform acts or services
hereunder and (C) printing and engraving expenses in connection with preparing
any Definitive Certificates. Except as otherwise provided herein, the Trustee
shall not be entitled to payment or reimbursement for any routine ongoing
expenses incurred by the Trustee in the ordinary course of its duties as
Trustee, Registrar, Tax Matters Person or Paying Agent hereunder or for any
other expenses.
SECTION
8.6 Eligibility
Requirements for Trustee.
The
Trustee hereunder shall at all times be a corporation or association organized
and doing business under the laws of a state or the United States of America,
authorized under such laws to exercise corporate trust powers, having a combined
capital and surplus of at least $50,000,000, subject to supervision or
examination by federal or state authority and with a credit rating which would
not cause either of the Rating Agencies to reduce their respective then current
ratings of the Certificates (or having provided such security from time to
time
as is sufficient to avoid such reduction). If such corporation or association
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for
the
purposes of this Section 8.6 the combined capital and surplus of such
corporation or association shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Trustee shall cease to be eligible in accordance with
the
provisions of this Section 8.6, the Trustee shall resign immediately in the
manner and with the effect specified in Section 8.7 hereof. The entity serving
as Trustee may have normal banking and trust relationships with the Depositor
and its affiliates or the Master Servicer and its affiliates; provided, however,
that such entity cannot be an affiliate of the Master Servicer other than the
Trustee in its role as successor to the Master Servicer.
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SECTION
8.7 Resignation
and Removal of Trustee.
The
Trustee may at any time resign and be discharged from the trusts hereby created
by giving written notice of resignation to the Depositor and the Master Servicer
and each Rating Agency not less than 60 days before the date specified in such
notice when, subject to Section 8.8, such resignation is to take effect, and
acceptance by a successor trustee in accordance with Section 8.8 meeting the
qualifications set forth in Section 8.6. If no successor trustee meeting such
qualifications shall have been so appointed and have accepted appointment within
30 days after the giving of such notice or resignation, the resigning Trustee
may petition any court of competent jurisdiction for the appointment of a
successor trustee.
As
a
condition to the effectiveness of any such resignation, at least 15 calendar
days prior to the effective date of such resignation, the Trustee shall provide
(x) written notice to the Depositor of any successor pursuant to this Section
and (y) in writing and in form and substance reasonably satisfactory to the
Depositor, all information reasonably requested by the Depositor in order to
comply with its reporting obligation under Item 6.02 of Form 8-K with respect
to
the resignation of the Trustee.
If
at any
time (i) the Trustee shall cease to be eligible in accordance with the
provisions of Section 8.6 hereof and shall fail to resign after written request
thereto by the Depositor, (ii) the Trustee shall become incapable of acting,
or
shall be adjudged as bankrupt or insolvent, or a receiver of the Trustee or
of
its property shall be appointed, or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation, (iii)(A) a tax is imposed with
respect to the Trust Fund by any state in which the Trustee or the Trust Fund
is
located, (B) the imposition of such tax would be avoided by the appointment
of a
different trustee and (C) the Trustee fails to indemnify the Trust Fund against
such tax, or (iv) during the period that the Depositor is required to file
Exchange Act Reports with respect to the Trust Fund, the Trustee fails to comply
with its obligations under the last sentence of Section 7.1, Section 8.9 or
Article X and such failure is not remedied within the lesser of ten (10)
calendar days or such period in which the applicable Exchange Act Report can
be
filed timely (without taking into account any extensions), then, in the case
of
clauses (i) through (iii), the Depositor or the Master Servicer may remove
the
Trustee and appoint a successor trustee by written instrument, in triplicate,
one copy of which instrument shall be delivered to the Trustee, one copy of
which shall be delivered to the Master Servicer and one copy to the successor
trustee.
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The
Holders of Certificates entitled to at least 51% of the Voting Rights may at
any
time remove the Trustee and appoint a successor trustee by written instrument
or
instruments, in triplicate, signed by such Holders or their attorneys-in-fact
duly authorized, one complete set of which instruments shall be delivered by
the
successor Trustee to the Master Servicer, one complete set to the Trustee so
removed and one complete set to the successor so appointed. Notice of any
removal of the Trustee shall be given to each Rating Agency by the Successor
Trustee.
Any
resignation or removal of the Trustee and appointment of a successor trustee
pursuant to any of the provisions of this Section 8.7 shall become effective
upon acceptance of appointment by the successor trustee as provided in Section
8.8 hereof.
SECTION
8.8 Successor
Trustee.
Any
successor trustee appointed as provided in Section 8.7 hereof shall execute,
acknowledge and deliver to the Depositor and to its predecessor trustee and
the
Master Servicer an instrument accepting such appointment hereunder and thereupon
the resignation or removal of the predecessor trustee shall become effective
and
such successor trustee, without any further act, deed or conveyance, shall
become fully vested with all the rights, powers, duties and obligations of
its
predecessor hereunder, with the like effect as if originally named as trustee
herein. The Depositor, the Master Servicer and the predecessor trustee shall
execute and deliver such instruments and do such other things as may reasonably
be required for more fully and certainly vesting and confirming in the successor
trustee all such rights, powers, duties, and obligations.
No
successor trustee shall accept appointment as provided in this Section 8.8
unless at the time of such acceptance such successor trustee shall be eligible
under the provisions of Section 8.6 hereof and its appointment shall not
adversely affect the then current rating of the Certificates.
Upon
acceptance of appointment by a successor trustee as provided in this Section
8.8, the Depositor shall mail notice of the succession of such trustee hereunder
to all Holders of Certificates. If the Depositor fails to mail such notice
within 10 days after acceptance of appointment by the successor trustee, the
successor trustee shall cause such notice to be mailed at the expense of the
Depositor.
SECTION
8.9 Merger
or
Consolidation of Trustee.
Any
corporation into which the Trustee may be merged or converted or with which
it
may be consolidated or any corporation resulting from any merger, conversion
or
consolidation to which the Trustee shall be a party, or any corporation
succeeding to the business of the Trustee, shall be the successor of the Trustee
hereunder, provided that such corporation shall be eligible under the provisions
of Section 8.6 hereof without the execution or filing of any paper or further
act on the part of any of the parties hereto, anything herein to the contrary
notwithstanding.
The
Trustee shall provide (x) written notice to the Depositor of any successor
due
to merger or consolidation of the trustee pursuant to this Section within five
(5) days of the effectiveness of such merger or consolidation and (y) in writing
and in form and substance reasonably satisfactory to the Depositor, all
information reasonably requested by the Depositor in order to comply with its
reporting obligation under Item 6.02 of Form 8-K with respect to a replacement
Trustee.
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SECTION
8.10 Appointment
of Co-Trustee or Separate Trustee.
Notwithstanding
any other provisions of this Agreement, at any time, for the purpose of meeting
any legal requirements of any jurisdiction in which any part of the Trust Fund
or property securing any Mortgage Note may at the time be located, the Master
Servicer and the Trustee acting jointly shall have the power and shall execute
and deliver all instruments to appoint one or more Persons approved by the
Trustee to act as co-trustee or co-trustees jointly with the Trustee, or
separate trustee or separate trustees, of all or any part of the Trust Fund,
and
to vest in such Person or Persons, in such capacity and for the benefit of
the
Certificateholders, such title to the Trust Fund or any part thereof, whichever
is applicable, and, subject to the other provisions of this Section 8.10, such
powers, duties, obligations, rights and trusts as the Master Servicer and the
Trustee may consider necessary or desirable. If the Master Servicer shall not
have joined in such appointment within 15 days after the receipt by it of a
request to do so, or in the case an Event of Default shall have occurred and
be
continuing, the Trustee alone shall have the power to make such appointment.
No
co-trustee or separate trustee hereunder shall be required to meet the terms
of
eligibility as a successor trustee under Section 8.6 and no notice to
Certificateholders of the appointment of any co-trustee or separate trustee
shall be required under Section 8.8.
Every
separate trustee and co-trustee shall, to the extent permitted by law, be
appointed and act subject to the following provisions and
conditions:
(i) To
the
extent necessary to effectuate the purposes of this Section 8.10, all rights,
powers, duties and obligations conferred or imposed upon the Trustee shall
be
conferred or imposed upon and exercised or performed by the Trustee and such
separate trustee or co-trustee jointly (it being understood that such separate
trustee or co-trustee is not authorized to act separately without the Trustee
joining in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed (whether
as
Trustee hereunder or as successor to the Master Servicer hereunder), the Trustee
shall be incompetent or unqualified to perform such act or acts, in which event
such rights, powers, duties and obligations (including the holding of title
to
the applicable Trust Fund or any portion thereof in any such jurisdiction)
shall
be exercised and performed singly by such separate trustee or co-trustee, but
solely at the direction of the Trustee;
(ii) No
trustee hereunder shall be held personally liable by reason of any act or
omission of any other trustee hereunder and such appointment shall not, and
shall not be deemed to, constitute any such separate trustee or co-trustee
as
agent of the Trustee;
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(iii) The
Trustee may at any time accept the resignation of or remove any separate trustee
or co-trustee; and
(iv) The
Master Servicer, and not the Trustee, shall be liable for the payment of
reasonable compensation, reimbursement and indemnification to any such separate
trustee or co-trustee.
Any
notice, request or other writing given to the Trustee shall be deemed to have
been given to each of the separate trustees and co-trustees, when and as
effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article VIII. Each separate trustee and co-trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to
the
Master Servicer and the Depositor.
Any
separate trustee or co-trustee may, at any time, constitute the Trustee its
agent or attorney-in-fact, with full power and authority, to the extent not
prohibited by law, to do any lawful act under or in respect of this Agreement
on
its behalf and in its name. If any separate trustee or co-trustee shall die,
become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
SECTION
8.11 Tax
Matters.
It
is
intended that the assets with respect to which each REMIC election is to be
made, as set forth in the preliminary statement shall constitute, and that
the
conduct of matters relating to such assets shall be such as to qualify such
assets as, a “real estate mortgage investment conduit” as defined in and in
accordance with the REMIC Provisions. In furtherance of such intention, the
Trustee covenants and agrees that it shall act as agent (and the Trustee is
hereby appointed to act as agent) on behalf of any such REMIC and that in such
capacity it shall: (a) prepare and file, or cause to be prepared and filed,
in a
timely manner, a U.S. Real Estate Mortgage Investment Conduit Income Tax Return
(Form 1066 or any successor form adopted by the Internal Revenue Service) and
prepare and file or cause to be prepared and filed with the Internal Revenue
Service and applicable state or local tax authorities income tax or information
returns for each taxable year with respect to any such REMIC, containing such
information and at the times and in the manner as may be required by the Code
or
state or local tax laws, regulations, or rules, and furnish or cause to be
furnished to Certificateholders the schedules, statements or information at
such
times and in such manner as may be required thereby; (b) within thirty days
of
the Closing Date, furnish or cause to be furnished to the Internal Revenue
Service, on Forms 8811 or as otherwise may be required by the Code, the name,
title, address, and telephone number of the person that the Holders of the
Certificates may contact for tax information relating thereto, together with
such additional information as may be required by such Form, and update such
information at the time or times in the manner required by the Code; (c) make
or
cause to be made elections that such assets be treated as a REMIC on the federal
tax return for its first taxable year (and, if necessary, under applicable
state
law); (d) prepare and forward, or cause to be prepared and forwarded, to the
Certificateholders and to the Internal Revenue Service and, if necessary, state
tax authorities, all information returns and reports as and when required to
be
provided to them in accordance with the REMIC Provisions, including without
limitation, the calculation of any original issue discount using the prepayment
assumption; (e) provide information necessary for the computation of tax imposed
on the transfer of a Residual Certificate to a Person that is not a Permitted
Transferee, or an agent (including a broker, nominee or other middleman) of
a
Non-Permitted Transferee, or a pass-through entity in which a Non-Permitted
Transferee is the record holder of an interest (the reasonable cost of computing
and furnishing such information may be charged to the Person liable for such
tax); (f) to the extent that they are under its control conduct matters relating
to such assets at all times that any Certificates are outstanding so as to
maintain the status as a REMIC under the REMIC Provisions; (g) not knowingly
or
intentionally take any action or omit to take any action that would cause the
termination of any REMIC status; (h) pay, from the sources specified in the
last
paragraph of this Section 8.11, the amount of any federal or state tax,
including prohibited transaction taxes as described below, imposed on any such
REMIC prior to its termination when and as the same shall be due and payable
(but such obligation shall not prevent the Trustee or any other appropriate
Person from contesting any such tax in appropriate proceedings and shall not
prevent the Trustee from withholding payment of such tax, if permitted by law,
pending the outcome of such proceedings); (i) ensure that federal, state or
local income tax or information returns shall be signed by the Trustee or such
other person as may be required to sign such returns by the Code or state or
local laws, regulations or rules; (j) maintain records relating to any such
REMIC, including but not limited to the income, expenses, assets and liabilities
thereof and the fair market value and adjusted basis of the assets determined
at
such intervals as may be required by the Code, as may be necessary to prepare
the foregoing returns, schedules, statements or information; and (k) as and
when
necessary and appropriate, represent any such REMIC in any administrative or
judicial proceedings relating to an examination or audit by any governmental
taxing authority, request an administrative adjustment as to any taxable year
of
any such REMIC, enter into settlement agreements with any governmental taxing
agency, extend any statute of limitations relating to any tax item of any such
REMIC, and otherwise act on behalf of any such REMIC in relation to any tax
matter or controversy involving it.
96
In
order
to enable the Trustee to perform its duties as set forth herein, the Depositor
shall provide, or cause to be provided, to the Trustee within ten (10) days
after the Closing Date all information or data that the Trustee requests in
writing and determines to be relevant for tax purposes to the valuations and
offering prices of the Certificates, including, without limitation, the price,
yield, prepayment assumption and projected cash flows of the Certificates and
the Mortgage Loans. Thereafter, the Depositor shall provide to the Trustee
promptly upon written request therefor, any such additional information or
data
that the Trustee may, from time to time, reasonably request in order to enable
the Trustee to perform its duties as set forth herein. The Depositor hereby
indemnifies the Trustee for any losses, liabilities, damages, claims or expenses
of the Trustee arising from any errors or miscalculations of the Trustee that
result from any failure of the Depositor to provide, or to cause to be provided,
accurate information or data to the Trustee on a timely basis.
In
the
event that any tax is imposed on “prohibited transactions” of any REMIC as
defined in Section 860F(a)(2) of the Code, on the “net income from foreclosure
property” of any REMIC as defined in Section 860G(c) of the Code, on any
contribution to any REMIC after the Startup Day pursuant to Section 860G(d)
of
the Code, or any other tax is imposed, if not paid as otherwise provided for
herein, such tax shall be paid by (i) the Trustee, if any such other tax arises
out of or results from a breach by the Trustee of any of its obligations under
this Agreement which breach was caused by its negligence or willful misconduct,
(ii) the Master Servicer, in the case of any such minimum tax, or if such tax
arises out of or results from a breach by the Master Servicer of any of their
obligations under this Agreement, (iii) the Seller, if any such tax arises
out
of or results from the Seller’s obligation to repurchase a Mortgage Loan
pursuant to Section 2.2 or 2.3 or (iv) in all other cases, or in the event
that
the Trustee, the Master Servicer or the Seller fails to honor its obligations
under the preceding clauses (i), (ii) or (iii), any such tax will be paid with
amounts otherwise to be distributed to the Certificateholders, as provided
in
Section 3.8(b).
97
ARTICLE
IX
TERMINATION
SECTION
9.1 Termination
upon Liquidation or Purchase of all Mortgage Loans.
Subject
to Section 9.3, the obligations and responsibilities of the Depositor, the
Master Servicer and the Trustee created hereby with respect to the Trust Fund
shall terminate upon the earlier of (a) the purchase by the Master Servicer
of
all Mortgage Loans (and REO Properties) remaining in the Trust Fund at the
price
equal to the sum of (i) 100% of the Stated Principal Balance of each Mortgage
Loan (other than a Mortgage Loan that has been foreclosed and subject to clause
(ii)) plus one month’s accrued interest thereon at the applicable Adjusted
Mortgage Rate, (ii) the lesser of (x) the appraised value of any REO Property
as
determined by the higher of two appraisals completed by two independent
appraisers selected by the Master Servicer at the expense of the Master Servicer
and (y) the Stated Principal Balance of each Mortgage Loan related to any REO
Property, plus accrued and unpaid interest thereon at the applicable Adjusted
Mortgage Rate, and (iii) any costs and damages incurred by the Trust in
connection with the noncompliance of such Mortgage Loan with any specifically
applicable predatory or abusive lending law, and (b) the later of (i) the
maturity or other liquidation (or any Advance with respect thereto) of the
last
Mortgage Loan remaining in the Trust Fund and the disposition of all REO
Property and (ii) the distribution to Certificateholders of all amounts required
to be distributed to them pursuant to this Agreement. In no event shall the
trusts created hereby continue beyond the earlier of (i) the expiration of
21
years from the death of the survivor of the descendants of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
the late Ambassador of the United States to the Court of St. James’s, living on
the date hereof, and (ii) the Latest Possible Maturity Date. The right to
purchase all Mortgage Loans and REO Properties pursuant to clause (a) above
shall be conditioned upon the aggregate of the Pool Principal Balances for
each
Mortgage Pool, at the time of any such repurchase, aggregating less than ten
percent of the aggregate Cut-off Date Pool Principal Balance of all the Mortgage
Pools.
SECTION
9.2 Final
Distribution on the Certificates.
If
on any
Determination Date, the Master Servicer determines that there are no Outstanding
Mortgage Loans and no other funds or assets in the Trust Fund other than the
funds in the Certificate Account, the Master Servicer shall direct the Trustee
promptly to send a final distribution notice to each Certificateholder. If
the
Master Servicer elects to terminate the Trust Fund pursuant to clause (a) of
Section 9.1, at least 20 days prior to the date notice is to be mailed to the
affected Certificateholders, the Master Servicer shall notify the Depositor
and
the Trustee of the date the Master Servicer intends to terminate the Trust
Fund
and of the applicable repurchase price of the Mortgage Loans and REO
Properties.
98
Notice
of
any termination of the Trust Fund, specifying the Distribution Date on which
Certificateholders may surrender their Certificates for payment of the final
distribution and cancellation, shall be given promptly by the Trustee by letter
to Certificateholders mailed not earlier than the 10th day and no later than
the
15th day of the month next preceding the month of such final distribution.
Any
such notice shall specify (a) the Distribution Date upon which final
distribution on the Certificates will be made upon presentation and surrender
of
Certificates at the office therein designated, (b) the amount of such final
distribution, (c) the location of the office or agency at which such
presentation and surrender must be made, and (d) that the Record Date otherwise
applicable to such Distribution Date is not applicable, distributions being
made
only upon presentation and surrender of the Certificates at the office therein
specified. The Master Servicer will give such notice to each Rating Agency
at
the time such notice is given to Certificateholders.
In
the
event such notice is given, the Master Servicer shall cause all funds in the
Certificate Account to be remitted to the Trustee for deposit in the applicable
subaccounts of the Distribution Account on the Business Day prior to the
applicable Distribution Date in an amount equal to the final distribution in
respect of the Certificates. Upon such final deposit with respect to the Trust
Fund and the receipt by the Trustee of a Request for Release therefor, the
Trustee shall promptly release to the Master Servicer the Mortgage Files for
the
Mortgage Loans.
Upon
presentation and surrender of the Certificates, the Trustee shall cause to
be
distributed to the Certificateholders of each Class, in the order set forth
in
Section 4.2 hereof, on the final Distribution Date, in the case of the
Certificateholders, in proportion to their respective Percentage Interests,
with
respect to Certificateholders of the same Class, an amount equal to (i) as
to
each Class of Regular Certificates, the Class Certificate Balance thereof plus
accrued interest thereon in the case of an interest bearing Certificate, and
(ii) as to the Residual Certificates, the amount, if any, which remains on
deposit in the Distribution Account (other than the amounts retained to meet
claims) after application pursuant to clause (i) above.
In
the
event that any affected Certificateholders shall not surrender Certificates
for
cancellation within six months after the date specified in the above mentioned
written notice, the Trustee shall give a second written notice to the remaining
Certificateholders to surrender their Certificates for cancellation and receive
the final distribution with respect thereto. If within six months after the
second notice all the applicable Certificates shall not have been surrendered
for cancellation, the Trustee may take appropriate steps, or may appoint an
agent to take appropriate steps, to contact the remaining Certificateholders
concerning surrender of their Certificates, and the cost thereof shall be paid
out of the funds and other assets which remain a part of the Trust Fund. If
within one year after the second notice all Certificates shall not have been
surrendered for cancellation, the Holders of each of the Class II-A-R
Certificates shall be entitled to all unclaimed funds and other assets of the
Trust Fund, held for distribution to such Certificateholders, which remain
subject hereto.
99
SECTION
9.3 Additional
Termination Requirements.
(a) In
the
event the Master Servicer exercises its purchase option as provided in Section
9.1, the Trust Fund and each REMIC created hereunder shall be terminated in
accordance with the following additional requirements, unless the Trustee has
been supplied with an Opinion of Counsel, at the expense of the Master Servicer,
to the effect that the failure to comply with the requirements of this Section
9.3 will not (i) result in the imposition of taxes on “prohibited transactions”
on any REMIC as defined in Section 860F of the Code, or (ii) cause any REMIC
to
fail to qualify as a REMIC at any time that any Certificates are
outstanding:
(1) Within
90
days prior to the final Distribution Date set forth in the notice given by
the
Master Servicer under Section 9.2, the Master Servicer shall prepare and the
Trustee, at the expense of the “tax matters person,” shall adopt a plan of
complete liquidation within the meaning of Section 860F(a)(4) of the Code for
each REMIC created hereunder which, as evidenced by an Opinion of Counsel
addressed to the Trustee (which opinion shall not be an expense of the Trustee
or the Tax Matters Person), meets the requirements of a qualified liquidation;
and
(2) Within
90
days after the time of adoption of such plans of complete liquidation, the
Trustee shall sell all of the assets of the Trust Fund to the Master Servicer
for cash in accordance with Section 9.1.
(b) The
Trustee as agent for any REMIC established hereunder hereby agrees to adopt
and
sign such a plan of complete liquidation upon the written request of the Master
Servicer, and the receipt of the Opinion of Counsel referred to in Section
9.3(a)(1) and to take such other action in connection therewith as may be
reasonably requested by the Master Servicer.
(c) By
their
acceptance of the Certificates, the Holders thereof hereby authorize the Master
Servicer to prepare and the Trustee to adopt and sign plans of complete
liquidation.
ARTICLE
X
EXCHANGE
ACT REPORTING
SECTION
10.1 Filing
Obligations.
The
Master Servicer, the Trustee and the Seller shall reasonably cooperate with
the
Depositor in connection with the satisfaction of the Depositor’s reporting
requirements under the Exchange Act with respect to the Trust Fund. In addition
to the information specified below, if so requested by the Depositor for the
purpose of satisfying its reporting obligation under the Exchange Act, the
Master Servicer, the Trustee and the Seller shall (and the Master Servicer
shall
cause each Subservicer to) provide the Depositor with (a) such information
which
is available to such Person without unreasonable effort or expense and within
such timeframe as may be reasonably requested by the Depositor to comply with
the Depositor’s reporting obligations under the Exchange Act and (b) to the
extent such Person is a party (and the Depositor is not a party) to any
agreement or amendment requested of it by the Depositor and required to be
filed, copies of such agreement or amendment in ▇▇▇▇▇-compatible
form.
100
SECTION
10.2 Form
10-D
Filings.
(a) Although
the Depositor is responsible under Regulation AB for filing the Form 10-D,
the
Trustee hereby agrees it shall prepare for filing and file within fifteen days
after each Distribution Date (subject to permitted extensions under the Exchange
Act) with the SEC with respect to the Trust Fund, a Form 10-D with copies of
the
Monthly Report and, to the extent delivered to the Trustee, no later than ten
days following the Distribution Date, such other information identified by
the
Depositor or the Master Servicer, in writing, to be filed with the SEC (such
other information, the “Additional Designated Information”). If the Depositor or
Master Servicer directs that any Additional Designated Information is to be
filed with any Form 10-D, the Depositor or Master Servicer, as the case may
be,
shall specify the Item on Form 10-D to which such information is responsive
and,
with respect to any Exhibit to be filed on Form 10-D, the Exhibit number. Any
information to be filed on Form 10-D shall be delivered to the Trustee in
▇▇▇▇▇-compatible form or as otherwise agreed upon by the Trustee and the
Depositor or the Master Servicer, as the case may be, at the Depositor’s
expense, and any necessary conversion to ▇▇▇▇▇-compatible format will be at
the
Depositor’s expense. At the reasonable request of, and in accordance with the
reasonable directions of, the Depositor or the Master Servicer, subject to
the
two preceding sentences, the Trustee shall prepare for filing and file an
amendment to any Form 10-D previously filed with the SEC with respect to the
Trust Fund. The Master Servicer shall sign the Form 10-D filed on behalf of
the
Trust Fund.
(b) No
later
than each Distribution Date, each of the Master Servicer and the Trustee shall
notify (and the Master Servicer shall cause any Subservicer to notify) the
Depositor and the Master Servicer of any Form 10-D Disclosure Item relating
to
it, together with a description of any such Form 10-D Disclosure Item in form
and substance reasonably acceptable to the Depositor. In addition to such
information as the Master Servicer and the Trustee are obligated to provide
pursuant to other provisions of this Agreement, if so requested by the
Depositor, each of the Master Servicer and the Trustee shall provide such
information which is available to the Master Servicer and the Trustee, as
applicable, without unreasonable effort or expense regarding the performance
or
servicing of the Mortgage Loans (in the case of the Trustee, based on the
information provided by the Master Servicer) as is reasonably required of the
Depositor to facilitate preparation of distribution reports in accordance with
Item 1121 of Regulation AB. Such information shall be provided concurrently
with
the delivering of the reports specified in Section 4.6 in the case of the Master
Servicer and the Monthly Statement in the case of the Trustee, commencing with
the first such report due not less than five (5) Business Days following such
request.
(c) The
Trustee shall not have any responsibility to file any items (other than those
generated by it) that have not been received in a format suitable (or readily
convertible into a format suitable) for electronic filing via the ▇▇▇▇▇ system
and shall not have any responsibility to convert any such items to such format
(other than those items generated by it or that are readily convertible to
such
format). The Trustee shall have no liability to the Certificateholders, the
Trust Fund, the Master Servicer or the Depositor with respect to any failure
to
properly prepare or file any of Form 10-D to the extent that such failure is
not
the result of any negligence, bad faith or willful misconduct on its part.
For
avoidance of doubt, the Trustee shall have no liability whatsoever under the
Securities Act or the Exchange Act.
101
SECTION
10.3 Form
8-K
Filings.
The
Master Servicer shall prepare and file on behalf of the Trust Fund any Form
8-K
required by the Exchange Act. Each Form 8-K must be signed by the Master
Servicer. Each of the Trustee and the Master Servicer shall (and the Master
Servicer shall cause any Subservicer to), promptly notify the Depositor and
the
Master Servicer (if the notifying party is not the Master Servicer), but in
no
event later than one (1) Business Day after its occurrence, of any Reportable
Event related to it, of which it has actual knowledge. The Master Servicer
shall
notify the Depositor if any material pool characteristic of the actual asset
pool at the time of issuance of the Certificates differs by five percent or
more
(other than as a result of the pool assets converting into cash in accordance
with their terms) from the description of the asset pool in the Prospectus
Supplement.
SECTION
10.4 Form
10-K
Filings.
Prior
to
March 30th of each year, commencing in 2007 (or such earlier date as may be
required by the Exchange Act), the Depositor shall prepare and file on behalf
of
the Trust Fund a Form 10-K, in form and substance as required by the Exchange
Act. A senior officer in charge of the servicing function of the Master Servicer
shall sign each Form 10-K filed on behalf of the Trust Fund. Such Form 10-K
shall include as exhibits each (i) annual compliance statement described under
Section 3.16(a), (ii) annual report on assessments of compliance with servicing
criteria described under Section 10.7 and (iii) accountant’s report described
under Section 10.7. Each Form 10-K shall also include any ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Certification required to be included therewith, as described in Section
10.5.
If
the
Item 1119 Parties listed on Exhibit P have changed since the Closing Date,
no
later than March 1 of each year, the Depositor shall provide each of the Master
Servicer (and the Master Servicer shall provide any Subservicer) and the Trustee
with an updated Exhibit P setting forth the Item 1119 Parties. No later than
March 15 of each year, commencing in 2007, the Master Servicer and the Trustee
shall notify (and the Master Servicer shall cause any Subservicer to notify)
the
Depositor of any Form 10-K Disclosure Item related to it, together with a
description of any such Form 10-K Disclosure Item in form and substance
reasonably acceptable to the Depositor. Additionally, each of the Master
Servicer and the Trustee shall provide to the Depositor, and shall cause each
Reporting Subcontractor retained by the Master Servicer or the Trustee, as
applicable, and in the case of the Master Servicer shall cause each Subservicer
that is a reporting Subcontractor, to provide to the Depositor, the following
information no later than March 15 of each year in which a Form 10-K is required
to be filed on behalf of the Trust Fund: (i) if such Person’s report on
assessment of compliance with servicing criteria described under Section 10.7
or
related registered public accounting firm attestation report described under
Section 10.7 identifies any material instance of noncompliance, notification
of
such instance of noncompliance and (ii) if any such Person’s report on
assessment of compliance with servicing criteria or related registered public
accounting firm attestation report is not provided to be filed as an exhibit
to
such Form 10-K, information detailing the explanation why such report is not
included.
102
SECTION
10.5 ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Certification.
Each
Form
10-K shall include a certification (the “▇▇▇▇▇▇▇▇-▇▇▇▇▇ Certification”) required
by Rules 13a-14(d) and 15d-14(d) under the Exchange Act (pursuant to Section
302
of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the rules and regulations of the SEC
promulgated thereunder (including any interpretations thereof by the SEC’s
staff)). No later than March 15 of each year, beginning in 2007, the Master
Servicer (unless such Person is the Certifying Person) and the Trustee shall,
and the Master Servicer shall cause each Subservicer to, provide to the Person
who signs the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Certification (the “Certifying Person”) a
certification (each, a “Performance Certification”), substantially in the form
attached hereto as Exhibit N-1 (in the case of a Subservicer) and Exhibit N-2
(in the case of the Trustee), unless such other form is mutually agreed upon,
on
which the Certifying Person, the entity for which the Certifying Person acts
as
an officer, and such entity’s officers, directors and Affiliates (collectively
with the Certifying Person, “Certification Parties”) can reasonably rely. The
senior officer in charge of the servicing function of the Master Servicer shall
serve as the Certifying Person on behalf of the Trust Fund. Neither the Master
Servicer nor the Depositor will request delivery of a certification under this
clause unless the Depositor is required under the Exchange Act to file an annual
report on Form 10-K with respect to the Trust Fund. In the event that prior
to
the filing date of the Form 10-K in March of each year, the Trustee or the
Depositor has actual knowledge of information material to the ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Certification, the Trustee or the Depositor, as the case may be, shall promptly
notify the Master Servicer and the Depositor. The respective parties hereto
agree to cooperate with all reasonable requests made by any Certifying Person
or
Certification Party in connection with such Person’s attempt to conduct any due
diligence that such Person reasonably believes to be appropriate in order to
allow it to deliver any ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Certification or portion thereof with
respect to the Trust Fund.
SECTION
10.6 Form
15
Filing.
Prior
to
January 31 of the first year in which the Depositor is able to do so under
applicable law, the Depositor shall file a Form 15 relating to the automatic
suspension of reporting in respect of the Trust Fund under the Exchange
Act.
SECTION
10.7 Report
on
Assessment of Compliance and Attestation.
(a) On
or
before March 15 of each calendar year, commencing in 2007:
(i) Each
of
the Master Servicer and the Trustee shall deliver to the Depositor and the
Master Servicer a report (in form and substance reasonably satisfactory to
the
Depositor) regarding the Master Servicer’s or the Trustee’s, as applicable,
assessment of compliance with the Servicing Criteria during the immediately
preceding calendar year, as required under Rules 13a-18 and 15d-18 of the
Exchange Act and Item 1122 of Regulation AB. Such report shall be signed by
an
authorized officer of such Person and shall address each of the Servicing
Criteria specified on a certification substantially in the form of Exhibit
O
hereto, unless such other form is mutually agreed upon delivered to the
Depositor concurrently with the execution of this Agreement. To the extent
any
of the Servicing Criteria are not applicable to such Person, with respect to
asset-backed securities transactions taken as a whole involving such Person
and
that are backed by the same asset type backing the Certificates, such report
shall include such a statement to that effect. The Depositor and the Master
Servicer, and each of their respective officers and directors shall be entitled
to rely upon each such servicing criteria assessment.
103
(ii) Each
of
the Master Servicer and the Trustee shall deliver to the Depositor and the
Master Servicer a report of a registered public accounting firm reasonably
acceptable to the Depositor that attests to, and reports on, the assessment
of
compliance made by Master Servicer or the Trustee, as applicable, and delivered
pursuant to the preceding paragraphs. Such attestation shall be in accordance
with Rules 1-02(a)(3) and 2-02(g) of Regulation S-X under the Securities Act
and
the Exchange Act, including, without limitation that in the event that an
overall opinion cannot be expressed, such registered public accounting firm
shall state in such report why it was unable to express such an opinion. Such
report must be available for general use and not contain restricted use
language. To the extent any of the Servicing Criteria are not applicable to
such
Person, with respect to asset-backed securities transactions taken as a whole
involving such Person and that are backed by the same asset type backing the
Certificates, such report shall include such a statement that that
effect.
(iii) The
Master Servicer shall cause each Subservicer that is a Reporting Subcontractor
engaged by it to deliver to the Depositor an assessment of compliance and
accountants’ attestation as and when provided in paragraphs (a) and (b) of this
Section 10.7.
(iv) The
Trustee shall cause each Reporting Subcontractor engaged by it to deliver to
the
Depositor and the Master Servicer an assessment of compliance and accountants’
attestation as and when provided in paragraphs (a) and (b) of this
Section.
(b) Each
assessment of compliance provided by a Subservicer pursuant to Section
10.7(a)(iii) shall address each of the Servicing Criteria specified on a
certification substantially in the form of Exhibit O hereto delivered to the
Depositor concurrently with the execution of this Agreement or, in the case
of a
Subservicer subsequently appointed as such, on or prior to the date of such
appointment. An assessment of compliance provided by a Subcontractor pursuant
to
Section 10.7(a)(iii) or (iv) need not address any elements of the Servicing
Criteria other than those specified by the Master Servicer or the Trustee,
as
applicable, pursuant to Section 10.7(a)(i).
104
SECTION
10.8 Use
of
Subservicers and Subcontractors.
(a) The
Master Servicer shall cause any Subservicer used by the Master Servicer (or
by
any Subservicer) for the benefit of the Depositor to comply with the provisions
of Section 3.16 and this Article X to the same extent as if such Subservicer
were the Master Servicer (except with respect to the Master Servicer’s duties
with respect to preparing and filing any Exchange Act Reports or as the
Certifying Person). The Master Servicer shall be responsible for obtaining
from
each Subservicer and delivering to the Depositor any servicer compliance
statement required to be delivered by such Subservicer under Section 3.16,
any
assessment of compliance and attestation required to be delivered by such
Subservicer under Section 10.7 and any certification required to be delivered
to
the Certifying Person under Section 10.5 as and when required to be delivered.
As a condition to the succession to any Subservicer as subservicer under this
Agreement by any Person (i) into which such Subservicer may be merged or
consolidated, or (ii) which may be appointed as a successor to any Subservicer,
the Master Servicer shall provide to the Depositor, at least fifteen (15)
calendar days prior to the effective date of such succession or appointment,
(x)
written notice to the Depositor of such succession or appointment and (y) in
writing and in form and substance reasonably satisfactory to the Depositor,
all
information reasonably requested by the Depositor in order to comply with its
reporting obligation under Item 6.2 of Form 8-K.
(b) It
shall
not be necessary for the Master Servicer or any Subservicer to seek the consent
of the Depositor or any other party hereto to the utilization of any
Subcontractor. The Master Servicer shall promptly upon request provide to the
Depositor (or any designee of the Depositor, such as the Master Servicer or
administrator) a written description (in form and substance satisfactory to
the
Depositor) of the role and function of each Subcontractor utilized by such
Person (or in the case of the Master Servicer or any Subservicer), specifying
(i) the identity of each such Subcontractor, (ii) which (if any) of such
Subcontractors are “participating in the servicing function” within the meaning
of Item 1122 of Regulation AB, and (iii) which elements of the Servicing
Criteria will be addressed in assessments of compliance provided by each
Subcontractor, who is a Reporting Subcontrator, identified pursuant to clause
(ii) of this paragraph.
As
a
condition to the utilization of any Subcontractor determined to be a Reporting
Subcontractor, the Master Servicer shall cause any such Subcontractor used
by
such Person (or in the case of the Master Servicer or any Subservicer) for
the
benefit of the Depositor to comply with the provisions of Sections 10.7 and
10.9
of this Agreement to the same extent as if such Subcontractor were the Master
Servicer (except with respect to the Master Servicer’s duties with respect to
preparing and filing any Exchange Act Reports or as the Certifying Person).
The
Master Servicer shall be responsible for obtaining from each Subcontractor
and
delivering to the Depositor and the Master Servicer, any assessment of
compliance and attestation required to be delivered by such Subcontractor under
Section 10.7, in each case as and when required to be delivered.
105
SECTION
10.9 Amendments.
In
the
event the parties to this Agreement desire to further clarify or amend any
provision of this Article X, this Agreement shall be amended to reflect the
new
agreement between the parties covering matters in this Article X pursuant to
Section 11.1, which amendment shall not require any Opinion of Counsel or Rating
Agency confirmations or the consent of any Certificateholder. If, during the
period that the Depositor is required to file Exchange Act Reports with respect
to the Trust Fund, the Master Servicer is no longer an Affiliate of the
Depositor, the Depositor shall assume the obligations and responsibilities
of
the Master Servicer in this Article X with respect to the preparation and filing
of the Exchange Act Reports and/or acting as the Certifying Person, if the
Depositor has received indemnity from such successor Master Servicer
satisfactory to the Depositor, and such Master Servicer has agreed to provide
a
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Certification to the Depositor substantially in the form of
Exhibit Q.
ARTICLE
XI
MISCELLANEOUS
PROVISIONS
SECTION
11.1 Amendment.
This
Agreement may be amended from time to time by the Depositor, the Master Servicer
and the Trustee without the consent of any of the Certificateholders (i) to
cure
any ambiguity or mistake, (ii) to correct any defective provision herein or
to
supplement any provision herein which may be inconsistent with any other
provision herein, (iii) to add to the duties of the Depositor, the Seller or
the
Master Servicer, (iv) to add any other provisions with respect to matters or
questions arising hereunder or (v) to modify, alter, amend, add to or rescind
any of the terms or provisions contained in this Agreement; provided that any
action pursuant to clauses (iv) or (v) above shall not, as evidenced by an
Opinion of Counsel delivered to the Trustee (which Opinion of Counsel shall
not
be an expense of the Trustee or the Trust Fund), adversely affect in any
material respect the interests of any Certificateholder; provided, however,
that
the amendment shall not be deemed to adversely affect in any material respect
the interests of the Certificateholders if the Person requesting the amendment
obtains a letter from each Rating Agency stating that the amendment would not
result in the downgrading or withdrawal of the respective ratings then assigned
to the Certificates; it being understood and agreed that any such letter in
and
of itself will not represent a determination as to the materiality of any such
amendment and will represent a determination only as to the credit issues
affecting any such rating. The Trustee, the Depositor and the Master Servicer
also may at any time and from time to time amend this Agreement without the
consent of the Certificateholders to modify, eliminate or add to any of its
provisions to such extent as shall be necessary or helpful to (i) maintain
the
qualification of any REMIC established hereunder as a REMIC under the Code,
(ii)
avoid or minimize the risk of the imposition of any tax on any REMIC established
hereunder pursuant to the Code that would be a claim at any time prior to the
final redemption of the Certificates or (iii) comply with any other requirements
of the Code, provided that the Trustee has been provided an Opinion of Counsel,
which opinion shall be an expense of the party requesting such opinion but
in
any case shall not be an expense of the Trustee or the Trust Fund, to the effect
that such action is necessary or helpful to, as applicable, (i) maintain such
qualification, (ii) avoid or minimize the risk of the imposition of such a
tax
or (iii) comply with any such requirements of the Code.
106
This
Agreement may also be amended from time to time by the Depositor, the Master
Servicer and the Trustee with the consent of the Holders of a Majority in
Interest of each Class of Certificates affected thereby for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or of modifying in any manner the rights of the
Holders of Certificates; provided, however, that no such amendment shall (i)
reduce in any manner the amount of, or delay the timing of, payments required
to
be distributed on any Certificate without the consent of the Holder of such
Certificate, (ii) adversely affect in any material respect the interests of
the
Holders of any Class of Certificates in a manner other than as described in
(i),
without the consent of the Holders of Certificates of such Class evidencing,
as
to such Class, Percentage Interests aggregating 66%, or (iii) reduce the
aforesaid percentages of Certificates the Holders of which are required to
consent to any such amendment, without the consent of the Holders of all such
Certificates then outstanding.
Notwithstanding
any contrary provision of this Agreement, the Trustee shall not consent to
any
amendment to this Agreement unless it shall have first received an Opinion
of
Counsel, which opinion shall not be an expense of the Trustee or the Trust
Fund,
to the effect that such amendment will not cause the imposition of any tax
on
any REMIC established hereunder or the Certificateholders or cause any REMIC
established hereunder to fail to qualify as a REMIC at any time that any
Certificates are outstanding.
Promptly
after the execution of any amendment to this Agreement requiring the consent
of
Certificateholders, the Trustee shall furnish written notification of the
substance or a copy of such amendment to each Certificateholder and each Rating
Agency.
It
shall
not be necessary for the consent of Certificateholders under this Section to
approve the particular form of any proposed amendment, but it shall be
sufficient if such consent shall approve the substance thereof. The manner
of
obtaining such consents and of evidencing the authorization of the execution
thereof by Certificateholders shall be subject to such reasonable regulations
as
the Trustee may prescribe.
Nothing
in this Agreement shall require the Trustee to enter into an amendment without
receiving an Opinion of Counsel (which Opinion shall not be an expense of the
Trustee or the Trust Fund), satisfactory to the Trustee that (i) such amendment
is permitted and is not prohibited by this Agreement and that all requirements
for amending this Agreement have been complied with; and (ii) either (A) the
amendment does not adversely affect in any material respect the interests of
any
Certificateholder or (B) the conclusion set forth in the immediately preceding
clause (A) is not required to be reached pursuant to this Section
11.1.
SECTION
11.2 Recordation
of Agreement; Counterparts.
This
Agreement is subject to recordation in all appropriate public offices for real
property records in all the counties or other comparable jurisdictions in which
any or all of the properties subject to the Mortgages are situated, and in
any
other appropriate public recording office or elsewhere, such recordation to
be
effected by the Master Servicer at its expense, but only upon direction a
majority of the Certificateholders to the effect that such recordation
materially and beneficially affects the interests of the
Certificateholders.
107
For
the
purpose of facilitating the recordation of this Agreement as herein provided
and
for other purposes, this Agreement may be executed (by facsimile or otherwise)
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one
and
the same instrument.
SECTION
11.3 Governing
Law.
THIS
AGREEMENT (OTHER THAN SECTION 2.1 HEREOF) SHALL BE CONSTRUED IN ACCORDANCE
WITH
AND GOVERNED BY THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED IN THE STATE OF NEW YORK AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HERETO AND THE
CERTIFICATEHOLDERS SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. SECTION
2.1
OF THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
SUBSTANTIVE LAWS OF THE STATE OF DELAWARE APPLICABLE TO AGREEMENTS MADE AND
TO
BE PERFORMED IN THE STATE OF DELAWARE AND THE OBLIGATIONS, RIGHTS AND REMEDIES
OF THE PARTIES HERETO AND THE CERTIFICATEHOLDERS UNDER SUCH SECTION SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION
11.4 Intention
of Parties.
It
is the
express intent of the parties hereto that the conveyance of the Trust Fund
by
the Depositor to the Trustee be, and be construed as, absolute sales thereof
to
the Trustee. It is, further, not the intention of the parties that such
conveyances be deemed a pledge thereof by the Depositor to the Trustee. However,
in the event that, notwithstanding the intent of the parties, such assets are
held to be the property of the Depositor, or if for any other reason this
Agreement is held or deemed to create a security interest in such assets, then
(i) this Agreement shall be deemed to be a security agreement within the meaning
of the Uniform Commercial Code of the State of New York and (ii) the conveyance
provided for in this Agreement shall be deemed to be an assignment and a grant
by the Depositor to the Trustee, for the benefit of the Certificateholders,
of a
security interest in all of the assets that constitute the Trust Fund, whether
now owned or hereafter acquired.
The
Depositor, for the benefit of the Certificateholders, shall, to the extent
consistent with this Agreement, take such actions as may be necessary to ensure
that, if this Agreement were deemed to create a security interest in the Trust
Fund, such security interest would be deemed to be a perfected security interest
of first priority under applicable law and will be maintained as such throughout
the term of the Agreement. The Depositor shall arrange for filing any Uniform
Commercial Code continuation statements in connection with any security interest
granted or assigned to the Trustee for the benefit of the
Certificateholders.
SECTION
11.5 Notices.
(a) The
Trustee shall use its best efforts to promptly provide notice to each Rating
Agency with respect to each of the following of which it has actual
knowledge:
| (1) |
Any
material change or amendment to this
Agreement;
|
108
| (2) |
The
occurrence of any Event of Default that has not been
cured;
|
| (3) |
The
resignation or termination of the Master Servicer or the Trustee
and the
appointment of any successor;
|
| (4) |
The
repurchase or substitution of Mortgage Loans pursuant to Section
2.3;
and
|
| (5) |
The
final payment to
Certificateholders.
|
| (6) |
Any
rating action involving the long-term credit rating of the Master
Servicer, which notice shall be made by first-class mail within two
Business Days after the Trustee gains actual knowledge
thereof.
|
In
addition, the Trustee shall promptly furnish to each Rating Agency copies of
the
following:
| (1) |
Each
report to Certificateholders described in Section
4.6;
|
| (2) |
Each
annual statement as to compliance described in Section 3.16;
and
|
| (3) |
Any
notice of a purchase of a Mortgage Loan pursuant to Section 2.2,
2.3 or
3.11.
|
(b) All
directions, demands, authorizations, consents, waivers, communications and
notices hereunder shall be in writing and shall be deemed to have been duly
given when delivered to by first class mail, facsimile or courier (a) in the
case of the Depositor, First Horizon Asset Securities Inc., ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇▇▇▇▇; (b) in the case of the Master
Servicer, First Horizon Home Loan Corporation, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇. ▇▇▇▇ or such other address as may be hereafter
furnished to the Depositor and the Trustee by the Master Servicer in writing;
(c) in the case of the Trustee, The Bank of New York, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Trust Administration—First
Horizon 2006-AA2, or such other address as the Trustee may hereafter furnish
to
the Depositor or Master Servicer; and (d) in the case of the Rating Agencies,
the address specified therefor in the definition corresponding to the name
of
such Rating Agency. Notices to Certificateholders shall be deemed given when
mailed, first class postage prepaid, to their respective addresses appearing
in
the Certificate Register.
SECTION
11.6 Severability
of Provisions.
If
any
one or more of the covenants, agreements, provisions or terms of this Agreement
shall be for any reason whatsoever held invalid, then such covenants,
agreements, provisions or terms shall be deemed severable from the remaining
covenants, agreements, provisions or terms of this Agreement and shall in no
way
affect the validity or enforceability of the other provisions of this Agreement
or of the Certificates or the rights of the Holders thereof.
109
SECTION
11.7 Assignment.
Notwithstanding
anything to the contrary contained herein, except as provided in Section 6.2,
this Agreement may not be assigned by the Master Servicer without the prior
written consent of the Trustee and Depositor.
SECTION
11.8 Limitation
on Rights of Certificateholders.
The
death
or incapacity of any Certificateholder shall not operate to terminate this
Agreement or the trust created hereby, nor entitle such Certificateholder’s
legal representative or heirs to claim an accounting or to take any action
or
commence any proceeding in any court for a petition or winding up of the trust
created hereby, or otherwise affect the rights, obligations and liabilities
of
the parties hereto or any of them.
No
Certificateholder shall have any right to vote (except as provided herein)
or in
any manner otherwise control the operation and management of the Trust Fund,
or
the obligations of the parties hereto, nor shall anything herein set forth
or
contained in the terms of the Certificates be construed so as to constitute
the
Certificateholders from time to time as partners or members of an association;
nor shall any Certificateholder be under any liability to any third party by
reason of any action taken by the parties to this Agreement pursuant to any
provision hereof.
No
Certificateholder shall have any right by virtue or by availing itself of any
provisions of this Agreement to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Agreement, unless such
Holder previously shall have given to the Trustee a written notice of an Event
of Default and of the continuance thereof, as herein provided, and unless the
Holders of Certificates evidencing not less than 25% of the Voting Rights
evidenced by the Certificates shall also have made written request to the
Trustee to institute such action, suit or proceeding in its own name as Trustee
hereunder and shall have offered to the Trustee such reasonable indemnity as
it
may require against the costs, expenses, and liabilities to be incurred therein
or thereby, and the Trustee, for 60 days after its receipt of such notice,
request and offer of indemnity shall have neglected or refused to institute
any
such action, suit or proceeding; it being understood and intended, and being
expressly covenanted by each Certificateholder with every other
Certificateholder and the Trustee, that no one or more Holders of Certificates
shall have any right in any manner whatever by virtue or by availing itself
or
themselves of any provisions of this Agreement to affect, disturb or prejudice
the rights of the Holders of any other of the Certificates, or to obtain or
seek
to obtain priority over or preference to any other such Holder or to enforce
any
right under this Agreement, except in the manner herein provided and for the
common benefit of all Certificateholders. For the protection and enforcement
of
the provisions of this Section 11.8, each and every Certificateholder and the
Trustee shall be entitled to such relief as can be given either at law or in
equity.
SECTION
11.9 Inspection
and Audit Rights.
The
Master Servicer agrees that, on reasonable prior notice, it will permit and
will
cause each Subservicer to permit any representative of the Depositor or the
Trustee during the Master Servicer’s normal business hours, to examine all the
books of account, records, reports and other papers of the Master Servicer
relating to the Mortgage Loans, to make copies and extracts therefrom, to cause
such books to be audited by independent certified public accountants selected
by
the Depositor or the Trustee and to discuss its affairs, finances and accounts
relating to the Mortgage Loans with its officers, employees and independent
public accountants (and by this provision the Master Servicer hereby authorizes
said accountants to discuss with such representative such affairs, finances
and
accounts), all at such reasonable times and as often as may be reasonably
requested. Any out-of-pocket expense incident to the exercise by the Depositor
or the Trustee of any right under this Section 11.9 shall be borne by the party
requesting such inspection; all other such expenses shall be borne by the Master
Servicer or the related Subservicer.
110
SECTION
11.10 Certificates
Nonassessable and Fully Paid.
It
is the
intention of the Depositor that Certificateholders shall not be personally
liable for obligations of the Trust Fund, that the interests in the Trust Fund
represented by the Certificates shall be nonassessable for any reason
whatsoever, and that the Certificates, upon due authentication thereof by the
Trustee pursuant to this Agreement, are and shall be deemed fully
paid.
SECTION
11.11 Limitations
on Actions; No Proceedings.
(a) Other
than pursuant to this Agreement, or in connection with or incidental to the
provisions or purposes of this Agreement, the trust created hereunder shall
not
(i) issue debt or otherwise borrow money, (ii) merge or consolidate with any
other entity reorganize, liquidate or transfer all or substantially all of
its
assets to any other entity, or (iii) otherwise engage in any activity or
exercise any power not provided for in this Agreement.
(b) Notwithstanding
any prior termination of this Agreement, the Trustee, the Master Servicer and
the Depositor shall not, prior to the date which is one year and one day after
the termination of this Agreement, acquiesce, petition or otherwise invoke
or
cause any Person to invoke the process of any court or government authority
for
the purpose of commencing or sustaining a case against the Depositor or the
Trust Fund under any federal or state bankruptcy, insolvency or other similar
law or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Depositor or the Trust Fund or
any
substantial part of their respective property, or ordering the winding up or
liquidation of the affairs of the Depositor or the Trust Fund.
SECTION
11.12 Acknowledgment
of Seller.
Seller
hereby acknowledges the provisions of this Agreement, including the obligations
under Sections 2.1(a), 2.2, 2.3(b) and 8.11 of this Agreement and further
acknowledges the Depositor’s assignment of its rights and remedies for the
breach of the representations and warranties made by the Seller under the
MLPA.
*
* * * *
*
111
IN
WITNESS WHEREOF, the Depositor, the Trustee and the Master Servicer have caused
their names to be signed hereto by their respective officers thereunto duly
authorized as of the day and year first above written.
|
FIRST
HORIZON ASSET SECURITIES INC.,
as
Depositor
|
||
| |
|
|
| By: | ||
|
▇▇▇▇▇▇ ▇▇▇▇▇ |
||
| Vice President | ||
|
THE
BANK OF NEW YORK,
not
in its individual capacity, but solely as
Trustee
|
||
| |
|
|
| By: | ||
|
▇▇▇▇▇ ▇▇▇▇▇▇▇ |
||
| Vice President | ||
|
FIRST
HORIZON HOME LOAN
CORPORATION,
in its capacity as Master Servicer
|
||
| |
|
|
| By: | ||
|
▇▇▇▇▇ ▇▇▇▇▇ |
||
| Executive Vice President | ||
The
foregoing agreement is hereby
acknowledged
and accepted as of the
date
first above written:
FIRST
HORIZON HOME LOAN CORPORATION,
in
its
capacity as Seller
By:
___________________________________
▇▇▇▇▇
▇▇▇▇▇
Executive
Vice President
SCHEDULE
I
First
Horizon Asset Securities Inc.
Mortgage
Pass-Through Certificates Series 2006-AA2
Mortgage
Loan Schedule
[Available
Upon Request from Trustee]
I-1
SCHEDULE
II
First
Horizon Asset Securities Inc.
Mortgage
Pass-Through Certificates Series 2006-AA2
Representations
and Warranties of the Master Servicer
First
Horizon Home Loan Corporation (“First Horizon”) hereby makes the representations
and warranties set forth in this Schedule II to the Depositor and the Trustee,
as of the Closing Date, or if so specified herein, as of the Cut-off Date.
Capitalized terms used but not otherwise defined in this Schedule II shall
have
the meanings ascribed thereto in the Pooling and Servicing Agreement (the
“Pooling and Servicing Agreement”) relating to the above-referenced Series,
among First Horizon, as master servicer, First Horizon Asset Securities Inc.,
as
depositor, and The Bank of New York, as trustee.
(1) First
Horizon is duly organized as a Kansas corporation and is validly existing and
in
good standing under the laws of the State of Kansas and is duly authorized
and
qualified to transact any and all business contemplated by the Pooling and
Servicing Agreement to be conducted by First Horizon in any state in which
a
Mortgaged Property is located or is otherwise not required under applicable
law
to effect such qualification and, in any event, is in compliance with the doing
business laws of any such state, to the extent necessary to ensure its ability
to enforce each Mortgage Loan, to service the Mortgage Loans in accordance
with
the terms of the Pooling and Servicing Agreement and to perform any of its
other
obligations under the Pooling and Servicing Agreement in accordance with the
terms thereof.
(2)
First
Horizon has the full corporate power and authority to service each Mortgage
Loan, and to execute, deliver and perform, and to enter into and consummate
the
transactions contemplated by the Pooling and Servicing Agreement and has duly
authorized by all necessary corporate action on the part of First Horizon the
execution, delivery and performance of the Pooling and Servicing Agreement;
and
the Pooling and Servicing Agreement, assuming the due authorization, execution
and delivery thereof by the other parties thereto, constitutes a legal, valid
and binding obligation of First Horizon, enforceable against First Horizon
in
accordance with its terms, except that (a) the enforceability thereof may be
limited by bankruptcy, insolvency, moratorium, receivership and other similar
laws relating to creditors’ rights generally and (b) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject
to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
(3) The
execution and delivery of the Pooling and Servicing Agreement by First Horizon,
the servicing of the Mortgage Loans by First Horizon under the Pooling and
Servicing Agreement, the consummation of any other of the transactions
contemplated by the Pooling and Servicing Agreement, and the fulfillment of
or
compliance with the terms thereof are in the ordinary course of business of
First Horizon and will not (A) result in a material breach of any term or
provision of the charter or by-laws of First Horizon or (B) materially conflict
with, result in a material breach, violation or acceleration of, or result
in a
material default under, the terms of any other material agreement or instrument
to which First Horizon is a party or by which it may be bound, or (C) constitute
a material violation of any statute, order or regulation applicable to First
Horizon of any court, regulatory body, administrative agency or governmental
body having jurisdiction over First Horizon; and First Horizon is not in breach
or violation of any material indenture or other material agreement or
instrument, or in violation of any statute, order or regulation of any court,
regulatory body, administrative agency or governmental body having jurisdiction
over it which breach or violation may materially impair First Horizon’s ability
to perform or meet any of its obligations under the Pooling and Servicing
Agreement.
II-1
(4) No
litigation is pending or, to the best of First Horizon’s knowledge, threatened
against First Horizon that would prohibit the execution or delivery of, or
performance under, the Pooling and Servicing Agreement by First Horizon.
(5) First
Horizon is a member of MERS in good standing, and will comply in all material
respects with the rules and procedures of MERS in connection with the servicing
of the MERS Mortgage Loans for as along as such Mortgage Loans are registered
with MERS.
II-2
SCHEDULE
III
First
Horizon Asset Securities Inc.
Mortgage
Pass-Through Certificates Series 2006-AA2
Form
of Monthly Master Servicer Report
[Begins
on Next Page]
III-1
EXHIBIT
A
[FORM
OF
SENIOR CERTIFICATE]
UNLESS
THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED
IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE &
CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF
DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO
ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO.,
HAS AN INTEREST HEREIN.
SOLELY
FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A “REGULAR INTEREST”
IN A “REAL ESTATE MORTGAGE INVESTMENT CONDUIT,” AS THOSE TERMS ARE DEFINED,
RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986,
AS
AMENDED (THE “CODE”).
A-1
|
Certificate
No.
|
: |
|
Cut-off
Date
|
: |
|
First
Distribution Date
|
: |
|
Initial
Certificate Balance of this Certificate (“Denominations”)
|
:
$
|
|
Initial
Certificate
Balances
of all
Certificate
of this
Class
|
:
$
|
|
CUSIP
|
: |
First
Horizon Alternative Mortgage Securities Trust 2006-AA2
Mortgage
Pass-Through Certificates, Series 2006-AA2
Class
[________]
evidencing
a percentage interest in the distributions allocable to the Certificates of
the
above-referenced Class with respect to a Trust Fund consisting primarily of
one
or more pools of conventional mortgage loans (the “Mortgage Loans”) secured by
first liens on one- to four-family residential properties.
First
Horizon Asset Securities Inc., as Depositor
[Principal
in respect of this Certificate is distributable monthly as set forth herein.
Accordingly, the Certificate Balance at any time may be less than the
Certificate Balance as set forth herein.] This Certificate does not evidence
an
obligation of, or an interest in, and is not guaranteed by the Depositor, the
Master Servicer or the Trustee referred to below or any of their respective
affiliates. Neither this Certificate nor the Mortgage Loans are guaranteed
or
insured by any governmental agency or instrumentality.
This
certifies that __________________ is the registered owner of the Percentage
Interest evidenced by this Certificate (obtained by dividing the denomination
of
this Certificate by the aggregate Initial Certificate Balances of all
Certificates of the Class to which this Certificate belongs) in certain monthly
distributions with respect to a Trust Fund consisting primarily of the Mortgage
Loans deposited by First Horizon Asset Securities Inc. (the “Depositor”). The
Trust Fund was created pursuant to a Pooling and Servicing Agreement dated
as of
the Cut-off Date specified above (the “Agreement”) among the Depositor, First
Horizon Home Loan Corporation, as master servicer (the “Master Servicer”), and
The Bank of New York, as trustee (the “Trustee”). To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
Reference
is hereby made to the further provisions of this Certificate set forth on the
reverse hereof, which further provisions shall for all purposes have the same
effect as if set forth at this place.
A-2
This
Certificate shall not be entitled to any benefit under the Agreement or be
valid
for any purpose unless manually countersigned by an authorized signatory of
the
Trustee.
A-3
IN
WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
March __, ▇▇▇▇
|
▇▇▇
▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇,
not
in its individual capacity, but solely as
Trustee
|
||
| |
|
|
| By: | ||
|
Authorized
Signatory of
THE
BANK OF NEW YORK
not
in its individual capacity,
but
solely as Trustee
|
||
Countersigned:
By
___________________________
Authorized
Signatory of
THE
BANK
OF NEW YORK,
not
in
its individual capacity,
but
solely as Trustee
A-4
EXHIBIT
B
[FORM
OF
SUBORDINATED CERTIFICATE]
[UNLESS
THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED
IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE &
CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF
DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO
ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO.,
HAS AN INTEREST HEREIN.]
SOLELY
FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A “REGULAR INTEREST”
IN A “REAL ESTATE MORTGAGE INVESTMENT CONDUIT,” AS THOSE TERMS ARE DEFINED,
RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986,
AS
AMENDED (THE “CODE”).
THIS
CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO CERTAIN CERTIFICATES AS
DESCRIBED IN THE AGREEMENT REFERRED TO HEREIN.
[THIS
CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT
OF
1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OF
THE UNITED STATES (“BLUE SKY LAWS”), AND SUCH CERTIFICATE MAY NOT BE OFFERED,
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) TO A PERSON WHOM THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF
RULE 144A UNDER THE SECURITIES ACT IN A TRANSACTION MEETING THE REQUIREMENTS
OF
RULE 144A, (B) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE
144
UNDER THE SECURITIES ACT (IF AVAILABLE) OR (C) TO AN INSTITUTIONAL ACCREDITED
INVESTOR AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER
THE
SECURITIES ACT IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF
THE
SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE BLUE SKY LAWS.
NO
REPRESENTATION IS MADE AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED BY
RULE
144 FOR RESALES OF THIS CERTIFICATE.]
B-1
[NEITHER
THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE REPRESENTS TO THE TRUSTEE THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE
BENEFIT PLAN OR ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974, AS AMENDED (“ERISA”), OR A PLAN OR ARRANGEMENT SUBJECT TO SECTION
4975 OF THE CODE, OR, IF SUCH PURCHASER IS AN INSURANCE COMPANY AND THE
CERTIFICATE HAS BEEN SUBJECT TO AN ERISA-QUALIFYING UNDERWRITING, A
REPRESENTATION IN ACCORDANCE WITH THE PROVISIONS OF THE AGREEMENT REFERRED
TO
HEREIN, OR DELIVERS TO THE TRUSTEE AN OPINION OF COUNSEL IN ACCORDANCE WITH
THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN. SUCH REPRESENTATION SHALL BE
DEEMED TO HAVE BEEN MADE TO THE TRUSTEE BY THE TRANSFEREE’S ACCEPTANCE OF A
CERTIFICATE OF THIS CLASS AND BY A BENEFICIAL OWNER’S ACCEPTANCE OF ITS INTEREST
IN A CERTIFICATE OF THIS CLASS. NOTWITHSTANDING ANYTHING ELSE TO THE CONTRARY
HEREIN, ANY PURPORTED TRANSFER OF THIS CERTIFICATE TO OR ON BEHALF OF AN
EMPLOYEE BENEFIT PLAN SUBJECT TO ERISA OR TO THE CODE WITHOUT THE OPINION OF
COUNSEL SATISFACTORY TO THE TRUSTEE AS DESCRIBED ABOVE SHALL BE VOID AND OF
NO
EFFECT.]
B-2
|
Certificate
No.
|
: |
|
Cut-off
Date
|
: |
|
First
Distribution Date
|
: |
|
Initial
Certificate Balance of this Certificate (“Denominations”)
|
:
$
|
|
Initial
Certificate
Balances
of all
Certificate
of this
Class
|
:
$
|
|
CUSIP
|
: |
First
Horizon Alternative Mortgage Securities Trust 2006-AA2
Mortgage
Pass-Through Certificates, Series 2006-AA2
Class
[___]
evidencing
a percentage interest in the distributions allocable to the Certificates of
the
above-referenced Class with respect to a Trust Fund consisting primarily of
one
or more pools of conventional mortgage loans (the “Mortgage Loans”) secured by
first liens on one- to four-family residential properties.
First
Horizon Asset Securities Inc., as Depositor
Principal
in respect of this Certificate is distributable monthly as set forth herein.
Accordingly, the Certificate Balance at any time may be less than the
Certificate Balance as set forth herein. This Certificate does not evidence
an
obligation of, or an interest in, and is not guaranteed by the Depositor, the
Master Servicer, or the Trustee referred to below or any of their respective
affiliates. Neither this Certificate nor the Mortgage Loans are guaranteed
or
insured by any governmental agency or instrumentality.
This
certifies that ___________ is the registered owner of the Percentage Interest
evidenced by this Certificate (obtained by dividing the denomination of this
Certificate by the aggregate Initial Certificate Balances of the denominations
of all Certificates of the Class to which this Certificate belongs) in certain
monthly distributions with respect to a Trust Fund consisting primarily of
the
Mortgage Loans deposited by First Horizon Asset Securities Inc. (the
“Depositor”). The Trust Fund was created pursuant to a Pooling and Servicing
Agreement dated as of the Cut-off Date specified above (the “Agreement”) among
the Depositor, First Horizon Home Loan Corporation, as master servicer (the
“Master Servicer”), and The Bank of New York, as trustee (the “Trustee”). To the
extent not defined herein, the capitalized terms used herein have the meanings
assigned in the Agreement. This Certificate is issued under and is subject
to
the terms, provisions and conditions of the Agreement, to which Agreement the
Holder of this Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.
B-3
[No
transfer of a Certificate of this Class shall be made unless such transfer
is
made pursuant to an effective registration statement under the Securities Act
and any applicable state securities laws or is exempt from the registration
requirements under said Act and such laws. In the event that a transfer is
to be
made in reliance upon an exemption from the Securities Act and such laws, in
order to assure compliance with the Securities Act and such laws, the
Certificateholder desiring to effect such transfer and such Certificateholder’s
prospective transferee shall each certify to the Trustee in writing the facts
surrounding the transfer. In the event that such a transfer is to be made within
two years from the date of the initial issuance of Certificates pursuant hereto,
there shall also be delivered (except in the case of a transfer pursuant to
Rule
144A of the Securities Act) to the Trustee an Opinion of Counsel that such
transfer may be made pursuant to an exemption from the Securities Act and such
state securities laws, which Opinion of Counsel shall not be obtained at the
expense of the Trustee, the Seller, the Master Servicer or the Depositor. The
Holder hereof desiring to effect such transfer shall, and does hereby agree
to,
indemnify the Trustee and the Depositor against any liability that may result
if
the transfer is not so exempt or is not made in accordance with such federal
and
state laws.]
[No
transfer of a Certificate of this Class shall be made unless the Trustee shall
have received either (i) a representation [letter] from the transferee of such
Certificate, acceptable to and in form and substance satisfactory to the
Trustee, to the effect that such transferee is not an employee benefit plan
or
arrangement subject to Section 406 of ERISA or Section 4975 of the Code, nor
a
person acting on behalf of any such plan, which representation letter shall
not
be an expense of the Trustee, the Depositor or the Master Servicer, (ii) if
the
purchaser is an insurance company and the certificate has been subject to an
ERISA-Qualifying Underwriting, a representation that the purchaser is an
insurance company which is purchasing such Certificates with funds contained
in
an “insurance company general account” (as such term is defined in Section V(e)
of Prohibited Transaction Class Exemption 95-60 (“PTCE 95-60”)) and that the
purchase and holding of such Certificates are covered under Sections I and
III
of PTCE 95-60 or (iii) in the case of any such Certificate presented for
registration in the name of an employee benefit plan subject to ERISA or Section
4975 of the Code (or comparable provisions of any subsequent enactments), or
a
trustee of any such plan or any other person acting on behalf of any such plan,
an Opinion of Counsel satisfactory to the Trustee to the effect that the
purchase or holding of such Certificate will not result in prohibited
transactions under Section 406 of ERISA and Section 4975 of the Code and will
not subject the Trustee, the Depositor or the Master Servicer to any obligation
in addition to those undertaken in the Agreement, which Opinion of Counsel
shall
not be an expense of the Trustee, the Depositor or the Master Servicer. [Such
representation shall be deemed to have been made to the Trustee by the
Transferee’s acceptance of a Certificate of this Class and by a beneficial
owner’s acceptance of its interest in a Certificate of this Class.]
Notwithstanding anything else to the contrary herein, any purported transfer
of
a Certificate of this Class to or on behalf of an employee benefit plan subject
to ERISA or to the Code without the opinion of counsel satisfactory to the
Trustee as described above shall be void and of no effect.]Reference is hereby
made to the further provisions of this Certificate set forth on the reverse
hereof, which further provisions shall for all purposes have the same effect
as
if set forth at this place.
Reference
is hereby made to the further provisions of this Certificate set forth on the
reverse hereof, which further provisions shall for all purposes have the same
effect as if set forth at this place.
B-4
This
Certificate shall not be entitled to any benefit under the Agreement or be
valid
for any purpose unless manually countersigned by an authorized signatory of
the
Trustee.
B-5
IN
WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
March __, ▇▇▇▇
|
▇▇▇
▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇,
not
in its individual capacity, but solely as
Trustee
|
||
| |
|
|
| By: | ||
|
Authorized
Signatory of
THE
BANK OF NEW YORK
not
in its individual capacity,
but
solely as Trustee
|
||
Countersigned:
By
___________________________
Authorized
Signatory of
THE
BANK
OF NEW YORK,
not
in
its individual capacity,
but
solely as Trustee
B-6
EXHIBIT
C
[FORM
OF
RESIDUAL CERTIFICATE]
SOLELY
FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A “RESIDUAL INTEREST”
IN A “REAL ESTATE MORTGAGE INVESTMENT CONDUIT,” AS THOSE TERMS ARE DEFINED,
RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986,
AS
AMENDED (THE “CODE”).
NEITHER
THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE PROPOSED
TRANSFEREE DELIVERS TO THE TRUSTEE A TRANSFER AFFIDAVIT IN ACCORDANCE WITH
THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
[THIS
CERTIFICATE REPRESENTS THE “TAX MATTERS PERSON RESIDUAL INTEREST” ISSUED UNDER
THE POOLING AND SERVICING AGREEMENT REFERRED TO BELOW AND MAY NOT BE TRANSFERRED
TO ANY PERSON EXCEPT IN CONNECTION WITH THE ASSUMPTION BY THE TRANSFEREE OF
THE
DUTIES OF THE SERVICER UNDER SUCH AGREEMENT.]
NEITHER
THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE REPRESENTS TO THE TRUSTEE THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE
BENEFIT PLAN OR ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974, AS AMENDED (“ERISA”), OR A PLAN OR ARRANGEMENT SUBJECT TO SECTION
4975 OF THE CODE, OR, IF SUCH PURCHASER IS AN INSURANCE COMPANY, A
REPRESENTATION IN ACCORDANCE WITH THE PROVISIONS OF THE AGREEMENT REFERRED
TO
HEREIN, OR DELIVERS TO THE TRUSTEE AN OPINION OF COUNSEL IN ACCORDANCE WITH
THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN. [SUCH REPRESENTATION SHALL
BE
DEEMED TO HAVE BEEN MADE TO THE TRUSTEE BY THE TRANSFEREE’S ACCEPTANCE OF A
CERTIFICATE OF THIS CLASS AND BY A BENEFICIAL OWNER’S ACCEPTANCE OF ITS INTEREST
IN A CERTIFICATE OF THIS CLASS.] NOTWITHSTANDING ANYTHING ELSE TO THE CONTRARY
HEREIN, ANY PURPORTED TRANSFER OF THIS CERTIFICATE TO OR ON BEHALF OF AN
EMPLOYEE BENEFIT PLAN SUBJECT TO ERISA OR TO THE CODE WITHOUT THE OPINION OF
COUNSEL SATISFACTORY TO THE TRUSTEE AS DESCRIBED ABOVE SHALL BE VOID AND OF
NO
EFFECT.
C-1
|
Certificate
No.
|
: |
|
Cut-off
Date
|
: |
|
First
Distribution Date
|
: |
|
Initial
Certificate Balance of this Certificate (“Denominations”)
|
:
$
|
|
Initial
Certificate
Balances
of all
Certificate
of this
Class
|
:
$
|
|
CUSIP
|
: |
First
Horizon Alternative Mortgage Securities Trust 2006-AA2
Mortgage
Pass-Through Certificates, Series 2006-AA2
evidencing
a percentage interest in the distributions allocable to the Certificates of
the
above-referenced Class with respect to a Trust Fund consisting primarily of
one
or more pools of conventional mortgage loans (the “Mortgage Loans”) secured by
first liens on one- to four-family residential properties.
First
Horizon Asset Securities Inc., as Depositor
Principal
in respect of this Certificate is distributable monthly as set forth herein.
Accordingly, the Certificate Balance at any time may be less than the
Certificate Balance as set forth herein. This Certificate does not evidence
an
obligation of, or an interest in, and is not guaranteed by the Depositor, the
Master Servicer or the Trustee referred to below or any of their respective
affiliates. Neither this Certificate nor the Mortgage Loans are guaranteed
or
insured by any governmental agency or instrumentality.
This
certifies that _________________ is the registered owner of the Percentage
Interest (obtained by dividing the denomination of this Certificate by the
aggregate Initial Certificate Balances of the denominations of all Certificates
of the Class to which this Certificate belongs) in certain monthly distributions
with respect to a Trust Fund consisting of the Mortgage Loans deposited by
First
Horizon Asset Securities Inc. (the “Depositor”). The Trust Fund was created
pursuant to a Pooling and Servicing Agreement dated as of the Cut-off Date
specified above (the “Agreement”) among the Depositor, First Horizon Home Loan
Corporation, as master servicer (the “Master Servicer”), and The Bank of New
York, as trustee (the “Trustee”). To the extent not defined herein, the
capitalized terms used herein have the meanings assigned in the Agreement.
This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is
bound.
Any
distribution of the proceeds of any remaining assets of the Trust Fund will
be
made only upon presentment and surrender of this Class II-A-R Certificate at
the
Corporate Trust Office or the office or agency maintained by the Trustee in
New
York, New York. This Class II-A-R Certificate represents an ownership in the
RL
Interest and RU Interest, as defined in the Agreement.
C-2
No
transfer of a Class II-A-R Certificate shall be made unless the Trustee shall
have received either (i) a representation [letter] from the transferee of such
Certificate, acceptable to and in form and substance satisfactory to the
Trustee, to the effect that such transferee is not an employee benefit plan
or
arrangement subject to Section 406 of ERISA or Section 4975 of the Code, nor
a
person acting on behalf of any such plan, which representation letter shall
not
be an expense of the Trustee, the Depositor or the Master Servicer, (ii) if
the
purchaser is an insurance company, a representation that the purchaser is an
insurance company which is purchasing such Certificate with funds contained
in
an “insurance company general account” (as such term is defined in Section V(e)
of Prohibited Transaction Class Exemption 95-60 (“PTCE 95-60”)) and that the
purchase and holding of such Certificate are covered under Sections I and III
of
PTCE 95-60 or (iii) in the case of any such Certificate presented for
registration in the name of an employee benefit plan subject to ERISA or Section
4975 of the Code (or comparable provisions of any subsequent enactments), or
a
trustee of any such plan or any other person acting on behalf of any such plan,
an Opinion of Counsel satisfactory to the Trustee to the effect that the
purchase or holding of such Class II-A-R Certificate will not result in
prohibited transactions under Section 406 of ERISA and Section 4975 of the
Code
and will not subject the Trustee, the Depositor and the Master Servicer to
any
obligation in addition to those undertaken in the Agreement, which Opinion
of
Counsel shall not be an expense of the Trustee, the Depositor or the Master
Servicer. [Such representation shall be deemed to have been made to the Trustee
by the Transferee’s acceptance of this Class II-A-R Certificate and by a
beneficial owner’s acceptance of its interest in such Certificate.]
Notwithstanding anything else to the contrary herein, any purported transfer
of
a Class II-A-R Certificate to or on behalf of an employee benefit plan subject
to ERISA or to the Code without the opinion of counsel satisfactory to the
Trustee as described above shall be void and of no effect.
Each
Holder of this Class II-A-R Certificate will be deemed to have agreed to be
bound by the restrictions of the Agreement, including but not limited to the
restrictions that (i) each person holding or acquiring any Ownership Interest
in
this Class II-A-R Certificate must be a Permitted Transferee, (ii) no Ownership
Interest in this Class II-A-R Certificate may be transferred without delivery
to
the Trustee of (a) a transfer affidavit of the proposed transferee and (b)
a
transfer certificate of the transferor, each of such documents to be in the
form
described in the Agreement, (iii) each person holding or acquiring any Ownership
Interest in this Class II-A-R Certificate must agree to require a transfer
affidavit and to deliver a transfer certificate to the Trustee as required
pursuant to the Agreement, (iv) each person holding or acquiring an Ownership
Interest in this Class II-A-R Certificate must agree not to transfer an
Ownership Interest in this Class II-A-R Certificate if it has actual knowledge
that the proposed transferee is not a Permitted Transferee and (v) any attempted
or purported transfer of any Ownership Interest in this Class II-A-R Certificate
in violation of such restrictions will be absolutely null and void and will
vest
no rights in the purported transferee.
Reference
is hereby made to the further provisions of this Certificate set forth on the
reverse hereof, which further provisions shall for all purposes have the same
effect as if set forth at this place.
C-3
This
Certificate shall not be entitled to any benefit under the Agreement or be
valid
for any purpose unless manually countersigned by an authorized signatory of
the
Trustee.
C-4
IN
WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
March __, ▇▇▇▇
|
▇▇▇
▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇,
not
in its individual capacity, but solely as
Trustee
|
||
| |
|
|
| By: | ||
|
Authorized
Signatory of
THE
BANK OF NEW YORK
not
in its individual capacity,
but
solely as
Trustee
|
||
Countersigned:
By
___________________________
Authorized
Signatory of
THE
BANK
OF NEW YORK,
not
in
its individual capacity,
but
solely as Trustee
C-5
EXHIBIT
D
[Form
of
Reverse of Certificates]
First
Horizon Alternative Mortgage Securities Trust 2006-AA2
Mortgage
Pass-Through Certificates
This
Certificate is one of a duly authorized issue of Certificates designated as
First Horizon Alternative Mortgage Securities Trust 2006-AA2 Mortgage
Pass-Through Certificates, of the Series specified on the face hereof (herein
collectively called the “Certificates”), and representing a beneficial ownership
interest in the Trust Fund created by the Agreement.
The
Certificateholder, by its acceptance of this Certificate, agrees that it will
look solely to the funds on deposit in the Distribution Account for payment
hereunder and that the Trustee is not liable to the Certificateholders for
any
amount payable under this Certificate or the Agreement or, except as expressly
provided in the Agreement, subject to any liability under the
Agreement.
This
Certificate does not purport to summarize the Agreement and reference is made
to
the Agreement for the interests, rights and limitations of rights, benefits,
obligations and duties evidenced thereby, and the rights, duties and immunities
of the Trustee.
Pursuant
to the terms of the Agreement, a distribution will be made on the 25th day
of
each month or, if such 25th day is not a Business Day, the Business Day
immediately following (the “Distribution Date”), commencing on the first
Distribution Date specified on the face hereof, to the Person in whose name
this
Certificate is registered at the close of business on the applicable Record
Date
in an amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount required to be distributed to Holders of Certificates
of the Class to which this Certificate belongs on such Distribution Date
pursuant to the Agreement. The Record Date applicable to each Distribution
Date
is the last Business Day of the month next preceding the month of such
Distribution Date.
Distributions
on this Certificate shall be made by wire transfer of immediately available
funds to the account of the Holder hereof at a bank or other entity having
appropriate facilities therefor, if such Certificateholder shall have so
notified the Trustee in writing at least five Business Days prior to the related
Record Date and such Certificateholder shall satisfy the conditions to receive
such form of payment set forth in the Agreement, or, if not, by check mailed
by
first class mail to the address of such Certificateholder appearing in the
Certificate Register. The final distribution on each Certificate will be made
in
like manner, but only upon presentment and surrender of such Certificate at
the
Corporate Trust Office or such other location specified in the notice to
Certificateholders of such final distribution.
The
Agreement permits, with certain exceptions therein provided, the amendment
thereof and the modification of the rights and obligations of the Trustee and
the rights of the Certificateholders under the Agreement at any time by the
Depositor, the Master Servicer and the Trustee with the consent of the Holders
of Certificates affected by such amendment evidencing the requisite Percentage
Interest, as provided in the Agreement. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange therefor or in lieu hereof whether or not notation of
such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders
of
any of the Certificates.
D-1
As
provided in the Agreement and subject to certain limitations therein set forth,
the transfer of this Certificate is registrable in the Certificate Register
of
the Trustee upon surrender of this Certificate for registration of transfer
at
the Corporate Trust Office or the office or agency maintained by the Trustee
in
New York, New York, accompanied by a written instrument of transfer in form
satisfactory to the Trustee and the Certificate Registrar duly executed by
the
holder hereof or such holder’s attorney duly authorized in writing, and
thereupon one or more new Certificates of the same Class in authorized
denominations and evidencing the same aggregate Percentage Interest in the
Trust
Fund will be issued to the designated transferee or transferees.
The
Certificates are issuable only as registered Certificates without coupons in
denominations specified in the Agreement. As provided in the Agreement and
subject to certain limitations therein set forth, Certificates are exchangeable
for new Certificates of the same Class in authorized denominations and
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.
No
service charge will be made for any such registration of transfer or exchange,
but the Trustee may require payment of a sum sufficient to cover any tax or
other governmental charge payable in connection therewith.
The
Depositor, the Master Servicer and the Trustee and any agent of the Depositor
or
the Trustee may treat the Person in whose name this Certificate is registered
as
the owner hereof for all purposes, and neither the Depositor, the Trustee,
nor
any such agent shall be affected by any notice to the contrary.
On
any
Distribution Date on which the aggregate of the Pool Principal Balances of
each
Mortgage Pool is less than 10% of the aggregate Cut-off Date Pool Principal
Balance of each Mortgage Pool, the Master Servicer will have the option to
repurchase, in whole, from the Trust Fund all remaining Mortgage Loans and
all
property acquired in respect of the Mortgage Loans in the Mortgage Pools at
a
purchase price determined as provided in the Agreement. In the event that no
such optional termination occurs, the obligations and responsibilities created
by the Agreement will terminate upon the later of the maturity or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund or the disposition of all property in respect
thereof and the distribution to Certificateholders of all amounts required
to be
distributed pursuant to the Agreement. In no event, however, will the trust
created by the Agreement continue beyond the expiration of 21 years from the
death of the last survivor of the descendants living at the date of the
Agreement of a certain person named in the Agreement.
Any
term
used herein that is defined in the Agreement shall have the meaning assigned
in
the Agreement, and nothing herein shall be deemed inconsistent with that
meaning.
D-2
ASSIGNMENT
FOR
VALUE
RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto
______________________________
(Please
insert social security or
other
identifying number of assignee)
________________________________________________________________________
________________________________________________________________________
(Please
print or typewrite name and address
including
postal zip code of assignee)
________________________________________________________________________
the
Percentage Interest evidenced by the within Certificate and hereby authorizes
the transfer of registration of such Percentage Interest to assignee on the
Certificate Register of the Trust Fund.
I
(We)
further direct the Trustee to issue a new Certificate of a like denomination
and
Class, to the above named assignee and deliver such Certificate to the following
address:
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
Dated: __________________
_____________________________
Signature
by or on behalf of assignor
DISTRIBUTION
INSTRUCTIONS
The
assignee should include the following for purposes of distribution:
Distributions
shall be made, by wire transfer or otherwise, in immediately available funds
to
______________________________________, for the account of
_____________________, account number ___________, or, if mailed by check,
to
___________________________. Applicable statements should be mailed to
__________________________.
This
information is provided by ________________________________________, the
assignee named above, or _________________, as its agent.
D-3
EXHIBIT
E
FORM
OF
INITIAL CERTIFICATION OF CUSTODIAN
[date]
First
Horizon Asset Securities Inc.
First
Horizon Home Loan Corporation
▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
The
Bank
of New York
▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇
▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
| Re: |
Custodial
Agreement dated as of March 30, 2006 by and among The Bank of New
York, as
Trustee, First Horizon Home Loan Corporation, as Servicer and First
Tennessee Bank National Association, as
Custodian
|
Gentlemen:
In
accordance with Section 2 of the above-captioned Custodial Agreement (the
“Custodial Agreement”), the undersigned, as Custodian, hereby certifies that, as
to each Mortgage Loan listed in the Mortgage Loan Schedule (other than any
Mortgage Loan listed in the attached schedule), it has received:
(i)
the
original Mortgage Note, endorsed as provided in the following form: “Pay to the
order of ___________________,
without
recourse”; and
(ii)
a
duly
executed assignment, or a copy of such assignment certified by the Seller as
being a true and complete copy of the assignment, of the Mortgage (which may
be
included in a blanket assignment or assignments); provided, however, that it
has
received no assignment with respect to any Mortgage for which the related
Mortgaged Property is located in the Commonwealth of Puerto Rico.
Based
on
its review and examination and only as to the foregoing documents, such
documents appear regular on their face and related to such Mortgage
Loan.
The
Custodian has made no independent examination of any documents contained in
each
Mortgage File beyond the review specifically required in the Custodial
Agreement. The Custodian makes no representations as to: (i) the validity,
legality, sufficiency, enforceability or genuineness of any of the documents
contained in each Mortgage File of any of the Mortgage Loans identified on
the
Mortgage Loan Schedule, or (ii) the collectability, insurability, effectiveness
or suitability of any such Mortgage Loan.
E-1
Capitalized
words and phrases used herein shall have the respective meanings assigned to
them in the Custodial Agreement.
|
FIRST
TENNESSEE BANK NATIONAL ASSOCIATION,
as
Custodian
By:
___________________________________
Name:
_________________________________
Title:
__________________________________
|
E-2
EXHIBIT
F
FORM
OF
DELAY DELIVERY CERTIFICATION
[date]
First
Horizon Asset Securities Inc.
First
Horizon Home Loan Corporation
▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
The
Bank
of New York
▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇
▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
| Re: |
Custodial
Agreement dated as of March 30, 2006 by and among The Bank of New
York, as
Trustee, First Horizon Home Loan Corporation, as Servicer, and First
Tennessee Bank National Association, as
Custodian
|
Ladies
and Gentlemen:
In
accordance with Section 3 of the above-captioned Custodial Agreement (the
“Custodial Agreement”), the undersigned, as Custodian, hereby certifies that, as
to each Delay Delivery Mortgage Loan listed in the Mortgage Loan Schedule (other
than any Delay Delivery Mortgage Loan listed in the attached schedule), it
has
received:
(i) the
original Mortgage Note, endorsed as provided in the following form: “Pay to the
order of _________________,
without
recourse”;
(ii) in
the
case of each Mortgage Loan, the original recorded Mortgage, or a copy of such
Mortgage certified by the Seller as being a true and complete copy of the
Mortgage, [and in the case of each Mortgage Loan that is a MERS Mortgage Loan,
the original Mortgage, or a copy of such Mortgage certified by the Seller as
being a true and complete copy of the Mortgage, noting thereon the presence
of
the MIN of the Mortgage Loan and language indicating that the Mortgage Loan
is a
MOM Loan if the Mortgage Loan is a MOM Loan, with evidence of recording
indicated thereon]; and
(iii) in
the
case of each Mortgage Loan, a duly executed assignment, or a copy of such
assignment certified by the Seller as a true and complete copy of the
assignment, of the Mortgage (which may be included in a blanket assignment
or
assignments); provided, however, that it has received no assignment with respect
to any Mortgage for which the related Mortgage Property is located in the
Commonwealth of Puerto Rico.
Based
on
its review and examination and only as to the foregoing documents, such
documents appear regular on their face and related to such Delay Delivery
Mortgage Loan.
The
Custodian has made no independent examination of any documents contained in
each
Mortgage File beyond the review specifically required in the Custodial
Agreement. The Custodian makes no representations as to: (i) the validity,
legality, sufficiency, enforceability or genuineness of any of the documents
contained in each Mortgage File of any of the Delay Delivery Mortgage Loans
identified on the Mortgage Loan Schedule, or (ii) the collectability,
insurability, effectiveness or suitability of any such Delay Delivery Mortgage
Loan.
F-1
Capitalized
words and phrases used herein shall have the respective meanings assigned to
them in the above-captioned Custodial Agreement.
|
FIRST
TENNESSEE BANK NATIONAL ASSOCIATION,
as
Custodian
By:
________________________________
Name:
______________________________
Title:
_______________________________
|
F-2
EXHIBIT
G
FORM
OF
SUBSEQUENT CERTIFICATION OF CUSTODIAN
[date]
First
Horizon Asset Securities Inc.
First
Horizon Home Loan Corporation
▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
The
Bank
of New York
▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇
▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
| Re: |
Custodial
Agreement dated as of March 30, 2006 by and among The Bank of New
York, as
Trustee, First Horizon Home Loan Corporation, as Servicer, and First
Tennessee Bank National Association, as
Custodian
|
Ladies
and Gentlemen:
In
accordance with Section 3 of the above-captioned Custodial Agreement (the
“Custodial Agreement”), the undersigned, as Custodian hereby certifies that as
to each Mortgage Loan listed in the Mortgage Loan Schedule (other than any
Mortgage Loan paid in full or listed on the attached exception report) it has
received, unless otherwise provided in Section 2 of the Custodial
Agreement:
(i) (A)
The
original Mortgage Note endorsed by manual or facsimile signature in blank in
the
following form: “Pay to the order of _____________ without
recourse,” with all intervening endorsements showing a complete chain of
endorsements from the originator to the Person endorsing the Mortgage Note
(each
such endorsement being sufficient to transfer all right, title and interest
of
the party so endorsing, as noteholder or assignee thereof, in and to that
Mortgage Note); or
(B)
with
respect to any Lost Mortgage Note, a lost note affidavit from the Seller stating
that the original Mortgage Note was lost or destroyed, together with a copy
of
such Mortgage Note;
(ii) except
as
provided in Section 2(c) of the Custodial Agreement and for each Mortgage Loan
that is not a MERS Mortgage Loan, the
original recorded Mortgage or a copy of such Mortgage certified by the Seller
as
being a true and complete copy of the Mortgage, and in the case of each MERS
Mortgage Loan, the original recorded Mortgage, noting the presence of the MIN
of
the Mortgage Loans and either language indicating that the Mortgage Loan is
a
MOM Loan if the Mortgage Loan is a MOM Loan or if the Mortgage Loan was not
a
MOM Loan at origination, the original Mortgage and the assignment thereof to
MERS, with evidence of recording indicated thereon, or a copy of the Mortgage
certified by the Seller as being a true and complete copy of the
Mortgage;
G-1
(iii) in
the
case of each Mortgage Loan that is not a MERS Mortgage Loan, a duly executed
assignment of the Mortgage, or a copy of such assignment certified by the Seller
as being a true and complete copy of the assignment, in blank (which may be
included in a blanket assignment or assignments), together with, except as
provided below, all interim recorded assignments, or copies of such interim
assignments certified by the Seller as being true and complete copies of the
interim assignments, of such Mortgage (each such assignment, when duly and
validly completed, to be in recordable form and sufficient to effect the
assignment of and transfer to the assignee thereof, under the Mortgage to which
the assignment relates); provided that, if the related Mortgage has not been
returned from the applicable public recording office, such assignment of the
Mortgage may exclude the information to be provided by the recording
office;
(iv) the
original or copies of each assumption, modification, written assurance or
substitution agreement, if any;
(v) either
the original or duplicate original title policy, or a copy of such title policy
certified by the Seller as being a true and complete copy of the title policy
(including all riders thereto), with respect to the related Mortgaged Property,
if available, provided that the title policy (including all riders thereto)
will
be delivered as soon as it becomes available, and if the title policy is not
available, and to the extent required pursuant to the second paragraph below
or
otherwise in connection with the rating of the Certificates, a written
commitment or interim binder or preliminary report of the title issued by the
title insurance or escrow company with respect to the Mortgaged Property, or
in
lieu thereof, an Alternative Title Product or a copy of such Alternative Title
Product certified by the Seller as being a true and complete copy of the
Alternative Title Product; and
(vi) in
the
case of a Cooperative Loan, the originals of the following documents or
instruments:
| (a) |
The
Coop Shares, together with a stock power in
blank;
|
| (b) |
The
executed Security Agreement;
|
| (c) |
The
executed Proprietary Lease;
|
| (d) |
The
executed UCC-1 financing statement with evidence of recording thereon
which have been filed in all places required to perfect the Seller’s
interest in the Coop Shares and the Proprietary Lease;
and
|
| (e) |
Executed
UCC-3 financing statements or their appropriate UCC financing statements
required by state law, evidencing a complete and unbroken line from
the
mortgagee to the Trustee with evidence of recording thereon (or in
a form
suitable for recordation).
|
G-2
Based
on
its review and examination and only as to the foregoing documents, (a) such
documents appear regular on their face and related to such Mortgage Loan, and
(b) the information set forth in items (i), (ii), (iii), (iv), (vi) and (xi)
of
the definition of the “Mortgage Loan Schedule” in Article I of the Pooling and
Servicing Agreement accurately reflects information set forth in the Mortgage
File.
The
Custodian has made no independent examination of any documents contained in
each
Mortgage File beyond the review specifically required in the Custodial
Agreement. The Custodian makes no representations as to: (i) the validity,
legality, sufficiency, enforceability or genuineness of any of the documents
contained in each Mortgage File of any of the Mortgage Loans identified on
the
Mortgage Loan Schedule, or (ii) the collectability, insurability, effectiveness
or suitability of any such Mortgage Loan. Notwithstanding anything herein to
the
contrary, the Custodian has made no determination and makes no representations
as to whether (i) any endorsement is sufficient to transfer all right, title,
and interest of the party so endorsing, as noteholder or assignee thereof,
in
and to that Mortgage Note or (ii) any assignment is in recordable form or
sufficient to effect the assignment of and transfer to the assignee thereof,
under the Mortgage to which the assignment relates.
Capitalized
words and phrases used herein shall have the respective meanings assigned to
them in the Custodial Agreement.
|
FIRST
TENNESSEE BANK NATIONAL ASSOCIATION,
as
Custodian
By:
________________________________
Name:
______________________________
Title:
_______________________________
|
G-3
EXHIBIT
H
TRANSFER
AFFIDAVIT
First
Horizon Alternative Mortgage Securities Trust 2006-AA2
Mortgage
Pass-Through Certificates
Series
2006-AA2
|
STATE
OF
|
)
|
|
)
ss.:
|
|
|
COUNTY
OF
|
)
|
The
undersigned, being first duly sworn, deposes and says as follows:
1. The
undersigned is an officer of __________, the proposed Transferee of an Ownership
Interest in a [Class II-A-R] Certificate (the “Certificate”) issued pursuant to
the Pooling and Servicing Agreement, (the “Agreement”), relating to the
above-referenced Series, by and among First Horizon Asset Securities Inc.,
as
depositor (the “Depositor”), First Horizon Home Loan Corporation, as master
servicer, and The Bank of New York, as trustee. Capitalized terms used, but
not
defined herein or in Exhibit 1 hereto, shall have the meanings ascribed to
such
terms in the Agreement. The Transferee has authorized the undersigned to make
this affidavit on behalf of the Transferee.
2. The
Transferee is, as of the date hereof, and will be, as of the date of the
Transfer, a Permitted Transferee. The Transferee is acquiring its Ownership
Interest in the Certificate either (i) for its own account or (ii) as nominee,
trustee or agent for another Person and has attached hereto an affidavit from
such Person in substantially the same form as this affidavit. The Transferee
has
no knowledge that any such affidavit is false. The Transferee does not hold
REMIC residual interests as nominee to facilitate the clearance and settlement
of such interests through electronic book-entry changes in accounts of
participating organizations.
3. The
Transferee has been advised of, and understands that (i) a tax may be imposed
on
Transfers of the Certificate to Persons that are not Permitted Transferees;
(ii)
such tax will be imposed on the transferor, or, if such Transfer is through
an
agent (which includes a broker, nominee or middleman) for a Person that is
not a
Permitted Transferee, on the agent; and (iii) the Person otherwise liable for
the tax shall be relieved of liability for the tax if the subsequent transferee
furnished to such Person an affidavit that such subsequent transferee is a
Permitted Transferee and, at the time of Transfer, such Person does not have
actual knowledge that the affidavit is false.
4. The
Transferee has been advised of, and understands that a tax may be imposed on
a
“pass-through entity” holding the Certificate if at any time during the taxable
year of the pass-through entity a Person that is not a Permitted Transferee
is
the record holder of an interest in such entity. The Transferee understands
that
such tax will not be imposed for any period with respect to which the record
holder furnishes to the pass-through entity an affidavit that such record holder
is a Permitted Transferee and the pass-through entity does not have actual
knowledge that such affidavit is false. (For this purpose, a “pass-through
entity” includes a regulated investment company, a real estate investment trust
or common trust fund, a partnership, trust or estate, and certain cooperatives
and, except as may be provided in Treasury Regulations, persons holding
interests in pass-through entities as a nominee for another
Person.)
H-1
5. The
Transferee has reviewed the provisions of Section 5.2(c) of the Agreement
(attached hereto as Exhibit 2 and incorporated herein by reference) and
understands the legal consequences of the acquisition of an Ownership Interest
in the Certificate including, without limitation, the restrictions on subsequent
Transfers and the provisions regarding voiding the Transfer and mandatory sales.
The Transferee expressly agrees to be bound by and to abide by the provisions
of
Section 5.2(c) of the Agreement and the restrictions noted on the face of the
Certificate. The Transferee understands and agrees that any breach of any of
the
representations included herein shall render the Transfer to the Transferee
contemplated hereby null and void.
6. The
Transferee agrees to require a Transfer Affidavit from any Person to whom the
Transferee attempts to Transfer its Ownership Interest in the Certificate,
and
in connection with any Transfer by a Person for whom the Transferee is acting
as
nominee, trustee or agent, and the Transferee will not Transfer its Ownership
Interest or cause any Ownership Interest to be Transferred to any Person that
the Transferee knows is not a Permitted Transferee. In connection with any
such
Transfer by the Transferee, the Transferee agrees to deliver to the Trustee
a
certificate substantially in the form set forth as Exhibit I to the Agreement
(a
“Transferor Certificate”) to the effect that such Transferee has no actual
knowledge that the Person to which the Transfer is to be made is not a Permitted
Transferee.
7. The
Transferee does not have the intention to impede the assessment or collection
of
any tax legally required to be paid with respect to the
Certificate.
8. The
Transferee’s taxpayer identification number is ______.
9. The
Transferee is either a U.S. Person as defined in Code Section 7701(a)(30) or
the
Transferee has furnished the Transferor a properly completed Internal Revenue
Service Form W-8ECI.
10. The
Transferee is aware that the Certificate may be a “noneconomic residual
interest” within the meaning of Treasury regulations promulgated pursuant to the
Code and that the transferor of a noneconomic residual interest will remain
liable for any taxes due with respect to the income on such residual interest,
unless no significant purpose of the transfer was to impede the assessment
or
collection of tax.
11. The
Transferee is not an employee benefit plan or arrangement subject to Section
406
of ERISA or a plan or arrangement subject to Section 4975 of the Code, nor
a
person acting on behalf of any such plan or arrangement, nor using the assets
of
any such plan or arrangement to effect such transfer.
12. The
Transferee has historically paid its debts as they came due and the Transferee
will continue to pay its debts as they come due in the future; the Transferee
understands that, as the holder of the Certificate, the Transferee may incur
tax
liabilities in excess of any cash flows generated by the Certificate and the
Transferee intends to pay taxes associated with holding the Certificate as
they
become due.
H-2
13. The
Transferee is a domestic corporation taxable as a regular corporation for U.S.
federal income tax purposes (a “taxable domestic C corporation”) and is not a
real estate investment trust, regulated investment company or REMIC. The
Transferee will not cause income from the Certificate to be attributable, for
U.S. federal income tax purposes, to a non-U.S. permanent establishment or
fixed
base (within the meaning of an applicable income tax treaty) of the Transferee
or another U.S. taxpayer. At the time of the Transfer, and at the close of
each
of the Transferee’s two fiscal years preceding the year of the Transfer, the
Transferee’s gross assets for financial reporting purposes exceeded $10 million
(together, the “Asset Requirements”), and the Transferee hereby covenants that
any subsequent Transfer of its Ownership Interest in the Certificate will be
to
another taxable, domestic C corporation satisfying the Asset
Requirements
IN
WITNESS WHEREOF, the Transferee has caused this instrument to be executed on
its
behalf, pursuant to authority of its Board of Directors, by its duly authorized
officer and its corporate seal to be hereunto affixed, duly attested, this
___
day of _________, 20__.
|
____________________________________________
Print
Name of Transferee
By:
_________________________________________
Name:
_______________________________________
Title:
________________________________________
|
Personally
appeared before me the above-named ________________, known or proved to me
to be
the same person who executed the foregoing instrument and to be the
_________________ of the Transferee, and acknowledged that he executed the
same
as his free act and deed and the free act and deed of the
Transferee.
Subscribed
and sworn before me this _____ day of ___________, 20____.
|
____________________________________________
NOTARY
PUBLIC
My
Commission expires the ___ day of
________________,
20___.
|
H-3
EXHIBIT
1
to EXHIBIT H
Certain
Definitions
“Ownership
Interest”: As to any Certificate, any ownership interest in such Certificate,
including any interest in such Certificate as the Holder thereof and any other
interest therein, whether direct or indirect, legal or beneficial.
“Permitted
Transferee”: Any Person other than (i) the United States, any State or political
subdivision thereof, or any agency or instrumentality of any of the foregoing,
(ii) a foreign government, International Organization or any agency or
instrumentality of either of the foregoing, (iii) an organization (except
certain farmers’ cooperatives described in section 521 of the Code) which is
exempt from tax imposed by Chapter 1 of the Code (including the tax imposed
by
section 511 of the Code on unrelated business taxable income) on any excess
inclusions (as defined in section 860E(c)(l) of the Code) with respect to any
Certificate, (iv) rural electric and telephone cooperatives described in section
1381(a)(2)(C) of the Code, (v) an “electing large partnership” as defined in
section 775 of the Code, (vi) a Person that is not (a) a citizen or resident
of
the United States, (b) a corporation, partnership, or other entity created
or
organized in or under the laws of the United States, any state thereof or the
District of Columbia, (c) an estate whose income from sources without the United
States is includible in gross income for United States federal income tax
purposes regardless of its connection with the conduct of a trade or business
within the United States or (d) a trust if a court within the United States
is
able to exercise primary supervision over the administration of the trust and
one or more United States persons have the authority to control all substantial
decisions of the trust, unless such Person has furnished the transferor and
the
Trustee with a duly completed Internal Revenue Service Form W-8ECI or any
applicable successor form, and (vii) any other Person so designated by the
Depositor based upon an Opinion of Counsel that the Transfer of an Ownership
Interest in a Certificate to such Person may cause any REMIC created pursuant
to
the Agreement to fail to qualify as a REMIC at any time that the Certificates
(as defined in the Agreement) are outstanding; provided, however, that if a
person is classified as a partnership or a disregarded entity under the Code,
such person shall only be a Permitted Transferee if all of its beneficial owners
are described in subclauses (a), (b), (c) or (d) of clause (vi) and the
governing documents of such person prohibits a transfer of any interest in
such
person to any person described in clause (vi). The terms “United States,”
“State” and “International Organization” shall have the meanings set forth in
section 7701 of the Code or successor provisions. A corporation will not be
treated as an instrumentality of the United States or of any State or political
subdivision thereof for these purposes if all of its activities are subject
to
tax and, with the exception of the Federal Home Loan Mortgage Corporation,
a
majority of its board of directors is not selected by such government unit.
“Person”:
Any individual, corporation, partnership, joint venture, association, bank,
joint-stock company, trust (including any beneficiary thereof), unincorporated
organization or government or any agency or political subdivision
thereof.
“Transfer”:
Any direct or indirect transfer or sale of any Ownership Interest in a
Certificate, including the acquisition of a Certificate by the
Depositor.
H-4
“Transferee”:
Any Person who is acquiring by Transfer any Ownership Interest in a
Certificate.
H-5
EXHIBIT
2
to EXHIBIT H
Section
5.2(c) of the Agreement
(c)
Each
Person who has or who acquires any Ownership Interest in a Residual Certificate
shall be deemed by the acceptance or acquisition of such Ownership Interest
to
have agreed to be bound by the following provisions, and the rights of each
Person acquiring any Ownership Interest in a Residual Certificate are expressly
subject to the following provisions:
(i) Each
Person holding or acquiring any Ownership Interest in a Residual Certificate
shall be a Permitted Transferee and shall promptly notify the Trustee of any
change or impending change in its status as a Permitted Transferee.
(ii) No
Ownership Interest in a Residual Certificate may be registered on the Closing
Date or thereafter transferred, and the Trustee shall not register the Transfer
of any Residual Certificate unless, in addition to the certificates required
to
be delivered to the Trustee under subparagraph (b) above, the Trustee shall
have
been furnished with an affidavit (a “Transfer Affidavit”) of the initial owner
or the proposed transferee in the form attached hereto as Exhibit H and with
a
certificate of the proposed transferor in the form attached hereto as Exhibit
I.
(iii) Each
Person holding or acquiring any Ownership Interest in a Residual Certificate
shall agree (A) to obtain a Transfer Affidavit from any other Person to whom
such Person attempts to Transfer its Ownership Interest in a Residual
Certificate, (B) to obtain a Transfer Affidavit from any Person for whom such
Person is acting as nominee, trustee or agent in connection with any Transfer
of
a Residual Certificate and (C) not to Transfer its Ownership Interest in a
Residual Certificate or to cause the Transfer of an Ownership Interest in a
Residual Certificate to any other Person if it has actual knowledge that such
Person is not a Permitted Transferee.
(iv) Any
attempted or purported Transfer of any Ownership Interest in a Residual
Certificate in violation of the provisions of this Section 5.2(c) shall be
absolutely null and void and shall vest no rights in the purported Transferee.
If any purported transferee shall become a Holder of a Residual Certificate
in
violation of the provisions of this Section 5.2(c), then the last preceding
Permitted Transferee shall be restored to all rights as Holder thereof
retroactive to the date of registration of Transfer of such Residual
Certificate. The Trustee shall be under no liability to any Person for any
registration of Transfer of a Residual Certificate that is in fact not permitted
by Section 5.2(b) and this Section 5.2(c) or for making any payments due on
such
Certificate to the Holder thereof or taking any other action with respect to
such Holder under the provisions of this Agreement so long as the Transfer
was
registered after receipt of the related Transfer Affidavit, Transferor
Certificate, and in the case of a Residual Certificate which is also a Private
Certificate, either the Rule 144A Letter or the Investment Letter. The Trustee
shall be entitled but not obligated to recover from any Holder of a Residual
Certificate that was in fact not a Permitted Transferee at the time it became
a
Holder or, at such subsequent time as it became other than a Permitted
Transferee, all payments made on such Residual Certificate at and after either
such time. Any such payments so recovered by the Trustee shall be paid and
delivered by the Trustee to the last preceding Permitted Transferee of such
Certificate.
H-6
(v) The
Depositor shall use its best efforts to make available, upon receipt of written
request from the Trustee, all information necessary to compute any tax imposed
under Section 860E(e) of the Code as a result of a Transfer of an Ownership
Interest in a Residual Certificate to any Holder who is not a Permitted
Transferee.
The
restrictions on Transfers of a Residual Certificate set forth in this Section
5.2(c) shall cease to apply (and the applicable portions of the legend on a
Residual Certificate may be deleted) with respect to Transfers occurring after
delivery to the Trustee of an Opinion of Counsel, which Opinion of Counsel
shall
not be an expense of the Trust Fund, the Trustee or the Master Servicer, to
the
effect that the elimination of such restrictions will not cause any REMIC
created hereunder to fail to qualify as a REMIC at any time that the
Certificates are outstanding or result in the imposition of any tax on the
Trust
Fund, a Certificateholder or another Person. Each Person holding or acquiring
any Ownership Interest in a Residual Certificate hereby consents to any
amendment of this Agreement which, based on an Opinion of Counsel furnished
to
the Trustee, is reasonably necessary (a) to ensure that the record ownership
of,
or any beneficial interest in, a Residual Certificate is not transferred,
directly or indirectly, to a Person that is not a Permitted Transferee and
(b)
to provide for a means to compel the Transfer of a Residual Certificate which
is
held by a Person that is not a Permitted Transferee to a Holder that is a
Permitted Transferee.
H-7
EXHIBIT
I
FORM
OF
TRANSFEROR CERTIFICATE
_______________,
20___
First
Horizon Asset Securities Inc.
First
Horizon Home Loan Corporation
40▇▇
▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
The
Bank
of New York
10▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇
▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
| Re: |
First
Horizon Alternative Mortgage Securities Trust 2006-AA2 Mortgage
Pass-Through Certificates, Series 2006-AA2, Class
___
|
Ladies
and Gentlemen:
In
connection with our disposition of the above Certificates we certify that (a)
to
the extent we are disposing of a Private Certificate, we understand that such
Private Certificate has not been registered under the Securities Act of 1933,
as
amended (the “Act”), and is being disposed of by us in a transaction that is
exempt from the registration requirements of the Act, (b) we have not offered
or
sold any Certificates to, or solicited offers to buy any Certificates from,
any
person, or otherwise approached or negotiated with any person with respect
thereto, in a manner that would be deemed, or taken any other action which
would
result in, a violation of Section 5 of the Act, and (c) to the extent we are
disposing of a Residual Certificate, we have no knowledge the transferee is
not
a Permitted Transferee.
Capitalized
terms used herein shall have the meaning ascribed to such terms in the Pooling
and Servicing Agreement, dated as of March 1, 2006, by and among First Horizon
Asset Securities Inc., as depositor, First Horizon Home Loan Corporation, as
master servicer, and The Bank of New York, as trustee, pursuant to which the
Residual Certificates were issued.
|
Very
truly yours,
_________________________________
Print
Name of Transferor
By:
___________________________________
Authorized
Officer
|
I-1
EXHIBIT
J
FORM
OF
INVESTMENT LETTER (NON-RULE 144A)
_____________,
20___
First
Horizon Asset Securities Inc.
40▇▇
▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
The
Bank
of New York
10▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇
▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention:
Mortgage-Backed Securities Group
| Re: |
First
Horizon Alternative Mortgage Securities Trust 2006-AA2 Mortgage
Pass-Through Certificates, Series 2006-AA2, Class
___
|
Ladies
and Gentlemen:
In
connection with our acquisition of the above Certificates we certify that (a)
we
understand that the Certificates are not being registered under the Securities
Act of 1933, as amended (the “Act”), or any state securities laws and are being
transferred to us in a transaction that is exempt from the registration
requirements of the Act and any such laws, (b) we are an “accredited investor,”
as defined in Regulation D under the Act, and have such knowledge and experience
in financial and business matters that we are capable of evaluating the merits
and risks of investments in the Certificates, (c) we have had the opportunity
to
ask questions of and receive answers from the Depositor concerning the purchase
of the Certificates and all matters relating thereto or any additional
information deemed necessary to our decision to purchase the Certificates,
(d)
either (i) we are not an employee benefit plan or arrangement that is subject
to
the Employee Retirement Income Security Act of 1974, as amended, or a plan
or
arrangement that is subject to Section 4975 of the Internal Revenue Code of
1986, as amended, nor are we acting on behalf of any such plan or arrangement
nor are we using the assets of any such plan or arrangement to effect such
acquisition or (ii) if, in the case of ERISA-Restricted Certificates that have
been the subject of an ERISA-Qualifying Underwriting, we are an insurance
company, a representation that we are an insurance company which is purchasing
such Certificates with funds contained in an “insurance company general account”
(as such term is defined in Section V(e) of Prohibited Transaction Class
Exemption 95-60 (“PTCE 95-60”)) and that the purchase and holding of such
Certificates are covered under Sections I and III of PTCE 95-60, (e) we are
acquiring the Certificates for investment for our own account and not with
a
view to any distribution of such Certificates (but without prejudice to our
right at all times to sell or otherwise dispose of the Certificates in
accordance with clause (g) below), (f) we have not offered or sold any
Certificates to, or solicited offers to buy any Certificates from, any person,
or otherwise approached or negotiated with any person with respect thereto,
or
taken any other action which would result in a violation of Section 5 of the
Act, and (g) we will not sell, transfer or otherwise dispose of any Certificates
unless (1) such sale, transfer or other disposition is made pursuant to an
effective registration statement under the Act or is exempt from such
registration requirements, and if requested, we will at our expense provide
an
opinion of counsel satisfactory to the addressees of this Certificate that
such
sale, transfer or other disposition may be made pursuant to an exemption from
the Act, (2) the purchaser or transferee of such Certificate has executed and
delivered to you a certificate to substantially the same effect as this
certificate, and (3) the purchaser or transferee has otherwise complied with
any
conditions for transfer set forth in the Pooling and Servicing
Agreement.
J-1
|
Very
truly yours,
_________________________________
Print
Name of Transferee
By:
___________________________________
Authorized
Officer
|
J-2
EXHIBIT
K
FORM
OF
RULE 144A LETTER
___________,
20__
First
Horizon Asset Securities Inc.
40▇▇
▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
The
Bank
of New York
10▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇
▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention:
Mortgage-Backed Securities Group
| Re: |
First
Horizon Alternative Mortgage Securities Trust 2006-AA2 Mortgage
Pass-Through Certificates, Series 2006-AA2, Class
___
|
Ladies
and Gentlemen:
In
connection with our acquisition of the above Certificates we certify that (a)
we
understand that the Certificates are not being registered under the Securities
Act of 1933, as amended (the “Act”), or any state securities laws and are being
transferred to us in a transaction that is exempt from the registration
requirements of the Act and any such laws, (b) we have such knowledge and
experience in financial and business matters that we are capable of evaluating
the merits and risks of investments in the Certificates, (c) we have had the
opportunity to ask questions of and receive answers from the Depositor
concerning the purchase of the Certificates and all matters relating thereto
or
any additional information deemed necessary to our decision to purchase the
Certificates, (d) we are not an employee benefit plan or arrangement that is
subject to the Employee Retirement Income Security Act of 1974, as amended,
or a
plan or arrangement that is subject to Section 4975 of the Internal Revenue
Code
of 1986, as amended, nor are we acting on behalf of any such plan or arrangement
nor using the assets of any such plan or arrangement to effect such acquisition,
(e) if an insurance company, in the case of ERISA-restricted Certificates that
have been the subject of an ERISA-Qualifying Underwriting, we are purchasing
the
Certificates with funds contained in an “insurance company general account” (as
defined in Section V(e) of Prohibited Transaction Class Exemption 95-60 (“PTCE
95-60”)) and our purchase and holding of the Certificates are covered under
Sections I and III of PTCE 95-60, (f) we have not, nor has anyone acting on
our
behalf offered, transferred, pledged, sold or otherwise disposed of the
Certificates, any interest in the Certificates or any other similar security
to,
or solicited any offer to buy or accept a transfer, pledge or other disposition
of the Certificates, any interest in the Certificates or any other similar
security from, or otherwise approached or negotiated with respect to the
Certificates, any interest in the Certificates or any other similar security
with, any person in any manner, or made any general solicitation by means of
general advertising or in any other manner, or taken any other action, that
would constitute a distribution of the Certificates under the Act or that would
render the disposition of the Certificates a violation of Section 5 of the
Act
or require registration pursuant thereto, nor will act, nor has authorized
or
will authorize any person to act, in such manner with respect to the
Certificates, (g) we are a “qualified institutional buyer” as that term is
defined in Rule 144A under the Act (“Rule 144A”) and have completed either of
the forms of certification to that effect attached hereto as Annex 1 or Annex
2,
(h) we are aware that the sale to us is being made in reliance on Rule 144A,
and
(i) we are acquiring the Certificates for our own account or for resale pursuant
to Rule 144A and further, understand that such Certificates may be resold,
pledged or transferred only (A) to a person reasonably believed to be a
qualified institutional buyer that purchases for its own account or for the
account of a qualified institutional buyer to whom notice is given that the
resale, pledge or transfer is being made in reliance on Rule 144A, or (B)
pursuant to another exemption from registration under the Act.
K-1
|
Very
truly yours,
_________________________________
Print
Name of Transferee
By:
___________________________________
Authorized
Officer
|
K-2
ANNEX
1
TO EXHIBIT K
QUALIFIED
INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For
Transferees Other Than Registered Investment Companies]
The
undersigned (the “Buyer”) hereby certifies as follows to the parties listed in
the Rule 144A Transferee Certificate to which this certification relates with
respect to the Certificates described therein:
1.
As
indicated below, the undersigned is the President, Chief Financial Officer,
Senior Vice President or other executive officer of the Buyer.
2.
In
connection with purchases by the Buyer, the Buyer is a “qualified institutional
buyer” as that term is defined in Rule 144A under the Securities Act of 1933, as
amended (“Rule 144A”) because (i) the Buyer owned and/or invested on a
discretionary basis $ ______1
in
securities (except for the excluded securities referred to below) as of the
end
of the Buyer’s most recent fiscal year (such amount being calculated in
accordance with Rule 144A and (ii) the Buyer satisfies the criteria in the
category marked below.
___ Corporation,
etc.
The
Buyer is a corporation (other than a bank, savings and loan association or
similar institution), Massachusetts or similar business trust, partnership,
or
charitable organization described in Section 501(c)(3) of the Internal Revenue
Code of 1986, as amended.
___ Bank.
The
Buyer (a) is a national bank or banking institution organized under the laws
of
any State, territory or the District of Columbia, the business of which is
substantially confined to banking and is supervised by the State or territorial
banking commission or similar official or is a foreign bank or equivalent
institution, and (b) has an audited net worth of at least $25,000,000 as
demonstrated in its latest annual financial statements, a
copy
of which is attached hereto.
___ Savings
and Loan.
The
Buyer (a) is a savings and loan association, building and loan association,
cooperative bank, homestead association or similar institution, which is
supervised and examined by a State or Federal authority having supervision
over
any such institutions or is a foreign savings and loan association or equivalent
institution and (b) has an audited net worth of at least $25,000,000 as
demonstrated in its latest annual financial statements, a
copy
of which is attached hereto.
___ Broker-dealer.
The
Buyer is a dealer registered pursuant to Section 15 of the Securities Exchange
Act of 1934.
___ Insurance
Company.
The
Buyer is an insurance company whose primary and predominant business activity
is
the writing of insurance or the reinsuring of risks underwritten by insurance
companies and which is subject to supervision by the insurance commissioner
or a
similar official or agency of a State, territory or the District of
Columbia.
1Buyer
must own and/or invest on a discretionary basis at least $100,000,000 in
securities unless Buyer is a dealer, and, in that case, Buyer must own and/or
invest on a discretionary basis at least $10,000,000 in securities.
K-3
___ State
or Local Plan.
The
Buyer is a plan established and maintained by a State, its political
subdivisions, or any agency or instrumentality of the State or its political
subdivisions, for the benefit of its employees.
___ ERISA
Plan.
The
Buyer is an employee benefit plan within the meaning of Title I of the Employee
Retirement Income Security Act of 1974.
___ Investment
Advisor.
The
Buyer is an investment advisor registered under the Investment Advisors Act
of
1940.
___ Small
Business Investment Company.
Buyer
is a small business investment company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small Business Investment
Act
of 1958.
___ Business
Development Company.
Buyer
is a business development company as defined in Section 202(a)(22) of the
Investment Advisors Act of 1940.
3.
The
term
“securities”
as
used
herein does
not include
(i)
securities of issuers that are affiliated with the Buyer, (ii) securities that
are part of an unsold allotment to or subscription by the Buyer, if the Buyer
is
a dealer, (iii) securities issued or guaranteed by the U.S. or any
instrumentality thereof, (iv) bank deposit notes and certificates of deposit,
(v) loan participations, (vi) repurchase agreements, (vii) securities owned
but
subject to a repurchase agreement and (viii) currency, interest rate and
commodity swaps.
4.
For
purposes of determining the aggregate amount of securities owned and/or invested
on a discretionary basis by the Buyer, the Buyer used the cost of such
securities to the Buyer and did not include any of the securities referred
to in
the preceding paragraph, except (i) where the Buyer reports its securities
holdings in its financial statements on the basis of their market value, and
(ii) no current information with respect to the cost of those securities has
been published. If clause (ii) in the preceding sentence applies, the securities
may be valued at market. Further, in determining such aggregate amount, the
Buyer may have included securities owned by subsidiaries of the Buyer, but
only
if such subsidiaries are consolidated with the Buyer in its financial statements
prepared in accordance with generally accepted accounting principles and if
the
investments of such subsidiaries are managed under the Buyer’s direction.
However, such securities were not included if the Buyer is a majority-owned,
consolidated subsidiary of another enterprise and the Buyer is not itself a
reporting company under the Securities Exchange Act of 1934, as
amended.
5.
The
Buyer
acknowledges that it is familiar with Rule 144A and understands that the seller
to it and other parties related to the Certificates are relying and will
continue to rely on the statements made herein because one or more sales to
the
Buyer may be in reliance on Rule 144A.
6.
Until
the
date of purchase of the Rule 144A Securities, the Buyer will notify each of
the
parties to which this certification is made of any changes in the information
and conclusions herein. Until such notice is given, the Buyer’s purchase of the
Certificates will constitute a reaffirmation of this certification as of the
date of such purchase. In addition, if the Buyer is a bank or savings and loan
is provided above, the Buyer agrees that it will furnish to such parties updated
annual financial statements promptly after they become available.
K-4
|
______________________________________
Print
Name of Transferee
By:
___________________________________
Name:
_________________________________
Title:
__________________________________
Date:
__________________________________
|
K-5
ANNEX
2
TO EXHIBIT K
QUALIFIED
INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For
Transferees That are Registered Investment Companies]
The
undersigned (the “Buyer”) hereby certifies as follows to the parties listed in
the Rule 144A Transferee Certificate to which this certification relates with
respect to the Certificates described therein:
1.
As
indicated below, the undersigned is the President, Chief Financial Officer
or
Senior Vice President of the Buyer or, if the Buyer is a “qualified
institutional buyer” as that term is defined in Rule 144A under the Securities
Act of 1933, as amended (“Rule 144A”) because Buyer is part of a Family of
Investment Companies (as defined below), is such an officer of the
Adviser.
2.
In
connection with purchases by Buyer, the Buyer is a “qualified institutional
buyer” as defined in SEC Rule 144A because (i) the Buyer is an investment
company registered under the Investment Company Act of 1940, as amended and
(ii)
as marked below, the Buyer alone, or the Buyer’s Family of Investment Companies,
owned at least $100,000,000 in securities (other than the excluded securities
referred to below) as of the end of the Buyer’s most recent fiscal year. For
purposes of determining the amount of securities owned by the Buyer or the
Buyer’s Family of Investment Companies, the cost of such securities was used,
except (i) where the Buyer or the Buyer’s Family of Investment Companies reports
its securities holdings in its financial statements on the basis of their market
value, and (ii) no current information with respect to the cost of those
securities has been published. If clause (ii) in the preceding sentence applies,
the securities may be valued at market.
___ The
Buyer
owned $ in securities (other than the excluded securities referred to below)
as
of the end of the Buyer’s most recent fiscal year (such amount being calculated
in accordance with Rule 144A).
___ The
Buyer
is part of a Family of Investment Companies which owned in the aggregate $
in
securities (other than the excluded securities referred to below) as of the
end
of the Buyer’s most recent fiscal year (such amount being calculated in
accordance with Rule 144A).
3.
The
term
“Family
of Investment Companies”
as
used
herein means two or more registered investment companies (or series thereof)
that have the same investment adviser or investment advisers that are affiliated
(by virtue of being majority owned subsidiaries of the same parent or because
one investment adviser is a majority owned subsidiary of the
other).
4.
The
term
“securities”
as
used
herein does not include (i) securities of issuers that are affiliated with
the
Buyer or are part of the Buyer’s Family of Investment Companies, (ii) securities
issued or guaranteed by the U.S. or any instrumentality thereof, (iii) bank
deposit notes and certificates of deposit, (iv) loan participations, (v)
repurchase agreements, (vi) securities owned but subject to a repurchase
agreement and (vii) currency, interest rate and commodity swaps.
K-6
5.
The
Buyer
is familiar with Rule 144A and understands that the parties listed in the Rule
144A Transferee Certificate to which this certification relates are relying
and
will continue to rely on the statements made herein because one or more sales
to
the Buyer will be in reliance on Rule 144A. In addition, the Buyer will only
purchase for the Buyer’s own account.
6.
Until
the
date of purchase of the Certificates, the undersigned will notify the parties
listed in the Rule 144A Transferee Certificate to which this certification
relates of any changes in the information and conclusions herein. Until such
notice is given, the Buyer’s purchase of the Certificates will constitute a
reaffirmation of this certification by the undersigned as of the date of such
purchase.
|
______________________________________
Print
Name of Transferee
By:
___________________________________
Name:
_________________________________
Title:
__________________________________
|
|
IF
AN ADVISER:
_________________________________
Print
Name of Buyer
Date:
_________________________________
|
K-7
EXHIBIT
L
REQUEST
FOR RELEASE
[Substitution
of Deleted Mortgage Loans
or
Mortgage
Loans Paid in Full]
____________________________________
Mortgage Loan Files
_____________________
hereby certifies that he/she is an officer of _____________________, holding
the
office set forth beneath his/her signature, and hereby further certifies as
follows:
(Check
One)
| □ |
With
respect to the mortgage loans described in the attached schedule,
each
such mortgage loan constitutes a “Substitute Mortgage Loan” (as the term
is defined in the Pooling and Servicing
Agreement).
|
| □ |
With
respect to the “Mortgage Loans” (as the term is defined in the custodial
agreement) described in the attached
schedule:
|
All
payments of principal, premium (if any), and interest have been made with
respect to the following:
Loan
Number: _________________________________
Borrower’s
Name: ______________________________
County:
______________________________________
We
hereby
certify that all amounts to be received in connection with such payments have
been received.
______________________________
Dated:
______________________
/
/ Vice
President
/
/
Assistant Vice President
L-1
EXHIBIT
M
REQUEST
FOR RELEASE AND RECEIPT
[For
Servicing and Foreclosure]
_____________________________________
Mortgage Loan Files
LOAN
INFORMATION
Name
of
Mortgagor: __________________________________
Loan
No.:
__________________________________
The
undersigned hereby acknowledges that it has received from FIRST TENNESSEE BANK
NATIONAL ASSOCIATION, as Custodian for ____________________ Mortgage Loan Files,
the documents referred to below (the “Documents”). All capitalized terms not
otherwise defined in this Request for Release and Receipt shall have the
meanings ascribed to them in the Custodial Agreement dated as of
__________________ among ___________________ and FIRST TENNESSEE BANK NATIONAL
ASSOCIATION, as Custodian (the “Custodial Agreement”).
[complete
as necessary]
The
undersigned hereby acknowledges an agrees as follows:
(1) The
undersigned shall hold and retain possession of the Documents in trust for
the
benefit of __________________, solely for the purposes provided in the Custodial
Agreement.
(2) The
undersigned shall not cause or permit the Documents to become subject to, or
encumbered by, any claim, liens, security interest, charges, writs of attachment
or other impositions nor shall the undersigned assert or seek to assert any
claims or rights of setoff to or against the Documents or any proceeds
thereof.
(3) The
undersigned shall return each and every Document previously requested from
the
Mortgage File to the Custodian when the need therefor no longer exists, unless
the Mortgage Loan relating to the Documents has been liquidated.
Date: _____________________
|
NAME
By:
___________________________________
Name:
_________________________________
Title:
__________________________________
|
M-1
EXHIBIT
N-1
FORM
OF
ANNUAL CERTIFICATION
(Subservicer)
Re: First
Horizon Mortgage Pass-Through Trust 2006-[ ] (the “Trust”),
Mortgage Pass-Through Certificates, Series 2006-[ ], issued pursuant to the
Pooling and Servicing Agreement, dated as of _____ 1, 2006 (the “Pooling
and Servicing Agreement”),
among
First Horizon Asset Securities Inc., as depositor (the “Depositor”),
First
Horizon Home Loan Corporation, as master servicer (the “Master Servicer”) and
The Bank of New York, as trustee (the “Trustee”)
I,
[identify the certifying individual], a [title of certifying individual] of
[name of company] (the “Company”), hereby certify to the Depositor, the Trustee,
the Master Servicer, and their officers, directors and affiliates, and with
the
knowledge and intent that they will rely upon this certification,
that:
1. I
have
reviewed the servicer compliance statement of the Company provided in accordance
with Item 1123 of Regulation AB (the “Compliance
Statement”),
the
report on assessment of the Company’s compliance with the servicing criteria set
forth in Item 1122(d) of Regulation AB (the “Servicing
Criteria”),
provided in accordance with Rules 13a-18 and 15d-18 under Securities Exchange
Act of 1934, as amended (the “Exchange
Act”)
and
Item 1122 of Regulation AB (the “Servicing
Assessment”),
the
registered public accounting firm’s attestation report provided in accordance
with Rules 13a-18 and 15d-18 under the Exchange Act and Section 1122(b) of
Regulation AB (the “Attestation
Report”),
and
all servicing reports, officer’s certificates and other information relating to
the servicing of the Mortgage Loans by the Company during 200[ ] that were
delivered by the Company to the [Depositor] [Master Servicer] [Trustee] pursuant
to the Pooling and Servicing Agreement (collectively, the “Company
Servicing Information”);
2. Based
upon my knowledge, the Company Servicing Information, taken as a whole, does
not
contain any untrue statement of a material fact or omit to state a material
fact
necessary to make the statements made, in light of the circumstances under
which
such statements were made, not misleading with respect to the period of time
covered by the Company Servicing Information;
3. Based
on
my knowledge, all of the Company Servicing Information required to be provided
by the Company under the Pooling and Servicing Agreement has been provided
to
the [Depositor] [Master Servicer] [Trustee];
4. I
am
responsible for reviewing the activities performed by the Company as a servicer
under the Pooling and Servicing Agreement, and based on my knowledge and the
compliance review conducted in preparing the Compliance Statement and except
as
disclosed in the Compliance Statement, the Servicing Assessment or the
Attestation Report, the Company has fulfilled its obligations under the Pooling
and Servicing Agreement in all material respects; and
N-1
5. The
Compliance Statement required to be delivered by the Company pursuant to the
Pooling and Servicing Agreement, and the Servicing Assessment and Attestation
Report required to be provided by the Company and by any Subservicer or
Subcontractor pursuant to the Pooling and Servicing Agreement, have been
provided to the [Depositor] [Master Servicer]. Any material instances of
noncompliance described in such reports have been disclosed to the [Depositor]
[Master Servicer]. Any material instance of noncompliance with the Servicing
Criteria has been disclosed in such reports.
| Date: | ____________________________ | |
| _________________________ | ||
| [Signature] | ||
|
[Title]
|
N-2
EXHIBIT
N-2
FORM
OF
ANNUAL CERTIFICATION
(Trustee)
Re: First
Horizon Mortgage Pass-Through Trust 2006-[ ] (the “Trust”),
Mortgage Pass-Through Certificates, Series 2006-[ ], issued pursuant to the
Pooling and Servicing Agreement, dated as of _____ 1, 2006 (the “Pooling
and Servicing Agreement”),
among
First Horizon Asset Securities Inc., as depositor (the “Depositor”),
First
Horizon Home Loan Corporation, as master servicer (the “Master Servicer”) and
The Bank of New York, as trustee (the “Trustee”)
I,
[identify the certifying individual], a [title of certifying individual] of
the
Trustee, hereby certify to the Depositor, the Master Servicer, and their
officers, directors and affiliates, and with the knowledge and intent that
they
will rely upon this certification, that:
1. I
have
reviewed the report on assessment of the Trustee’s compliance with the servicing
criteria set forth in Item 1122(d) of Regulation AB (the “Servicing
Criteria”),
provided in accordance with Rules 13a-18 and 15d-18 under Securities Exchange
Act of 1934, as amended (the “Exchange
Act”)
and
Item 1122 of Regulation AB (the “Servicing
Assessment”),
and
the registered public accounting firm’s attestation report provided in
accordance with Rules 13a-18 and 15d-18 under the Exchange Act and Section
1122(b) of Regulation AB (the “Attestation
Report”)
(collectively, the “Trustee
Information”);
2. Based
upon my knowledge, the Trustee Information, taken as a whole, does not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under
which
such statements were made, not misleading with respect to the period of time
covered by the Trustee Information;
3. Based
on
my knowledge, all of the Trustee Information required to be provided by the
Trustee under the Pooling and Servicing Agreement has been provided to the
[Depositor] [Master Servicer];
4. I
am
responsible for reviewing the activities performed by the Trustee as trustee
under the Pooling and Servicing Agreement, and based on my knowledge and the
compliance review conducted in preparing the Compliance Statement and except
as
disclosed in the Servicing Assessment or the Attestation Report, the Trustee
has
fulfilled its obligations under the Pooling and Servicing Agreement in all
material respects; and
5. The
Servicing Assessment and Attestation Report required to be provided by the
Trustee pursuant to the Pooling and Servicing Agreement have been provided
to
the [Depositor] [Master Servicer]. Any material instances of noncompliance
described in such reports have been disclosed to the [Depositor] [Master
Servicer]. Any material instance of noncompliance with the Servicing Criteria
has been disclosed in such reports.
| Date: | ____________________________ | |
| _________________________ | ||
| [Signature] | ||
|
[Title]
|
N-2-1
EXHIBIT
O
[FORM
OF]
SERVICING CRITERIA TO BE ADDRESSED IN ASSESSMENT OF COMPLIANCE
STATEMENT
The
assessment of compliance to be delivered by [the Master Servicer] [Trustee]
[Name of Subservicer] shall address, at a minimum, the criteria identified
as
below as “Applicable Servicing Criteria”:
|
SERVICING
CRITERIA
|
|||
|
Reference
|
Criteria
|
Responsible
Party *
|
|
|
General
Servicing Considerations
|
|||
|
1122(d)(1)(i)
|
Policies
and procedures are instituted to monitor any performance or other
triggers
and events of default in accordance with the transaction
agreements.
|
Master
Servicer
|
|
|
1122(d)(1)(ii)
|
If
any material servicing activities are outsourced to third parties,
policies and procedures are instituted to monitor the third party’s
performance and compliance with such servicing activities.
|
Master
Servicer
Trustee
|
|
|
1122(d)(1)(iii)
|
Any
requirements in the transaction agreements to maintain a back-up
servicer
for the mortgage loans are maintained.
|
N/A
|
|
|
1122(d)(1)(iv)
|
A
fidelity bond and errors and omissions policy is in effect on the
party
participating in the servicing function throughout the reporting
period in
the amount of coverage required by and otherwise in accordance with
the
terms of the transaction agreements.
|
Master
Servicer
|
|
|
Cash
Collection and Administration
|
|||
|
1122(d)(2)(i)
|
Payments
on mortgage loans are deposited into the appropriate custodial bank
accounts and related bank clearing accounts no more than two business
days
following receipt, or such other number of days specified in the
transaction agreements.
|
Trustee (Distribution
Account) (1);
Master/Sub
Servicer (Certificate Account)
|
|
|
1122(d)(2)(ii)
|
Disbursements
made via wire transfer on behalf of an obligor or to an investor
are made
only by authorized personnel.
|
Master
Servicer
Trustee
|
|
*
Unless
otherwise mutually agreed upon.
(1)
Based
solely on deposits made by the Trustee.
O-1
|
1122(d)(2)(iii)
|
Advances
of funds or guarantees regarding collections, cash flows or distributions,
and any interest or other fees charged for such advances, are made,
reviewed and approved as specified in the transaction
agreements.
|
Master/Sub
Servicer
|
|
|
1122(d)(2)(iv)
|
The
related accounts for the transaction, such as cash reserve accounts
or
accounts established as a form of overcollateralization, are separately
maintained (e.g., with respect to commingling of cash) as set forth
in the
transaction agreements.
|
Master/Sub
Servicer
Trustee
|
|
|
1122(d)(2)(v)
|
Each
custodial account is maintained at a federally insured depository
institution as set forth in the transaction agreements. For purposes
of
this criterion, “federally insured depository institution” with respect to
a foreign financial institution means a foreign financial institution
that
meets the requirements of Rule 13k-1(b)(1) of the Securities Exchange
Act.
|
Trustee
(Distribution Account);
Master/Sub
Servicer (Certificate Account)
|
|
|
1122(d)(2)(vi)
|
Unissued
checks are safeguarded so as to prevent unauthorized
access.
|
N/A
|
|
|
1122(d)(2)(vii)
|
Reconciliations
are prepared on a monthly basis for all asset-backed securities related
bank accounts, including custodial accounts and related bank clearing
accounts. These reconciliations are (A) mathematically accurate;
(B)
prepared within 30 calendar days after the bank statement cutoff
date, or
such other number of days specified in the transaction agreements;
(C)
reviewed and approved by someone other than the person who prepared
the
reconciliation; and (D) contain explanations for reconciling items.
These
reconciling items are resolved within 90 calendar days of their original
identification, or such other number of days specified in the transaction
agreements.
|
Master/Sub
Servicer
|
|
|
Investor
Remittances and Reporting
|
|||
|
1122(d)(3)(i)
|
Reports
to investors, including those to be filed with the Commission, are
maintained in accordance with the transaction agreements and applicable
Commission requirements. Specifically, such reports (A) are prepared
in
accordance with timeframes and other terms set forth in the transaction
agreements; (B) provide information calculated in accordance with
the
terms specified in the transaction agreements; (C) are filed with
the
Commission as required by its rules and regulations; and (D) agree
with
investors’ or the trustee’s records as to the total unpaid principal
balance and number of mortgage loans serviced by the
Servicer.
|
Trustee
((A)-(C) only)
|
|
|
1122(d)(3)(ii)
|
Amounts
due to investors are allocated and remitted in other terms set forth
in
the transaction agreements.
|
Master
Servicer
Trustee
|
|
|
1122(d)(3)(iii)
|
Disbursements
made to an investor are posted within two business days to the Servicer’s
investor records, or such other number of days specified in the
transaction agreements.
|
Trustee
|
|
O-2
|
1122(d)(3)(iv)
|
Amounts
remitted to investors per the investor reports agree with cancelled
checks, or other form of payment, or custodial bank
statements.
|
Trustee
|
|
|
Pool
Asset Administration
|
|||
|
1122(d)(4)(i)
|
Collateral
or security on mortgage loans is maintained as required by the transaction
agreements or related mortgage loan documents.
|
Master/Sub
Servicer
|
|
|
1122(d)(4)(ii)
|
Mortgage
loan and related documents are safeguarded as required by the transaction
agreements.
|
Master/Sub
Servicer
|
|
|
1122(d)(4)(iii)
|
Any
additions, removals or substitutions to the asset pool are made,
reviewed
and approved in accordance with any conditions or requirements in
the
transaction agreements.
|
Master/Sub
Servicer
|
|
|
1122(d)(4)(iv)
|
Payments
on mortgage loans, including any payoffs, made in accordance with
the
related mortgage loan documents are posted to the Servicer’s obligor
records maintained no more than two business days after receipt,
or such
other number of days specified in the transaction agreements, and
allocated to principal, interest or other items (e.g., escrow) in
accordance with the related mortgage loan documents.
|
Master/Sub
Servicer
|
|
|
1122(d)(4)(v)
|
The
Servicer’s records regarding the mortgage loans agree with the Servicer’s
records with respect to an obligor’s unpaid principal
balance.
|
Master/Sub
Servicer
|
|
|
1122(d)(4)(vi)
|
Changes
with respect to the terms or status of an obligor’s mortgage loans (e.g.,
loan modifications or re-agings) are made, reviewed and approved
by
authorized personnel in accordance with the transaction agreements
and
related pool asset documents.
|
Master/Sub
Servicer
|
|
|
1122(d)(4)(vii)
|
Loss
mitigation or recovery actions (e.g., forbearance plans, modifications
and
deeds in lieu of foreclosure, foreclosures and repossessions, as
applicable) are initiated, conducted and concluded in accordance
with the
timeframes or other requirements established by the transaction
agreements
|
Master/Sub
Servicer
|
|
|
1122(d)(4)(viii)
|
Records
documenting collection efforts are maintained during the period a
mortgage
loan is delinquent in accordance with the transaction agreements.
Such
records are maintained on at least a monthly basis, or such other
period
specified in the transaction agreements, and describe the entity’s
activities in monitoring delinquent mortgage loans including, for
example,
phone calls, letters and payment rescheduling plans in cases where
delinquency is deemed temporary (e.g., illness or
unemployment).
|
Master/Sub
Servicer
|
|
|
1122(d)(4)(ix)
|
Adjustments
to interest rates or rates of return for mortgage loans with variable
rates are computed based on the related mortgage loan
documents.
|
Master/Sub
Servicer
|
|
O-3
|
1122(d)(4)(x)
|
Regarding
any funds held in trust for an obligor (such as escrow accounts):
(A) such
funds are analyzed, in accordance with the obligor’s mortgage loan
documents, on at least an annual basis, or such other period specified
in
the transaction agreements; (B) interest on such funds is paid, or
credited, to obligors in accordance with applicable mortgage loan
documents and state laws; and (C) such funds are returned to the
obligor
within 30 calendar days of full repayment of the related mortgage
loans,
or such other number of days specified in the transaction
agreements.
|
Master/Sub
Servicer
|
|
|
1122(d)(4)(xi)
|
Payments
made on behalf of an obligor (such as tax or insurance payments)
are made
on or before the related penalty or expiration dates, as indicated
on the
appropriate bills or notices for such payments, provided that such
support
has been received by the servicer at least 30 calendar days prior
to these
dates, or such other number of days specified in the transaction
agreements.
|
Master/Sub
Servicer
|
|
|
1122(d)(4)(xii)
|
Any
late payment penalties in connection with any payment to be made
on behalf
of an obligor are paid from the servicer’s funds and not charged to the
obligor, unless the late payment was due to the obligor’s error or
omission.
|
Master/Sub
Servicer
|
|
|
1122(d)(4)(xiii)
|
Disbursements
made on behalf of an obligor are posted within two business days
to the
obligor’s records maintained by the servicer, or such other number of days
specified in the transaction agreements.
|
Master/Sub
Servicer
|
|
|
1122(d)(4)(xiv)
|
Delinquencies,
charge-offs and uncollectible accounts are recognized and recorded
in
accordance with the transaction agreements.
|
Master/Sub
Servicer
|
|
|
1122(d)(4)(xv)
|
Any
external enhancement or other support, identified in Item 1114(a)(1)
through (3) or Item 1115 of Regulation AB, is maintained as set forth
in
the transaction agreements.
|
Trustee
|
|
|
[NAME
OF MASTER SERVICER] [NAME OF TRUSTEE] [NAME OF CO-TRUSTEE]
[SUBSERVICER]
Date:
By:
_______________________________
Name:
_____________________________
Title:
______________________________
|
O-4
EXHIBIT
P
[FORM
OF]
LIST OF ITEM 1119 PARTIES
___________
MORTGAGE PASS-THROUGH TRUST 200_-___
Mortgage
Pass-Through Certificates,
Series
200__-___
|
Party
|
Contact
Information
|
P-1
EXHIBIT
Q
FORM
OF
▇▇▇▇▇▇▇▇-▇▇▇▇▇ CERTIFICATION
(Replacement
of the Master Servicer)
I,
[identify the certifying individual], a [title of certifying individual] of
First Horizon Home Loan Corporation (the “Company”),
hereby certify that:
6. I
have
reviewed the report on Form 10-K and all reports on Form 10-D required to be
filed in respect of the period covered by this report on Form 10-K of First
Horizon Alternative Mortgage Trust 2006-FA1 (the “Exchange
Act Reports”);
7. Based
upon my knowledge, the Exchange Act Reports, taken as a whole, do not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under
which
such statements were made, not misleading with respect to the period covered
by
this report;
8. Based
on
my knowledge, all of the distribution, servicing and other information required
to be provided under Form 10-D for the period covered by this report is included
in the Exchange Act Reports;
9. I
am
responsible for reviewing the activities performed by the Company as master
servicer under the Pooling and Servicing Agreement and, based on my knowledge
and the compliance review(s) conducted in preparing the servicer compliance
statement(s) required in this report under Item 1123 of Regulation AB (the
“Compliance
Statements”),
and
except as disclosed in the Exchange Act Reports, the Company has fulfilled
its
obligations as master servicer under the Pooling and Servicing Agreement; and
10. All
of
the reports on assessment of compliance with servicing criteria for asset-backed
securities and their related attestation reports on assessment of compliance
with servicing criteria for asset-backed securities required to be included
in
this report in accordance with Item 1122 of Regulation AB and Exchange Act
Rules
13a-18 and 15d-18 have been included as an exhibit to this report, except as
otherwise disclosed in this report. Any material instances of noncompliance
described in such reports have been disclosed in this report on Form 10-K.
[In
giving the certifications above, I have reasonably relied on information
provided to me by the following unaffiliated parties [name of servicer,
sub-servicer, co-servicer, depositor or trustee].
| Date: | ____________________________ | |
| _________________________ | ||
| [Signature] | ||
|
[Title]
|
Q-1