Exhibit 4.1
EXECUTION COPY
▇▇▇▇▇▇▇ ▇▇▇▇▇ MORTGAGE INVESTORS, INC.
Depositor,
PHH MORTGAGE CORPORATION
Servicer,
and
▇▇▇▇▇ FARGO BANK, N.A.
Trustee
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POOLING AND SERVICING AGREEMENT
Dated as of February 1, 2006
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▇▇▇▇▇▇▇ ▇▇▇▇▇ MORTGAGE INVESTORS TRUST SERIES MLCC 2006-1
MORTGAGE PASS-THROUGH CERTIFICATES
TABLE OF CONTENTS
PAGE
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ARTICLE I. DEFINITIONS.......................................... 4
Section 1.01. Definitions.......................................... 4
Section 1.02. Calculations Respecting Mortgage Loans............... 32
ARTICLE II. DECLARATION OF TRUST; ISSUANCE OF CERTIFICATES....... 33
Section 2.01. Creation and Declaration of Trust Fund; Conveyance
of Mortgage Loans.................................... 33
Section 2.02. Acceptance of Trust Fund by Trustee; Review of
Documentation for Trust Fund......................... 36
Section 2.03. Representations and Warranties of the Depositor
and the Servicer..................................... 38
Section 2.04. Discovery of Breach; Repurchase or Substitution
of Mortgage Loans.................................... 42
Section 2.05. Grant Clause......................................... 45
ARTICLE III. THE CERTIFICATES..................................... 46
Section 3.01. The Certificates..................................... 46
Section 3.02. Registration......................................... 47
Section 3.03. Transfer and Exchange of Certificates................ 47
Section 3.04. Cancellation of Certificates......................... 50
Section 3.05. Replacement of Certificates.......................... 50
Section 3.06. Persons Deemed Owners................................ 51
Section 3.07. Temporary Certificates............................... 51
Section 3.08. Appointment of Paying Agent.......................... 52
Section 3.09. Book-Entry Certificates.............................. 52
ARTICLE IV. ADMINISTRATION OF THE TRUST FUND..................... 53
Section 4.01. Custodial Accounts; Distribution Account............. 53
Section 4.02. Reports to Trustee and Certificateholders............ 54
ARTICLE V. DISTRIBUTIONS TO HOLDERS OF CERTIFICATES............. 57
Section 5.01. Distributions Generally.............................. 57
Section 5.02. Distributions from the Distribution Account.......... 57
Section 5.03. Allocation of Losses................................. 60
Section 5.04. Advances............................................. 61
ARTICLE VI. CONCERNING THE TRUSTEE; EVENTS OF DEFAULT............ 61
Section 6.01. Duties of Trustee.................................... 61
Section 6.02. Certain Matters Affecting the Trustee................ 63
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TABLE OF CONTENTS
(continued)
PAGE
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Section 6.03. Trustee Not Liable for Certificates.................. 65
Section 6.04. Trustee May Own Certificates......................... 65
Section 6.05. Eligibility Requirements for Trustee................. 65
Section 6.06. Resignation and Removal of Trustee................... 65
Section 6.07. Successor Trustee.................................... 66
Section 6.08. Merger or Consolidation of Trustee................... 67
Section 6.09. Appointment of Co-Trustee, Separate Trustee
or Custodian......................................... 67
Section 6.10. Authenticating Agents................................ 68
Section 6.11. Indemnification of Trustee........................... 69
Section 6.12. Fees and Expenses of the Trustee..................... 70
Section 6.13. Collection of Monies................................. 70
Section 6.14. Events of Default; Trustee To Act; Appointment
of Successor......................................... 70
Section 6.15. Additional Remedies of Trustee Upon Event
of Default........................................... 72
Section 6.16. Waiver of Defaults................................... 72
Section 6.17. Notification to Holders.............................. 72
Section 6.18. Directions by Certificateholders and Duties of
Trustee During Event of Default...................... 73
Section 6.19. Preparation of Tax Returns and Other Reports......... 73
ARTICLE VII. PURCHASE OF MORTGAGE LOANS AND TERMINATION OF
THE TRUST FUND....................................... 74
Section 7.01. Purchase of Mortgage Loans; Termination of Trust Fund
Upon Purchase or Liquidation of All Mortgage Loans... 74
Section 7.02. Procedure Upon Termination of Trust Fund............. 74
Section 7.03. Additional Trust Fund Termination Requirements....... 75
ARTICLE VIII. RIGHTS OF CERTIFICATEHOLDERS......................... 76
Section 8.01. Limitation on Rights of Holders...................... 76
Section 8.02. Access to List of Holders............................ 77
Section 8.03. Acts of Holders of Certificates...................... 77
ARTICLE IX. ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS... 78
Section 9.01. Servicer to Act as Servicer.......................... 78
Section 9.02. Title, Management and Disposition of REO Property.... 79
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TABLE OF CONTENTS
(continued)
PAGE
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Section 9.03. Trustee and Depositor's Right to Examine
Servicer Records..................................... 80
Section 9.04. Legal Proceedings Involving the Servicer and/or
the Mortgage Loans................................... 81
Section 9.05. Material Changes..................................... 81
Section 9.06. Servicer Shall Provide Information as Reasonably
Required............................................. 82
Section 9.07. Servicer Not to Resign............................... 82
Section 9.08. Custodial Accounts and Escrow Accounts............... 82
Section 9.09. Assumption Processing................................ 83
Section 9.10. Books and Records.................................... 83
Section 9.11. Annual Statement as to Compliance.................... 83
Section 9.12. [Reserved.].......................................... 84
Section 9.13. Reports on Assessment of Compliance and Attestation.. 84
Section 9.14. Servicing Compensation............................... 86
Section 9.15. Indemnification...................................... 86
Section 9.16. Non Solicitation..................................... 87
Section 9.17. Successor to the Servicer............................ 87
Section 9.18. Statements to the Trustee............................ 88
Section 9.19. Merger or Consolidation of the Servicer.............. 88
Section 9.20. Limitation on Liability of the Servicer.............. 88
Section 9.21. Periodic Filings..................................... 89
Section 9.22. Maintenance of Hazard Insurance and Errors and
Omissions and Fidelity Coverage...................... 94
ARTICLE X. REMIC ADMINISTRATION................................. 95
Section 10.01. REMIC Administration................................. 95
Section 10.02. Prohibited Transactions and Activities............... 97
Section 10.03. Indemnification with Respect to Prohibited
Transactions or Loss of REMIC Status................. 97
Section 10.04. REO Property......................................... 97
ARTICLE XI. MISCELLANEOUS PROVISIONS............................. 98
Section 11.01. Binding Nature of Agreement; Assignment.............. 98
Section 11.02. Entire Agreement..................................... 98
Section 11.03. Amendment............................................ 98
Section 11.04. Voting Rights........................................ 100
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TABLE OF CONTENTS
(continued)
PAGE
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Section 11.05. Provision of Information............................. 100
Section 11.06. Governing Law........................................ 100
Section 11.07. Notices.............................................. 100
Section 11.08. Severability of Provisions........................... 101
Section 11.09. Indulgences; No Waivers.............................. 101
Section 11.10. Headings Not To Affect Interpretation................ 101
Section 11.11. Benefits of Agreement................................ 101
Section 11.12. Special Notices to the Rating Agencies............... 101
Section 11.13. [RESERVED]........................................... 102
Section 11.14. Counterparts......................................... 102
Section 11.15. No Petitions......................................... 102
Section 11.16. Compliance with Regulation AB........................ 103
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EXHIBITS
Exhibit A Form of Certificates
Exhibit B Form of Residual Certificate Transfer Affidavit (Transferee)
Exhibit C Form of Residual Certificate Transfer Affidavit (Transferor)
Exhibit D-1 Standard Layout for Monthly Remittance Advice
Exhibit D-2 Standard Layout for Monthly Defaulted Loan Report
Exhibit E Mortgage Loan Sale and Assignment Agreement
Exhibit F List of Limited Purpose Surety Bonds
Exhibit G Form of Rule 144A Transfer Certificate
Exhibit H Form of Purchaser's Letter for Institutional Accredited Investor
Exhibit I Form of ERISA Transfer Affidavit
Exhibit J Form of Letter of Representations with the Depository Trust Company
Exhibit K Form of Initial Certification
Exhibit L Form of Final Certification
Exhibit M List of Servicing Officers
Exhibit N Request for Release
Exhibit O [Reserved]
Exhibit P [Reserved]
Exhibit Q Form of Trustee Back-up Certification
Exhibit R Form of Officer's Certificate of Servicer
Exhibit S-1 Form of Assessment of Compliance
Exhibit S-2 Servicing Criteria to be Addressed in Assessment of Compliance
Exhibit T Form of ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Certification
Exhibit U Additional Disclosure Notification
Exhibit V Form of Officer's Certificate of [Servicer][Trustee]
Exhibit W Items for Form 8-K
Exhibit X Items for Form 10-D
Exhibit Y Items for Form 10-K
Schedule A Mortgage Loan Schedule
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This POOLING AND SERVICING AGREEMENT, dated as of February 1, 2006 (the
"Agreement"), by and among ▇▇▇▇▇▇▇ ▇▇▇▇▇ MORTGAGE INVESTORS, INC., a Delaware
corporation, as depositor (the "Depositor"), PHH MORTGAGE CORPORATION, a New
Jersey corporation, as servicer (the "Servicer") and ▇▇▇▇▇ FARGO BANK, N.A., as
Trustee (the "Trustee"), and acknowledged by ▇▇▇▇▇▇▇ ▇▇▇▇▇ MORTGAGE LENDING,
INC. a Delaware corporation, as sponsor (the "Sponsor"), for purposes of Section
2.04.
PRELIMINARY STATEMENT
The Depositor has acquired the Mortgage Loans from the Sponsor and at the
Closing Date is the owner of the Mortgage Loans and the other property being
conveyed by the Depositor to the Trustee hereunder for inclusion in the Trust
Fund. On the Closing Date, the Depositor will acquire the Certificates from the
Trustee as consideration for the Depositor's transfer to the Trust Fund of the
Mortgage Loans and the other property constituting the Trust Fund. The Depositor
has duly authorized the execution and delivery of this Agreement to provide for
the conveyance to the Trustee of the Mortgage Loans and the other property
constituting the Trust Fund. All covenants and agreements made by the Sponsor in
the Mortgage Loan Sale and Assignment Agreement and in this Agreement and all
covenants and agreements made by the Depositor, the Servicer and the Trustee
herein with respect to the Mortgage Loans and the other property constituting
the Trust Fund are for the benefit of the Holders from time to time of the
Certificates. The Depositor, the Servicer and the Trustee are entering into this
Agreement, and the Trustee is accepting the Trust Fund created hereby, for good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged.
As provided herein, the Trustee shall elect that the Trust Fund be treated
for federal income tax purposes as comprising two real estate mortgage
investment conduits (each a "REMIC" or, in the alternative, "REMIC 1" and the
"Upper Tier REMIC," respectively) in a tiered structure. The Certificates, other
than the Class A-R Certificate, shall represent ownership of regular interests
in the Upper Tier REMIC. The Class A-R Certificate represents the sole class of
residual interest in each of REMIC 1 and the Upper Tier REMIC.
The Upper Tier REMIC shall hold as its assets the several classes of
uncertificated REMIC 1 Regular Interests. REMIC 1 shall hold as its assets the
property of the Trust Fund other than the REMIC 1 Interests.
Each Upper Tier REMIC Regular Interest is hereby designated as a regular
interest in the Upper Tier REMIC for purposes of the REMIC Provisions. Each
REMIC 1 Regular Interest is hereby designated as a regular interest in REMIC 1
for purposes of the REMIC Provisions.
The Class LT1-R Interest is hereby designated as the sole class of residual
interest in REMIC 1 for purposes of the REMIC Provisions. The Class A-R
Certificate, other than the portion thereof representing the right to receive
payments in respect of the Class LT1-R Interest is hereby designated as the sole
class of residual interest in the Upper Tier REMIC for purposes of the REMIC
provisions and will also represent the Class LT1-R Interest.
THE REMIC 1 INTERESTS
The following table sets forth (or describes) the class designation,
interest rate, initial principal amount, and related pool of Mortgage Loans for
each class of REMIC 1 Interests:
1
Interest Related Mortgage Pool
Class Designation Principal Amount Rate or Pools
----------------- ----------------- -------- ---------------------
LT11A $ 27,943.8421 (2) Pool 1
LT11B $ 798,313.8421 (3) Pool 1
LT12A $ 138,864.8681 (2) Pool 2
LT12B $ 3,967,304.8681 (4) Pool 2
LT1Z $471,629,443.5996 (2) Pool 1 and Pool 2
LT1-R (1) (1) N/A
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(1) The Class LT1-R Interest represents the sole class of residual interest in
REMIC 1 and has neither a principal amount nor an interest rate. The Class
LT1-R Interest shall be represented by the Class A-R Certificate.
(2) The Class LT11A Interest, the Class LT12A Interest, and the Class LT1Z
Interest shall have an interest rate for each Distribution Date (and the
related Accrual Period) equal to the Net WAC.
(3) The Class LT11B Interest shall have an interest rate for any Distribution
Date (and the related Accrual Period) equal to the Pool 1 Net WAC.
(4) The Class LT12B Interest shall have an interest rate for any Distribution
Date (and the related Accrual Period) equal to the Pool 2 Net WAC.
On each Distribution Date, the Trustee shall first pay or charge as an
expense of REMIC 1 all expenses of the Issuing Entity for such Distribution
Date.
Principal distributions shall be deemed to be made on the REMIC 1 Interests
first, so as to keep the uncertificated principal balance of each REMIC 1
Interest ending with the designation "A" equal to 1% of the excess of (x) the
aggregate Principal Balance of the Mortgage Loans in the related Mortgage Pool
over (y) the aggregate class principal amounts of the Certificates in the
Certificate Group related to such Mortgage Pool (except that if 1% of any such
excess is greater than the principal amount of the corresponding REMIC 1
Interest ending with the designation "A", the least amount of principal shall be
distributed to such REMIC 1 Interests such that the REMIC 1 Subordinate Balance
Ratio is maintained); second, to each REMIC 1 Interest ending with the
designation "B" so as to keep the uncertificated principal balance of each such
REMIC 1 Interest equal to 1% of the aggregate Principal Balance of the Mortgage
Loans in the related Mortgage Pool and finally, all remaining principal amounts
shall be distributed in respect of the Class LT1Z Interest. Realized Losses with
respect to principal shall be allocated among the REMIC 1 Interests first, so as
to keep the uncertificated principal balance of each REMIC 1 Interest ending
with the designation "A" equal to 1% of the excess of (x) the aggregate
Principal Balance of the Mortgage Loans in the related Mortgage Pool over (y)
the aggregate class principal amounts of the Certificates in the Certificate
Group related to such Mortgage Pool (except that if 1% of any such excess is
greater than the principal amount of the corresponding REMIC 1 Interest ending
with the designation "A", the least amount of losses shall be allocated to such
REMIC 1 Interests such that the REMIC 1 Subordinate Balance Ratio is
maintained); second, to each REMIC 1 Interest ending with the designation "B" so
as to keep the uncertificated principal balance of each such REMIC 1 Interest
equal to 1% of the aggregate Principal Balance of the Mortgage Loans in the
related Mortgage Pool and finally, all remaining Realized Losses with respect to
principal shall be distributed in respect of the Class LT1Z Interest.
2
If on any Distribution Date the Certificate Principal Amount of any Class
of Certificates is increased pursuant to the penultimate sentence of the
definition of "Certificate Principal Amount", then there shall be an equivalent
aggregate increase in the principal amounts of the REMIC 1 Regular Interests,
with such increase allocated (before the making of distributions and the
allocation of losses on the REMIC 1 Regular Interests on such Distribution Date)
among the REMIC 1 Regular Interests as follows: (i) first, to each REMIC 1
Interest ending with the designation "B" so as to keep the uncertificated
principal balance of each such REMIC 1 Interest equal to 1% of the aggregate
Principal Balance of the Mortgage Loans in the related Mortgage Pool, (ii)
second, to each REMIC 1 Regular Interest ending with the designation "A", so
that the uncertificated principal balance of each REMIC 1 Regular Interest
ending with the designation "A" is as close as possible to (but does not exceed)
1% of the excess of (x) the aggregate Principal Balance of the Mortgage Loans in
related Mortgage Pool over (y) the aggregate class principal balance of the
Certificates in the Certificate Group related to such Mortgage Pool; provided,
however, that (a) the REMIC 1 Subordinate Balance Ratio is maintained and (b)
amounts allocated to any REMIC 1 Regular Interest pursuant to this clause (ii)
shall not exceed the amount of any previous realized losses allocated to such
REMIC 1 Regular Interest not previously offset by distributions or increases in
the principal amount of such REMIC 1 Regular Interest and (iii) finally, all
remaining amounts to the Class LT1Z Interest.
All computations with respect to the REMIC 1 Interests shall be computed to
eight decimal places.
THE CERTIFICATES
The following table sets forth (or describes) the Class designation,
Certificate Interest Rate, initial Class Principal Amount, and minimum
denomination for each Class of Certificates comprising interests in the Trust
Fund created hereunder.
Related Class or
Classes of interests
Class in the Upper Tier Certificate Initial Class Minimum Denominations
Designation REMIC Interest Rate Principal Amount or Percentage Interest
------------ -------------------- ------------- ---------------- ----------------------
Class I-A Class I-A (1) $ 77,036,900 $ 25,000.00
Class II-A-1 Class II-A-1 (2) $369,444,000 $ 25,000.00
Class II-A-2 Class II-A-2 (2) $ 13,400,000 $ 25,000.00
Class A-R Class A-R (3) $ 100 100%
Class M-1 Class M-1 (4) $ 7,626,000 $ 25,000.00
Class M-2 Class M-2 (4) $ 3,336,000 $ 25,000.00
Class M-3 Class M-3 (4) $ 1,906,000 $ 25,000.00
Class B-1 Class B-1 (4) $ 1,668,000 $100,000.00
Class B-2 Class B-2 (4) $ 1,191,000 $100,000.00
Class B-3 Class B-3 (4) $ 953,871 $100,000.00
(1) The Certificate Interest Rate with respect to any Distribution Date (and
the related Accrual Period) for the
3
Class I-A Certificates will be the Pool 1 Net WAC.
(2) The Certificate Interest Rate with respect to any Distribution Date (and
the related Accrual Period) for the Class II-A-1 and Class II-A-2
Certificates will be the Pool 2 Net WAC.
(3) The Certificate Interest Rate with respect to any Distribution Date (and
the related Accrual Period) for the Class A-R Certificate will equal the
Pool 1 Net WAC.
(4) The Certificate Interest Rates with respect to any Distribution Date (and
the related Accrual Period) for the Class M-1, Class M-2, Class M-3, Class
B-1, Class B-2 and Class B-3 Certificates will be equal to the Subordinate
Net WAC.
As of the Cut-off Date, the Mortgage Loans had an aggregate Scheduled
Principal Balance of $476,561,871.02.
In consideration of the mutual agreements herein contained, the Depositor,
the Servicer and the Trustee hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions.
The following words and phrases, unless the context otherwise requires,
shall have the following meanings:
Accepted Servicing Practices: The Servicer's normal servicing practices,
which will conform to the mortgage servicing practices of prudent mortgage
lending institutions which service for their own account mortgage loans of the
same type as the Mortgage Loans in the jurisdictions in which the related
Mortgaged Properties are located.
Accountant: A Person engaged in the practice of accounting who (except when
this Agreement provides that an Accountant must be Independent) may be employed
by or affiliated with the Depositor or an Affiliate of the Depositor.
Accountant's Attestation: As defined in Section 9.13.
Accrual Period: With respect to any Distribution Date, the calendar month
immediately preceding the month in which the related Distribution Date occurs.
Interest shall accrue on all Classes of Certificates and on all Lower Tier REMIC
Interests on the basis of a 360-day year consisting of twelve 30-day months.
Additional Collateral: With respect to any Additional Collateral Mortgage
Loan, the meaning assigned thereto in the Mortgage Loan Sale and Assignment
Agreement.
Additional Collateral Mortgage Loan: Each Mortgage Loan identified as such
in the Mortgage Loan Schedule.
Additional Form 10-D Disclosure: As defined in Section 9.21.
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Adjustment Date: As to any Mortgage Loan, the date on which the related
Mortgage Rate adjusts in accordance with the terms of the related Mortgage Note.
Advance: With respect to a Mortgage Loan, the payments required to be made
by the Trustee solely in its capacity as successor servicer or by the Servicer
with respect to any Distribution Date pursuant to this Agreement, the amount of
any such payment being equal to the aggregate of the payments of principal and
interest (net of the applicable 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 payment that either the
Trustee or the Servicer has determined would constitute Nonrecoverable Advances
if advanced.
Adverse REMIC Event: As defined in Section 10.01(f) hereof.
Affiliate: With respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
Aggregate Senior Percentage: As to any Distribution Date, the percentage
equivalent of a fraction, the numerator of which is the aggregate of the Class
Principal Amounts of the Class I-A, Class II-A-1, Class II-A-2 and Class A-R
Certificates and the denominator of which is the Aggregate Stated Principal
Balance, but in no event greater than 100%.
Aggregate Stated Principal Balance: As to any Distribution Date, the
aggregate of the Stated Principal Balances for all Mortgage Loans (and when such
term is used with respect to a particular Mortgage Pool, the aggregate of the
Stated Principal Balances of the Mortgage Loans in such Mortgage Pool) which
were outstanding on the Due Date in the month preceding the month of such
Distribution Date.
Aggregate Subordinate Percentage: As to any Distribution Date, the
difference between 100% and the Aggregate Senior Percentage for such
Distribution Date, but in no event less than zero.
Aggregate Voting Interests: The aggregate of the Voting Interests of all
the Certificates under this Agreement.
Agreement: This Pooling and Servicing Agreement and all amendments and
supplements hereto.
Allocable Share: With respect to each Class of Subordinate Certificates and
any Distribution Date, the percentage equivalent of a fraction, the numerator of
which is the Class Principal Amount of such Class and the denominator of which
is the aggregate of the Class Principal Amounts of each Class of Subordinate
Certificates.
Ancillary Fees: With respect to any Mortgage Loan, (i) all late charges,
(ii) all fees payable pursuant to PHH's "Speed Pay" program, (iii) all
returned-item charges (e.g. insufficient funds charges) and (iv) modification or
conversion fees.
5
Applicable Credit Support Percentage: As to any Class of Subordinate
Certificates and any Distribution Date, the sum of the Class Subordination
Percentages of such Class and the aggregate Class Subordination Percentage of
all other Classes of Subordinate Certificates having higher numerical Class
designations than such Class.
Apportioned Principal Balance: As to any Distribution Date and each Class
of Subordinate Certificates and any Mortgage Pool, the Class Principal Amount
thereof multiplied by a fraction, the numerator of which is the applicable Pool
Subordinate Amount (i.e., the Pool 1 Subordinate Amount or the Pool 2
Subordinate Amount, as the case may require), and the denominator of which is
the sum of such Pool Subordinate Amounts on such 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; and (ii) with respect to a
Refinancing Mortgage Loan, the value of the Mortgaged Property based upon the
appraisal made at the time of the origination of such Refinancing Mortgage Loan.
Assessment of Compliance: As defined in Section 9.13.
Assignment of Mortgage: An assignment of the Mortgage, notice of transfer
or equivalent instrument, in recordable form, sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to reflect the
sale of the Mortgage to the Trustee, which assignment, notice of transfer or
equivalent instrument may be in the form of one or more blanket assignments
covering the Mortgage Loans secured by Mortgaged Properties located in the same
jurisdiction, if permitted by law; provided, however, that the Trustee shall not
be responsible for determining whether any such assignment is in recordable
form.
Authenticating Agent: The Trustee or any authenticating agent appointed by
the Trustee pursuant to Section 6.10 until any successor authenticating agent
for the Certificates is named, and thereafter "Authenticating Agent" shall mean
any such successor.
Authorized Officer: Any Person who may execute an Officer's Certificate on
behalf of the Depositor.
Available Distribution Amount: With respect to any Distribution Date and
each Mortgage Pool, the total amount of all cash received by the Trustee on the
Mortgage Loans in such Mortgage Pool from the Servicer or otherwise through the
Distribution Account Deposit Date for deposit into the Distribution Account in
respect of such Distribution Date, including (1) all scheduled installments of
interest (net of the Servicing Fee) and principal collected on the related
Mortgage Loans and due during the Due Period related to such Distribution Date,
together with any Advances in respect thereof, (2) all Insurance Proceeds,
Liquidation Proceeds, Subsequent Recoveries and the proceeds of any Additional
Collateral from the related Mortgage Loans, in each case for such Distribution
Date, (3) all partial or full Principal Prepayments, together with any accrued
interest thereon, identified as having been received from the related Mortgage
Loans during the related Prepayment Period, (4) any amounts received from the
Servicer in respect of Prepayment Interest Shortfalls with respect to the
related Mortgage Loans; and (5) the aggregate Purchase Price of all Defective
Mortgage Loans and Converted Mortgage Loans (if any) in such Mortgage Pool
purchased from the Trust Fund during the related Prepayment Period, minus:
6
(A) all related fees, charges and amounts payable or reimbursable to the
Trustee under this Agreement, to the extent that, if paid by the Trust Fund,
such fees, charges or other amounts would constitute "unanticipated expenses"
(within the meaning of Treasury Regulations Section 1.860G-1(b)(3)(ii)) of any
of the REMICs provided for herein and up to an aggregate maximum amount equal to
$300,000 annually; provided, such annual aggregate maximum amount shall exclude
(i) any Servicing Transfer Costs, or amounts reimbursable to the Servicer under
this Agreement and (ii) any costs, damages or expenses incurred by the Trustee
in connection with any "high cost" home loans or any predatory or abusive
lending laws, which amounts shall in no case be subject to any such limitation;
(B) in the case of (2), (3), (4) and (5) above, any related unreimbursed
expenses incurred by the Servicer in connection with a liquidation or
foreclosure and any unreimbursed Advances or Servicing Advances due to the
Servicer (or, pursuant to Section 5.04, the Trustee);
(C) any related unreimbursed Nonrecoverable Advances due to the Servicer
(or, pursuant to Section 5.04, the Trustee); and
(D) in the case of (1) through (4) above, any related amounts collected
which are determined to be attributable to a subsequent Due Period or Prepayment
Period.
Bankruptcy: As to any Person, the making of an assignment for the benefit
of creditors, the filing of a voluntary petition in bankruptcy, adjudication as
a bankrupt or insolvent, the entry of an order for relief in a bankruptcy or
insolvency proceeding, the seeking of reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief, or seeking, consenting
to or acquiescing in the appointment of a trustee, receiver or liquidator,
dissolution, or termination, as the case may be, of such Person pursuant to the
provisions of either the Bankruptcy Code or any other similar state laws.
Bankruptcy Code: The United States Bankruptcy Code of 1986, as amended.
BBA: The British Banker's Association.
Book-Entry Certificates: Beneficial interests in Certificates designated as
"Book-Entry Certificates" in this Agreement, ownership and transfers of which
shall be evidenced or made through book entries by a Clearing Agency as
described in Section 3.09; provided, that after the occurrence of a Book-Entry
Termination whereupon book-entry registration and transfer are no longer
permitted and Definitive Certificates are to be issued to Certificate Owners,
such Book-Entry Certificates shall no longer be "Book-Entry Certificates." As of
the Closing Date, the following Classes of Certificates constitute Book-Entry
Certificates: Class I-A, Class II-A, Class M-1, Class M-2, Class M-3, Class B-1,
Class B-2 and Class B-3.
Book-Entry Termination: The occurrence of any of the following events: (i)
the Clearing Agency is no longer willing or able to properly discharge its
responsibilities with respect to the Book Entry Certificates, and the Depositor
is unable to locate a qualified successor; or (ii) the Depositor at its option
advises the Trustee and the Certificate Registrar in writing that it elects to
terminate the book-entry system through the Clearing Agency.
Business Day: Any day other than (i) a Saturday or a Sunday or (ii) a day
on which banking institutions in New York, New York or, if other than New York,
any city in which the Corporate Trust Office of the Trustee is located, or the
States of Maryland or Minnesota, are authorized or obligated by law or executive
order to be closed.
7
Certificate: Any one of the certificates signed by the Trustee and
authenticated by the Authenticating Agent in substantially the forms attached
hereto as Exhibit A.
Certificate Group: Each of the Group 1 Certificates and the Group 2
Certificates.
Certificate Interest Rate: With respect to each Class of Certificates and
any Distribution Date, the applicable per annum rate described in the
Preliminary Statement hereto.
Certificate Owner: With respect to a Book-Entry Certificate, the Person who
is the owner of such Book-Entry Certificate, as reflected on the books of the
Clearing Agency, or on the books of a Person maintaining an account with such
Clearing Agency (directly or as an indirect participant, in accordance with the
rules of such Clearing Agency).
Certificate Principal Amount: With respect to any Certificate, at the time
of determination, the maximum specified dollar amount of principal to which the
Holder thereof is then entitled hereunder, such amount being equal to the
initial principal amount set forth on the face of such Certificate, less (i) the
amount of all principal distributions previously made with respect to such
Certificate; (ii) all Realized Losses allocated to such Certificate; and (iii)
in the case of a Subordinate Certificate, any Subordinate Certificate Writedown
Amount allocated to such Certificates. Notwithstanding the foregoing, on any
Distribution Date relating to a Due Period in which a Subsequent Recovery has
been received by the Servicer, the Certificate Principal Amount of any Class of
Certificates then outstanding for which any Realized Loss or any Subordinate
Certificate Writedown Amount has been applied will be increased, in order of
seniority, by an amount equal to the lesser of (i) the amount such Class of
Certificates has been written down in respect of Realized Losses or Subordinate
Certificate Writedown Amounts, to the extent not previously offset by increases
in Certificate Principal Amount pursuant to this sentence and (ii) the total of
any Subsequent Recovery distributed on such date to the Certificateholders
(reduced (x) by the amount of the increase in the Certificate Principal Amount
of any more senior Class of Certificates pursuant to this sentence on such
Distribution Date and (y) to reflect a proportionate amount of the increase in
the Certificate Principal Amount of any pari passu Class of Certificates on such
Distribution Date pursuant to this sentence). For purposes of Article V hereof,
unless specifically provided to the contrary, Certificate Principal Amounts
shall be determined as of the close of business of the immediately preceding
Distribution Date, after giving effect to all distributions made on such date.
Certificate Register and Certificate Registrar: The register maintained and
the registrar appointed pursuant to Section 3.02.
Certificateholder: The meaning provided in the definition of "Holder."
Civil Relief Act: The Servicemembers Civil Relief Act.
Class: Collectively, Certificates bearing the same class designation. In
the case of the REMIC 1 and the Upper Tier REMIC, the term "Class" refers to all
REMIC Interests having the same alphanumeric designation.
Class A Certificates: Any Class I-A, Class II-A-1, Class II-A-2 or Class
A-R Certificate.
Class A-R Certificate: The Class A-R Certificate executed by the Trustee,
and authenticated and delivered by the Authenticating Agent, substantially in
the form annexed hereto
8
as Exhibit A, and evidencing the ownership of the Class LT1-R Interest and the
residual interest in the Upper Tier REMIC.
Class Principal Amount: With respect to each Class of Certificates the
aggregate of the Certificate Principal Amounts of all Certificates of such Class
at the date of determination.
Class Subordination Percentage: With respect to each Class of Subordinate
Certificates, for each Distribution Date, the percentage obtained by dividing
the Class Principal Amount of such Class immediately prior to such Distribution
Date by the sum of the Class Principal Amounts of all Classes of Certificates
immediately prior to such Distribution Date.
Clearing Agency: An organization registered as a "clearing agency" pursuant
to Section 17A of the Securities Exchange Act of 1934, as amended. As of the
Closing Date, the Clearing Agency shall be The Depository Trust Company.
Clearing Agency Participant: A broker, dealer, bank, other financial
institution or other Person for whom from time to time a Clearing Agency effects
book-entry transfers and pledges of securities deposited with the Clearing
Agency.
Closing Date: February 28, 2006.
Code: The Internal Revenue Code of 1986, as amended, and as it may be
further amended from time to time, any successor statutes thereto, and
applicable U.S. Department of Treasury regulations issued pursuant thereto in
temporary or final form.
Commission: Securities and Exchange Commission.
Compensating Interest Payment: As to any Distribution Date, the lesser of
(1) the Servicing Fee for such date and (2) any Prepayment Interest Shortfall
for such date.
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.
Cooperative Loan: Any Mortgage Loan secured by Cooperative Shares and a
Proprietary Lease.
Cooperative Property: The real property and improvements owned by the
Cooperative Corporation, that includes the allocation of individual dwelling
units to the holders of the shares of the Cooperative Corporation.
Cooperative Shares: Shares issued by a Cooperative Corporation.
Corporate Trust Office: With respect to the presentment of Certificates for
registration of transfer, exchange or final payment, ▇▇▇▇▇ Fargo Bank, N.A.,
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
Corporate Trust Services - MLMI Series MLCC 2006-1 and for all other purposes,
▇▇▇▇▇ Fargo Bank, N.A., ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: Corporate Trust Services - MLMI Series MLCC 2006-1, or such other
address as the Trustee may designate from time to time by notice to the
Certificateholders.
9
Corresponding Classes of Certificates: With respect to each Lower Tier
REMIC Interest, the Class or Classes of Certificates appearing opposite such
Lower Tier REMIC Interest as described in the Preliminary Statement hereto.
Credit Support Depletion Date: The first Distribution Date, if any, on
which the aggregate Certificate Principal Amounts of the Subordinate
Certificates have been reduced to zero.
Current Interest: With respect to each Class of Certificates on each
Distribution Date, the aggregate amount of interest accrued at the applicable
Certificate Interest Rate during the related Accrual Period on the Class
Principal Amount of such Class.
Custodial Account: The separate trust account or accounts created and
maintained by the Servicer pursuant to the ▇▇▇▇▇▇ ▇▇▇ Servicing Guide which
shall be entitled "▇▇▇▇▇ Fargo Bank, N.A., in trust for the registered holders
for ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors Trust Series MLCC 2006-1 Mortgage
Pass-Through Certificates." The Custodial Account shall be an Eligible Account.
Cut-off Date: February 1, 2006.
Cut-off Date Balance: With respect to the Mortgage Loans in the Trust Fund
on the Closing Date, the Aggregate Stated Principal Balance as of 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: As defined in Section 2.04(a).
Deficiency Amount: As defined in Section 5.03(b)(ii).
Deficient Valuation: With respect to any Mortgage Loan, a valuation of the
related Mortgaged Property by a court of competent jurisdiction 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 Certificate: A Certificate of any Class issued in definitive,
fully registered, certificated form.
Deleted Mortgage Loan: As defined in Section 2.04(a).
Delinquent: Any Mortgage Loan with respect to which the Scheduled Payment
due on a Due Date is not received.
Depositor: ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors, Inc., a Delaware corporation,
having its principal place of business at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, 4 World Financial
Center, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or its successors in interest.
10
Determination Date: With respect to each Distribution Date, the 15th day of
the month in which such Distribution Date occurs, or, if such 15th day is not a
Business Day, the next succeeding Business Day.
Disqualified Organization: A "disqualified organization" as defined in
Section 860E(e)(5) of the Code.
Distribution Account: The separate Eligible Account created and maintained
by the Trustee pursuant to Section 4.01 in the name of the Trustee for the
benefit of the Certificateholders and designated "▇▇▇▇▇ Fargo Bank, N.A., in
trust for registered holders of ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors Trust Series
MLCC 2006-1, Mortgage Pass-Through Certificates." Funds in the Distribution
Account (exclusive of any earnings on investments made with funds deposited in
the Distribution Account) shall be held in trust for the Trustee and the
Certificateholders for the uses and purposes set forth in this Agreement.
Distribution Account Deposit Date: The 18th day of each calendar month
after the initial issuance of the Certificates or, if such 18th day is not a
Business Day, the immediately preceding Business Day, commencing in March 2006.
Distribution Date: The 25th day of each month or, if such 25th day is not a
Business Day, the next succeeding Business Day, commencing in March 2006.
Due Date: With respect to any Mortgage Loan, the date on which a Scheduled
Payment is due under the related Mortgage Note as indicated in the Mortgage
Note, which is the first day of the calendar month.
Due Period: As to any Distribution Date, the period beginning on the second
day of the month preceding the month of such Distribution Date, and ending on
the first day of the month of such Distribution Date.
EDP: The electronic data processing system used by the Sponsor and the
Servicer, which are licensees of ALLTEL Information Services, Inc.
Effective Loan-to-Value Ratio: A fraction, expressed as a percentage, the
numerator of which is the original Stated Principal Balance of the Mortgage
Loan, less the amount of Additional Collateral required to secure such Mortgage
Loan at the time of origination, if any, and the denominator of which is the
Appraised Value of the related Mortgage Property at such date.
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) 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
11
company in which such account is maintained, or (iii) a trust account or
accounts maintained with the trust department of a federal or state chartered
depository institution or 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, any Paying Agent, or the Servicer.
ERISA: The Employee Retirement Income Security Act of 1974, as amended, and
as it may be further amended from time to time, any successor statutes thereto,
and applicable U.S. Department of Labor regulations issued pursuant thereto in
temporary or final form.
ERISA-Qualifying Underwriting: A best efforts or firm commitment
underwriting or private placement that would satisfy the requirements of the
Underwriter's Exemption, except, in relevant part, for the requirement that the
certificates have received a rating at the time of acquisition that is in one of
the three (or four, in the case of a "designated transaction") highest generic
rating categories by at least one of the Rating Agencies.
ERISA-Restricted Certificate: The Class B-1, Class B-2 and Class B-3
Certificates and any other Certificate, as long as the acquisition and holding
of such other Certificate is not covered by and exempt under the Underwriter's
Exemption.
Escrow Account: The separate trust account or accounts created and
maintained by the Servicer pursuant to the ▇▇▇▇▇▇ Mae Servicing Guide which
shall be entitled "▇▇▇▇▇ Fargo Bank, N.A., in trust for the registered holders
for ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors Trust Series MLCC 2006-1 Mortgage
Pass-Through Certificates." The Escrow Account shall be an Eligible Account.
Event of Default: As defined in Section 6.14.
"Exception Report": The exception report prepared by the Trustee, which
lists all exceptions with respect to the Mortgage Loan Schedule, as updated from
time to time in accordance with Section 2.02 hereof.
Exchange Act: The Securities Exchange Act of 1934, as amended.
▇▇▇▇▇▇ Mae: The entity formerly known as 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.
FDIC: The Federal Deposit Insurance Corporation or any successor thereto.
FHA: The Federal Housing Administration 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.
Final Certification: As referred to in Section 2.02(c), the form of which
is set forth at Exhibit ▇.
▇▇▇▇▇ Ratings: Fitch, Inc., or any successor in interest.
Form 8-K Disclosure Information: As defined in Section 9.21.
12
GNMA: The Government National Mortgage Association, or any successor
thereto.
Global Securities: The global certificates representing the Book-Entry
Certificates.
Group 1: All of the Group 1 Certificates.
Group 1 Certificate: Any Class I-A or Class A-R Certificate.
Group 2: All of the Group 2 Certificates.
Group 2 Certificate: Any Class II-A-1 or Class II-A-2 Certificate.
Holder or Certificateholder: The registered owner of any Certificate as
recorded on the books of the Certificate Registrar except that, solely for the
purposes of taking any action or giving any consent pursuant to this Agreement,
any Certificate registered in the name of the Depositor, the Trustee or the
Servicer, or any Affiliate thereof shall be deemed not to be outstanding in
determining whether the requisite percentage necessary to effect any such
consent has been obtained, except that, in determining whether the Trustee shall
be protected in relying upon any such consent, only Certificates which a
Responsible Officer of the Trustee knows to be so owned shall be disregarded.
The Trustee may request and conclusively rely on certifications by the Depositor
and the Servicer in determining whether any Certificates are registered to an
Affiliate of the Depositor or the Servicer.
HUD: The United States Department of Housing and Urban Development, or any
successor thereto.
Indemnified Parties: As defined in Section 9.15.
Independent: When used with respect to any Accountants, a Person who is
"independent" within the meaning of Rule 2-01(b) of the Commission's Regulation
S-X. When used with respect to any other Person, a Person who (a) is in fact
independent of another specified Person and any Affiliate of such other Person,
(b) does not have any material direct financial interest in such other Person or
any Affiliate of such other Person, and (c) is not connected with such other
Person or any Affiliate of such other Person as an officer, employee, promoter,
underwriter, trustee, partner, director or Person performing similar functions.
Index: As to each Mortgage Loan, the index from time to time in effect for
adjustment of the Mortgage Rate as set forth as such on the related Mortgage
Note.
Initial Certification: As referred to in Section 2.02(a), the form of which
is set forth at Exhibit K.
Initial Optional Purchase Date: The first Distribution Date following the
date on which the Aggregate Stated Principal Balance is less than 10.00% of the
Cut-off Date Balance.
Insurance Policy: With respect to any Mortgage Loan, any insurance policy,
including all names and endorsements thereto in effect, including any
replacement policy or policies for any Insurance Policies.
Insurance Proceeds: Proceeds paid by any Insurance Policy (excluding
proceeds required to be applied to the restoration and repair of the related
Mortgaged Property or released to the
13
Mortgagor), in each case other than any amount included in such Insurance
Proceeds in respect of Insured Expenses and the proceeds from any Limited
Purpose Surety Bond.
Insured Expenses: Expenses covered by an Insurance Policy or any other
insurance policy with respect to the Mortgage Loans.
Interest Distribution Amount: For each Class of Certificates, on any
Distribution Date, the Current Interest for such Class, as reduced by such
Class's share of Net Prepayment Interest Shortfalls and Relief Act Reductions.
Any such shortfalls and reductions shall be allocated among (i) all Classes of
Certificates of the related Certificate Group from such Mortgage Pool and (ii)
the Subordinate Certificates proportionately on the basis of (1) in the case of
the Senior Certificates, Current Interest otherwise distributable thereon on
such Distribution Date and (2) in the case of Subordinate Certificates, interest
accrued at the Net WAC of the applicable Mortgage Pool on their Apportioned
Principal Balance before taking into account any reductions in such amounts from
Net Interest Shortfalls for that Distribution Date.
Interest Shortfall: As to any Class of Certificates and any Distribution
Date, (i) the amount by which the Interest Distribution Amount for such Class on
such Distribution Date and all prior Distribution Dates exceeds (ii) amounts
distributed in respect thereof to such Class on prior Distribution Dates (as
determined without reduction for amounts not paid to such Class as a result of
the provisos set forth in Sections 5.02(a)(i) and 5.02(b) hereof).
Interest Transfer Amount: For any Distribution Date and for any
Undercollateralized Group, an amount equal to one month's interest on the
applicable Principal Transfer Amount at the related Mortgage Pool's Net WAC,
plus any shortfall of interest on the Senior Certificates related to such
Undercollateralized Group remaining unpaid from prior Distribution Dates.
Intervening Assignments: The original intervening assignments of the
Mortgage, notices of transfer or equivalent instrument.
Issuing Entity: ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors Trust Series MLCC 2006-1.
Latest Possible Maturity Date: The Distribution Date in February 2036.
LIBOR: With respect to each Accrual Period, a per annum rate determined on
the LIBOR Determination Date in the following manner by the Trustee on the basis
of the "Interest Settlement Rate" set by the BBA for one-month or six-month
United States dollar deposits, as such rates appear on the Telerate Page 3750,
as of 11:00 a.m. (London time) on such LIBOR Determination Date.
(a) If on such a LIBOR Determination Date, the BBA's Interest Settlement
Rate does not appear on the Telerate Page 3750 as of 11:00 a.m. (London time),
or if the Telerate Page 3750 is not available on such date, the Trustee will
obtain such rate from Reuters' "page LIBOR 01" or Bloomberg's page "BBAM." If
such rate is not published for such LIBOR Determination Date, LIBOR for such
date will be the most recently published Interest Settlement Rate. In the event
that the BBA no longer sets an Interest Settlement Rate, the Trustee will
designate an alternative index that has performed, or that the Trustee expects
to perform, in a manner substantially similar to the BBA's Interest Settlement
Rate. The Trustee will select a particular index as the alternative index only
if it receives an Opinion of Counsel, which opinion shall be an expense
reimbursed from the Distribution Account, that the selection of such index will
not cause any of the REMICs to lose their classification as REMICs for federal
income tax purposes.
14
(b) The establishment of LIBOR by the Trustee for the relevant Accrual
Period, in the absence of manifest error, will be final and binding.
LIBOR Business Day: Any day on which banks in London, England and The City
of New York are open and conducting transactions in foreign currency and
exchange.
Limited Purpose Surety Bond: Any Limited Purpose Surety Bond listed in
Exhibit F.
Liquidated Mortgage Loan: With respect to any Distribution Date, a
defaulted Mortgage Loan (including any REO Property) which was liquidated in the
calendar month preceding the month of such Distribution Date and as to which the
Servicer has certified (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.
Liquidation Proceeds: Amounts, including Insurance Proceeds, 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.
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: With respect to any indemnification arising under Section 9.15 of
this Agreement, any and all losses, claims, damages, penalties, liabilities,
obligations, judgments, settlements, awards, demands, offsets, defenses,
counterclaims, actions or proceedings, reasonable out-of-pocket costs, expenses
and attorneys' fees of an Indemnified Party (including but not limited to, (a)
any reasonable costs, expenses and attorneys' fees incurred by such Indemnified
Party in enforcing such right of indemnification against any Indemnifying Party
or with respect to any appeal, and (b) interest on any amount for which an
Indemnified Party is entitled to be indemnified from the date such Indemnified
Party notifies the Servicer of the expenditure or such amounts until such
amounts are paid by the Servicer; provided, however, that in no event shall a
"Loss" include a claim for consequential damages, indirect damages or lost
profits except when the Loss results from the gross negligence, fraud or willful
misconduct of the Servicer.
Lower Tier Regular Interests: Any of the REMIC 1 Regular Interests.
Lower Tier REMIC Interests: Any of the REMIC 1 Interests.
Margin: As to each Mortgage Loan, the percentage amount set forth on the
related Mortgage Note added to the Index in calculating the Mortgage Rate
thereon.
Material Defect: As defined in Section 2.02(b).
Maximum Rate: As to any Mortgage Loan, the maximum rate set forth on the
related Mortgage Note at which interest can accrue on such Mortgage Loan.
MERS: Mortgage Electronic Registration Systems, Inc., a corporation
organized and existing under the laws of the State of Delaware or any successor
thereto.
15
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.
Monthly Statement: The statement delivered to the Certificateholders
pursuant to Section 4.02.
Moody's: ▇▇▇▇▇'▇ Investors Service, Inc., or any successor in interest.
Mortgage: A mortgage, deed of trust or other instrument encumbering a fee
simple interest in real property securing a Mortgage Note, together with
improvements thereto.
Mortgage Documents: With respect to each Mortgage Loan, the mortgage
documents required to be delivered to the Trustee pursuant to this Agreement.
Mortgage Loan: A Mortgage and the related notes or other evidences of
indebtedness secured by each such Mortgage conveyed, transferred, sold, assigned
to or deposited with the Trustee pursuant to Section 2.01 (including any
Replacement Loan and REO Property), including without limitation, each Mortgage
Loan listed on the Mortgage Loan Schedule, as amended from time to time.
Mortgage Loan Sale and Assignment Agreement: The Mortgage Loan Sale and
Assignment Agreement, dated as of February 28, 2006, between the Sponsor and the
Depositor with respect to the sale and purchase of the Mortgage Loans.
Mortgage Loan Schedule: The schedule attached hereto as Schedule A, which
shall identify each Mortgage Loan, as such schedule may be amended by the
Depositor or the Servicer from time to time to reflect the addition of
Replacement Mortgage Loans to, or the deletion of Deleted Mortgage Loans from,
the Trust Fund. Such schedule shall, among other things (1) identify the
designated Mortgage Pool in which such Mortgage Loan is included and (2)
separately identify One-Year Treasury Loans, Six-Month LIBOR Loans and
Additional Collateral Mortgage Loans.
Mortgage Note: The original executed note or other evidence of the
indebtedness of a Mortgagor secured by a Mortgage under a Mortgage Loan.
Mortgage Pools: Pool 1 and Pool 2.
Mortgaged Property: The underlying property, including any Additional
Collateral, securing a Mortgage Loan which, with respect to a Cooperative Loan,
is the related Cooperative Shares and Property Lease.
Mortgage Rate: As to any Mortgage Loan, the annual rate of interest borne
by the related Mortgage Notes.
Mortgagor: The obligor on a Mortgage Note.
Net Interest Shortfalls: With respect to any Distribution Date, any Net
Prepayment Interest Shortfalls for that Distribution Date and the amount of
interest that would otherwise have
16
been received with respect to any Mortgage Loan which was subject to (i) a
Relief Act Reduction or (ii) the interest portion of any Debt Service Reduction
or Deficient Valuation, after exhaustion of the respective amounts of coverage
provided by the Subordinate Certificates for those type of losses.
Net Liquidation Proceeds: With respect to any Liquidated Mortgage Loan or
any other disposition of related Mortgaged Property, the related Liquidation
Proceeds net of Advances, Servicer Advances, related Servicing Fees and any
other accrued and unpaid fees received and retained in connection with the
liquidation of such Mortgage Loan or Mortgaged Property.
Net Mortgage Rate: With respect to any Mortgage Loan and any Distribution
Date, the related Mortgage Rate as of the Due Date in the month preceding the
month of such Distribution Date reduced by the Servicing Fee Rate for such
Mortgage Loan.
Net Prepayment Interest Shortfall: With respect to any Mortgage Loan and
any Distribution Date, the amount by which any Prepayment Interest Shortfall for
such date exceeds the amount payable by the Servicer in respect of such
shortfall.
Net WAC: As to any Distribution Date, the weighted average of the Net
Mortgage Rates of the Mortgage Loans as of the first day of the calendar month
immediately preceding the calendar month of such Distribution Date, weighted on
the basis of their outstanding Stated Principal Balances at such time. When the
term "Net WAC" is used herein with reference to only the One-Year Treasury Loans
or only the Six-Month LIBOR Loans, such weighted average shall be computed with
reference solely to the Mortgage Loans in the relevant group.
Non-Book-Entry Certificate: Any Certificate other than a Book-Entry
Certificate.
Non-permitted Foreign Holder: As defined in Section 3.03(f).
Nonrecoverable Advance: Any portion of an Advance or Servicer Advance
previously made or proposed to be made by the Servicer (as certified in an
Officer's Certificate of the Servicer) or by the Trustee pursuant to Section
5.04, which in the good faith judgment of such party, shall not be ultimately
recoverable by such party from the related Mortgagor, related Liquidation
Proceeds or otherwise.
Non-U.S. Person: Any person other than a "United States person" within the
meaning of Section 7701(a)(30) of the Code.
Offering Document: The Prospectus.
Officer's Certificate: A certificate signed by the Chairman of the Board,
the Vice Chairman of the Board, the President, a vice president (however
denominated), an Assistant Vice President, the Treasurer, the Secretary, or one
of the assistant treasurers or assistant secretaries (or any other officer
customarily performing functions similar to those performed by any of the above
designated officers and also to whom, with respect to a particular matter, such
matter is referred because of such officer's knowledge of and familiarity with a
particular subject) of the Depositor or the Trustee, as the case may be, and
delivered to the Depositor or the Trustee, as the case may be, as required by
this Agreement.
Officer's Certificate of the Servicer: A certificate (i) signed by the
Chairman of the Board, the Vice Chairman of the Board, the President, a Managing
Director, a Vice President
17
(however denominated), an Assistant Vice President, the Treasurer, the
Secretary, or one of the Assistant Treasurers or Assistant Secretaries of the
Servicer, or (ii) if provided for herein, signed by a Servicing Officer, as the
case may be, and delivered to the Trustee or the Depositor, as the case may be.
One-Year Treasury Index: The twelve-month moving average monthly yield on
the United States Treasury Securities adjusted to a constant maturity of one
year, as published by the Federal Reserve Board in the Federal Reserve
Statistical Release Selected Interest Rates (H.15) 5 19
One-Year Treasury Loan: Each Mortgage Loan bearing a Mortgage Rate that
adjusts in accordance with the One-Year Treasury Index.
Opinion of Counsel: A written opinion of counsel, who may be an employee of
the Depositor or the Servicer, that is reasonably acceptable to each addressee
of such opinion; provided that any Opinion of Counsel relating to (a)
qualification of the Mortgage Loans in a REMIC or (b) compliance with the REMIC
Provisions, must be an opinion of counsel reasonably acceptable to each
addressee of such opinion, who (i) is in fact independent of the Servicer and
the Depositor, (ii) does not have any material direct or indirect financial
interest in the Servicer or the Depositor or in an affiliate of either and (iii)
is not connected with the Servicer or the Depositor as an officer, employee,
director or person performing similar functions.
Optional Termination Price: An amount equal to the sum of (i) 100% of the
Stated Principal Balance of the Mortgage Loans (other than any Mortgage Loan
that has become an REO Property) plus accrued interest thereon at the applicable
Mortgage Rate through the Due Date in the month in which the Optional
Termination Price is to be distributed to the Certificateholders and the fair
market value of any REO Property plus accrued interest thereon; (ii) any
unreimbursed costs and damages incurred by the Issuing Entity (or the Trustee on
behalf of the Issuing Entity) in connection with the violation of any
anti-predatory or anti-abusive lending laws; and (iii) the payment of all
amounts (including, without limitation, all previously unreimbursed Advances and
Servicing Advances and accrued and unpaid Servicing Fees) payable or
reimbursable to the Servicer or Trustee.
Original Applicable Credit Support Percentage: With respect to each Class
of Subordinate Certificates, the corresponding percentage set forth opposite its
Class designation: Class M-1 - 3.50%; Class M-2 - 1.90%; Class M-3 - 1.20%;
Class B-1 - 0.80%; Class B-2 - 0.45%; and Class B-3 - 0.20%.
Original Subordinate Principal Amount: The aggregate of the initial Class
Principal Amounts of the Classes of Subordinate Certificates.
Originator: With respect to any Mortgage Loan, the entity that (i) took the
Mortgagor's loan application, (ii) processed the Mortgagor's loan application,
and (iii) closed and/or funded the Mortgagor's Mortgage Loan.
Overcollateralized Senior Certificates: As defined in Section 5.02(b)(iii).
Parent Power(R) Guaranty and Security Agreement: With respect to any
Additional Collateral Loan, as defined in the Mortgage Loan Sale and Assignment
Agreement.
Paying Agent: Any paying agent appointed by the Trustee pursuant to Section
3.08.
18
PCAOB: The Public Company Accounting Oversight Board.
Percentage Interest: With respect to any Certificate, its percentage
interest in the undivided beneficial ownership interest in the Trust Fund
evidenced by all Certificates of the same Class as such Certificate. With
respect to any Certificate other than the Class A-R Certificate, the Percentage
Interest evidenced thereby shall equal the initial Certificate Principal Amount
thereof divided by the initial Class Principal Amount of all Certificates of the
same Class. With respect to the Class A-R Certificate, the Percentage Interest
evidenced thereby shall be as specified on the face thereof, or otherwise, be
equal to 100%.
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 that 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, or such
lower rating as shall not result in the downgrading or withdrawal
of the ratings then assigned to the Certificates by the Rating
Agencies, as evidenced by a signed writing delivered by 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 rating such paper, or such lower rating as
shall not result in the downgrading or withdrawal of the ratings
then assigned to the Certificates by the Rating Agencies, as
evidenced by a signed writing delivered by 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 the applicable
Rating Agency) are then rated one of the two highest long-term
and the highest short-term ratings of each Rating Agency for such
securities, or such lower ratings as shall not result in the
downgrading or withdrawal of the ratings then assigned to the
Certificates by the Rating Agencies, as evidenced by a signed
writing delivered by each Rating Agency;
(v) guaranteed reinvestment agreements issued by any bank,
insurance company or other corporation acceptable to the Rating
Agencies at the time of the issuance of such agreements, as
evidenced by a signed writing delivered by each Rating Agency;
19
(vi) 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;
(vii) 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, such rating shall
be the highest commercial paper rating of Moody's for any such
series), or such lower rating as shall not result in the
downgrading or withdrawal of the ratings then assigned to the
Certificates by the Rating Agencies, as evidenced by a signed
writing delivered by each Rating Agency;
(viii) interests in any money market fund which at the date
of acquisition of the interests in such fund and throughout the
time such interests are held in such fund has the highest
applicable rating by each Rating Agency rating such fund or such
lower rating as shall not result in a change in the rating then
assigned to the Certificates by each Rating Agency including
funds for which the Trustee or any of its Affiliates is
investment manager or adviser;
(ix) short-term investment funds sponsored by any trust
company or national banking association incorporated under the
laws of the United States or any state thereof which on the date
of acquisition has been rated by each applicable Rating Agency in
their respective highest applicable rating category or such lower
rating as shall not result in a change in the rating then
specified stated maturity and bearing interest or sold at a
discount acceptable to each Rating Agency as shall not result in
the downgrading or withdrawal of the ratings then assigned to the
Certificates by the Rating Agencies; and
(x) such other investments having a specified stated
maturity and bearing interest or sold at a discount acceptable to
the Rating Agencies as shall not result in the downgrading or
withdrawal of the ratings then assigned to the Certificates by
the Rating Agencies;
provided, that no such instrument shall be a Permitted Investment if (i)
such instrument evidences the right to receive interest only payments with
respect to the obligations underlying such instrument, (ii) such instrument
would require the Depositor to register as an investment company under the
Investment Company Act of 1940, as amended, or (iii) such instrument would not
be a "permitted investment" within the meaning of such term as provided for in
Section 860G(a)(5) of the Code and the Treasury Regulations thereunder.
Person: Any individual, corporation, partnership, joint venture,
association, joint-stock company, limited liability company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
20
PHH: PHH Mortgage Corporation or its successors in interest.
Pool Net WAC: The Pool 1 Net WAC or Pool 2 Net WAC, as the context may
require.
Pool 1: The aggregate of Mortgage Loans identified on the Mortgage Loan
Schedule as being included in Pool 1.
Pool 1 Mortgage Loans: Any Mortgage Loan in Pool 1.
Pool 1 Net WAC: With respect to any Distribution Date, the weighted average
of the Net Mortgage Rates of the Pool 1 Mortgage Loans as of the first day of
the calendar month immediately preceding the calendar month of such Distribution
Date, weighted on the basis of their Stated Principal Balances at such time.
Pool 1 Subordinate Amount: For any Distribution Date, the excess of (a) the
Aggregate Stated Principal Balance of the Pool 1 Mortgage Loans as of the first
day of the month preceding the month in which such Distribution Date occurs over
(b) the sum of the Class Principal Amounts of the Class I-A and Class A-R
Certificates immediately before such Distribution Date.
Pool 2: The aggregate of Mortgage Loans identified on the Mortgage Loan
Schedule as being included in Pool 2.
Pool 2 Mortgage Loans: Any Mortgage Loan in Pool 2.
Pool 2 Net WAC: With respect to any Distribution Date, the weighted average
of the Net Mortgage Rates of the Pool 2 Mortgage Loans as of the first day of
the calendar month immediately preceding the calendar month of such Distribution
Date, weighted on the basis of their Stated Principal Balances at such time.
Pool 2 Subordinate Amount: For any Distribution Date, the excess of (a) the
Aggregate Stated Principal Balance of the Pool 2 Mortgage Loans as of the first
day of the month preceding the month in which such Distribution Date occurs over
(b) the aggregate Class Principal Amount of the Class II-A-1 and Class II-A-2
Certificates immediately before such Distribution Date.
Pool Percentage: With respect to each Mortgage Pool and any Distribution
Date, a fraction, expressed as a percentage, the numerator of which is the
Aggregate Stated Principal Balance of such Mortgage Pool and the denominator of
which is the Aggregate Stated Principal Balance as of such Due Date.
Pool Subordinate Amount: Either of the Pool 1 Subordinate Amount or the
Pool 2 Subordinate Amount.
Prepayment Interest Shortfall: With respect to any full or partial
Principal Prepayment of a Mortgage Loan, the excess, if any, of (i) one full
month's interest at the applicable Mortgage Rate on the outstanding principal
balance of such Mortgage Loan immediately prior to such Principal Prepayment
over (ii) the amount of interest actually received with respect to such Mortgage
Loan in connection with such Principal Prepayment.
Prepayment Period: With respect to each Distribution Date, the calendar
month immediately preceding the month in which the Distribution Date occurs.
21
Primary Mortgage Insurance Policy: Each policy of primary mortgage guaranty
insurance or any replacement policy therefor with respect to any Mortgage Loan.
Principal Distribution Amount: With respect to any Mortgage Pool and any
Distribution Date, the sum of (a) each Scheduled Payment of principal collected
or advanced on the related Mortgage Loans (before taking into account any
Deficient Valuations or Debt Service Reductions) and due during the related Due
Period, (b) that portion of the Purchase Price representing principal of any
Mortgage Loans in such Mortgage Pool purchased in accordance with Section 2.04
hereof and received during the related Prepayment Period, (c) the principal
portion of any related Substitution Amount received during the related
Prepayment Period, (d) the principal portion of all Insurance Proceeds received
during the related Prepayment Period with respect to Mortgage Loans in such
Mortgage Pool that are not yet Liquidated Mortgage Loans, (e) the principal
portion of all Net Liquidation Proceeds received during the related Prepayment
Period with respect to Liquidated Mortgage Loans in such Mortgage Pool, (f) all
Subsequent Recoveries received during the related Prepayment Period with respect
to Liquidated Mortgage Loans in such Mortgage Pool, (g) the principal portion of
the proceeds of any Additional Collateral with respect to the Mortgage Loans in
such Mortgage Pool, (h) the principal portion of all partial and full principal
prepayments of Mortgage Loans in such Mortgage Pool applied by the Servicer
during the related Prepayment Period and (i) on the Distribution Date on which
the Trust Fund is to be terminated pursuant to Article VII hereof, that portion
of the Optional Termination Price in respect of principal for such Mortgage
Pool.
Principal Prepayment: Any Mortgagor payment of principal or other recovery
of principal on a Mortgage Loan that is recognized as having been received or
recovered in advance of its scheduled Due Date and applied to reduce the
principal balance of the Mortgage Loan in accordance with the terms of the
Mortgage Note or this Agreement.
Principal Prepayment In Full: Any Principal Prepayment of the entire
principal balance of the Mortgage Loans.
Principal Transfer Amount: For any Distribution Date and for any
Undercollateralized Group, the excess, if any, of the aggregate Class Principal
Amount of such Undercollateralized Group immediately prior to such Distribution
Date over the Aggregate Stated Principal Balance of the related Mortgage Pool
immediately prior to such Distribution Date.
Proceeding: Any suit in equity, action at law or other judicial or
administrative proceeding.
Proprietary Lease: With respect to any Cooperative Property, a lease or
occupancy agreement between a Cooperative Corporation and a holder of related
Cooperative Shares.
Pro Rata Senior Percentage: With respect to each Distribution Date and each
Mortgage Pool, the percentage equivalent of a fraction the numerator of which is
the aggregate Class Principal Amount of the Class or Classes of the Related
Certificate Group immediately prior to such Distribution Date and the
denominator of which is the Aggregate Stated Principal Balance of the related
Mortgage Pool for such Distribution Date.
Prospectus: The prospectus supplement dated February 24, 2006, together
with the accompanying prospectus dated January 18, 2006, relating to the initial
sale of the Class I-A, Class II-A-1, Class II-A-2, Class A-R, Class M-1, Class
M-2 and Class M-3 Certificates.
22
Purchase Date: Any Distribution Date on which Certificates may be
repurchased pursuant to Section 7.01(c).
Purchase Price: With respect to any Mortgage Loan required or permitted to
be purchased by the Depositor pursuant to this Agreement, by the Servicer
pursuant to this Agreement, or by the Sponsor pursuant to the Mortgage Loan
Purchase Agreement, 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 Net Mortgage Rate 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 unreimbursed costs, penalties and/or damages incurred by the Trust
Fund in connection with any violation relating to such Mortgage Loan of any
predatory or abusive lending law.
Rating Agency: Each of ▇▇▇▇▇'▇, S&P and Fitch.
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 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) the Net Liquidation Proceeds and the proceeds of
any Additional Collateral, if any, received during the month in which such
liquidation occurred, to the extent applied as recoveries of interest at the 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.
Record Date: As to any Distribution Date, the last Business Day of the
month preceding the month of each Distribution Date.
Refinancing Mortgage Loan: Any Mortgage Loan originated in connection with
the refinancing of an existing mortgage loan.
Regulation AB: Subpart 22.1100 - Asset Backed Securities (Regulation AB),
17 C.F.R. Sections 229.1100-229.1123, as such may be amended from time to time,
and subject to such clarification and interpretation as have been provided by
the Commission in the adopting release (Asset-Backed Securities, Securities Act
Release No. 33-8518, 70 Fed Reg. 1,506, 1.531 (Jan. 7, 2005) or by the staff of
the Commission, or as may be provided by the Commission or its staff from time
to time.
Related Certificate Group: The Certificate Group related to a particular
Mortgage Pool as indicated by the same numerical designation (i.e., Group 1
Certificates are related to Pool 1 and Group 2 Certificates are related to Pool
2).
Related Class of Upper Tier REMIC Interest: With respect to any Class of
Certificates, the interest in the Upper Tier REMIC appearing opposite such Class
in the Preliminary Statement hereto.
23
Relevant Servicing Criteria: The Servicing Criteria applicable to the
various parties, as set forth on Exhibit S-2 hereto. For clarification purposes,
multiple parties can have responsibility for the same Relevant Servicing
Criteria. With respect to a Subcontractor engaged by the Trustee or the
Servicer, the term "Relevant Servicing Criteria" may refer to one or more
discrete functions specified in the Relevant Servicing Criteria applicable to
the Servicer or the Trustee.
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 Civil Relief Act, the amount, if any, by which (i)
interest collectible on such Mortgage Loan for the most recently ended calendar
month is less than (ii) interest accrued thereon for such month pursuant to the
Mortgage Note.
REMIC: Each pool of assets in the Trust Fund designated as a REMIC as
described in the Preliminary Statement.
REMIC Interests: Any regular or residual interest in any of REMIC 1 or the
Upper Tier REMIC, as described in the Preliminary Statement.
REMIC Provisions: The 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, including proposed regulations and rulings, and administrative
pronouncements promulgated thereunder, as the foregoing may be in effect from
time to time.
REMIC 1: As described in the Preliminary Statement.
REMIC 1 Interest: Each class of interest in REMIC 1 as described in the
Preliminary Statement.
REMIC 1 Regular Interest: Each of the REMIC 1 Interests other than the
Class LT1-R Interest.
REMIC 1 Subordinate Balance Ratio: The ratio among the uncertificated
principal balances of each of the REMIC 1 Interests ending with the designation
"A" that is equal to the ratio among, with respect to each such REMIC 1
Interest, the excess of (x) the aggregate Scheduled Principal Balance of the
Mortgage Loans in the related Mortgage Pool over (y) the aggregate Class
Principal Amount of the Certificates in the Certificate Group related to such
Mortgage Pool.
REO Disposition: The final sale by the Servicer of an REO Property.
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 or otherwise treated as having been acquired pursuant to the REMIC
Provisions.
Replacement Mortgage Loan: A mortgage loan substituted by the Sponsor for a
Deleted Mortgage Loan which must, on the date of such substitution, as confirmed
in a Request for Release substantially in the form attached to this Agreement,
(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
24
the Deleted Mortgage Loan; (ii) have a Maximum Rate not less than (and not more
than two percentage points greater than) the Maximum Rate of the Deleted
Mortgage Loan; (iii) have a gross margin not less than that of the Deleted
Mortgage Loan and, if Mortgage Loans equal to 1% or more of the balance of the
related Mortgage Pool as of the Cut-off Date have become Deleted Mortgage Loans,
not more than two percentage points more than that of the Deleted Mortgage Loan;
(iv) have an Effective Loan-to-Value Ratio no higher than that of the Deleted
Mortgage Loan; (v) have Adjustment Dates that are no more or less frequent than
the Deleted Mortgage Loan; (vi) have a remaining term to maturity no greater
than (and not more than one year less than that of) the Deleted Mortgage Loan;
(vii) not permit conversion of the related Mortgage Rate to a permanent fixed
Mortgage Rate; (viii) not be a Cooperative Loan unless the Deleted Mortgage Loan
was a Cooperative Loan; (ix) have the same or better FICO credit score; (x) have
an initial interest adjustment date no earlier than five months before (and no
later than five months after) the initial adjustment date of the Deleted
Mortgage Loan, (xi) comply with each representation and warranty set forth in
Section 2.03 of this Agreement; and (xii) shall be accompanied by an Opinion of
Counsel that such Replacement Mortgage Loan would not adversely affect the REMIC
status of any of the REMICs formed pursuant to this Pooling and Servicing
Agreement or would not otherwise be prohibited by this Pooling and Servicing
Agreement.
Reportable Event: As defined in Section 9.21.
Request for Release: A request for release, substantially in the form of
Exhibit N attached hereto, properly completed and signed by a Servicing Officer
(or, if delivered on behalf of the Sponsor or Depositor, an Authorized Officer
thereof).
Residual Certificate: The Class A-R Certificate.
Residual Interest: The Residual Certificate, other than the portion thereof
representing the right to payments in respect of the Class LT1-R Interest.
RESPA: The Real Estate Settlement Procedures Act, 12 U.S.C Section 2601 et
seq., and Regulation X, 24 C.F.R. Section 3500.21, thereunder, as the foregoing
may be amended from time to time.
Responsible Officer: With respect to the Trustee, any officer in the
corporate trust department or similar group of the Trustee with direct
responsibility for the administration of this Agreement and also, with respect
to a particular corporate trust matter, any other officer to whom such matter is
referred because of his or her knowledge of and familiarity with the particular
subject.
Restricted Certificate: Any Class B-1, Class B-2 or Class B-3 Certificate.
Restricted Global Security: As defined in Section 3.01(c).
S&P: Standard & Poor's, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., or
any successor in interest.
SAIF: The Saving's Association Insurance Fund, or any successor thereto.
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Certification: As defined in Section 9.21.
25
Schedule of Exceptions: As defined in Section 2.02(a) of this Agreement.
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 in this Agreement, 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.
Section 302 Requirements: Any rules or regulations promulgated pursuant to
the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 (as such may be amended from time to time).
Securities Act: The Securities Act of 1933, as amended.
Senior Certificate: Any one of the Class I-A, Class II-A-1, Class II-A-2 or
Class A-R Certificates.
Senior Percentage: Except as provided in this definition, for each Mortgage
Pool with respect to any Distribution Date before March 2013, 100%.
Notwithstanding the foregoing sentence, for any Distribution Date (i) occurring
prior to the Distribution Date in March 2017 but in or after March 2009 on which
the Two Times Test is satisfied or (ii) in or after March 2017, the related
Senior Percentage for each Mortgage Pool will be the related Pro Rata Senior
Percentage. For any Distribution Date occurring prior to March 2009 on which the
Two Times Test is satisfied, the related Senior Percentage for such Mortgage
Pool will be equal to the related Pro Rata Senior Percentage plus 50% of an
amount equal to 100% minus the related Pro Rata Senior Percentage. With respect
to any Distribution Date after the related Senior Termination Date, the related
Senior Percentage will be 0%. If on any Distribution Date the allocation to the
Senior Certificates of the related Certificate Group then entitled to
distributions of principal of full and partial prepayments and other amounts in
the percentage required above would reduce the sum of the Class Principal
Amounts of those Certificates to below zero, the Senior Percentage for such
Distribution Date shall be limited to the percentage necessary to reduce such
Class Principal Amounts to zero.
Senior Prepayment Percentage: For the Senior Certificates for any
Distribution Date and each related Certificate Group occurring in or after March
2013, will be as follows:
(i) for any Distribution Date occurring in or after March 2013 but
before March 2014, the related Pro Rata Senior Percentage plus 70% of the
related Subordinate Percentage for that date;
(ii) for any Distribution Date occurring in or after March 2014 but
before March 2015, the related Pro Rata Senior Percentage plus 60% of the
related Subordinate Percentage for that date;
(iii) for any Distribution Date occurring in or after March 2015 but
before March 2016, the related Pro Rata Senior Percentage plus 40% of the
related Subordinate Percentage for that date;
(iv) for any Distribution Date occurring in or after March 2016 but
before March 2017, the related Pro Rata Senior Percentage plus 20% of the
related Subordinate Percentage for that date; and
26
(v) for any Distribution Date occurring in March 2017 or thereafter,
the related Pro Rata Senior Percentage for that date;
(i) provided however, that any scheduled reduction to the Senior Prepayment
Percentage for any Mortgage Pool as described above will occur unless either:
(a)(i)(x) the Stated Principal Balance of Mortgage Loans delinquent 60 days or
more (including for this purpose any such Mortgage Loans in foreclosure or
Bankruptcy and REO Property), averaged over the last six months, as a percentage
of the aggregate outstanding Class Principal Amount of the Subordinate
Certificates, is less than 50% or (y) the Stated Principal Balance of Mortgage
Loans delinquent 60 days or more averaged over the last six months, as a
percentage of the aggregate Stated Principal Balance of all Mortgage Loans
averaged over the last six months, does not exceed 2%, and
(ii) Realized Losses on the Mortgage Loans to date for such Distribution
Date, if occurring during the eighth, ninth, tenth, eleventh or twelfth year (or
any year thereafter) after the Closing Date, are less than 30%, 35%, 40%, 45% or
50%, respectively, of the sum of the Class Principal Amount of the Subordinate
Certificates as of the Closing Date; or (b)(i) the Stated Principal Balance of
Mortgage Loans delinquent 60 days or more (including for this purpose any such
Mortgage Loans in foreclosure or Bankruptcy and REO Property), averaged over the
last six months, as a percentage of the aggregate outstanding principal balance
of all Mortgage Loans averaged over the last six months, does not exceed 4%, and
(ii) Realized Losses on the Mortgage Loans to date for such Distribution Date,
if occurring during the eighth, ninth, tenth, eleventh or twelfth year (or any
year thereafter) after the Closing Date, are less than 10%, 15%, 20%, 25% or
30%, respectively, of the sum of the Class Principal Amount of the Subordinate
Certificates as of the Closing Date and (ii) that for any Distribution Date on
which the Pro Rata Senior Percentage exceeds the Pro Rata Senior Percentage as
of the Closing Date, the Senior Prepayment Percentage for the related Mortgage
Pool shall be 100%. Notwithstanding the foregoing, upon the reduction of the
Class Principal Amount of the Senior Certificates to zero, the Senior Prepayment
Percentage will equal 0%.
In addition, on any Distribution Date on or after the Distribution Date
occurring in March 2009, if the current weighted average of the Subordinate
Percentage of both Mortgage Pools is equal to or greater than two times the
weighted average of the Subordinate Percentage as of the Closing Date, and (a)
the Stated Principal Balance of the Mortgage Loans delinquent 60 days or more
(including for this purpose any such Mortgage Loans in foreclosure or Bankruptcy
and REO Property), averaged over the last six months, as a percentage of the
Subordinate Percentage for that Distribution Date times the aggregate Stated
Principal Balance of the Mortgage Loans, does not exceed 50% and (b) cumulative
Realized Losses on the Mortgage Loans do not exceed 20% of the Subordinate
Percentage as of the Closing Date times the aggregate Stated Principal Balance
of the Mortgage Loans as of the Cut-off Date, then, in each case, the related
Senior Percentage for such Distribution Date will equal the related Senior
Prepayment Percentage (such test, the "Two Times Test").
Senior Principal Distribution Amount: With respect to any Mortgage Pool and
Distribution Date, the sum of:
1. the product of (a) the related Pro Rata Senior Percentage and (b)
the principal portion of each Scheduled Payment (without giving effect to
any Debt Service Reduction) on each Mortgage Loan in the related Mortgage
Pool due during the related Due Period;
27
2. the product of (a) the related Senior Prepayment Percentage and (b)
each of the following amounts: (i) the principal portion of each full and
partial principal prepayment made by a borrower on a Mortgage Loan in the
related Mortgage Pool during the related Prepayment Period; (ii) each other
unscheduled collection, including Insurance Proceeds and net Liquidation
Proceeds (other than with respect to any Mortgage Loan in the related
Mortgage Pool that was finally liquidated during the related Prepayment
Period) representing or allocable to recoveries of principal of the related
Mortgage Loans received during the related Prepayment Period; and (iii) the
principal portion of the purchase price of each Mortgage Loan purchased by
the Sponsor or any other person pursuant to the Mortgage Loan Purchase
Agreement due to a defect in documentation or a material breach of a
representation and warranty with respect to such Mortgage Loan or, in the
case of a permitted substitution of a Defective Mortgage Loan, the amount
representing any principal adjustment in connection with any such replaced
Mortgage Loan in the related Mortgage Pool with respect to the related
Prepayment Period;
3. with respect to unscheduled recoveries allocable to principal of
any Mortgage Loan in the related Mortgage Pool that was fully liquidated
during the related Prepayment Period, the lesser of (a) the product of (i)
the Senior Percentage for that date and (ii) the remaining Stated Principal
Balance of the related Mortgage Loan at the time of liquidation and (b) the
product of (i) the Senior Prepayment Percentage for that date and (ii) the
net Liquidation Proceeds allocable to principal; and
4. any amounts described in clauses (1) through (3) above that remain
unpaid with respect to such Certificate Group from prior Distribution
Dates.
Senior Termination Date: For each Certificate Group, the Distribution Date
when the aggregate of the Class Certificate Principal Balances of that Group has
been reduced to zero.
Servicer: PHH and its successors and assigns.
Servicer Advance: The outstanding moneys that have been advanced by the
Servicer from its funds in connection with its servicing of a Mortgage Loan
(including, but not limited to, taxes, ground rents, assessments, insurance
premiums, release fees, foreclosure and bankruptcy fees and expenses, and other
expenses) (i) that have been made by the Servicer in accordance with the terms
and provisions herein, (ii) that are recoverable through Liquidation Proceeds
and/or Insurance Proceeds, or that are made at the direction of the Sponsor or
to preserve its security interest in the related Mortgaged Property and (iii)
for which the Servicer has a right of reimbursement.
Servicing Criteria: The "servicing criteria" set forth in Item 1122(d) of
Regulation AB, as such may be amended from time to time.
Servicing Fee: As to any Distribution Date and each Mortgage Loan, an
amount equal to the product of (a) one-twelfth of the Servicing Fee Rate and (b)
the outstanding principal balance of such Mortgage Loan as of the first day of
the related Due Period.
Servicing Fee Rate: With respect to each Mortgage Loan and any Distribution
Date, 0.25% per annum.
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Servicing Officer: Any officer of the Servicer involved in, or responsible
for, the administration and servicing of the Mortgage Loans whose name and
facsimile signature appear on a list of servicing officers furnished to the
Trustee by the Servicer on the Closing Date and attached hereto as Exhibit M, as
such list may from time to time be amended.
Servicing Transfer Costs: As defined in Section 6.14(b).
Six-Month LIBOR Loan: Each Mortgage Loan bearing a Mortgage Rate that
adjusts in accordance with LIBOR for six-month U.S. dollar deposits.
Sponsor: ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Lending, Inc., or its successor in
interest.
Startup Day: The day designated as such pursuant to Section 10.01(b)
hereof.
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 Principal Prepayments and
Liquidation Proceeds allocable to principal and to the payment of principal due
on such Due Date and irrespective of any delinquency in payment by the related
Mortgagor.
Subcontractor: Any outsourcer that performs one or more discrete functions
identified in Item 1122(d) of Regulation AB with respect to more than 5% of the
Mortgage Loans under the direction or authority of a Servicer or the Trustee
(measured by aggregate Stated Principal Balance of the Mortgage Loans, annually
at the commencement of the calendar year prior to the year in which an
Assessment of Compliance is required to be delivered, multiplied by a fraction,
the numerator of which is the number of months during which such Subcontractor
performs such discrete functions and the denominator of which is 12, or, in the
case of the year in which the Closing Date occurs, the number of months elapsed
in such calendar year).
Subordinate Certificate: Any of the Class M-1, Class M-2, Class M-3, Class
B-1, Class B-2 or Class B-3 Certificates.
Subordinate Certificate Writedown Amount: The amount described in Section
5.03(b)(iii).
Subordinate Class Percentage: As to any Distribution Date and any Class of
Subordinate Certificates, a fraction, expressed as a percentage, the numerator
of which is the Class Principal Amount of such Class on such date, and the
denominator of which is the aggregate Class Principal Amount of all Classes of
Subordinate Certificates on such date.
Subordinate Net WAC: For any Distribution Date, the weighted average of the
Pool 1 Net WAC and the Pool 2 Net WAC, weighted on the basis of the Pool
Subordinate Amounts for Pool 1 and Pool 2, respectively, for such Distribution
Date.
Subordinate Percentage: With respect to each Mortgage Pool and any
Distribution Date, the difference between 100% and the related Senior Percentage
for such Mortgage Pool for such Distribution Date; provided, however, that on
any Distribution Date after a Senior Termination Date has occurred with respect
a Mortgage Pool, the Subordinate Percentage will represent the entire interest
of the Subordinate Certificates in the Mortgage Loans and will be equal to the
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difference between 100% and the Senior Percentage related to the Mortgage Loans
in the aggregate for such Distribution Date.
Subordinate Prepayment Percentage: With respect to any Distribution Date
and for any Mortgage Pool, the difference between 100% and the related Senior
Prepayment Percentage for such Mortgage Pool for that Distribution Date;
provided, however, that on any Distribution Date after a Senior Termination Date
has occurred with respect to a Mortgage Pool, the Subordinate Prepayment
Percentage will represent the entire interest of the Subordinate Certificates in
the Mortgage Loans and will be equal to the difference between 100% and the
Senior Prepayment Percentage related to the Mortgage Loans in the aggregate for
such Distribution Date.
Subordinate Principal Distribution Amount: With respect to any Distribution
Date and each Mortgage Pool, an amount equal to the sum of:
1. the related Subordinate Percentage of all amounts described in
clause (a) of the definition of "Principal Distribution Amount" for that
Distribution Date;
2. with respect to each Mortgage Loan in the related Mortgage Pool
that became a Liquidated Mortgage Loan during the related Prepayment Period
the amount of the Net Liquidation Proceeds allocated to principal received
with respect thereto remaining after application thereof pursuant to clause
(2) of the definition of "Senior Principal Distribution Amount" for that
Distribution Date, up to the Subordinate Percentage of the Stated Principal
Balance of such Mortgage Loan;
3. the related Subordinate Prepayment Percentage of all amounts
described in clauses (b), (c), (d), (f), (g), (h) and (i) of the definition
of "Principal Distribution Amount" for that Mortgage Pool and that
Distribution Date; and
4. any amounts described in clauses (1) through (3) for any previous
Distribution Date that remain unpaid
minus the sum of:
5. if the aggregate Class Principal Amount of any Certificate Group
has been reduced to zero, principal paid from the Available Distribution
Amount from the related Mortgage Pool to the remaining Certificate Group;
and
6. the amounts paid from the Available Distribution Amount for the
Overcollateralized Senior Certificates to the Undercollateralized Senior
Certificates.
Subsequent Recovery: The amount, if any, recovered by the Servicer with
respect to a Liquidated Mortgage Loan with respect to which a Realized Loss has
been incurred after liquidation and disposition of such Mortgage Loan.
Sub-Servicer: Any Person that services Mortgage Loans on behalf of the
Servicer pursuant to a subservicing agreement and is responsible for the
performance of the material servicing functions required to be performed by the
Servicer under this Agreement that are identified in Item 1122(d) of Regulation
AB and meets any of the criteria of Item 1108(a)(2)(i) through (iii) under the
direction or authority of the Servicer (measured by aggregate Stated Principal
Balance of the Mortgage Loans, annually at the commencement of the calendar year
prior to the year in which an Assessment of Compliance is required to be
delivered, multiplied by
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a fraction, the numerator of which is the number of months during which such
Sub-Servicer services the related Mortgage Loans and the denominator of which is
12, or, in the case of the year in which the Closing Date occurs, the number of
months elapsed in such calendar year). Any Sub-Servicer shall meet the
qualifications set forth in Section 3.02. For classification purposes, the
Trustee shall not be deemed a Sub-Servicer.
Subservicing Agreement: As defined in Section 9.21.
Substitution Amount: As defined in the second paragraph of Section 2.04(b).
Tax Matters Person: The "tax matters person" as specified in the REMIC
Provisions which shall initially be the Holder of the Class A-R Certificate.
Telerate Page 3750: The display currently so designated as "Page 3750" on
the Bridge Telerate Service (or such other page selected by the Trustee as may
replace Page 3750 on that service for the purpose of displaying daily comparable
rates on prices).
Transfer Agreement: The Master Mortgage Loan Purchase Agreement, dated as
of August 1, 2004 between ▇▇▇▇▇▇▇ ▇▇▇▇▇ Credit Corporation and ▇▇▇▇▇▇▇ ▇▇▇▇▇
Mortgage Lending, Inc., as amended by Amendment Number One thereto, dated as of
September 21, 2005.
Transferor: ▇▇▇▇▇▇▇ ▇▇▇▇▇ Credit Corporation.
Trust Fund: The corpus of the Issuing Entity created pursuant to this
Agreement, consisting of (i) the Mortgage Loans, including the right to all
payments of principal and interest received on or with respect to the Mortgage
Loans on and after the Cut-off Date (other than Scheduled Payments due on or
before such date), and all such payments due after such date but received prior
to such date and intended by the related Mortgagors to be applied after such
date; (ii) all of the Depositor's right, title and interest in and to all
amounts from time to time credited to and the proceeds of the Distribution
Account, any Custodial Accounts or any Escrow Accounts established with respect
to the Mortgage Loans; (iii) all of the Depositor's rights under the Mortgage
Loan Sale and Assignment Agreement; (iv) all of the Depositor's right, title or
interest in REO Property and the proceeds thereof; (v) all of the Depositor's
rights under any Insurance Policies relating to the Mortgage Loans; (vi) all
proceeds of the conversion, voluntary or involuntary, of any of the foregoing
into cash or other liquid assets, including without limitation, all Insurance
Proceeds, Liquidation Proceeds and condemnation awards; and (vii) the
Depositor's security interest in any collateral pledged to secure the Mortgage
Loans, including the Mortgaged Properties and any Additional Collateral relating
to the Additional Collateral Mortgage Loans, including, but not limited to, any
pledge, control and guaranty agreements and the Limited Purpose Surety Bond and
any proceeds of the foregoing.
Trustee: ▇▇▇▇▇ Fargo Bank, N.A. and any Person succeeding the Trustee
hereunder, or if any separate trustee or any co-trustee shall be appointed as
herein provided, then such separate trustee and such co-trustee, as the case may
be.
Trustee Mortgage Files: With respect to each Mortgage Loan, the Mortgage
Documents to be retained in the custody and possession of the Trustee.
Two Times Test: As defined in the definition of "Senior Prepayment
Percentage".
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UCC: The Uniform Commercial Code as enacted in the relevant jurisdiction.
Undercollateralized Amount: As defined in Section 5.02(b)(iii).
Undercollateralized Senior Certificates: As defined in Section
5.02(b)(iii).
Underwriter: ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated.
Underwriter's Exemption: Prohibited Transaction Exemption ("PTE") 90-29
(Exemption Application No. D-8019, 55 Fed. Reg. 21459 (1990)) as amended, or any
substantially similar administrative exemption granted by the U.S. Department of
Labor to the Underwriter.
Underwriting Agreement: The underwriting agreement, dated February 28, 2003
and the terms agreement, dated February 23 2006, between the Depositor and the
Underwriter, referred to collectively.
Underwriting Standards: As to each Mortgage Loan, the Sponsor's or
Originator's written underwriting guidelines in effect as of the origination
date of such Mortgage Loan.
Uniform Commercial Code: The Uniform Commercial Code as in effect in any
applicable jurisdiction from time to time.
Upper Tier REMIC: As described in the Preliminary Statement.
Upper Tier REMIC Regular Interest: Each of the Class I-A Certificates, the
Class II-A-1 Certificates, the Class II-A-2 Certificates, the Class M-1
Certificates, the Class M-2 Certificates, the Class M-3 Certificates, the Class
B-1 Certificates, the Class B-2 Certificates and the Class B-3 Certificates.
Voting Interests: The portion of the voting rights of all the Certificates
that is allocated to any Certificate for purposes of the voting provisions of
this Agreement. At all times during the term of this Agreement, 100.00% of all
Voting Interests shall be allocated to the Class I-A, Class II-A-1, Class
II-A-2, Class A-R, Class M-1, Class M-2, Class M-3, Class B-1, Class B-2 and
Class B-3 Certificates. Voting Interests shall be allocated among such
Certificates (other than the Class A-R Certificates) based on the product of (i)
98.00% and (ii) the fraction, expressed as a percentage, the numerator of which
is the aggregate Class Principal Amounts for each Class then outstanding and the
denominator of which is the Aggregate Stated Principal Balance outstanding, and
the remainder of such percentage of Voting Interests shall be allocated to the
Class A-R Certificates. Voting Interests shall be allocated among the
Certificates within each such Class in proportion to their Certificate Principal
Amounts or Percentage Interests.
Section 1.02. Calculations Respecting Mortgage Loans.
Calculations required to be made pursuant to this Agreement with respect to
any Mortgage Loan in the Trust Fund shall be made based upon current information
as to the terms of the Mortgage Loans and reports of payments received from the
Mortgagor on such Mortgage Loans and payments to be made to the Trustee as
provided by the Servicer. The Trustee shall not be required to recompute, verify
or recalculate the information supplied to it by the Servicer.
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ARTICLE II.
DECLARATION OF TRUST;
ISSUANCE OF CERTIFICATES
Section 2.01. Creation and Declaration of Trust Fund; Conveyance of
Mortgage Loans.
(a) Concurrently with the execution and delivery of this Agreement, the
Depositor does hereby establish the Trust Fund and transfer, assign, set over,
deposit with and otherwise convey to the Trustee, without recourse, subject to
Sections 2.02 and 2.04, in trust, all the right, title and interest of the
Depositor in and to the Trust Fund. Such conveyance includes, without
limitation, (i) the Mortgage Loans, including the right to all payments of
principal and interest received on or with respect to the Mortgage Loans on and
after the Cut-off Date (other than Scheduled Payments due on or before such
date), and all such payments due after such date but received prior to such date
and intended by the related Mortgagors to be applied after such date; (ii) all
of the Depositor's right, title and interest in and to all amounts from time to
time credited to and the proceeds of the Distribution Account, any Custodial
Accounts or any Escrow Account established with respect to the Mortgage Loans;
(iii) all of the Depositor's rights under the Mortgage Loan Sale and Assignment
Agreement; (iv) all of the Depositor's right, title or interest in REO Property
and the proceeds thereof; (v) all of the Depositor's rights under any Insurance
Policies relating to the Mortgage Loans; (vi) all proceeds of the conversion,
voluntary or involuntary, of any of the foregoing into cash or other liquid
assets, including, without limitation, all Insurance Proceeds, Liquidation
Proceeds and condemnation awards; and (vii) the Depositor's security interest in
any collateral pledged to secure the Mortgage Loans, including the Mortgaged
Properties and any Additional Collateral relating to the Additional Collateral
Mortgage Loans, including, but not limited to, any pledge, control and guaranty
agreements and the Limited Purpose Surety Bond and any proceeds of the
foregoing, to have and to hold, in trust; and the Trustee declares that, subject
to the review provided for in Section 2.02, it has received and shall hold the
Trust Fund, as trustee, in trust, for the benefit and use of the Holders of the
Certificates and for the purposes and subject to the terms and conditions set
forth in this Agreement, and, concurrently with such receipt, has caused to be
executed, authenticated and delivered to or upon the order of the Depositor, in
exchange for the Trust Fund, Certificates in the authorized denominations
evidencing the entire ownership of the Trust Fund. Notwithstanding anything to
the contrary in this Agreement, the Trust Fund shall not obtain title to or
beneficial ownership of any Additional Collateral as a result of or in lieu of
the disposition thereof or otherwise.
The foregoing sale, transfer, assignment, set-over, deposit and conveyance
does not and is not intended to result in the creation or assumption by the
Trustee of any obligation of the Depositor, the Sponsor or any other Person in
connection with the Mortgage Loans or any other agreement or instrument relating
thereto except as specifically set forth therein.
It is agreed and understood by the parties hereto that it is not intended
that any Mortgage Loan be included in the Trust Fund that is a "High-Cost Home
Loan" as defined in the New Jersey Home Ownership Act, effective November 27,
2003, the New Mexico Home Loan Protection Act, effective January 1, 2004, the
Massachusetts Predatory Home Loan Practices Act, effective November 7, 2004, and
the Indiana High Cost Home Loan Law, effective January 1, 2005.
In connection with such transfer and assignment of the Mortgage Loans, the
Depositor shall deliver to, and deposit with, or cause to be delivered to and
deposited with, the Trustee, the following documents or instruments; provided
that in Section 2.01(a)(i) below, a lost note
33
affidavit (including a copy of the original Mortgage Note) may be delivered in
lieu of the original Mortgage Note (each a "Trustee Mortgage File") so
transferred and assigned:
(i) The original Mortgage Note endorsed, "Pay to the order of ___________,
without recourse" and signed in the name of the name of last endorsee, by
an authorized officer of the last endorsee. If the Mortgage Loan was
acquired by the last endorsee in a merger or other type of acquisition, the
endorsement must be by "[name of last endorsee], successor [by merger to or
in interest to, as applicable] [name of predecessor]"; and if the Mortgage
Loan was acquired or originated by the last endorsee while doing business
under another name, the endorsement must be by "[name of last endorsee],
successor in interest to [previous name]." The Mortgage Note shall include
all intervening endorsements showing a complete chain of title from the
originator to the last endorsee.
(ii) The original recorded Mortgage, with evidence of recording thereon,
or, if the original Mortgage has not yet been returned from the recording
office, a copy of the original Mortgage certified by the previous owner to
be a true copy of the original of the Mortgage which has been delivered for
recording in the appropriate recording office of the jurisdiction in which
the Mortgaged Property is located.
(iii) The original Assignment of Mortgage, executed in blank. If the
Mortgage Loan was acquired by the last endorsee in a merger or other type
of acquisition, the assignment must be by "[name of last assignee],
successor [by merger to or in interest to, as applicable] [name of
predecessor]"; and if the Mortgage Loan was acquired or originated by the
last endorsee while doing business under another name, the assignment must
be by "[name of last assignee], successor in interest to [previous name]."
(iv) The original policy of title insurance (or a preliminary title report
if the original title insurance policy has not been received from the title
insurance company).
(v) Originals of any intervening assignments of the Mortgage, with evidence
of recording thereon or, if the original intervening assignment has not yet
been returned from the recording office, a copy of such assignment
certified by the Depositor to be a true copy of the original of the
assignment which has been delivered for recording in the appropriate
recording office of the jurisdiction in which the Mortgaged Property is
located.
(vi) With respect to a Mortgage Loan that, according to the Mortgage Loan
Schedule is covered by a primary mortgage insurance policy, the original or
a copy of primary mortgage insurance certificate, if any.
(vii) If indicated on the Mortgage Loan Schedule, originals of all
assumption and modification agreements, if any, with originals or copies of
the underlying instruments being modified.
(viii) With respect to each Additional Collateral Mortgage Loan,
A. Copy of the related Mortgage 100 Pledge Agreement for
Securities Account or the Parent Power Guaranty and Security
Agreement for Securities Account or the Parent Power
Guaranty Agreement for Real Estate, as the case may be;
34
B. copy of the UCC-1 (applicable for South Carolina and
Rhode Island only);
C. an original form UCC-3, if applicable;
D. For loans originated by a correspondent lender, an
original assignment of security interest of the related
Mortgage 100 Pledge Agreement or Parent Power Agreement, as
the case may be.
(ix) With respect to each Cooperative Loan:
A. the original proprietary lease;
B. the original recognition agreement;
C. the original security agreement;
D. the original or copy of the assignment of proprietary
lease;
E. the original cooperative stock certificate and stock
power executed by borrower in blank;
F. the original UCC-1 financing statements; and
G. the original UCC-3 financing statements.
(xi) Power of attorney, if applicable.
(b) The Depositor shall cause the Mortgage Notes with respect to each
Mortgage Loan to be completed either (A) in blank, without recourse, or (B)
endorsed to "▇▇▇▇▇ Fargo Bank, N.A., as Trustee of the ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage
Investors Trust Series MLCC 2006-1, Mortgage Pass-Through Certificates, without
recourse" and the Depositor shall cause Assignments of Mortgage with respect to
each Mortgage Loan other than a Cooperative Mortgage Loan to be completed either
(A) in blank or (B) to "▇▇▇▇▇ Fargo Bank, N.A., as Trustee of the ▇▇▇▇▇▇▇ ▇▇▇▇▇
Mortgage Investors Trust Series MLCC 2006-1, Mortgage Pass-Through
Certificates," within 30 days of the Closing Date for purpose of their
recording; provided, however, that such Assignments of Mortgage need not be
recorded unless required in writing by the Rating Agencies; provided, further,
that with respect to each MERS Mortgage Loan where MERS is not the Mortgagee of
record, the original Assignment of Mortgage showing MERS as the assignee of the
Mortgage, with the evidence of recording thereon or copies thereof certified by
an officer of the Depositor to have been submitted for recordation, shall be
delivered to the Trustee.
If any Mortgage has been recorded in the name of MERS or its designee, no
Assignment of Mortgage in favor of the Trustee will be required to be prepared
or delivered and instead, the Servicer shall take all actions as are necessary
to cause the Trustee to be shown as the owner of the related Mortgage Loan on
the records of MERS for the purpose of the system of recording transfer of
beneficial ownership of mortgages maintained by MERS.
(c) In instances where a title insurance policy is required to be delivered
to the Trustee and is not so delivered, the Depositor will provide a copy of
such title insurance policy to the
35
Trustee, as promptly as practicable after the execution and delivery hereof, but
in any case within 270 days of the Closing Date.
(d) For Mortgage Loans (if any) that have been prepaid in full after the
Cut-off Date and prior to the Closing Date, the Depositor, in lieu of delivering
the above Trustee Mortgage File, shall deliver to the Trustee an Officer's
Certificate which shall include a statement to the effect that all amounts
received in connection with such prepayment that are required to be deposited in
the Distribution Account pursuant to Section 4.01 have been so deposited. All
original documents that are not delivered to the Trustee shall be held by the
Servicer in trust for the benefit of the Trustee and the Certificateholders.
Section 2.02. Acceptance of Trust Fund by Trustee; Review of Documentation
for Trust Fund.
(a) The Trustee, by execution and delivery hereof, acknowledges receipt by
it of the Trustee Mortgage Files pertaining to the Mortgage Loans listed on the
Mortgage Loan Schedule, subject to review thereof as provided herein. Upon
receipt by the Trustee of each Trustee Mortgage File, the Trustee shall review
each Trustee Mortgage File in accordance with the following review procedures:
The Trustee shall review the documents delivered to it and shall deliver to
the Depositor, prior to the Closing Date, a Mortgage Loan Schedule and
Schedule of Exceptions (as defined below) with respect to the Mortgage
Loans, and the delivery of each Mortgage Loan Schedule and Schedule of
Exceptions by the Trustee hereunder shall be the Trustee's certification
that such Mortgage Loans are held for the Trust Fund and that, as to each
Mortgage Loan listed in the related Mortgage Loan Schedule (other than any
Mortgage Loan paid in full or any Mortgage Loan specifically identified in
such certification as not covered by the Schedule of Exceptions):
(A) all documents described in Sections 2.02(a)(i) through 2.02(a)(v)
and to the extent provided in the Trustee's Mortgage Files Sections
2.02(a)(vi) through 2.02(a)(xi), if applicable, of this Agreement are in
its possession;
(B) such documents have reviewed by it and appear regular on their
face and relate to such Mortgage Loan;
(C) based on its examination and only as to the foregoing documents,
the information set forth in the Mortgage Loan Schedule corresponding to
the loan number for the Mortgage Loan, the Mortgagor's name, including the
street address but excluding the zip code, the Mortgage Interest Rate and
the original principal balance of the Mortgage Loan respecting such
Mortgage Loan is correct; and
(D) each Mortgage Note has been endorsed and each Assignment has been
executed as provided in Section 2.01 hereof.
In making such verifications, the Trustee may rely conclusively on the
Mortgage Loan Schedule and the documents constituting the Trustee Mortgage File,
and the Trustee shall have no obligation to independently verify the validity,
enforceability, recordability, sufficiency, due authorization or genuineness of
any document in any Trustee Mortgage File or any Mortgage Loan hereunder, nor
the collectibility, insurability, effectiveness or suitability of any Mortgage
Loan hereunder. The Trustee shall prepare an initial certification to be
delivered to the Depositor,
36
the Sponsor and the Servicer on the Closing Date in the form annexed hereto as
Exhibit K (the "Initial Certification") with respect to the Mortgage Loans
(other than any Mortgage Loan paid in full or any Mortgage Loan specifically
identified on the Schedule of Exceptions attached to the Initial Certification
(the "Schedule of Exceptions") as not covered by such Initial Certification)
listed on the Mortgage Loan Schedule. If the Trustee determines from such
verification that any discrepancy or deficiency exists with respect to a Trustee
Mortgage File, the Trustee shall note such omission, discrepancy or deficiency
on the Schedule of Exceptions attached to the Initial Certification, and shall
deliver a copy (which shall be electronic, if requested) of the Schedule of
Exceptions to the Depositor on the Closing Date. During the life of the Mortgage
Loans (while subject to this Agreement), in the event the Trustee discovers any
defect with respect to any Trustee Mortgage File, the Trustee shall give written
specification of such defect to the Depositor. Except as specifically provided
above, the Trustee shall be under no duty to review, inspect or examine such
documents to determine that any of them are enforceable or appropriate for their
prescribed purpose.
(b) If in the course of the review described in paragraph (a) of this
Section 2.02 the Trustee discovers any document or documents constituting a part
of a Trustee Mortgage File that is missing, does not appear regular on its face
(i.e., is mutilated, damaged, defaced, torn or otherwise physically altered) or
appears to be unrelated to the Mortgage Loans identified in the Mortgage Loan
Schedule (each, a "Material Defect"), the Trustee, upon discovering such
Material Defect shall promptly identify the Mortgage Loan to which such Material
Defect relates to the Depositor, the Sponsor and the Servicer. Within 90 days of
its receipt of such notice (but in no case prior to the 270th day following the
Closing Date), the Depositor shall be required to cure such Material Defect
(and, in such event, the Depositor shall provide the Trustee with an Officer's
Certificate confirming that such cure has been effected). If the Servicer
notifies the Depositor and the Trustee in writing that (i) a loss has occurred
and (ii) such loss relates to a Mortgage Loan for which the Trustee previously
identified a Material Defect or for which the Servicer has identified a Material
Defect and the Depositor has not cured such Material Defect, then the Depositor
shall repurchase such Mortgage Loan at the Purchase Price therefor in the event
that such loss would, if such Mortgage Loan is not repurchased by the Depositor,
constitute a Realized Loss and such loss is attributable to the failure of the
Depositor to have cured such Material Defect. A loss shall be deemed to be
attributable to the failure of the Depositor to cure a Material Defect if, as
determined by the Depositor, upon mutual agreement with the Trustee each acting
in good faith, absent such Material Defect, such loss would not have been
incurred. Within the two-year period following the Closing Date, the Depositor
may, in lieu of repurchasing a Mortgage Loan pursuant to this Section 2.02(b),
substitute for such Mortgage Loan a Replacement Mortgage Loan subject to the
provisions of Section 2.04.
(c) Within 270 days following the Closing Date, the Trustee shall deliver
to the Depositor, the Sponsor and the Servicer, a final certification
substantially in the form attached as Exhibit L (the "Final Certification")
evidencing the completeness of the Trustee Mortgage Files in its possession or
control, with any exceptions noted on the Schedule of Exceptions attached to the
Final Certification.
(d) Nothing in this Agreement shall be construed to constitute an
assumption by the Trust Fund, the Trustee or the Certificateholders of any
unsatisfied duty, claim or other liability on any Mortgage Loan or to any
Mortgagor.
(e) Upon execution of this Agreement, the Depositor hereby delivers to the
Trustee and the Trustee acknowledges receipt of the Mortgage Loan Sale and
Assignment Agreement.
37
Section 2.03. Representations and Warranties of the Depositor and the
Servicer.
(a) The Depositor hereby represents and warrants to the Servicer and to the
Trustee, for the benefit of the Certificateholders as of the Closing Date or
such other date as is specified, that:
(i) the Depositor is a corporation duly organized, validly existing
and in good standing under the laws governing its creation and existence
and has full corporate power and authority to own its property, to carry on
its business as presently conducted, to enter into and perform its
obligations under this Agreement, and to create the trust pursuant hereto;
(ii) the execution and delivery by the Depositor of this Agreement
have been duly authorized by all necessary corporate action on the part of
the Depositor; neither the execution and delivery of this Agreement, nor
the consummation of the transactions herein contemplated, nor compliance
with the provisions hereof, will conflict with or result in a breach of, or
constitute a default under, any of the provisions of any law, governmental
rule, regulation, judgment, decree or order binding on the Depositor or its
properties or the certificate of incorporation or bylaws of the Depositor;
(iii) the execution, delivery and performance by the Depositor of this
Agreement and the consummation of the transactions contemplated hereby do
not require the consent or approval of, the giving of notice to, the
registration with, or the taking of any other action in respect of, any
state, federal or other governmental authority or agency, except such as
has been obtained, given, effected or taken prior to the date hereof;
(iv) this Agreement has been duly executed and delivered by the
Depositor and, assuming due authorization, execution and delivery by the
Trustee, constitutes a valid and binding obligation of the Depositor
enforceable against it in accordance with its terms except as such
enforceability may be subject to (A) applicable bankruptcy and insolvency
laws and other similar laws affecting the enforcement of the rights of
creditors generally and (B) general principles of equity regardless of
whether such enforcement is considered in a proceeding in equity or at law;
(v) there are no actions, suits or proceedings pending or, to the
knowledge of the Depositor, threatened or likely to be asserted against or
affecting the Depositor, before or by any court, administrative agency,
arbitrator or governmental body (A) with respect to any of the transactions
contemplated by this Agreement or (B) with respect to any other matter
which in the judgment of the Depositor will be determined adversely to the
Depositor and will if determined adversely to the Depositor materially and
adversely affect it or its business, assets, operations or condition,
financial or otherwise, or adversely affect its ability to perform its
obligations under this Agreement;
(vi) immediately prior to the transfer and assignment of the Mortgage
Loans to the Trustee, the Depositor was the sole owner of record and holder
of each Mortgage Loan, and the Depositor had good and marketable title
thereto, and had full right to transfer and sell each Mortgage Loan to the
Trustee free and clear, subject only to (1) liens of current real property
taxes and assessments not yet due and payable and, if the related Mortgaged
Property is a condominium unit, any lien for common charges permitted by
statute, (2) covenants, conditions and restrictions, rights of way,
easements
38
and other matters of public record as of the date or recording of such
Mortgage acceptable to mortgage lending institutions in the area in which
the related Mortgaged Property is located and specifically referred to in
the lender's title insurance policy or attorney's opinion f title and
abstract of title delivered to the Originator of such Mortgage Loan, and
(3) such other matters to which like properties are commonly subject which
do not, individually or in the aggregate, materially interfere with the
benefits of the security intended to be provided by the Mortgage, of any
encumbrance, equity, participation interest, lien, pledge, charge, claim or
security interest, and had full right and authority, subject to no interest
or participation of, or agreement with, any other party, to sell and assign
each Mortgage Loan pursuant to this Agreement;
(vii) None of the Mortgage Loans have any marks or notations
indicating that such Mortgage Loans have been pledged, assigned or
otherwise conveyed to any Person other than the Trustee;
(viii) The Depositor has received all consents and approvals required
by the terms of the Mortgage Loans to convey the Mortgage Loans hereunder
to the Trustee;
(ix) As of the Closing Date, no Mortgage Loan provides for interest
other than at either (x) a single fixed rate in effect throughout the term
of the Mortgage Loan or (y) a single "variable rate" (within the meaning of
Treasury Regulations Section 1.860G-1(a)(3)) in effect throughout the term
of the Mortgage Loan;
(x) As of the Closing Date, each Mortgage Loan is a "qualified
mortgage" within the meaning of Section 860G(a)(3) of the Code (without
regard to Treasury Regulations Section 1.860G-2(f)) or any similar rule
that provides that a defective obligation is a qualified mortgage for a
temporary period);
(xi) As of the Closing Date, no Mortgage Loan is the subject of
pending or final foreclosure proceedings; and
(xii) As of the Closing Date, the Depositor would not initiate
foreclosure proceedings with respect to any Mortgage Loan based on such
Mortgage Loan's delinquency status prior to the next scheduled payment date
for such Mortgage Loan.
The foregoing representations made in this Section 2.03 by the Depositor
shall survive the termination of this Agreement and shall not be waived by any
party hereto
(b) The representations and warranties of the Transferor with respect to
the related Mortgage Loans in the Transfer Agreement, which have been assigned
to the Trustee hereunder, were made as of the date specified in the Transfer
Agreement. The representations and warranties of the Sponsor with respect to the
Mortgage Loans contained in the Mortgage Loan Sale and Assignment Agreement were
made as of the Closing Date. To the extent that any fact, condition or event
with respect to a Mortgage Loan constitutes a breach of both (i) a
representation or warranty of the Transferor under the Transfer Agreement and
(ii) a representation or warranty of the Sponsor under the Mortgage Loan Sale
and Assignment Agreement, the obligations of the Sponsor under the Mortgage Loan
Sale and Assignment Agreement shall be enforced against the Transferor or the
Sponsor, as applicable, as set forth in the Mortgage Loan Sale and Assignment
Agreement. The Trustee acknowledges that the Sponsor shall have no obligation or
liability with respect to any breach of a representation or warranty made by it
with respect to any related Mortgage Loans, if the fact, condition or event
constituting
39
such breach also constitutes a breach of a representation or warranty made by
the Transferor in the Transfer Agreement, without regard to whether the
Transferor fulfills its contractual obligations in respect of such
representation or warranty. The Trustee also acknowledges that the Sponsor shall
have no obligation or liability with respect to any breach of a representation
or warranty made solely by the Transferor with respect to the Mortgage Loans,
without regard to whether the related Transferor fulfills its contractual
obligations in respect of such representation or warranty. The Trustee further
acknowledges that the Depositor shall have no obligation or liability with
respect to any breach of any representation or warranty with respect to the
Mortgage Loans (except as set forth in Section 2.03(a)(iii)) under any
circumstances.
In addition to the representations and warranties of the Transferor in the
Transfer Agreement, with respect to each Mortgage Loan, the Transferor made
certain additional covenants regarding such Mortgage Loan, as set forth in the
related Transfer Agreement. With respect to any breach of such additional
covenants that materially and adversely affects the interests of the
Certificateholders in such Mortgage Loan, the Sponsor shall (1) use reasonable
efforts to enforce such covenant against the Transferor and (2) if the Sponsor
successfully enforces any obligation of the Transferor to repurchase such
Mortgage Loan, the Sponsor shall repurchase such Mortgage Loan in accordance
with this Section 2.03. If the Sponsor does not successfully enforce the
obligation, if any, of the Transferor to repurchase a Mortgage Loan with respect
to any breach of any such additional covenants, the Sponsor shall have no
obligation or right to repurchase or cure such Mortgage Loan.
(c) The Servicer hereby represents, warrants, and covenants to the
Depositor and to the Trustee, for the benefit of the Certificateholders as of
the Closing Date that:
(i) The Servicer is a corporation duly organized, validly existing and
in good standing under the laws of the State of New Jersey. The Servicer
has in full force and effect (without notice of possible suspension,
revocation or impairment) all required qualifications, permits, approvals,
licenses, and registrations, or exemption therefrom, to conduct all
activities in all jurisdictions in which its activities with respect to the
Mortgage Loans require it to be qualified or licensed;
(ii) The Servicer has all requisite corporate power, authority and
capacity to carry on its business as it is now being conducted, to execute
and deliver this Agreement, and to perform all of its obligations
hereunder. The Servicer does not believe, nor does it have any cause or
reason to believe, that it cannot perform each and every covenant contained
in this Agreement;
(iii) The execution, delivery and performance of this Agreement by the
Servicer and consummation of the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate, shareholder or
other action by the Servicer; this Agreement has been duly and validly
executed and delivered by the Servicer; and this Agreement is a valid and
legally binding agreement of the Servicer, enforceable against the Servicer
in accordance with its respective terms, subject to bankruptcy, insolvency
and similar laws affecting generally the enforcement of creditors' rights
and the discretion of a court to grant specific performance of contracts;
(iv) Neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, nor compliance with
their respective terms and conditions shall (a) violate, conflict with,
result in the breach of, constitute a default under, be prohibited by or
require any additional approval under any
40
terms, conditions or provisions of the Servicer's articles of incorporation
or by-laws or any other similar corporate or organizational document of the
Servicer; any mortgage, indenture, deed of trust, loan or credit agreement
or other agreement or instrument to which the Servicer is now a party or by
which it is bound; or any law, ordinance, rule, regulation, order, judgment
or decree of any governmental authority applicable to the Servicer; or (b)
result in the creation or imposition of any lien, charge or encumbrance of
any material nature upon any of the properties or assets of the Servicer;
(v) The Servicer holds all licenses, approvals, permits and other
authorizations, or exemptions therefrom, required under applicable law to
assume responsibility for servicing the Mortgage Loans;
(vi) There is no litigation, claim, demand, proceeding or governmental
investigation existing or pending, or to the knowledge of the Servicer,
threatened, nor is there any order, injunction or decree outstanding
against or relating to the Servicer that could (i) have a material adverse
effect upon the performance by the Servicer of its obligations under this
Agreement or (ii) to the Servicer's knowledge, result in any material loss
or liability to Depositor, the Trustee, the Trust Fund or the Sponsor.
Further, to the Servicer's knowledge, there is no meritorious basis for any
such litigation, claim, demand, proceeding, or governmental investigation;
(vii) The Servicer has been approved by GNMA, ▇▇▇▇▇▇ ▇▇▇ and FHLMC and
will remain approved as an "eligible seller/servicer" of residential
mortgage loans as provided in GNMA, ▇▇▇▇▇▇ Mae, or FHLMC guidelines and in
good standing. The Servicer has not received any notification from GNMA,
▇▇▇▇▇▇ ▇▇▇ or FHLMC that the Servicer is not in compliance with the
requirements of the approved "seller/servicer" status. The Servicer is a
mortgagee approved by the Secretary of HUD pursuant to Section 203 and 211
of the National Housing Act. The Servicer has not received any notification
from HUD that the Servicer is not in compliance with the requirements of
the approved mortgagee status;
(viii) The servicing practices to be used by the Servicer under this
Agreement are, and shall remain, in all material respects in compliance
with Accepted Servicing Practices, including without limitation, all
federal, state and local laws, rules, all regulations and requirements in
connection therewith, and ▇▇▇▇▇▇ Mae guidelines, as applicable;
(ix) The Servicer has not received written notice from or on behalf of
FHA, HUD, FDIC, ▇▇▇▇▇▇ ▇▇▇, FHLMC or GNMA, advising the Servicer of its
failure to comply with applicable servicing or claims procedures, or
resulted in a request for repurchase of mortgage loans or indemnification
in connection with any mortgage loans;
(x) The Servicer has in place a contingency plan that will enable it
to perform its obligations under this Agreement in all material respects,
at another location within five (5) Business Days in the event its primary
location is rendered inoperative as a result of a natural or other disaster
or emergency;
(xi) The Servicer maintains and shall maintain, in good standing, all
licenses and approvals necessary to service the Mortgage Loans and
maintains and shall at all times maintain the capital requirements imposed
by the licensing or approving entities having jurisdiction over the
Servicer. The Servicer has filed applications for all
41
applicable licenses and qualifications to do business and to service the
Mortgage Loans in the U.S. Virgin Islands;
(xii) The Servicer maintains and shall at all times maintain error and
omissions and fidelity insurance coverage of the type and in the amounts
required by ▇▇▇▇▇▇ Mae;
(xiii) The Servicer has, and shall at all times maintain during the
term of this Agreement, sufficient systems, including but not limited to
the Servicer's EDP, and trained and experienced personnel in place to
perform its obligations under this Agreement;
(xiv) For so long as, and to the extent that, the Servicer services
the Mortgage Loans, the Servicer will continue to comply with each
applicable federal, state, or local, law, statute, and ordinance, and any
rule, regulation, or order issued thereunder, pertaining to the subject
matter of this Agreement, including, but not limited to, usury, RESPA,
Consumer Credit Reporting Act, Equal Credit Opportunity Act, Federal
Deposit Insurance Corporation Improvement Act, Regulation B, Fair Credit
Reporting Act, Fair Debt Collection Practices Act, Fair Housing Act, Truth
in Lending Act and Regulation Z, Flood Disaster Protection Act of 1973, and
any applicable regulations related thereto, and such other fair housing,
anti-redlining, equal credit opportunity, truth-in-lending, real estate
settlement procedures, fair credit reporting, and every other prohibition
against unlawful discrimination in residential mortgage lending or
governing consumer credit, and all state consumer credit statutes and
regulations, as amended. In the event the Depositor or the Trustee has a
reasonable good faith belief in the Servicer's non-compliance with this
representation and warranty and upon the Depositor's or the Trustee's
written request, the Servicer shall deliver to the Depositor or the Trustee
reasonable evidence of compliance with any of the requirements of this
representation and warranty; and
(xv) Neither the Servicer, its parent, nor any of its subsidiaries is
in bankruptcy, receivership or conservatorship. The Servicer has the
requisite financial resources and ability to meet its obligations under
this Agreement, including, but not limited to, any and all indemnification
obligations.
Within 60 days of the earlier of either discovery by or notice to the
Servicer of any breach of a representation or warranty set forth in this Section
2.03(c), which materially and adversely affects the ability of the Servicer to
perform its duties and obligations under this Agreement or otherwise materially
and adversely affects the value of the Mortgage Loans, the Mortgaged Property or
the priority of the security interest on such Mortgaged Property, the Servicer
shall use its best efforts promptly to cure such breach in all material respects
and, if such breach cannot be cured, the Servicer shall, at the Trustee's
option, assign the Servicer's rights and obligations under this Agreement (or
respecting the affected Mortgage Loans) to a successor servicer selected by the
Depositor with the prior consent and approval of the Trustee. Such assignment
shall be made in accordance with this Agreement.
Section 2.04. Discovery of Breach; Repurchase or Substitution of Mortgage
Loans.
Upon discovery (i) by the Depositor, the Sponsor, the Servicer or the
Trustee of a breach of any representation or warranty made by the Depositor
under Section 2.03 which materially adversely affects the value of a Mortgage
Loan or the interest therein of the Certificateholder (a
42
"Defective Mortgage Loan"), or (ii) by the Depositor or the Sponsor of the
breach by the Sponsor or the Transferor of any representation or warranty herein
or under the Mortgage Loan Sale and Assignment Agreement or the Transfer
Agreement, respectively, in respect of any Mortgage Loan, which breach results
in the Mortgage Loan being a "Defective Mortgage Loan" (each of such parties
hereby agreeing to give written notice of such breach to the Trustee and the
other of such parties), the Trustee, or its designee, shall promptly notify the
Depositor in writing of such breach and request that the Depositor cure or cause
the cure of such breach within 90 days from the date that the Depositor
discovered or was notified of such breach, and if the Depositor does not cure
such breach in all material respects during such period, the Trustee shall (i)
in the case of an uncured breach under Section 2.03, cause the Depositor to
repurchase such Defective Mortgage Loan at the Purchase Price, (ii) in the case
of an uncured breach by the Sponsor under the Mortgage Loan Sale and Assignment
Agreement, cause the Depositor to enforce the Sponsor's obligation under the
Mortgage Loan Sale and Assignment Agreement to repurchase that Defective
Mortgage Loan from the Trust Fund at the Purchase Price, and (iii) in the case
of an uncured breach by the Transferor under the Transfer Agreement, cause the
Depositor to enforce the Transferor's obligation under the Transfer Agreement to
repurchase that Defective Mortgage Loan from the Trust Fund at the Purchase
Price, in each case on or prior to the Determination Date following the
expiration of such 90-day period (subject to Section 2.04(b) below); provided,
however, that, in connection with any such breach under clauses (ii) or (iii)
above that could not reasonably have been cured within such 90-day period, if
the Sponsor or the Transferor shall have commenced to cure such breach within
such 90-day period and, if the defective Mortgage Loan qualifies as a "qualified
mortgage" within the meaning of Section 860G(a)(3) of the Code following such
90-day period, the Sponsor or the Transferor shall be permitted to proceed
thereafter diligently and expeditiously to cure the same within an additional
90-day period. The Purchase Price for the repurchased Defective Mortgage Loan
shall be deposited in the related Distribution Account, and the Trustee, or its
designee, upon receipt of such deposit and two copies of a Request for Release
with respect to such Defective Mortgage Loan, shall release to the Sponsor or
the Depositor, as applicable, the related Trustee Mortgage File and shall
execute and deliver such instruments of transfer or assignment, in each case
without recourse, representation or warranties, as either party shall furnish to
it and as shall be necessary to vest in such party any Defective Mortgage Loan
released pursuant hereto and the Trustee, or its designee, shall have no further
responsibility with regard to such Trustee Mortgage File (it being understood
that the Trustee shall have no responsibility for determining the sufficiency of
such assignment for its intended purpose). In lieu of repurchasing any such
Defective Mortgage Loan as provided above, the Sponsor may cause such Defective
Mortgage Loan to be removed from the Trust Fund (in which case it shall become a
Deleted Mortgage Loan) and substitute one or more Replacement Mortgage Loans in
the manner and subject to the limitations set forth in Section 2.04(b) below. It
is understood and agreed that the obligation of the Sponsor or the Transferor
(or the Depositor, if applicable) to cure or to repurchase (or to substitute
for) any Mortgage Loan as to which a breach has occurred and is continuing shall
constitute the sole remedy against the Sponsor or the Transferor (or the
Depositor, if applicable) respecting such breach available to the Trustee on
behalf of the Certificateholders. With respect to the representations and
warranties that are made to the best of the Sponsor's knowledge, if it is
discovered by any of the Depositor, the Sponsor 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, then
notwithstanding the Sponsor's lack of knowledge with respect to the substance of
such representation and warranty, such inaccuracy shall be deemed a breach of
the applicable representation or warranty.
(a) Any substitution of Replacement Mortgage Loans for Deleted Mortgage
Loans made pursuant to Section 2.04(a) above must be effected prior to the last
Business Day that is
43
within two years after the Closing Date. As to any Deleted Mortgage Loan for
which the Sponsor substitutes a Replacement Mortgage Loan or Loans, such
substitution shall be effected by delivering to the Trustee for such Replacement
Mortgage Loan or Loans, the Mortgage Note, the Mortgage, the Assignment to the
Trustee, and such other documents and agreements, with all necessary
endorsements thereon, together with an Officers' Certificate stating that each
such Replacement Mortgage Loan satisfies the definition thereof and specifying
the Substitution Amount (as described below), if any, in connection with such
substitution. The Trustee shall acknowledge receipt for such Replacement
Mortgage Loan and, within 45 days thereafter, shall review such Mortgage
Documents as specified in this Agreement under Section 2.02(a) and deliver to
the Depositor, with respect to such Replacement Mortgage Loans, a certification
substantially in the form of a revised Initial Certification, with any
exceptions noted thereon. Within one year of the date of substitution, the
Trustee shall deliver to the Depositor a certification substantially in the form
of a revised Final Certification, with respect to such Replacement Mortgage
Loans, with any exceptions noted thereon. Monthly Payments due with respect to
Replacement Mortgage Loans in the month of substitution shall not be included as
part of the Trust Fund and shall be retained by the Sponsor. For the month of
substitution, distributions to Certificateholders shall reflect the collections
and recoveries in respect of such Deleted Mortgage in the Due Period preceding
the month of substitution and the Sponsor shall thereafter be entitled to retain
all amounts subsequently received in respect of such Deleted Mortgage Loan. Upon
such substitution, such Replacement Mortgage Loan shall constitute part of the
Trust Fund and shall be subject in all respects to the terms of this Agreement
and the Mortgage Loan Sale and Assignment Agreement, including all
representations and warranties thereof included in the Mortgage Loan Sale and
Assignment Agreement, in each case as of the date of substitution.
For any month in which the Sponsor substitutes one or more Replacement
Mortgage Loans for one or more Deleted Mortgage Loans, the Trustee, based upon
information provided by the Servicer, shall determine the excess (each, a
"Substitution Amount"), if any, by which the aggregate Purchase Price of all
such Deleted Mortgage Loans exceeds the aggregate Stated Principal Balance of
the Replacement Mortgage Loans replacing such Deleted Mortgage Loans, together
with one month's interest on such excess amount at the applicable Net Mortgage
Rate. On the date of such substitution, the Sponsor shall deliver or cause to be
delivered to the Servicer for deposit in the Custodial Account an amount equal
to the related Substitution Amount, if any, and the Trustee, upon receipt of the
related Replacement Mortgage Loan or Loans and two copies of a Request for
Release with respect to the Deleted Mortgage Loan or Loans, shall release to the
Sponsor the related Trustee Mortgage File or Files and shall execute and deliver
such instruments of transfer or assignment, in each case without recourse, as
the Sponsor shall deliver to it and as shall be necessary to vest therein any
Deleted Mortgage Loan released pursuant hereto.
In addition, the Sponsor shall obtain at its own expense and deliver to the
Trustee an Opinion of Counsel to the effect that such substitution (either
specifically or as a class of transactions) shall not cause (a) any federal tax
to be imposed on the Trust Fund, including without limitation, any federal tax
imposed on "prohibited transactions" under Section 860F(a)(l) of the Code or on
"contributions after the startup date" under Section 860G(d)(l) of the Code, or
(b) any REMIC created hereunder to fail to qualify as a REMIC at any time that
any Certificate is outstanding. If such Opinion of Counsel can not be delivered,
then such substitution may only be effected at such time as the required Opinion
of Counsel can be given.
(b) Upon discovery by the Sponsor, the Depositor, the 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 within two Business Days give
44
written notice thereof to the other parties. In connection therewith, the
Sponsor or Depositor, as applicable, shall repurchase, or the Sponsor, subject
to the limitations set forth in Section 2.04(b), shall substitute one or more
Replacement Mortgage Loans for the affected Mortgage Loan within 90 days of the
earlier of discovery or receipt of such notice with respect to such affected
Mortgage Loan. Any such repurchase or substitution shall be made in the same
manner as set forth in Sections 2.04(a) and 2.04(b) above. The Trustee shall
re-convey to the Sponsor 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.
The Sponsor indemnifies and holds the Trust Fund, the Trustee, the
Depositor, the Servicer and each Certificateholder harmless against any and all
taxes, claims, losses, penalties, fines, forfeitures, reasonable legal fees and
related costs, judgments, and any other costs, fees and expenses that the Trust
Fund, the Trustee, the Depositor, the Servicer and any Certificateholder may
sustain in connection with any actions of such party relating to a repurchase of
a Mortgage Loan other than in compliance with the terms of this Section 2.04 and
the Mortgage Loan Sale and Assignment Agreement, to the extent that any such
action causes (i) any federal or state tax to be imposed on the Trust Fund,
including without limitation, any federal tax imposed on "prohibited
transactions" under Section 860F(a)(1) of the Code or on "contributions after
the startup date" under Section 860G(d)(1) of the Code, or (ii) any REMIC formed
hereby to fail to qualify as a REMIC at any time that any Certificate is
outstanding.
(c) Notwithstanding anything to the contrary in this Agreement, Sponsor
shall service and administer the Additional Collateral, it being understood and
agreed that only Sponsor shall service and administer the related securities
accounts, lines of credit and guarantees with respect to Additional Collateral.
Section 2.05. Grant Clause.
(a) It is intended that the conveyance of the Depositor's right, title and
interest in and to property constituting the Trust Fund pursuant to this
Agreement shall constitute, and shall be construed as, a sale of such property
and not a grant of a security interest to secure a loan. However, if such
conveyance is deemed to be in respect of a loan, it is intended that: (1) the
rights and obligations of the parties shall be established pursuant to the terms
of this Agreement; (2) the Depositor hereby grants to the Trustee for the
benefit of the Holders of the Certificates a first priority security interest in
all of the Depositor's right, title and interest in, to and under, whether now
owned or hereafter acquired, the Trust Fund and all proceeds of any and all
property constituting the Trust Fund to secure payment of the Certificates; and
(3) this Agreement shall constitute a security agreement under applicable law.
If such conveyance is deemed to be in respect of a loan and the trust created by
this Agreement terminates prior to the satisfaction of the claims of any Person
holding any Certificate, the security interest created hereby shall continue in
full force and effect and the Trustee shall be deemed to be the collateral agent
for the benefit of such Person, and all proceeds shall be distributed as herein
provided.
(b) The Depositor shall, to the extent consistent with this Agreement, take
such reasonable actions as may be necessary to ensure that, if this Agreement
were deemed to create a security interest in the Mortgage Loans and the other
property described above, such security interest would be deemed to be a
perfected security interest of first priority under applicable law and will be
maintained as such throughout the term of this Agreement. The Depositor will, at
its own expense, make all initial filings on or about the Closing Date and shall
forward a copy of such filing or filings to the Trustee. Without limiting the
generality of the foregoing, the Depositor shall prepare and forward for filing,
or shall cause to be forwarded for filing, at the
45
expense of the Depositor, all filings necessary to maintain the effectiveness of
any original filings necessary under the relevant UCC to perfect the Trustee's
security interest in or lien on the Mortgage Loans and the other property
described above, including without limitation (x) continuation statements, and
(y) such other statements as may be occasioned by (1) any change of name of
Sponsor, the Depositor or the Trustee, (2) any change of location of the place
of business or the chief executive office of the Sponsor or the Depositor, (3)
any transfer of any interest of the Depositor in any Mortgage Loan or (4) any
change under the relevant UCC or other applicable laws. The Depositor shall not
organize under the law of any jurisdiction other than the State under which each
is organized as of the Closing Date (whether changing its jurisdiction of
organization or organizing under an additional jurisdiction) without giving 30
days prior written notice of such action to its immediate and intermediate
transferee, including the Trustee. Before effecting such change, the Depositor
proposing to change its jurisdiction of organization shall prepare and file in
the appropriate filing office any financing statements or other statements
necessary to continue the perfection of the interests of its immediate and
mediate transferees, including the Trustee, in the Mortgage Loans and the other
property described above. In connection with the transactions contemplated by
this Agreement, the Depositor authorizes its immediate or mediate transferee to
file in any filing office any initial financing statements, any amendments to
financing statements, any continuation statements, or any other statements or
filings described in this paragraph (b).
ARTICLE III.
THE CERTIFICATES
Section 3.01. The Certificates.
(a) The Certificates shall be issuable in registered form only and shall be
securities governed by Article 8 of the New York Uniform Commercial Code. The
Book-Entry Certificates will be evidenced by one or more certificates,
beneficial ownership of which will be held in the dollar denominations in
Certificate Principal Amount or in the Percentage Interests specified herein.
Each Class of Book-Entry Certificates will be issued in the minimum
denominations in Certificate Principal Amount specified in the Preliminary
Statement hereto and in integral multiples of $1 in excess thereof. The Residual
Certificates shall be issued as single Certificates and maintained in
definitive, fully registered form in a denomination equal to 100% of the
Percentage Interest of each such Class.
(b) The Certificates shall be executed by manual or facsimile signature on
behalf of the Trustee by an authorized officer. Each Certificate shall, on
original issue, be authenticated by the Trustee or an Authenticating Agent upon
the order of the Depositor upon receipt by the Trustee of the Trustee Mortgage
Files described in Section 2.01. No Certificate shall be entitled to any benefit
under this Agreement, or be valid for any purpose, unless there appears on such
Certificate a certificate of authentication substantially in the form provided
for herein, executed by an authorized officer of the Trustee or of an
Authenticating Agent, by manual signature, and such certification upon any
Certificate shall be conclusive evidence, and the only evidence, that such
Certificate has been duly authenticated and delivered hereunder. All
Certificates shall be dated the date of their authentication. At any time and
from time to time after the execution and delivery of this Agreement, the
Depositor may deliver Certificates executed by the Trustee to the Trustee or the
Authenticating Agent for authentication and the Trustee or the Authenticating
Agent shall authenticate and deliver such Certificates as in this Agreement
provided and not otherwise.
46
(c) The Class B-1, Class B-2 and Class B-3 certificates offered and sold in
reliance on the exemption from registration under Rule 144A under the Securities
Act shall be issued initially in the form of one or more permanent global
Certificates in definitive, fully registered form without interest coupons with
the applicable legends set forth in Exhibit A added to the forms of such
Certificates (each, a "Restricted Global Security").
Section 3.02. Registration.
The Trustee is hereby appointed, and the Trustee hereby accepts its
appointment as, initial Certificate Registrar in respect of the Certificates and
shall maintain books for the registration and for the transfer of Certificates
(the "Certificate Register"). The Trustee may appoint a bank or trust company to
act as successor Certificate Registrar. A registration book shall be maintained
for the Certificates collectively. The Certificate Registrar may resign or be
discharged or removed and a new successor may be appointed in accordance with
the procedures and requirements set forth in Sections 6.06 and 6.07 hereof with
respect to the resignation, discharge or removal of the Trustee and the
appointment of a successor Trustee. The Certificate Registrar may appoint, by a
written instrument delivered to the Holders, any bank or trust company to act as
co-registrar under such conditions as the Certificate Registrar may prescribe;
provided, however, that the Certificate Registrar shall not be relieved of any
of its duties or responsibilities hereunder by reason of such appointment.
Section 3.03. Transfer and Exchange of Certificates.
(a) A Certificate (other than Book-Entry Certificates which shall be
subject to Section 3.09 hereof) may be transferred by the Holder thereof only
upon presentation and surrender of such Certificate at the office of the
Certificate Registrar duly endorsed or accompanied by an assignment duly
executed by such Holder or his duly authorized attorney in such form as shall be
satisfactory to the Certificate Registrar. Upon the transfer of any Certificate
in accordance with the preceding sentence, the Trustee shall execute, and the
Authenticating Agent shall authenticate and deliver to the transferee, one or
more new Certificates of the same Class and evidencing, in the aggregate, the
same aggregate Certificate Principal Amount as the Certificate being
transferred. No service charge shall be made to a Certificateholder for any
registration of transfer of Certificates, but the Certificate Registrar may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any registration of transfer of Certificates.
(b) A Certificate may be exchanged by the Holder thereof for any number of
new Certificates of the same Class, in authorized denominations, representing in
the aggregate the same Certificate Principal Amount as the Certificate
surrendered, upon surrender of the Certificate to be exchanged at the office of
the Certificate Registrar duly endorsed or accompanied by a written instrument
of transfer duly executed by such Holder or his duly authorized attorney in such
form as is satisfactory to the Certificate Registrar. Certificates delivered
upon any such exchange will evidence the same obligations, and will be entitled
to the same rights and privileges, as the Certificates surrendered. No service
charge shall be made to a Certificateholder for any exchange of Certificates,
but the Certificate Registrar may require payment of a sum sufficient to cover
any tax or governmental charge that may be imposed in connection with any
exchange of Certificates. Whenever any Certificates are so surrendered for
exchange, the Trustee shall execute, and the Authenticating Agent shall
authenticate, date and deliver the Certificates which the Certificateholder
making the exchange is entitled to receive.
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(c) By acceptance of a Restricted Certificate, whether upon original
issuance or subsequent transfer, each Holder of such a Certificate acknowledges
the restrictions on the transfer of such Certificate set forth thereon and
agrees that it will transfer such a Certificate only as provided herein.
The following restrictions shall apply with respect to the transfer and
registration of transfer of a Restricted Certificate to a transferee that takes
delivery in the form of a Definitive Certificate:
(i) The Certificate Registrar shall register the transfer of a
Restricted Certificate if the requested transfer is (x) to the Depositor or
an affiliate (as defined in Rule 405 under the ▇▇▇▇ ▇▇▇) of the Depositor
or (y) being made to a "qualified institutional buyer" (a "QIB") as defined
in Rule 144A under the Securities Act by a transferor that has provided the
Certificate Registrar with a certificate in the form of Exhibit G hereto;
and
(ii) The Certificate Registrar shall register the transfer of a
Restricted Certificate if the requested transfer is being made to an
"accredited investor" under Rule 501(a)(1), (2), (3) or (7) under the
Securities Act, or to any Person all of the equity owners in which are such
accredited investors, by a transferor who furnishes to the Certificate
Registrar a letter of the transferee substantially in the form of Exhibit H
hereto.
(d) (i) No transfer of an ERISA-Restricted Certificate or a Class A-R
Certificate shall be made unless the prospective transferee provides the Trustee
and the Depositor with (I) a representation as set forth in Exhibit B or Exhibit
I, as applicable, to the effect that such transferee is not an employee benefit
plan subject to Title I of ERISA, a plan subject to Section 4975 of the Code or
a plan or arrangement subject to any provisions under any federal, state, local,
non-U.S. or other laws or regulations that are substantively similar to the
foregoing provisions of ERISA or the Code ("Similar Law") (collectively, a
"Plan"), and is not directly or indirectly acquiring such Certificate for, on
behalf of or with any assets of any such Plan, or (II) solely in the case of
ERISA-Restricted Certificates, (A) if the ERISA-Restricted Certificate has been
the subject of an ERISA-Qualifying Underwriting, a representation as set forth
in Exhibit I that such transferee is an insurance company that is acquiring the
ERISA-Restricted Certificate with assets contained in an "insurance company
general account," as defined in Section V(E) of Prohibited Transaction Class
Exemption ("PTCE") 95-60, and the acquisition and holding of the
ERISA-Restricted Certificate are covered and exempt under Sections I and III of
PTCE 95-60, or (B) solely in the case of a Definitive Certificate, an Opinion of
Counsel satisfactory to the Trustee and the Depositor to the effect that the
acquisition and holding of such ERISA-Restricted Certificate will not constitute
or result in a nonexempt prohibited transaction under ERISA or the Code, or a
violation of Similar Law, and will not subject the Certificate Registrar, the
Depositor, the Servicer or the Trustee to any obligation in addition to those
expressly undertaken in this Agreement, which Opinion of Counsel shall not be an
expense of the Certificate Registrar, the Depositor, the Servicer or the
Trustee.
(ii) Except in the case of a Definitive Certificate, the
representations set forth in paragraph (i) of this Subsection 3.03(d),
other than subparagraph (II)(B) and in Exhibit B or Exhibit I, as
applicable, shall be deemed to have been made to the Trustee or the
Depositor by the transferee's acceptance of an ERISA-Restricted Certificate
or a Class A-R Certificate (or the acceptance by a Certificate Owner of the
beneficial interest in any Class of ERISA-Restricted Certificates or a
Class A-R Certificate). Notwithstanding any
48
other provision herein to the contrary, any purported transfer of an
ERISA-Restricted Certificate or a Class A-R Certificate to or on behalf of
a Plan without the delivery to the Trustee or the Depositor of a
representation or an Opinion of Counsel satisfactory to the Trustee or the
Depositor as described above shall be void and of no effect. None of the
Certificate Registrar, the Depositor, the Servicer or the Trustee shall be
under any liability to any Person for any registration or transfer of any
ERISA-Restricted Certificate or Class A-R Certificate that is in fact not
permitted by this Section 3.03(d) nor shall the Paying Agent be under any
liability 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
Certificate Registrar in accordance with the foregoing requirements. The
Certificate Registrar, Depositor, Servicer, Paying Agent and/or Trustee
shall be entitled, but not obligated, to recover from any Holder of any
ERISA-Restricted Certificate or Class A-R Certificate that was in fact a
Plan and that held such Certificate in violation of this Section 3.03(d)
all payments made on such ERISA-Restricted Certificate or Class A-R
Certificate at and after the time it commenced such holding. Any such
payments so recovered shall be paid and delivered to the last preceding
Holder of such Certificate that is not a Plan.
(iii) Notwithstanding the foregoing, no representation or Opinion of
Counsel shall be required for the initial issuance of the ERISA-Restricted
Certificates.
(e) As a condition of the registration of transfer or exchange of any
Certificate, the Certificate Registrar may require the certified taxpayer
identification number of the owner of the Certificate and the payment of a sum
sufficient to cover any tax or other governmental charge imposed in connection
therewith; provided, however, that the Certificate Registrar shall have no
obligation to require such payment or to determine whether or not any such tax
or charge may be applicable. No service charge shall be made to the
Certificateholder for any registration, transfer or exchange of a Certificate.
(f) Notwithstanding anything to the contrary contained herein, no Residual
Certificate or beneficial interest therein may be owned, pledged or transferred,
directly or indirectly, by or to (i) a Disqualified Organization or (ii) an
individual, corporation or partnership or other person unless, in the case of
clause (ii), such person is (A) not a Non-U.S. Person or (B) is a Non-U.S.
Person that holds a Residual Certificate in connection with the conduct of a
trade or business within the United States and has furnished the transferor and
the Certificate Registrar with an effective Internal Revenue Service Form W-8ECI
or successor form at the time and in the manner required by the Code (any such
person who is not covered by clause (A) or (B) above is referred to herein as a
"Non-permitted Foreign Holder").
Prior to and as a condition of the registration of any transfer, sale or
other disposition of a Residual Certificate or a beneficial interest therein,
the proposed transferee shall deliver to the Trustee and the Certificate
Registrar an affidavit in substantially the form attached hereto as Exhibit B
representing and warranting, among other things, that such transferee is neither
a Disqualified Organization, an agent or nominee acting on behalf of a
Disqualified Organization, nor a Non-permitted Foreign Holder (any such
transferee, a "Permitted Transferee"), and the proposed transferor shall deliver
to the Trustee and the Certificate Registrar an affidavit in substantially the
form attached hereto as Exhibit C. In addition, the Trustee or the Certificate
Registrar may (but shall have no obligation to) require, prior to and as a
condition of any such transfer, the delivery by the proposed transferee of an
Opinion of Counsel, addressed to the Trustee and the Certificate Registrar, that
such proposed transferee or, if the proposed transferee is an agent or nominee,
the proposed beneficial owner, is not a Disqualified Organization, agent or
nominee thereof, or a Non-permitted Foreign Holder. Notwithstanding the
registration in the Certificate Register of any transfer, sale, or other
disposition of a Residual Certificate to a Disqualified Organization, an agent
or nominee thereof, or Non-permitted Foreign Holder, such registration shall be
deemed to be of no legal force or effect whatsoever and such Disqualified
Organization, agent
49
or nominee thereof, or Non-permitted Foreign Holder shall not be deemed to be a
Certificateholder for any purpose hereunder, including, but not limited to, the
receipt of distributions on such Residual Certificate. The Depositor, the
Certificate Registrar and the Trustee shall be under no liability to any Person
for any registration or transfer of a Residual Certificate to a Disqualified
Organization, agent or nominee thereof or Non-permitted Foreign Holder or for
the Paying Agent making any payments due on such Residual Certificate to the
Holder thereof or for taking any other action with respect to such Holder under
the provisions of the Agreement, so long as the transfer was effected in
accordance with this Section 3.03(f), unless the Certificate Registrar shall
have actual knowledge at the time of such transfer or the time of such payment
or other action that the transferee is a Disqualified Organization, or an agent
or nominee thereof, or Non-permitted Foreign Holder. The Certificate Registrar
shall be entitled to recover from any Holder of a Residual Certificate that was
a Disqualified Organization, agent or nominee thereof, or Non-permitted Foreign
Holder at the time it became a Holder or at any subsequent time became a
Disqualified Organization, agent or nominee thereof, or Non-permitted Foreign
Holder, all payments made on such Residual Certificate at and after either of
such times (and all costs and expenses, including but not limited to attorneys'
fees, incurred in connection therewith). Any payment (not including any such
costs and expenses) so recovered by the Certificate Registrar shall be paid and
delivered to the last preceding Holder of such Residual Certificate.
If any purported transferee shall become a registered Holder of a Residual
Certificate in violation of the provisions of this Section 3.03(f), then upon
receipt of written notice to the Trustee that the registration of transfer of
such Residual Certificate was not in fact permitted by this Section 3.03(f),
such transfer shall be absolutely null and void and shall vest no rights in the
purported transferee and the last preceding Permitted Transferee shall be
restored to all rights as Holder thereof retroactive to the date of such
registration of transfer of such Residual Certificate. The Depositor, the
Certificate Registrar and 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 this Section 3.03(f), or for the Paying Agent making any payment
due on such Certificate to the registered Holder thereof or for taking any other
action with respect to such Holder under the provisions of this Agreement so
long as the transfer was registered upon receipt of the affidavit described in
the preceding paragraph of this Section 3.03(f).
(g) Each Holder or Certificate Owner of a Restricted Certificate,
ERISA-Restricted Certificate or Residual Certificate, or an interest therein, by
such Holder's or Owner's acceptance thereof, shall be deemed for all purposes to
have consented to the provisions of this section.
Section 3.04. Cancellation of Certificates.
Any Certificate surrendered for registration of transfer or exchange shall
be cancelled and retained in accordance with normal retention policies with
respect to cancelled certificates maintained by the Trustee or the Certificate
Registrar.
Section 3.05. Replacement of Certificates.
If (i) any Certificate is mutilated and is surrendered to the Trustee or
the Certificate Registrar or (ii) the Trustee or the Certificate Registrar
receives evidence to its satisfaction of the
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destruction, loss or theft of any Certificate, and there is delivered to the
Trustee and the Certificate Registrar such security or indemnity as may be
required by them to save each of them harmless, then, in the absence of notice
to the Depositor, the Trustee or the Certificate Registrar that such destroyed,
lost or stolen Certificate has been acquired by a protected purchaser, the
Trustee shall execute and the Authenticating Agent shall authenticate and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Certificate, a new Certificate of like tenor and Certificate Principal
Amount. Upon the issuance of any new Certificate under this Section 3.05, the
Trustee, the Depositor or the Certificate Registrar 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, the Depositor or the Certificate Registrar) connected therewith.
Any replacement Certificate issued pursuant to this Section 3.05 shall
constitute complete and indefeasible evidence of ownership in the applicable
Trust Fund, as if originally issued, whether or not the lost, stolen or
destroyed Certificate shall be found at any time.
If after the delivery of such new Certificate, a protected purchaser of the
original Certificate in lieu of which such new Certificate was issued presents
for payment such original Certificate, the Depositor, the Certificate Registrar
and the Trustee or any agent shall be entitled to recover such new Certificate
from the Person to whom it was delivered or any Person taking therefrom, except
a protected purchaser, and shall be entitled to recover upon the security or
indemnity provided therefor to the extent of any loss, damage, cost or expenses
incurred by the Depositor, the Certificate Registrar, the Trustee or any agent
in connection therewith.
Section 3.06. Persons Deemed Owners.
Subject to the provisions of Section 3.09 with respect to Book-Entry
Certificates, the Depositor, the Trustee, the Certificate Registrar, the Paying
Agent and any agent of any of them shall treat the Person in whose name any
Certificate is registered upon the books of the Certificate Registrar as the
owner of such Certificate for the purpose of receiving distributions pursuant to
Sections 5.01 and 5.02 and for all other purposes whatsoever, and neither the
Depositor, the Trustee, the Certificate Registrar, the Paying Agent nor any
agent of any of them shall be affected by notice to the contrary.
Section 3.07. Temporary Certificates.
(a) Pending the preparation of definitive Certificates, upon the order of
the Depositor, the Trustee shall execute and the Authenticating Agent shall
authenticate and deliver temporary Certificates that are printed, lithographed,
typewritten, mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Certificates in lieu of which they
are issued and with such variations as the authorized officers executing such
Certificates may determine, as evidenced by their execution of such
Certificates.
(b) If temporary Certificates are issued, the Depositor will cause
definitive Certificates to be prepared without unreasonable delay. After the
preparation of definitive Certificates, the temporary Certificates shall be
exchangeable for definitive Certificates upon surrender of the temporary
Certificates at the office or agency of the Certificate Registrar without charge
to the Holder. Upon surrender for cancellation of any one or more temporary
Certificates, the Trustee shall execute and the Authenticating Agent shall
authenticate and deliver in exchange therefor a like aggregate Certificate
Principal Amount of definitive Certificates of the same Class in the authorized
denominations. Until so exchanged, the temporary Certificates shall in all
respects be entitled to the same benefits under this Agreement as definitive
Certificates of the same Class.
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Section 3.08. Appointment of Paying Agent.
The Trustee may appoint a Paying Agent (which may be the Trustee) for the
purpose of making distributions to Certificateholders hereunder. The Trustee
shall cause any Paying Agent to execute and deliver to the Trustee an instrument
in which such Paying Agent shall agree with the Trustee that such Paying Agent
will hold all sums held by it for the payment to Certificateholders in an
Eligible Account (which shall be the Distribution Account) in trust for the
benefit of the Certificateholders entitled thereto until such sums shall be paid
to the Certificateholders. All funds remitted by the Trustee to any such Paying
Agent for the purpose of making distributions shall be paid to
Certificateholders on each Distribution Date and any amounts not so paid shall
be returned on such Distribution Date to the Trustee. If the Paying Agent is not
the Trustee, the Trustee shall cause to be remitted to the Paying Agent on or
before the Business Day prior to each Distribution Date, by wire transfer in
immediately available funds, the funds to be distributed on such Distribution
Date. Any Paying Agent shall be either a bank or trust company or otherwise
authorized under law to exercise corporate trust powers.
Section 3.09. Book-Entry Certificates.
(a) Each Class of Book-Entry Certificates, upon original issuance, shall be
issued in the form of one or more typewritten Certificates representing the
Book-Entry Certificates. The Book-Entry Certificates shall initially be
registered on the Certificate Register in the name of the nominee of the
Clearing Agency, and no Certificate Owner will receive a definitive certificate
representing such Certificate Owner's interest in the Book-Entry Certificates,
except as provided in Section 3.09(c). Unless Definitive Certificates have been
issued to Certificate Owners of Book-Entry Certificates pursuant to Section
3.09(c):
(i) the provisions of this Section 3.09 shall be in full force and
effect;
(ii) the Certificate Registrar, the Paying Agent and the Trustee shall
deal with the Clearing Agency for all purposes (including the making of
distributions on the Book-Entry Certificates) as the authorized
representatives of the Certificate Owners and the Clearing Agency and shall
be responsible for crediting the amount of such distributions to the
accounts of such Persons entitled thereto, in accordance with the Clearing
Agency's normal procedures;
(iii) to the extent that the provisions of this Section 3.09 conflict
with any other provisions of this Agreement, the provisions of this Section
3.09 shall control; and
(iv) the rights of Certificate Owners shall be exercised only through
the Clearing Agency and the Clearing Agency Participants and shall be
limited to those established by law and agreements between such Certificate
Owners and the Clearing Agency and/or the Clearing Agency Participants.
Unless and until Definitive Certificates are issued pursuant to Section
3.09(c), the initial Clearing Agency will make book-entry transfers among
the Clearing Agency Participants and receive and transmit distributions of
principal of and interest on the Book-Entry Certificates to such Clearing
Agency Participants.
(b) Whenever notice or other communication to the Certificateholders is
required under this Agreement, unless and until Definitive Certificates shall
have been issued to Certificate Owners pursuant to Section 3.09(c), the Trustee
shall give all such notices and communications specified herein to be given to
Holders of the Book-Entry Certificates to the Clearing Agency.
52
(c) If (i) (A) the Clearing Agency or the Depositor advises the Paying
Agent in writing that the Clearing Agency is no longer willing or able to
discharge properly its responsibilities with respect to the Book-Entry
Certificates, and (B) the Depositor is unable to locate a qualified successor
satisfactory to the Depositor and the Paying Agent, (ii) the Depositor, at its
option, advises the Paying Agent in writing that it elects to terminate the
book-entry system through the Clearing Agency or (iii) after the occurrence of
an Event of Default, Certificate Owners representing beneficial interests
aggregating not less than 50% of the Class Principal Amount of a Class of
Book-Entry Certificates advise the Paying Agent and the Clearing Agency through
the Clearing Agency Participants in writing that the continuation of a
book-entry system through the Clearing Agency is no longer in the best interests
of the Certificate Owners of a Class of Book-Entry Certificates, the Certificate
Registrar shall notify the Clearing Agency to effect notification to all
Certificate Owners, through the Clearing Agency, of the occurrence of any such
event and of the availability of Definitive Certificates to Certificate Owners
requesting the same. Upon surrender to the Certificate Registrar of the
Book-Entry Certificates by the Clearing Agency, accompanied by registration
instructions from the Clearing Agency for registration, the Certificate
Registrar shall issue the Definitive Certificates. None of the Depositor, the
Certificate Registrar or the Trustee shall be liable for any delay in delivery
of such instructions and may conclusively rely on, and shall be protected in
relying on, such instructions. Upon the issuance of Definitive Certificates all
references herein to obligations imposed upon or to be performed by the Clearing
Agency shall be deemed to be imposed upon and performed by the Certificate
Registrar, to the extent applicable, with respect to such Definitive
Certificates and the Certificate Registrar shall recognize the holders of the
Definitive Certificates as Certificateholders hereunder. Notwithstanding the
foregoing, the Certificate Registrar, upon the instruction of the Depositor,
shall have the right to issue Definitive Certificates on the Closing Date in
connection with credit enhancement programs.
ARTICLE IV.
ADMINISTRATION OF THE TRUST FUND
Section 4.01. Custodial Accounts; Distribution Account.
(a) On or prior to the Closing Date, the Servicer shall establish and
maintain one or more Custodial Accounts, as provided herein, into which the
Servicer shall deposit daily, within two Business Days of receipt thereof, in
immediately available funds, any Scheduled Payments and unscheduled payments
with respect to the Mortgage Loans, net of any deductions or reimbursements
permitted under this Agreement. Prior to 1:00 p.m. New York City time on each
Distribution Account Deposit Date, the Servicer shall remit to the Trustee for
deposit into the Distribution Account, all amounts so required to be deposited
into such account in accordance with the terms of this Agreement.
(b) Funds in the Custodial Accounts may be invested in Permitted
Investments selected by the Servicer, which shall mature not later than one
Business Day prior to the Distribution Account Deposit Date (except that if such
Permitted Investment is an obligation of the Servicer or is managed or advised
by the Servicer or its affiliates, then such Permitted Investment shall mature
not later than such applicable Distribution Account Deposit Date) and any such
Permitted Investment shall not be sold or disposed of prior to its maturity. All
such Permitted Investments shall be made in the name of the Servicer (in its
capacity as such) or its nominee. All income and gain realized from any
Permitted Investment shall be for the benefit of the Servicer as servicing
compensation and shall be subject to its withdrawal or order from time to time,
and shall not be part of the Trust Fund. The amount of any losses incurred in
respect of
53
any such investments shall be deposited in the Custodial Accounts by the
Servicer out of its own funds, without any right of reimbursement therefor,
immediately as realized. Any such funds that are not invested in Permitted
Investments may be held uninvested.
(c) The Trustee, shall establish and maintain an Eligible Account entitled
"Distribution Account of ▇▇▇▇▇ Fargo Bank, N.A., as Trustee, for the benefit of
▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors Trust Series MLCC 2006-1 Holders of Mortgage
Pass-Through Certificates." The Trustee shall, promptly upon receipt from the
Servicer on each Distribution Account Deposit Date, deposit into the
Distribution Account and retain on deposit until the related Distribution Date
the following amounts:
(i) the aggregate of collections with respect to the Mortgage Loans
remitted by the Servicer from the Custodial Accounts in accordance with
this Agreement, including the amount of any Advances or Compensating
Interest Payments with respect to the Mortgage Loans required to be paid by
the Servicer; and
(ii) any other amounts so required to be deposited in the Distribution
Account in the related Due Period pursuant to this Agreement.
(d) In the event Servicer has remitted in error to the Distribution Account
any amount not required to be remitted in accordance with the definition of
Available Distribution Amount, it may at any time direct the Trustee to withdraw
such amount from the Distribution Account for repayment to the Servicer, as
applicable, by delivery of an Officer's Certificate of the Servicer to the
Trustee which describes the amount deposited in error.
(e) On each Distribution Date and Purchase Date, the Trustee shall
distribute the Available Distribution Amount to the Certificateholders and any
other parties entitled thereto in the amounts and priorities set forth in
Section 5.02. The Trustee may from time to time withdraw from the Distribution
Account and pay itself or the Servicer any amounts permitted to be paid or
reimbursed to such Person from funds in the Distribution Account pursuant to the
clauses (A) through (D) of the definition of Available Distribution Amount.
(f) Funds in the Distribution Account may be invested in Permitted
Investments selected by the Trustee, which shall mature not later than one
Business Day prior to the Distribution Date (except that if such Permitted
Investment is an obligation of the Trustee or is managed or advised by the
Trustee or its affiliates, then such Permitted Investment shall mature not later
than such applicable Distribution Date) and any such Permitted Investment shall
not be sold or disposed of prior to its maturity. All such Permitted Investments
shall be made in the name of the Trustee (in its capacity as such) or its
nominee. All income and gain realized from any Permitted Investment shall be for
the benefit of the Trustee and shall be subject to its withdrawal or order from
time to time, and shall not be part of the Trust Fund. The amount of any losses
incurred in respect of any such investments shall be deposited in such
Distribution Account by the Trustee out of its own funds, without any right of
reimbursement therefor, immediately as realized. Any such funds that are not
invested in Permitted Investments may be held uninvested.
Section 4.02. Reports to Trustee and Certificateholders.
On each Distribution Date, the Trustee shall have prepared and shall make
available to each Certificateholder and other interested parties a written
report setting forth the following
54
information (based solely on the report provided to the Trustee by the Servicer
pursuant to Section 9.18).
(i) the amount of the distributions, separately identified, with
respect to each Class of Certificates;
(ii) the amount of the distributions set forth in the clause (i)
allocable to principal, separately identifying the aggregate amount of any
Principal Prepayments or other unscheduled recoveries of principal included
in that amount;
(iii) the amount of the distributions set forth in the clause (i)
allocable to interest and how it was calculated;
(iv) the amount of any unpaid Interest Shortfall and the related
accrued interest thereon, with respect to each Class of Certificates;
(v) the Class Principal Amount of each Class of Certificates after
giving effect to the distribution of principal on that Distribution Date;
(vi) the Aggregate Stated Principal Balance of the Mortgage Loans in
each Mortgage Pool and the applicable Net WAC of the Mortgage Loans at the
end of the related Prepayment Period;
(vii) the Stated Principal Balance of the Mortgage Loans in each
Mortgage Pool whose Mortgage Rates adjust on the basis of the One-Year
Treasury index and the Six-Month LIBOR index at the end of the related
Prepayment Period;
(viii) the Pro Rata Senior Percentage, Senior Percentage and the
Subordinate Percentage for each Mortgage Pool for the following
Distribution Date;
(ix) the Senior Prepayment Percentage and Subordinate Prepayment
Percentage for each Mortgage Pool the following Distribution Date;
(x) in the aggregate and with respect to each Mortgage Pool, the
amount of Servicing Fee paid to or retained by the Servicer;
(xi) in the aggregate and with respect to each Mortgage Pool, the
amount of Advances for the related Due Period;
(xii) in the aggregate and with respect to each Mortgage Pool, the
number and Stated Principal Balance of the Mortgage Loans that were (A)
Delinquent (exclusive of Mortgage Loans in foreclosure) (1) 30 to 59 days,
(2) 60 to 89 days and (3) 90 or more days, (B) in foreclosure and
Delinquent (1) 30 to 59 days, (2) 60 to 89 days and (3) 90 or more days and
(C) in bankruptcy as of the close of business on the last day of the
calendar month preceding that Distribution Date as determined in accordance
with the MBA methodology;
(xiii) in the aggregate and with respect to each Mortgage Pool, for
any Mortgage Loan as to which the related Mortgaged Property was an REO
property during the preceding calendar month, the principal balance of that
Mortgage Loan as of the close of business on the last day of the related
Due Period;
55
(xiv) in the aggregate and with respect to each Mortgage Pool, the
total number and principal balance of any REO properties as of the close of
business on the last day of the preceding Due Period;
(xv) in the aggregate and with respect to each Mortgage Pool, the
amount of Realized Losses incurred during the preceding calendar month;
(xvi) in the aggregate and with respect to each Mortgage Pool, the
cumulative amount of Realized Losses incurred since the Closing Date;
(xvii) the Realized Losses, if any, allocated to each Class of
Certificates on that Distribution Date;
(xviii) the Certificate Interest Rate for each Class of Certificates
for that Distribution Date; and
(xix) the amount of any Compensating Interest Payments, if any,
allocated to each Class of Certificates on that Distribution Date.
The Trustee shall make such reports available each month via its website at
▇▇▇▇://▇▇▇.▇▇▇▇▇▇▇.▇▇▇. Assistance in using the website may be obtained by
calling the Trustee's customer service desk at (▇▇▇) ▇▇▇-▇▇▇▇.
Certificateholders and other parties that are unable to use the website are
entitled to have a paper copy mailed to them via first class mail by contacting
the Trustee and indicating such. In preparing or furnishing the foregoing
information, the Trustee shall be entitled to rely conclusively on the accuracy
of the information or data regarding the Mortgage Loans and the related REO
Properties that has been provided to the Trustee by the Servicer, and the
Trustee shall not be obligated to verify, recompute, reconcile or recalculate
any such information or data.
Upon receipt by the Trustee of the reasonable advance written request of
any Certificateholder that is a savings and loan, bank or insurance company, the
Trustee shall provide, or cause to be provided (or, to the extent that such
information or documentation is not required to be provided by a Servicer under
this Agreement, shall use reasonable efforts to obtain such information and
documentation from the Servicer, and provide) to such Certificateholders such
reports and access to information and documentation regarding the Mortgage Loans
as such Certificateholders may reasonably deem necessary to comply with
applicable regulations of the Office of Thrift Supervision or its successor or
other regulatory authorities with respect to an investment in the Certificates;
provided, however, that the Trustee shall be entitled to be reimbursed by such
Certificateholders for the Trustee's actual expenses incurred in providing such
reports and access.
The Trustee shall prepare and file with the Internal Revenue Service
("IRS"), on behalf of each of REMIC 1 and the Upper Tier REMIC, an application
for an employer identification number on IRS Form SS-4 or by any other
acceptable method. The Trustee shall also file a Form 8811 as required. The
Trustee, upon receipt from the IRS of the Notice of Taxpayer Identification
Number Assigned, shall upon request promptly forward a copy of such notice to
the Depositor. The Trustee shall furnish any other information that is required
by the Code and regulations thereunder to be made available to
Certificateholders. The Depositor shall cause the Servicer to provide the
Trustee with such information as is necessary for the Trustee to prepare such
reports.
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ARTICLE V.
DISTRIBUTIONS TO HOLDERS OF CERTIFICATES
Section 5.01. Distributions Generally.
(a) Subject to Section 7.01 respecting the final distribution on the
Certificates, on each Distribution Date the Trustee or the Paying Agent shall
make distributions in accordance with this Article V. Such distributions shall
be made by check mailed to each Certificateholder's address as it appears on the
Certificate Register of the Certificate Registrar or, upon written request made
to the Trustee at least five Business Days prior to the related Record Date by
any Certificateholder owning an aggregate initial Certificate Principal Amount
of at least $1,000,000, or in the case of a Residual Certificate, a Percentage
Interest of not less than 100%, by wire transfer in immediately available funds
to an account specified in the request and at the expense of such
Certificateholder; provided, however, that the final distribution in respect of
any Certificate shall be made only upon presentation and surrender of such
Certificate at the Certificate Registrar's Corporate Trust Office; provided,
further, that the foregoing provisions shall not apply to any Class of
Certificates as long as such Certificate remains a Book-Entry Certificate in
which case all payments made shall be made through the Clearing Agency and its
Clearing Agency Participants. Wire transfers will be made at the expense of the
Holder requesting such wire transfer by deducting a wire transfer fee from the
related distribution. Notwithstanding such final payment of principal of any of
the Certificates, each Residual Certificate will remain outstanding until the
termination of each REMIC and the payment in full of all other amounts due with
respect to the Residual Certificates and at such time such final payment in
retirement of any Residual Certificate will be made only upon presentation and
surrender of such Certificate at the Certificate Registrar's Corporate Trust
Office. If any payment required to be made on the Certificates is to be made on
a day that is not a Business Day, then such payment will be made on the next
succeeding Business Day.
(b) All distributions or allocations made with respect to
Certificateholders within each Class on each Distribution Date shall be
allocated among the outstanding Certificates in such Class equally in proportion
to their respective initial Class Principal Amounts (or Percentage Interests).
Section 5.02. Distributions from the Distribution Account.
(a) Subject to Sections 5.02(g) and 5.02(h), on each Distribution Date, the
Available Distribution Amount for the related Mortgage Pool (in the case of the
Senior Certificates and the Mortgage Pools in the aggregate (in the case of the
Subordinate Certificates) shall be withdrawn by the Trustee from the
Distribution Account and allocated among the classes of Senior Certificates and
Subordinate Certificates in the following order of priority:
(i) Concurrently, to the payment of the Interest Distribution Amount
and any accrued but unpaid Interest Shortfalls on each class of Senior
Certificates;
(ii) Concurrently, to the Senior Certificates from the Available
Distribution Amount remaining in the related Mortgage Pool after
application of amounts pursuant to clause (i) above, as follows:
(A) first, to the Class A-R Certificate and Class I-A
Certificates sequentially in that order, an amount up to the Senior
Principal Distribution
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Amount for Pool 1, until their respective Class Principal Amounts have
been reduced to zero; and
(B) second, to the Class II-A-1 and II-A-2 Certificates, pro rata
an amount up to the Senior Principal Distribution Amount for Pool 2,
until the Class Principal Amount thereof has been reduced to zero.
(iii) From the Available Distribution Amount from the Mortgage Pools
in the aggregate remaining after application amounts pursuant to clauses
(i) and (ii) above:
(A) to the Class M-1 Certificates, the payment of its applicable
Interest Distribution Amount and any outstanding Interest Shortfalls;
(B) to the Class M-2 Certificates, the payment of its applicable
Interest Distribution Amount and any outstanding Interest Shortfalls;
(C) to the Class M-3 Certificates, the payment of its applicable
Interest Distribution Amount and any outstanding Interest Shortfalls;
(D) to the Class B-1 Certificates, the payment of its applicable
Interest Distribution Amount and any outstanding Interest Shortfalls;
(E) to the Class B-2 Certificates, the payment of its applicable
Interest Distribution Amount and any outstanding Interest Shortfalls;
(F) to the Class B-3 Certificates, the payment of its applicable
Interest Distribution Amount and any outstanding Interest Shortfalls;
(G) to the Class M-1 Certificates, such class's Subordinate Class
Percentage of the Subordinate Principal Distribution Amount for each
Mortgage Pool, until its Class Principal Amount has been reduced to
zero;
(H) to the Class M-2 Certificates, such class's Subordinate Class
Percentage of the Subordinate Principal Distribution Amount for each
Mortgage Pool, until its Class Principal Amount has been reduced to
zero;
(I) to the Class M-3 Certificates, such class's Subordinate Class
Percentage of the Subordinate Principal Distribution Amount for each
Mortgage Pool, until its Class Principal Amount has been reduced to
zero;
(J) to the Class B-1 Certificates, such class's Subordinate Class
Percentage of the Subordinate Principal Distribution Amount for each
Mortgage Pool, until its Class Principal Amount has been reduced to
zero;
(K) to the Class B-2 Certificates, such class's Subordinate Class
Percentage of the Subordinate Principal Distribution Amount for each
Mortgage Pool, until its Class Principal Amount has been reduced to
zero; and
(L) to the Class B-3 Certificates, such class's Subordinate Class
Percentage of the Subordinate Principal Distribution Amount for each
Mortgage Pool, until its Class Principal Amount has been reduced to
zero.
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(iv) To the Class A-R Certificate, any remaining amount of the
Available Distribution Amount from the Mortgage Pools in the aggregate.
(b) (i) On each Distribution Date on and after the Credit Support Depletion
Date, the Available Distribution Amount for each Mortgage Pool remaining after
the distributions in clause (a) above and any distributions required to be made
pursuant to clause b(ii) and b(iii) below, will be distributed to the remaining
classes of the related Certificate Group on a pro rata basis, first, to pay the
Interest Distribution Amount and any accrued but unpaid Interest Shortfalls;
second, to pay the Senior Principal Distribution Amount; and third, to the Class
A-R Certificate, any remaining Available Distribution Amount for such Mortgage
Pool.
(ii) On each Distribution Date prior to the Credit Support Depletion
Date but after the reduction of the aggregate Class Principal Amount of the
Senior Certificates of a Certificate Group to zero, the remaining class or
classes of Senior Certificates in the remaining Certificate Group or
Groups, will be entitled to receive in reduction of their Class Principal
Amount, pro rata, based upon their Class Principal Amount immediately prior
to such Distribution Date, in addition to any principal prepayments related
to such remaining Senior Certificates' respective Mortgage Pool allocated
to such Senior Certificates, 100% of the Principal Payments on any Mortgage
Loan in the Mortgage Pool relating to the fully repaid class or classes of
Senior Certificates of the fully repaid Certificate Group; provided,
however, that if both (a) the weighted average of the Aggregate Subordinate
Percentage equals or exceeds 200% of the original weighted average of the
Aggregate Subordinate Percentage as of the Closing Date on or after the
Distribution Date in March 2009 and (b) the aggregate Stated Principal
Balance of the Mortgage Loans delinquent 60 days or more, averaged over the
last six months, as a percentage of the aggregate Class Principal Amount of
the Class M Certificates and Class B Certificates, does not exceed 100%,
then the additional allocation of principal prepayments to the Senior
Certificates in accordance with this clause (b) will not be made and 100%
of the Principal Prepayments on any Mortgage Loan in the Mortgage Pool
relating to the fully repaid class or classes of Senior Certificates will
be applied as a principal distribution to the Subordinate Certificates.
(iii) If on any Distribution Date on which the aggregate Class
Principal Amount of any class or classes of Senior Certificates would be
greater than the aggregate Stated Principal Balance of the Mortgage Loans
in its related Mortgage Pool (the amount of such excess, the
"Undercollateralized Amount," and any such class or classes of Senior
Certificates, the "Undercollateralized Senior Certificates") and the other
class or classes of Senior Certificates, the "Overcollateralized Senior
Certificates") and any Subordinate Certificates are still outstanding in
each case after giving effect to distributions to be made on such
Distribution Date, (i) 100% of amounts otherwise allocable to the
Subordinate Certificates in respect of principal will be distributed to the
Undercollateralized Senior Certificates in reduction of the Class Principal
Amounts thereof, until the aggregate Class Principal Amount of such class
or classes of Undercollateralized Senior Certificates is equal to the
aggregate Stated Principal Balance of the Mortgage Loans in its related
Senior Certificates, and (ii) the Interest Distribution Amount otherwise
allocable to the Subordinate Certificates on such Distribution Date will be
reduced, if necessary, and distributed to such class or classes of
Undercollateralized Senior Certificates pursuant to 5.02(a) above, in an
amount equal to the Net WAC of the related Mortgage Pool for such class or
classes of Undercollateralized Senior Certificates for such Distribution
Date on a balance equal to the related Undercollateralized Amount. Any such
reduction in the Interest Distribution
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Amount on the Subordinate Certificates will be allocated to the Class B-3,
Class B-2, Class B-1, Class M-3, Class M-2 and Class M-1 Certificates, in
that order.
(c) Notwithstanding the priority and allocation set forth in Section
5.02(a)(iii) above, if with respect to any Class of Subordinate Certificates on
any Distribution Date the sum of the related Class Subordination Percentages of
such Class and of all other Classes of Subordinate Certificates which have a
higher numerical Class designation than such Class is less than the Original
Applicable Credit Support Percentage for such Class, no distribution of
Principal Prepayments shall be made to any such Classes and the amount of such
Principal Prepayment otherwise distributable to such Classes shall be
distributed to any Classes of Subordinate Certificates having lower numerical
Class designations than such Class, pro rata, based on the Class Principal
Amounts of the respective Classes immediately prior to such Distribution Date
and shall be distributed in the sequential order provided in Section
5.02(a)(iii) above.
(d) Amounts distributed to the Residual Certificates pursuant to
subparagraph (a)(iv) of this Section 5.02 on any Distribution Date shall be
allocated among the REMIC residual interests represented thereby such that each
such interest is allocated the excess of funds available to the related REMIC
over required distributions to the regular interests in such REMIC on such
Distribution Date.
(e) For purposes of distributions provided in this Section 5.02, each
Mortgage Pool shall "relate" to the Senior Class or Classes of the applicable
Related Certificate Group.
(f) For purposes of distributions of interest in paragraph (a) of this
Section 5.02 such distributions to a Class of Certificates on any Distribution
Date shall be made first, in respect of Current Interest; and second, in respect
of Interest Shortfall.
Section 5.03. Allocation of Losses.
(a) On or prior to each Distribution Date, the Trustee shall aggregate the
information provided by the Servicer with respect to the total amount of
Realized Losses, with respect to the Mortgage Loans for the related Distribution
Date.
(b) On each Distribution Date, the principal portion of Realized Losses on
the Mortgage Loans with respect to such Distribution Date shall be allocated in
the following order:
(i) to the Class B-3 Certificates; second, to the Class B-2
Certificates; third, to the Class B-1 Certificates; fourth, to the Class
M-3 Certificates; fifth, to the Class M-2 Certificates; and sixth, to the
Class M-1 Certificates, in each case until the Class Principal Amount of
such class of Certificates has been reduced to zero; and
(ii) commencing on the Credit Support Depletion Date, Realized Losses
will be allocated among the Senior Certificates as follows:
first, if the Realized Loss occurs on a Mortgage Loan in a
Mortgage Pool where the aggregate Stated Principal Balance of the
Mortgage Loans in such Mortgage Pool is greater than the aggregate
Class Principal Amount of the related Senior Certificates, the
Realized Loss will be allocated to any Senior Certificates related to
a Mortgage Pool where the aggregate Stated Principal Balance of the
Mortgage Loans in such Mortgage Pool is less than the aggregate Class
Principal Amount of the related Senior Certificates (any such amount,
the
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"Deficiency Amount"), pro rata, based on the respective Deficiency
Amount, in each case until the amount by which the aggregate Stated
Principal Balance of the Mortgage Loans in the Mortgage Pool in which
the Realized Loss occurs exceeds the aggregate Class Principal Amount
of the related Senior Certificates until the Class Principal Amounts
of such Senior Certificates have been reduced to zero; and
second, to the Senior Certificates related to the Mortgage Pool
in which the Realized Loss occurred, until the Class Principal Amounts
thereof have been reduced to zero.
(iii) Reserved.
(iv) Any allocation of a loss pursuant to this section to a Class of
Certificates shall be achieved by reducing the Class Principal Amount
thereof by the amount of such loss.
(c) Notwithstanding the other provisions of Section 5.03, the first $0.02
of Realized Losses shall not be allocated to any Class of Certificates.
Section 5.04. Advances.
If the Servicer fails to remit any Advance required to be made under this
Agreement, the Trustee solely in its capacity as successor Servicer shall itself
make, or shall cause the successor Servicer to make, such Advance. If the
Trustee solely in its capacity as successor Servicer determines that an Advance
is required, it shall on the Business Day preceding the related Distribution
Date immediately following such Determination Date remit from its own funds (or
funds advanced by the successor Servicer) for deposit in the Distribution
Account immediately available funds in an amount equal to such Advance. Each of
the Trustee and the Servicer shall be entitled to be reimbursed for all Advances
made by it, respectively. Notwithstanding anything to the contrary herein, in
the event the Trustee (or successor servicer) determines in its reasonable
judgment that an Advance is Nonrecoverable, the Trustee (or successor servicer)
shall be under no obligation to make such Advance.
ARTICLE VI.
CONCERNING THE TRUSTEE; EVENTS OF DEFAULT
Section 6.01. Duties of Trustee.
(a) The Trustee, except during the continuance of an Event of Default,
undertakes to perform such duties and only such duties as are specifically set
forth in this Agreement. Any permissive right of the Trustee provided for in
this Agreement shall not be construed as a duty of the Trustee. If an Event of
Default has occurred and has not otherwise been cured or waived, 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.
(b) The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to
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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 furnished by the Servicer to the Trustee pursuant to this
Agreement, and shall not be required to recalculate or verify any numerical
information furnished to the Trustee pursuant to this Agreement. Subject to the
immediately preceding sentence, if any such resolution, certificate, statement,
opinion, report, document, order or other instrument is found not to conform to
the form required by this Agreement in a material manner the Trustee shall take
such action as it deems appropriate to cause the instrument to be corrected, and
if the instrument is not corrected to the Trustee's satisfaction, the Trustee
will provide notice thereof to the Certificateholders and will, at the expense
of the Trust Fund, which expense shall be reasonable given the scope and nature
of the required action, take such further action as directed by the
Certificateholders.
(c) The Trustee shall not have any liability arising out of or in
connection with this Agreement, except for its negligence or willful misconduct.
Notwithstanding anything in this Agreement to the contrary, the Trustee shall
not be liable for special, indirect or consequential losses or damages of any
kind whatsoever (including, but not limited to, lost profits). No provision of
this Agreement shall be construed to relieve the Trustee of liability for its
own negligent action, its own negligent failure to act or its own willful
misconduct; provided, however, that:
(i) 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 as provided in Section 6.18 hereof;
(ii) For all purposes under this Agreement, the Trustee shall not be
deemed to have notice of any Event of Default (other than resulting from a
failure by the Servicer (i) to remit funds (or to make Advances) or (ii) to
furnish information to the Trustee when required to do so) unless a
Responsible Officer of the Trustee has actual knowledge thereof or unless
written notice of any event which is in fact such a default is received by
the Trustee at the Corporate Trust Office of the Trustee, and such notice
references the Holders of the Certificates and this Agreement;
(iii) No provision of this Agreement shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder, or in the exercise of any
of its rights or powers, if it shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity against such risk or
liability is not reasonably 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 Servicer under this Agreement;
(iv) The Trustee shall not be responsible for any act or omission of
the Servicer, the Depositor or the Sponsor.
(d) The Trustee shall have no duty hereunder with respect to any complaint,
claim, demand, notice or other document it may receive or which may be alleged
to have been delivered to or served upon it by the parties as a consequence of
the assignment of any Mortgage Loan hereunder; provided, however, that the
Trustee shall promptly remit to the Servicer upon receipt any such complaint,
claim, demand, notice or other document (i) which is delivered to the Corporate
Trust Office of the Trustee, (ii) of which a Responsible Officer has actual
knowledge,
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and (iii) which contains information sufficient to permit the Trustee to make a
determination that the real property to which such document relates is a
Mortgaged Property.
(e) The Trustee shall not be personally liable with respect to any action
taken, suffered or omitted to be taken by it in good faith in accordance with
the direction of the Certificateholders of any Class holding Certificates which
evidence, as to such Class, Percentage Interests aggregating not less than 25%
as 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.
(f) The Trustee shall not be required to perform services under this
Agreement, or to expend or risk its own funds or otherwise incur financial
liability for 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
timely payment of its fees and expenses or the repayment of such funds or
adequate indemnity against such risk or liability is not reasonably 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 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 Servicer in accordance with
the terms of this Agreement.
(g) The Trustee shall not be held liable by reason of any insufficiency in
the Distribution Account resulting from any investment loss on any Permitted
Investment included therein (except to the extent that the Trustee is the
obligor and has defaulted thereon).
(h) Except as otherwise provided herein, the Trustee shall not have any
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 depositing or to any re-recording, refiling or
redepositing of any thereof, (B) to see to the provision of 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, or (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.
(i) The Trustee shall not be liable, in its individual capacity, for an
error of judgment made in good faith by a Responsible Officer or other officers
of the Trustee, unless it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts.
(j) Notwithstanding anything in this Agreement to the contrary, the Trustee
shall not be liable for special, indirect or consequential losses or damages of
any kind whatsoever (including, but not limited to, lost profits), even if the
Trustee has been advised of the likelihood of such loss or damage and regardless
of the form of action.
Section 6.02. Certain Matters Affecting the Trustee.
Except as otherwise provided in Section 6.01:
(i) The Trustee may request, and may rely and shall be protected in
acting or refraining from acting upon any resolution, Officer's
Certificate, certificate of auditors or
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any other certificate, statement, instrument, opinion, report, notice,
request, consent, order, approval, 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;
(ii) The Trustee may consult with counsel and any advice of its
counsel or 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 advice or Opinion of
Counsel;
(iii) The Trustee shall not be personally liable for any action taken,
suffered or omitted by it in good faith and reasonably believed by it to be
authorized or within the discretion or rights or powers conferred upon it
by this Agreement;
(iv) Unless an Event of Default shall have occurred and be continuing,
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 (provided the same appears regular on its face), unless
requested in writing to do so by the Holders of at least a majority in
Class Principal Amount (or Percentage Interest) of 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 reasonably assured to the Trustee by the security afforded
to it by the terms of this Agreement, the Trustee may require reasonable
indemnity against such expense or liability or payment of such estimated
expenses from the Certificateholders as a condition to proceeding. The
reasonable expense thereof shall be paid by the party requesting such
investigation and if not reimbursed by the requesting party shall be
reimbursed to the Trustee by the Trust Fund;
(v) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents,
custodians or attorneys, which agents, custodians or attorneys shall have
any and all of the rights, powers, duties and obligations of the Trustee
conferred on it by such appointment, provided that the Trustee shall
continue to be responsible for its duties and obligations hereunder to the
extent provided herein, and provided further that the Trustee shall not be
responsible for any misconduct or negligence on the part of any such agent
or attorney appointed with due care by the Trustee;
(vi) The Trustee shall not be under any obligation to exercise any of
the trusts or powers vested in it by this Agreement or to institute,
conduct or defend any litigation hereunder or in relation hereto, in each
case 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 against the costs, expenses and liabilities which may be incurred
therein or thereby;
(vii) 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
(viii) 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.
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Section 6.03. Trustee Not Liable for Certificates.
The Trustee makes no representations as to the validity or sufficiency of
this Agreement or of the Certificates (other than the certificate of
authentication on the Certificates) or of any Mortgage Loan, or related document
save that the Trustee represents that, assuming due execution and delivery by
the other parties hereto, this Agreement has been duly authorized, executed and
delivered by it and constitutes its valid and binding obligation, enforceable
against it in accordance with its terms except as such enforceability may be
subject to (A) applicable bankruptcy and insolvency laws and other similar laws
affecting the enforcement of the rights of creditors generally, and (B) general
principles of equity regardless of whether such enforcement is considered in a
proceeding in equity or at law. The Trustee shall not be accountable for the use
or application by the Depositor of funds paid to the Depositor in consideration
of the assignment of the Mortgage Loans to the Trust Fund by the Depositor or
for the use or application of any funds deposited into the Distribution Account
or any other fund or account maintained with respect to the Certificates. The
Trustee shall not be responsible for the legality or validity of this Agreement
or the validity, priority, perfection or sufficiency of the security for the
Certificates issued or intended to be issued hereunder. Except as otherwise
provided herein, the Trustee shall have no responsibility for filing any
financing or continuation statement in any public office at any time or to
otherwise perfect or maintain the perfection of any security interest or lien
granted to it hereunder or to record this Agreement.
Section 6.04. Trustee May Own Certificates.
The Trustee and any Affiliate or agent of the Trustee in its individual or
any other capacity may become the owner or pledgee of Certificates and may
transact banking and trust business with the other parties hereto and their
Affiliates with the same rights it would have if it were not Trustee or such
agent.
Section 6.05. Eligibility Requirements for Trustee.
The Trustee hereunder shall at all times (i) be an institution insured by
the FDIC, (ii) a corporation or national banking association, organized and
doing business under the laws of the United States of America or any state
thereof, authorized under such laws to exercise corporate trust powers, having a
combined capital and surplus of not less than $50,000,000 and subject to
supervision or examination by federal or state authority and (iii) not be an
Affiliate of the Servicer. If such corporation or national banking 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, the combined capital and surplus of such corporation
or national banking 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
provisions of this Section, the Trustee shall resign immediately in the manner
and with the effect specified in Section 6.06.
Section 6.06. Resignation and Removal of Trustee.
(a) The Trustee may at any time resign and be discharged from the trust
hereby created by giving written notice thereof to the Depositor and the
Servicer. Upon receiving such notice of resignation, the Depositor will promptly
appoint a successor trustee by written instrument, one copy of which instrument
shall be delivered to the resigning Trustee, one copy to the successor trustee
and one copy to the Servicer. If no successor trustee shall have been so
appointed and shall have accepted appointment within 30 days after the giving of
such notice of
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resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee.
(b) If at any time (i) the Trustee shall cease to be eligible in accordance
with the provisions of Section 6.05 and shall fail to resign after written
request therefor by the Depositor, (ii) the Trustee shall become incapable of
acting, or shall be adjudged a bankrupt or insolvent, or a receiver of the
Trustee of its property shall be appointed, or any public officer shall take
charge or control of the Trustee or of either of their property or affairs for
the purpose of rehabilitation, conservation or liquidation, (iii) a tax is
imposed or threatened with respect to the Trust Fund by any state in which the
Trustee or the Trust Fund held by the Trustee is located, or (iv) the continued
use of the Trustee would result in a downgrading of the rating by any Rating
Agency of any Class of Certificates with a rating, then the Depositor shall
remove the Trustee and the Depositor shall appoint a successor trustee by
written instrument, one copy of which instrument shall be delivered to the
Trustee so removed, one copy each to the successor trustee and one copy to the
Servicer.
(c) The Holders of more than 50% of the Class Principal Amount (or
Percentage Interest) of each Class of Certificates may at any time upon 30 days'
written notice to the Trustee and to the Depositor remove the Trustee by such
written instrument, signed by such Holders or their attorney-in-fact duly
authorized, one copy of which instrument shall be delivered to the Depositor and
one copy to the Trustee; the Depositor shall thereupon appoint a successor
trustee in accordance with this Section.
(d) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section shall become
effective upon acceptance by the successor trustee of appointment, as provided
in Section 6.07.
Section 6.07. Successor Trustee.
(a) Any successor trustee appointed as provided in Section 6.06 shall
execute, acknowledge and deliver to the Depositor and to its predecessor
trustee, 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 like effect as if originally named as trustee. The
predecessor trustee shall deliver to the successor trustee all Trustee Mortgage
Files and documents and statements related to each Trustee Mortgage File held by
it hereunder, and shall duly assign, transfer, deliver and pay over to the
successor trustee the entire Trust Fund, together with all necessary instruments
of transfer and assignment or other documents properly executed necessary to
effect such transfer and such of the records or copies thereof maintained by the
predecessor trustee in the administration hereof as may be requested by the
successor trustee and shall thereupon be discharged from all duties and
responsibilities under this Agreement. In addition, the Depositor and the
predecessor trustee shall execute and deliver such other instruments and do such
other things as may reasonably be required to more fully and certainly vest and
confirm in the successor trustee all such rights, powers, duties and
obligations.
(b) No successor trustee shall accept appointment as provided in this
Section unless at the time of such appointment such successor trustee shall be
eligible under the provisions of Section 6.05.
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(c) Upon acceptance by a successor trustee of appointment as provided in
this Section, the predecessor trustee shall mail notice of the succession of
such successor trustee hereunder to all Holders of Certificates at their
addresses as shown in the Certificate Register and to any Rating Agency. The
expenses of such mailing shall be borne by the Depositor.
Section 6.08. Merger or Consolidation of Trustee.
Any Person into which the Trustee may be merged or with which it may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any Persons succeeding
to the business of the Trustee shall be the successor to the Trustee 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 that, in the case of the Trustee, such Person shall be eligible under
the provisions of Section 6.05.
Section 6.09. Appointment of Co-Trustee, Separate Trustee or Custodian.
(a) Notwithstanding any other provisions hereof, at any time, the Trustee,
the Depositor or the Certificateholders evidencing more than 50% of the Class
Principal Amount (or Percentage Interest) of every Class of Certificates shall
have the power from time to time to appoint one or more Persons, approved by the
Trustee, to act either as co-trustees jointly with the Trustee, or as separate
trustees, or as custodians, for the purpose of holding title to, foreclosing or
otherwise taking action with respect to any Mortgage Loan outside the state
where the Trustee has its principal place of business where such separate
trustee or co-trustee is necessary or advisable (or the Trustee has been advised
by the Servicer that such separate trustee or co-trustee is necessary or
advisable) under the laws of any state in which a property securing a Mortgage
Loan is located or for the purpose of otherwise conforming to any legal
requirement, restriction or condition in any state in which a property securing
a Mortgage Loan is located or in any state in which any portion of the Trust
Fund is located. The separate trustees, co-trustees, or custodians so appointed
shall be trustees or custodians for the benefit of all the Certificateholders
and shall have such powers, rights and remedies as shall be specified in the
instrument of appointment; provided, however, that no such appointment shall, or
shall be deemed to, constitute the appointee an agent of the Trustee. The
obligation of the Trustee to make Advances pursuant to Section 5.04 hereof shall
not be affected or assigned by the appointment of a co-trustee.
(b) Every separate trustee, co-trustee, and custodian shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all powers, duties, obligations and rights conferred upon the
Trustee in respect of the receipt, custody and payment of moneys shall be
exercised solely by the Trustee;
(ii) all other 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, co-trustee, or
custodian jointly, except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed 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 Trust Fund or any portion thereof in any such
jurisdiction, shall be exercised and performed by such separate trustee,
co-trustee, or custodian at the sole discretion of the Trustee;
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(iii) no trustee or custodian hereunder shall be personally liable by
reason of any act or omission of any other trustee or custodian hereunder;
and
(iv) the Trustee may at any time, by an instrument in writing executed
by it, with the concurrence of the Depositor, accept the resignation of or
remove any separate trustee, co-trustee or custodian, so appointed by it or
them, if such resignation or removal does not violate the other terms of
this Agreement.
(c) Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee, co-trustee or custodian shall refer to this Agreement and the
conditions of this Article VI. 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 given
to the Servicer.
(d) Any separate trustee, co-trustee or custodian 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, co-trustee or custodian 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.
(e) No separate trustee, co-trustee or custodian hereunder shall be
required to meet the terms of eligibility as a successor trustee under Section
6.05 hereunder and no notice to Certificateholders of the appointment shall be
required under Section 6.07 hereof.
(f) The Trustee agrees to instruct the co-trustees, if any, to the extent
necessary to fulfill the Trustee's obligations hereunder.
(g) The Issuing Entity shall pay the reasonable compensation of the
co-trustees (which compensation shall not reduce any compensation payable to the
Trustee under such Section).
Section 6.10. Authenticating Agents.
(a) The Trustee may appoint one or more Authenticating Agents which shall
be authorized to act on behalf of the Trustee in authenticating Certificates. If
such an agent is so appointed by the Trustee, wherever reference is made in this
Agreement to the authentication of Certificates by the Trustee or the Trustee's
certificate of authentication, such reference shall be deemed to include
authentication on behalf of the Trustee by an Authenticating Agent and a
certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent must be a corporation organized
and doing business under the laws of the United States of America or of any
state, having a combined capital and surplus of at least $15,000,000, authorized
under such laws to do a trust business and subject to supervision or examination
by federal or state authorities.
(b) Any Person into which any Authenticating Agent may be merged or
converted or with which it may be consolidated, or any Person resulting from any
merger, conversion or consolidation to which any Authenticating Agent shall be a
party, or any Person succeeding to the
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corporate agency business of any Authenticating Agent, shall continue to be the
Authenticating Agent without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
(c) Any Authenticating Agent may at any time resign by giving at least 30
days' advance written notice of resignation to the Trustee and the Depositor.
The Trustee may at any time terminate the agency of any Authenticating Agent by
giving written notice of termination to such Authenticating Agent and the
Depositor. Upon receiving a notice of resignation or upon such a termination, or
in case at any time any Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section 6.10, the Trustee may appoint a
successor authenticating agent, shall give written notice of such appointment to
the Depositor and shall mail notice of such appointment to all Holders of
Certificates. Any successor authenticating agent upon acceptance of its
appointment hereunder shall become vested with all the rights, powers, duties
and responsibilities of its predecessor hereunder, with like effect as if
originally named as Authenticating Agent. No successor authenticating agent
shall be appointed unless eligible under the provisions of this Section 6.10. No
Authenticating Agent shall have responsibility or liability for any action taken
by it as such at the direction of the Trustee.
Section 6.11. Indemnification of Trustee.
The Trustee and its respective directors, officers, employees and agents
shall be entitled to indemnification from the Depositor and the Trust Fund;
provided that the Trust Fund's indemnification under this Section 6.11 is
limited by Section 4.01(d) for any loss, liability or expense (including,
without limitation, reasonable attorneys' fees and disbursements (and, in
connection with any custody agreement the Trustee may enter pursuant to this
Agreement, including the reasonable compensation and the expenses and
disbursements of its agents or counsel)), incurred without negligence or willful
misconduct on its part, arising out of, or in connection with, the acceptance or
administration of the trusts created hereunder or in connection with the
performance of their duties hereunder including the costs and expenses of
defending themselves against any claim in connection with the exercise or
performance of any of their powers or duties hereunder, provided that:
(i) with respect to any such claim, the Trustee shall have given the
Depositor written notice thereof promptly after the Trustee shall have
knowledge thereof;
(ii) while maintaining control over its own defense, the Trustee shall
cooperate and consult fully with the Depositor in preparing such defense;
(iii) notwithstanding anything to the contrary in this Section 6.11,
the Trust Fund shall not be liable for settlement of any such claim by the
Trustee entered into without the prior consent of the Depositor, which
consent shall not be unreasonably withheld; and
(iv) the Trust's Fund's indemnification obligations hereunder shall be
limited to losses, liability, costs or expenses, payments in respect of
which by the Trust Fund would constitute "unanticipated expenses" within
the meaning of Treasury Regulations Section 1.860G-1(b)(3)(ii)).
The provisions of this Section 6.11 shall survive any termination of this
Agreement and the resignation or removal of the Trustee and shall be construed
to include, but not be limited to, any loss, liability or expense under any
environmental law.
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Section 6.12. Fees and Expenses of the Trustee.
As compensation for its services hereunder, the Trustee shall be entitled
to retain any and all investment earnings on amounts on deposit in the
Distribution Account pending the distribution of such funds to
Certificateholders on each Distribution Date (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust). Any expenses incurred by the Trustee shall be reimbursed to the
extent provided in Section 6.11.
Section 6.13. Collection of Monies.
Except as otherwise expressly provided in this Agreement, the Trustee may
demand payment or delivery of, and shall receive and collect, all money and
other property payable to or receivable by the Trustee pursuant to this
Agreement. The Trustee shall hold all such money and property received by it as
part of the Trust Fund and shall distribute it as provided in this Agreement.
Section 6.14. Events of Default; Trustee To Act; Appointment of Successor.
(a) "Event of Default," wherever used herein, means any one of the
following events:
(i) any failure by the Servicer to make any Advance, to deposit in the
Custodial Account or to remit to the Trustee any payment required to be
made under the terms of this Agreement on the day it is due;
(ii) any material breach on the part of the Servicer of any other
term, agreement, covenant, representation or warranty in this Agreement
that has not been cured after written notice and a thirty (30) day curative
period, except, with respect to Sections 9.11, 9.13(a), 9.13(b), 9.21(ix)
and 9.21(xi), any material breach on the part of the Servicer of any term,
agreement, covenant, representation or warranty that has not been cured
after written notice and a twelve (12) day curative period;
(iii) following entry against the Servicer of a decree or order of a
court or agency or supervisory authority having jurisdiction for the
appointment of a trustee, conservator, receiver, liquidator, assignee,
custodian or sequestrator (or other similar official) for the Servicer in
any federal or state bankruptcy, insolvency, readjustment of debt,
marshaling of assets and liabilities or similar proceedings, or for the
winding-up or liquidation of the Servicer's affairs, if such decree or
order has remained in force undischarged or unstayed for a period of sixty
(60) days;
(iv) upon consent by the Servicer to the appointment of a trustee,
conservator, receiver, liquidator, assignee, custodian or sequestrator (or
other similar official) in, or commencement of a voluntary case under, any
federal or state bankruptcy insolvency, readjustment of debt, marshaling of
assets and liabilities or similar proceedings of or relating to the
Servicer or of or relating to all or substantially all of the Servicer's
property;
(v) upon the Servicer's (A) admitting in writing its inability to pay
its debts generally as they become due, (B) filing a petition to take
advantage of any applicable insolvency or reorganization statute, (C)
making an assignment for the benefit of its creditors or (D) voluntarily
suspending payment of its obligations; or
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(vi) the Servicer ceases to be eligible to sell mortgage loans to or
service mortgage loans for FNMA, FHLMC or GNMA or ceases to be a
HUD-approved mortgagee.
If an Event of Default shall occur and be continuing, then, in each and
every case, subject to applicable law, so long as any such Event of Default
shall not have been remedied within any period of time prescribed by this
Agreement, by notice in writing to the Servicer either (x) the Depositor or (y)
the Trustee may (or the Trustee shall if so directed by Certificateholders
evidencing more than 50% of the Class Principal Amount of each Class of
Certificates) terminate all of the rights and obligations of the Servicer under
this Agreement in accordance with the terms of this Agreement. On or after the
receipt by the Servicer of such written notice, all authority and power of the
Servicer, whether with respect to the Mortgage Loans or otherwise, shall pass to
and be vested in the Trustee; and the Trustee is hereby authorized and empowered
to execute and deliver, on behalf of the defaulting 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.
If any Event of Default shall occur, the Trustee, upon becoming aware of
the occurrence thereof, shall promptly notify the Depositor and each Rating
Agency of the nature and extent of such Event of Default.
(b) Within 90 days of the time the Servicer receives a notice of
termination from the Trustee pursuant to Section 6.14, the Trustee, unless
another Servicer shall have been appointed, shall be the successor in all
respects to the Servicer in its capacity as such under this Agreement and the
transactions set forth or provided for therein and shall have all the rights and
powers and be subject to all the responsibilities, duties and liabilities
relating thereto and arising thereafter placed on the Servicer thereunder,
including the obligation to make Advances; provided, however, that any failure
to perform such duties or responsibilities caused by the Servicer's failure to
provide information required by this Agreement or this Agreement shall not be
considered a default by the Trustee hereunder. In addition, the Trustee shall
have no responsibility for any act or omission of the Servicer prior to the
issuance of any notice of termination. The Trustee shall have no liability
relating to any representations and warranties of the Servicer set forth in this
Agreement. In the Trustee's capacity as such successor, the Trustee shall have
the same limitations on liability provided to the Servicer in this Agreement. As
compensation therefor, the Trustee shall be entitled to receive all compensation
payable to the Servicer under this Agreement.
The Trustee shall be entitled to be reimbursed by the Depositor and the
Trust Fund (pursuant to Section 6.11 but without regard to any annual limitation
thereunder), in the event that the Servicer does not reimburse the Trustee under
this Agreement, for all costs associated with the transfer of servicing from the
predecessor Servicer, including, without limitation, any costs or expenses
associated with the termination of the predecessor Servicer, the appointment of
a successor servicer, the complete transfer of all servicing data and the
completion, correction or manipulation of such servicing data as may be required
by the Trustee or any successor servicer to correct any errors or
insufficiencies in the servicing data or otherwise to enable the Trustee or
successor servicer to service the Mortgage Loans property and effectively (such
costs, "Servicing Transfer Costs").
(c) Notwithstanding the above, the Trustee may, if it shall be unwilling to
continue to so act, or shall, if it is unable to so act, petition a court of
competent jurisdiction to appoint, or,
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with the consent of the Depositor, appoint on its own behalf any established
housing and home finance institution servicer, or servicing or mortgage
servicing institution having a net worth of not less than $15,000,000 and
meeting such other standards for a successor servicer as are set forth in this
Agreement and reasonably satisfactory to the Depositor, as the successor to the
Servicer in the assumption of all of the responsibilities, duties or liabilities
of a servicer, like the Servicer. Any entity designated by the Trustee as a
successor servicer may be an Affiliate of the Trustee; provided, however, that,
unless such Affiliate meets the net worth requirements and other standards set
forth herein for a successor servicer, the Trustee, in its individual capacity
shall agree, at the time of such designation, to be and remain liable to the
Trust Fund for such Affiliate's actions and omissions in performing its duties
under this Agreement. 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 that permitted to the
Servicer under this Agreement. The Trustee and such successor shall take such
actions, consistent with this Agreement, as shall be necessary to effectuate any
such succession and may make other arrangements with respect to the servicing to
be conducted hereunder which are not inconsistent herewith and therewith.
Neither the Trustee nor any other successor 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 caused by (i) the failure of the
Servicer to deliver, or any delay in delivering, cash, documents or records to
it, (ii) the failure of the Servicer to cooperate as required by this Agreement,
(iii) the failure of the Servicer to deliver the Mortgage Loan data to the
Trustee as required by this Agreement or (iv) restrictions imposed by any
regulatory authority having jurisdiction over the Servicer.
Section 6.15. Additional Remedies of Trustee Upon Event of Default.
During the continuance of any Event of Default, so long as such Event of
Default shall not have been remedied, the Trustee, in addition to the rights
specified in Section 6.14, shall have the right, in its own name and as trustee
of the Trust Fund, to take all actions now or hereafter existing at law, in
equity or by statute to enforce its rights and remedies and to protect the
interests, and enforce the rights and remedies, of the Certificateholders
(including the institution and prosecution of all judicial, administrative and
other proceedings and the filings of proofs of claim and debt in connection
therewith). Except as otherwise expressly provided in this Agreement, no remedy
provided for by this Agreement shall be exclusive of any other remedy, and each
and every remedy shall be cumulative and in addition to any other remedy, and no
delay or omission to exercise any right or remedy shall impair any such right or
remedy or shall be deemed to be a waiver of any Event of Default.
Section 6.16. Waiver of Defaults.
More than 50% of the Aggregate Voting Interests of Certificateholders may
waive any default or Event of Default by the Servicer in the performance of its
obligations hereunder, except that a default in the making of any required
deposit to the Distribution Account that would result in a failure of the
Trustee to make any required payment of principal of or interest on the
Certificates may only be waived with the consent of 100% of the affected
Certificateholders. Upon any such waiver of a past default, such default shall
cease to exist, and any Event of Default arising therefrom shall be deemed to
have been remedied for every purpose of this Agreement. No such waiver shall
extend to any subsequent or other default or impair any right consequent thereon
except to the extent expressly so waived.
Section 6.17. Notification to Holders.
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Upon termination of the Servicer or appointment of a successor to the
Servicer, in each case as provided herein, the Trustee shall promptly mail
notice thereof by first class mail to the Certificateholders at their respective
addresses appearing on the Certificate Register. The Trustee shall also, within
45 days after the occurrence of any Event of Default known to the Trustee, give
written notice thereof to the Certificateholders, unless such Event of Default
shall have been cured or waived prior to the issuance of such notice and within
such 45-day period.
Section 6.18. Directions by Certificateholders and Duties of Trustee During
Event of Default.
Subject to the provisions of Section 8.01 hereof, during the continuance of
any Event of Default, Holders of Certificates evidencing not less than 25% of
the Class Principal Amount (or Percentage Interest) of each Class of
Certificates affected thereby may direct 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; provided,
however, that the Trustee shall be under no obligation to pursue any such
remedy, or to exercise any of the trusts or powers vested in it by this
Agreement (including, without limitation, (i) the conducting or defending of any
administrative action or litigation hereunder or in relation hereto and (ii) the
terminating of the Servicer or any successor servicer from its rights and duties
as servicer) at the request, order or direction of any of the
Certificateholders, unless such Certificateholders shall have offered to the
Trustee reasonable security or indemnity against the cost, expenses and
liabilities which may be incurred therein or thereby; and, provided further,
that, subject to the provisions of Section 8.01, the Trustee shall have the
right to decline to follow any such direction if the Trustee, in accordance with
an Opinion of Counsel, determines that the action or proceeding so directed may
not lawfully be taken or if the Trustee in good faith determines that the action
or proceeding so directed would involve it in personal liability for which it is
not indemnified to its satisfaction or be unjustly prejudicial to the
non-assenting Certificateholders.
Section 6.19. Preparation of Tax Returns and Other Reports.
(a) The Trustee shall prepare or cause to be prepared on behalf of the
Trust Fund, based upon information calculated in accordance with this Agreement
pursuant to instructions given by the Depositor, and the Trustee shall file
federal tax returns, all in accordance with Article X hereof. The Trustee shall
prepare and file such state income tax returns and such other returns as may be
required by applicable law relating to the Trust Fund, and, if required by state
law, and shall file any other documents to the extent required by applicable
state tax law (to the extent such documents are in the Trustee's possession).
The Trustee shall forward copies to the Depositor of all such returns and Form
1099 supplemental tax information and such other information within the control
of the Trustee as the Depositor may reasonably request in writing, and shall
distribute to each Certificateholder such forms and furnish such information
within the control of the Trustee as are required by the Code and the REMIC
Provisions to be furnished to them, and will prepare and distribute to
Certificateholders Form 1099 (supplemental tax information) (or otherwise
furnish information within the control of the Trustee) to the extent required by
applicable law.
(b) The Trustee shall prepare and file with the Internal Revenue Service
("IRS"), on behalf of each of REMIC 1 and the Upper Tier REMIC, an application
on IRS Form SS-4 or shall obtain a Taxpayer Identification Number for each of
REMIC 1 and the Upper Tier REMIC using another reasonable method. If the
application is filed on Form SS-4, the Trustee, upon receipt from the IRS of the
Notice of Taxpayer Identification Number Assigned for each REMIC, shall
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promptly forward copies of such notices to the Depositor, upon request. The
Trustee will file an IRS Form 8811.
ARTICLE VII.
PURCHASE OF MORTGAGE LOANS AND
TERMINATION OF THE TRUST FUND
Section 7.01. Purchase of Mortgage Loans; Termination of Trust Fund Upon
Purchase or Liquidation of All Mortgage Loans.
(a) The respective obligations and responsibilities of the Trustee, the
Servicer and the Depositor created hereby (other than the obligation of the
Trustee to make payments to Certificateholders as set forth in Section 7.02),
shall terminate on the earliest of (i) the final payment or other liquidation of
the last Mortgage Loan remaining in the Trust Fund and the disposition of all
REO Property, (ii) the sale of the property held by the Trust Fund at auction in
accordance with Section 7.01(c) and (iii) the Latest Possible Maturity Date;
provided, however, that in no event shall the Trust Fund created hereby continue
beyond the expiration of 21 years from the death of the last survivor of the
descendants of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the late Ambassador of the United States to
the Court of St. James's, living on the date hereof. Any termination of the
Trust Fund shall be carried out in such a manner so that the termination of each
REMIC included therein shall qualify as a "qualified liquidation" under the
REMIC Provisions.
(b) [Reserved]
(c) Any termination of the Trust Fund pursuant to clause (a)(ii) above
shall be effected by the auction by the Trustee of all of the Mortgage Loans and
REO Properties via a solicitation of bids in accordance with procedures to be
agreed upon by the Trustee and the Depositor. The Trustee shall accept the
highest such bid, provided that such bid equals or exceeds the amount described
in the definition of "Optional Termination Price." Notwithstanding anything to
the contrary herein, the Optional Termination Price received by the Trustee
shall be deposited by the Trustee directly into the Distribution Account no
later than the Business Day prior to the date of termination.
The right of the Trustee to conduct an auction pursuant to the preceding
paragraph shall be conditioned upon the aggregate outstanding Stated Principal
Balance of the Mortgage Loans, at the time of such auction, aggregating ten (10)
percent or less of the Stated Principal Balance of the Mortgage Loans as of the
Cut-off Date.
(d) The Servicer and the Trustee shall be reimbursed from the Optional
Termination Price for any Advances, Servicer Advances, accrued and unpaid
Servicing Fees, the cost of any auction conducted pursuant to (c) above or other
amounts with respect to the Mortgage Loans that are reimbursable to such parties
under this Agreement.
Section 7.02. Procedure Upon Termination of Trust Fund.
(a) Notice of any optional termination pursuant to the provisions of
Section 7.01(c) specifying the Distribution Date upon which the final
distribution shall be made or the Purchase Date, shall be given promptly by the
Trustee by first class mail to Certificateholders mailed no later than the first
day of the month in which the Distribution Date selected for purchase of the
Mortgage Loans occurs or upon (x) the sale of all of the property of the Trust
Fund by the Trustee
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or in the case of a sale of assets of the Trust Fund, or (y) upon the final
payment or other liquidation of the last Mortgage Loan or REO Property in the
Trust Fund. Such notice shall specify (A) the Purchase Date and the Distribution
Date upon which final distribution on the Certificates of all amounts required
to be distributed to Certificateholders pursuant to Section 5.02 will be made
upon presentation and surrender of the Certificates at the Certificate
Registrar's Corporate Trust Office, and (B) that the Record Date otherwise
applicable to such Distribution Date is not applicable, distribution being made
only upon presentation and surrender of the Certificates at the office or agency
of the Trustee therein specified. The Trustee shall give such notice to the
Certificate Registrar at the time such notice is given to Holders of the
Certificates. Upon any such termination, the duties of the Trustee and the
Certificate Registrar with respect to the Certificates shall terminate and the
Trustee shall terminate the Distribution Account and any other account or fund
maintained with respect to the Certificates, subject to the Trustee's obligation
hereunder to hold all amounts payable to Certificateholders in trust without
interest pending such payment.
(b) In the event that all of the Holders do not surrender their
Certificates for cancellation within three months after the time 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
one year after the second notice any Certificates shall not have been
surrendered for cancellation, the Trustee may take appropriate steps to contact
the remaining Certificateholders concerning surrender of such Certificates, and
the cost thereof shall be paid out of the amounts distributable to such Holders.
If within two years after the second notice any Certificates shall not have been
surrendered for cancellation, the Trustee shall, subject to applicable state law
relating to escheatment, hold all amounts distributable to such Holders for the
benefit of such Holders. No interest shall accrue on any amount held by the
Trustee and not distributed to a Certificateholder due to such
Certificateholder's failure to surrender its Certificate(s) for payment of the
final distribution thereon in accordance with this Section.
(c) Any reasonable expenses incurred by the Trustee, to the extent that
such expenses, if paid or reimbursed by the Trust Fund, would constitute
"unanticipated expenses" within the meaning of Treasury Regulations Section
1.860G-1(b)(3)(ii), in connection with any redemption or termination or
liquidation of the Trust Fund shall be reimbursed from proceeds received from
the liquidation of the Trust Fund.
Section 7.03. Additional Trust Fund Termination Requirements.
(a) Any termination of the Trust Fund shall be effected in accordance with
the following additional requirements, unless the Trustee seeks and receives an
Opinion of Counsel (at the expense of such requesting party), addressed to the
Trustee, to the effect that the failure of the Trust Fund to comply with the
requirements of this Section 7.03 will not (I) result in the imposition of taxes
on any REMIC under the REMIC Provisions or (II) cause any REMIC established
hereunder to fail to qualify as a REMIC at any time that any Certificates are
outstanding:
(i) Within 89 days prior to the time of the making of the final
payment on the Certificates upon notification by the Depositor that it
intends to exercise its option to cause the termination of the Trust Fund,
the Trustee shall adopt a plan of complete liquidation prepared by the
Depositor of the Trust Fund on behalf of each REMIC, meeting the
requirements of a qualified liquidation under the REMIC Provisions;
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(ii) Any sale of the assets of the Trust Fund pursuant to Section 7.01
or 7.02 shall be a sale for cash and shall occur at or after the time of
adoption of such a plan of complete liquidation and prior to the time of
making of the final payment on the Certificates;
(iii) On the date specified for final payment of the Certificates, the
Trustee shall make final distributions of principal and interest on the
Certificates in accordance with Section 5.02 and, after payment of, or
provision for any outstanding expenses, distribute or credit, or cause to
be distributed or credited, to the Holders of the Residual Certificates all
cash on hand after such final payment (other than cash retained to meet
claims), and the Trust Fund (and each REMIC) shall terminate at that time;
and
(iv) In no event may the final payment on the Certificates or the
final distribution or credit to the Holders of the Residual Certificates be
made after the 89th day from the date on which the plan of complete
liquidation is adopted.
(b) By its acceptance of a Residual Certificate, each Holder thereof hereby
agrees to accept the plan of complete liquidation adopted by the Trustee under
this Section and to take such other action in connection therewith as may be
reasonably requested by the Trustee.
ARTICLE VIII.
RIGHTS OF CERTIFICATEHOLDERS
Section 8.01. Limitation on Rights of Holders.
(a) The death or incapacity of any Certificateholder shall not operate to
terminate this Agreement or this Trust Fund, nor entitle such
Certificateholder's legal representatives or heirs to claim an accounting or
take any action or proceeding in any court for a partition or winding up of this
Trust Fund, nor otherwise affect the rights, obligations and liabilities of the
parties hereto or any of them. Except as otherwise expressly provided herein, no
Certificateholder, solely by virtue of its status as a Certificateholder, shall
have any right to vote or in any manner otherwise control the Trustee or 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 person by reason of any
action taken by the parties to this Agreement pursuant to any provision hereof.
(b) No Certificateholder, solely by virtue of its status as
Certificateholder, shall have any right by virtue or by availing itself of any
provision of this Agreement to institute any suit, action or proceeding in
equity or at law upon, 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 hereinbefore provided, and unless
also the Holders of Certificates evidencing not less than 25% of the Class
Principal Amount (or Percentage Interest) of Certificates of each Class affected
thereby shall have made written request upon 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
cost, expenses and liabilities to be incurred therein or thereby, and the
Trustee, for sixty 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 and no direction inconsistent with such written request has been
given such Trustee during such sixty-day period by such Certificateholders; it
being understood and
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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 of any provision of this Agreement to affect, disturb or
prejudice the rights of the Holders of any other of such 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 benefit of all Certificateholders. For the protection and
enforcement of the provisions of this Section, each and every Certificateholder
and the Trustee shall be entitled to such relief as can be given either at law
or in equity.
Section 8.02. Access to List of Holders.
(a) If the Trustee is not acting as Certificate Registrar, the Certificate
Registrar will furnish or cause to be furnished to the Trustee, within fifteen
days after receipt by the Certificate Registrar of a request by the Trustee in
writing, a list, in such form as the Trustee may reasonably require, of the
names and addresses of the Certificateholders of each Class as of the most
recent Record Date.
(b) If three or more Holders or Certificate Owners (hereinafter referred to
as "Applicants") apply in writing to the Trustee, and such application states
that the Applicants desire to communicate with other Holders with respect to
their rights under this Agreement or under the Certificates and is accompanied
by a copy of the communication which such Applicants propose to transmit, then
the Trustee shall, within five Business Days after the receipt of such
application, afford such Applicants reasonable access during the normal business
hours of the Trustee to the most recent list of Certificateholders held by the
Trustee or shall, as an alternative, send, at the Applicants' expense, the
written communication proffered by the Applicants to all Certificateholders at
their addresses as they appear in the Certificate Register.
(c) Every Holder or Certificate Owner, if the Holder is a Clearing Agency,
by receiving and holding a Certificate, agrees with the Depositor, the
Certificate Registrar and the Trustee that neither the Depositor, the
Certificate Registrar nor the Trustee shall be held accountable by reason of the
disclosure of any information as to the names and addresses of the
Certificateholders hereunder, regardless of the source from which such
information was derived.
Section 8.03. Acts of Holders of Certificates.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Agreement to be given or taken by Holders or
Certificate Owners, if the Holder is a Clearing Agency, may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Holders in person or by agent duly appointed in writing; and, except as
herein otherwise expressly provided, such action shall become effective when
such instrument or instruments are delivered to the Trustee. Such instrument or
instruments (as the action embodies therein and evidenced thereby) are herein
sometimes referred to as an "Act" of the Holders signing such instrument or
instruments. Proof of execution of any such instrument or of a writing
appointing any such agents shall be sufficient for any purpose of this Agreement
and conclusive in favor of the Trustee, if made in the manner provided in this
Section.
(b) The fact and date of the execution by any Person of any such instrument
or writing may be proved by the affidavit of a witness of such execution or by
the certificate of any notary public or other officer authorized by law to take
acknowledgments or deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof.
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Whenever such execution is by an officer of a corporation or a member of a
partnership on behalf of such corporation or partnership, such certificate or
affidavit shall also constitute sufficient proof of his authority. The fact and
date of the execution of any such instrument or writing, or the authority of the
individual executing the same, may also be proved in any other manner which the
Trustee deems sufficient.
(c) The ownership of Certificates (whether or not such Certificates shall
be overdue and notwithstanding any notation of ownership or other writing
thereon made by anyone other than the Trustee) shall be proved by the
Certificate Register, and neither the Trustee nor the Depositor shall be
affected by any notice to the contrary.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other action by the Holder of any Certificate shall bind every future Holder
of the same Certificate and the Holder of every Certificate issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof, in
respect of anything done, omitted or suffered to be done by the Trustee in
reliance thereon, whether or not notation of such action is made upon such
Certificate.
ARTICLE IX.
ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS
Section 9.01. Servicer to Act as Servicer.
(a) Commencing on the Closing Date, the Servicer shall service each
Mortgage Loan in accordance with Accepted Servicing Practices.
(b) The Servicer shall maintain an EDP containing all information and
programming necessary to service the Mortgage Loans in accordance with Section
2.01(a) hereof. The Mortgage Loans shall be grouped on the Servicer's EDP to
reflect the Trust Fund as the owner of the Mortgage Loans.
(c) The Servicer may not waive, modify or vary any term of a Mortgage Note
without the Depositor's prior written consent. The Servicer shall comply with
all applicable federal, state and local legal and regulatory requirements
(including laws, statutes, rules, regulations and ordinances) in connection with
the modification of the Mortgage Note.
(d) Notwithstanding anything herein to the contrary, the Servicer shall
follow any reasonable directions given by the Trustee and/or the Depositor with
respect to the servicing of the Mortgage Loans.
(e) With the exception of Ancillary Fees and any other charges expressly
permitted by the Mortgage Note and applicable law, the Servicer covenants and
agrees that it will not, without the prior written consent of the Sponsor,
charge or collect from any Mortgagor, or trustee under a deed of trust, any fees
of any kind including, but not limited to charges for amounts expended by the
Servicer, regardless of the characterization of the fee or charge.
(f) The Trustee agrees to execute such limited powers of attorney provided
to it by the Servicer as are necessary and appropriate to assist the Servicer to
carry out its servicing and administrative responsibilities under this
Agreement.
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(g) In connection with its duties hereunder, in the event the Servicer
requires an original of any document contained in a Mortgagor's file to service
a Mortgage Loan, it shall submit a written request to the Trustee and the
Trustee shall provide the original document to the Servicer within two (2)
Business Days after receipt of the written request, provided that (a) as to any
recorded document, the applicable recorder's office has returned the recorded
document to the Servicer or (b) as to the original title insurance policy, the
Servicer has received such policy. When requesting a release of documents from
the Trustee, the Servicer shall use the form attached hereto as Exhibit N.
Notwithstanding the foregoing, the Servicer acknowledges and agrees that the
Sponsor maintains agreements with document custodians selected by it from time
to time, pursuant to which such custodians maintain Mortgage Loan files on
behalf of the Sponsor. The Servicer agrees to cooperate with such custodians and
request from such custodians the documents and Mortgage Files required by the
Servicer which are maintained by such custodians (with a copy of such request
sent to the Sponsor).
(h) The Servicer shall not, unless default by the related Mortgagor has
occurred or is imminent, knowingly permit any modification, waiver or amendment
of any material term of any Mortgage Loan (including but not limited to the
interest rate, the principal balance, the amortization schedule, or any other
term affecting the amount or timing of payments on the Mortgage Loan or the
collateral therefor) unless the Servicer shall have provided to the Depositor
and the Trustee an Opinion of Counsel in writing to the effect that such
modification, waiver or amendment would not cause an Adverse REMIC Event.
Section 9.02. Title, Management and Disposition of REO Property.
(a) If title to a Mortgaged Property is acquired in foreclosure or by deed
in lieu of foreclosure, the deed or certificate of sale shall be taken in the
name of the Trustee or its designee. Notwithstanding the foregoing, the Servicer
shall not acquire title to any Mortgaged Property, or proceed with the
management of any REO Property, for which the Servicer has knowledge that such
Mortgaged Property or REO Property is affected by hazardous waste. The Servicer
shall either itself, or through an agent, manage, conserve, protect and operate
each REO Property (and may temporarily rent the same) on behalf of the Trust
Fund.
In the event that the Trust Fund acquires any REO Property in connection
with a default or imminent default on a Mortgage Loan, the Servicer shall
dispose of such REO Property not later than the end of the third taxable year
after the year of its acquisition by the Trust Fund unless the Servicer has
applied for and received a grant of extension from the Internal Revenue Service
to the effect that, under the REMIC Provisions and any relevant proposed
legislation and under applicable state law, the Trust Fund may hold REO Property
for a longer period without adversely affecting the REMIC status of such REMIC
or causing the imposition of a federal or state tax upon such REMIC. If the
Servicer has received such an extension, then the Servicer shall continue to
attempt to sell the REO Property for its fair market value for such period
longer than three years as such extension permits (the "Extended Period"). If
the Servicer has not received such an extension and the Servicer is unable to
sell the REO Property within the period ending 3 months before the end of such
third taxable year after its acquisition by the Trust Fund or if the Servicer
has received such an extension, and the Servicer is unable to sell the REO
Property within the period ending three months before the close of the Extended
Period, the Servicer shall, before the end of the three year period or the
Extended Period, as applicable, (i) purchase such REO Property at a price equal
to the REO Property's fair market value or (ii) auction the REO Property to the
highest bidder (which may be the Servicer) in an auction reasonably designed to
produce a fair price prior to the expiration of the three-year period or the
Extended Period, as the case may be. The Trustee shall sign any document
prepared by the
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Servicer or take any other action reasonably requested by the Servicer which
would enable the Servicer, on behalf of the Trust Fund, to request such grant of
extension.
Notwithstanding any other provisions of this Agreement, no REO Property
acquired by the Trust Fund shall be held, rented (or allowed to continue to be
rented) or otherwise used by or on behalf of the Trust Fund in such a manner or
pursuant to any terms that would: (i) cause such REO Property to fail to qualify
as "foreclosure property" within the meaning of Section 860G(a)(8) of the Code;
or (ii) subject the Trust Fund to the imposition of any federal income taxes on
the income earned from such REO Property, including any taxes imposed by reason
of Sections 860F or 860G(c) of the Code, unless the Servicer has agreed to
indemnify and hold harmless the Trust Fund with respect to the imposition of any
such taxes.
(b) The Servicer shall deposit or cause to be deposited in the applicable
Custodial Account, on a daily basis, all revenues received with respect to each
REO Property and shall be permitted to withdraw therefrom, to the extent of the
amount of such revenues on deposit therein, funds necessary for the proper
operation, management and maintenance of such REO Property, including but not
limited to the cost of maintaining any hazard insurance and the fees of any
managing agent acting on behalf of the Servicer.
(c) If the Servicer elects to dispose of an REO Property without utilizing
the services of an agent, the Servicer shall notify the Trustee of its receipt
of any and all bona fide offers to purchase that REO Property. Each such REO
Disposition shall be carried out by the Servicer at such price, and upon such
terms and conditions.
If the Servicer utilizes the services of an approved agent to dispose of an
REO Property, the Servicer shall provide the Trustee with a copy of such agent's
marketing plan, which shall include, but not be limited to, (i) the marketing
time period, (ii) an estimate of the costs of any repairs or improvements, (iii)
the lowest acceptable sale price for the REO Property and (iv) other proposed
terms and conditions of sale. The REO Disposition shall be carried out by the
Servicer in accordance with the terms thereof. If the Servicer receives a bona
fide offer to purchase an REO Property and would like to accept the offer, but
the offer is outside the parameters of the approved marketing plan, the Servicer
shall provide the Trustee with written notification of the terms and conditions
of the offer.
The Servicer, upon an REO Disposition, shall be entitled to reimbursement
for any related unreimbursed Servicing Advances from proceeds received in
connection with such REO Disposition. If the proceeds from an REO Disposition
are insufficient to reimburse the Servicer for any related unreimbursed
Servicing Advances, to the extent such reimbursement will constitute an
"unanticipated expense" (within the meaning of Treasury Regulations Section
1.860G-1(b)(3)(ii)) of a REMIC provided for herein, the Servicer shall be
entitled to withdraw any such deficiency from amounts on deposit in the
applicable Custodial Account. All proceeds from an REO Disposition, net of any
reimbursement to the Servicer as provided above, shall be remitted to the
Trustee within three (3) Business Days following receipt thereof.
Section 9.03. Trustee and Depositor's Right to Examine Servicer Records.
(a) The Servicer shall cooperate with the Depositor and/or the Trustee, its
counsel, accountants (including outside accountants), supervisory agents,
examiners and other representatives in providing reasonable access during normal
business hours to examine and audit any and all of the books, records,
documentation or other information of the Servicer related to
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the Mortgage Loans, which may be relevant to the performance or observance by
the Servicer of the terms, covenants or conditions of this Agreement.
(b) The examination and audit rights and other rights to access described
in clause (a) above shall be afforded by the Servicer at its offices without
charge, upon reasonable request, and during normal business hours or at such
other times as may be reasonable under applicable circumstances. The Servicer,
at its expense, shall make available all customary, reasonable office space,
facilities, and equipment for the visiting party and shall provide the visiting
party with access to reasonable cooperation with its officers and employees. The
salaries, travel, subsistence and other related expenses for the Depositor's
and/or the Trustee's representatives shall be borne by the Depositor and/or the
Trustee.
Section 9.04. Legal Proceedings Involving the Servicer and/or the Mortgage
Loans.
(a) The Servicer shall commence, defend, appear, or otherwise participate
in any foreclosure, condemnation, bankruptcy, or other legal proceedings
relating to a Mortgage Loan in the name of the Trustee and/or the Trust Fund.
The Servicer shall provide the Trustee, on a monthly basis, with such written
reports as it receives regarding any legal proceedings.
(b) The Servicer shall commence all foreclosures, bankruptcies and other
legal proceedings in the name of the Trustee and/or the Trust Fund unless
otherwise directed in writing by the Trustee.
Section 9.05. Material Changes.
The Servicer shall promptly report to the Trustee and the Depositor any
change in its business operations, financial condition, properties or assets
that could have a material adverse effect on the Servicer's ability to perform
its obligations hereunder. Events for which the Trustee and the Depositor must
receive notice include, but are not limited to, the following:
(a) any merger or consolidation, any changes in the Servicer's ownership
whether directly or indirectly (including any change in ownership of the
Servicer's parent), or any significant reorganization;
(b) any material changes in management ordered or required by a regulatory
authority supervising or licensing the Servicer;
(c) the entry against the Servicer of a decree or order of a court or
agency or supervisory authority having jurisdiction for the appointment of a
trustee, conservator, receiver, liquidator, assignee, custodian or sequestrator
(or other similar official) in any federal or state bankruptcy, insolvency,
readjustment of debt, marshaling of assets and liabilities or similar
proceedings, or for the winding-up or liquidation of its affairs, if such decree
or order has remained in force undischarged or unstayed for a period of sixty
(60) days;
(d) the consent by the Servicer to the appointment of a trustee,
conservator, receiver, liquidator, assignee, custodian or sequestrator (or other
similar official) in, or commencement of a voluntary case under, any federal or
state bankruptcy, insolvency, readjustment of debt, marshaling of assets and
liabilities or similar proceedings;
(e) upon the Servicer's (A) admitting in writing its inability to pay its
debts generally as they become due, (B) filing a petition to take advantage of
any applicable insolvency or
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reorganization statute, (C) making an assignment for the benefit of its
creditors or (D) voluntarily suspending payment of its obligations;
(f) entry of any court judgment or regulatory order in which the Servicer
is or may be required to pay a claim or claims that may have a material adverse
effect on the Servicer's financial condition;
(g) any admission by the Servicer to the commission of, or any finding that
the Servicer has committed, any violation of any law, regulation or order in any
proceeding or audit commenced by any governmental, or regulatory authority, or
any proceeding commenced in any court of law;
(h) the commencement of any class action law suits against the Servicer;
and
(i) the Servicer's entry into any agreement with a third party that would
result in any material change in the financial status or ownership of the
Servicer or any merger of the Servicer.
Section 9.06. Servicer Shall Provide Information as Reasonably Required.
During the term of this Agreement, the Servicer shall furnish any reports
or documentation that the Trustee and/or the Depositor may reasonably request.
Reports requested may include reports not specified or otherwise required by
this Agreement or reports required to comply with any regulations regarding any
supervisory agents or examiners of the Trustee and/or the Depositor, as
applicable. All reports will be delivered in accordance with the Trustee and/or
the Depositor's reasonable instructions and directions. The Servicer agrees to
execute and deliver all such instruments and take all such action as the Trustee
and/or the Depositor, as applicable, from time to time, may reasonably request
in order to effectuate the purpose and to carry out the terms of this Agreement.
Section 9.07. Servicer Not to Resign.
The Servicer shall neither assign this Agreement or the servicing hereunder
or delegate its rights or duties hereunder or any portion hereof (to other than
a third party in the case of outsourcing routine tasks such as taxes, insurance
and property inspection, in which case the Servicer shall be fully liable for
such tasks as if the Servicer performed them itself) nor sell or otherwise
dispose of all or substantially all of its property or assets without the prior
written consent of the Trustee and the Depositor, which consent shall be granted
or withheld in the reasonable discretion of such parties, provided, however,
that (i) the Servicer may assign its rights and obligations hereunder without
prior written consent of the Trustee and the Depositor to any entity that is
directly owned or controlled by the Servicer, and the Servicer guarantees the
performance of such entity hereunder, (ii) the Servicer is no longer permitted
to act as Servicer under applicable law as evidenced by an Opinion of Counsel or
(iii) upon a sale of its servicing rights with respect to the Mortgage Loans
with the prior written consent of the Sponsor. In the case of item (i) above,
the Servicer shall provide the Trustee and the Depositor with a written
statement guaranteeing the successor entity's performance of the Servicer's
obligations under the Agreement.
Section 9.08. Custodial Accounts and Escrow Accounts.
The Servicer shall segregate and hold all funds collected and received
pursuant to each Mortgage Loan separate and apart from any of its own funds and
general assets. The Servicer
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shall create and maintain Custodial Accounts and Escrow Accounts for the deposit
of all funds, except as otherwise provided herein, received by the Servicer on
the Mortgage Loans. The Servicer shall be responsible for reviewing and
reconciling all collection accounts in accordance with industry standards. The
Servicer shall act promptly to resolve any discrepancies. The Servicer shall be
responsible for all expenses and consequences for failure to reconcile the
accounts.
Section 9.09. Assumption Processing.
Within three (3) Business Days of receipt by the Servicer of a request by a
Mortgagor to be released from liability for payment of a Mortgage Loan in
connection with an assumption of the related Mortgage Note, the Servicer shall
notify the Trustee of such request. Upon the completion of the assumption
processing, the Sponsor shall provide the Servicer with all necessary
information to enable the Servicer to update its EDP.
Section 9.10. Books and Records.
The Servicer shall be responsible for maintaining, and shall maintain, a
complete set of records for the Mortgage Loans. The Servicer's books and records
shall clearly reflect the ownership of the Mortgage Loans by the Trust Fund. All
documents, records and correspondence, regardless of the media in which they are
stored or maintained, are property of the Trust Fund, and the Servicer shall
hold the same in a fiduciary capacity for the Trust Fund. The Servicer may
retain copies of all such documents, records and correspondence as may be
necessary to service the Mortgage Loans under this Agreement.
Section 9.11. Annual Statement as to Compliance.
Not later than (a) March 1 of each calendar year (other than the calendar
year during which the Closing Date occurs), or (b) with respect to any calendar
year during which an annual report on Form 10-K is not required to be filed
pursuant to Section 9.21 on behalf of the Issuing Entity, by April 15 of each
calendar year (or if such day is not a Business Day, the immediately preceding
Business Day), each of the Servicer and the Trustee shall deliver to the Trustee
and the Depositor, an Officer's Certificate in the form attached hereto as
Exhibit V stating, as to each signatory thereof, that (i) a review of the
activities of such signatory during the preceding calendar year, or portion
thereof, and of the performance of such signatory 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, such signatory has fulfilled all its
obligations under this Agreement in all material respects throughout such year
or a 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. With respect to any Sub-Servicer to
which the Servicer has delegated any servicing responsibilities, the Servicer
shall deliver, on behalf of that Sub-Servicer, the Officer's Certificate set
forth in this Section 9.11 in the same manner and with the same time frames as
required by the Servicer and the Trustee above. Promptly after receipt of each
such Officer's Certificate, the Depositor may review such Officer's Certificate
and, if applicable, consult with the Servicer, any Sub-Servicer, and the
Trustee, as applicable, as to the nature of any failures by such party, in the
fulfillment of any of such party's obligations hereunder or, in the case of any
Sub-Servicer, under such other applicable agreement.
In the event the Trustee or the Servicer is terminated or resigns pursuant
to the terms of this Agreement, such party shall provide, and shall use its
reasonable efforts to cause any Sub-Servicer that resigns or is terminated under
any applicable servicing agreement to provide, an
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annual statement of compliance pursuant to this Section 9.11 with respect to the
period of time that the Trustee or the Servicer was subject to this Agreement or
the period of time that the Sub-Servicer was subject to such other servicing
agreement.
Section 9.12. [Reserved.]
Section 9.13. Reports on Assessment of Compliance and Attestation.
(a) Not later than March 1 of each calendar year (other than the calendar
year during which the Closing Date occurs) with respect to any calendar year
during which the Issuing Entity's annual report on Form 10-K is required to be
filed in accordance with the Exchange Act and the rules and regulations of the
Commission, the Servicer and the Trustee each at its own expense, shall furnish,
and each of the preceding parties, as applicable, shall cause any Sub-Servicer
or Subcontractor engaged by it to furnish (unless in the case of a
Subcontractor, the Servicer or the Trustee, as applicable, has notified the
Depositor and the Trustee in writing that such compliance statement is not
required for the Subcontractor) and (ii) not later than April 15 of each
calendar year with respect to any calendar year during which the Issuing
Entity's annual report on Form 10-K is not required to be filed in accordance
with the Exchange Act and the rules and regulations of the Commission, the
Servicer and the Trustee each at its own expense, shall furnish, and each of the
preceding parties, as applicable, shall cause any Sub-Servicer or Subcontractor
engaged by it to furnish, to the Trustee and the Depositor an officer's
assessment of its compliance with the Relevant Servicing Criteria during the
preceding calendar year as required by Rules 13a-18 and 15d-18 of the Exchange
Act and Item 1122 of Regulation AB (the "Assessment of Compliance"), which
assessment shall contain (A) a statement by such party of its responsibility for
assessing compliance with the Relevant Servicing Criteria, (B) a statement that
such party used the Relevant Servicing Criteria to assess compliance with the
Relevant Servicing Criteria, (C) such party's assessment of compliance with the
Relevant Servicing Criteria as of and for the fiscal year covered by the Form
10-K required to be filed pursuant to Section 9.13, including, if there has been
any material instance of noncompliance with the Relevant Servicing Criteria, a
discussion of each such failure and the nature and status thereof, which
assessment shall be based on the activities it performs with respect to
asset-backed securities transactions taken as a whole involving such party that
are backed by the same asset type as the Mortgage Loans, and (D) a statement
that a registered public accounting firm has issued an attestation report on
such party's assessment of compliance with the Relevant Servicing Criteria as of
and for such period.
Promptly after receipt of each report on assessment of compliance, (i) the
Depositor may review each such report and, if applicable, consult with the
Servicer, and the Trustee, and any Sub-Servicer or Subcontractor engaged by such
parties as to the nature of any material instance of noncompliance with the
Relevant Servicing Criteria by the Servicer, the Trustee, and any Sub-Servicer
or Subcontractor engaged by such parties, and (ii) the Trustee shall confirm
that the assessments individually address the Relevant Servicing Criteria for
each party as set forth on Exhibit S-2 and notify the Depositor of any
exceptions.
In the event the Trustee or the Servicer is terminated or resigns pursuant
to the terms of this Agreement, such party shall provide, and each such party
shall cause any subcontractor engaged by it to provide, and each such party
shall use its reasonable efforts to cause any Sub-Servicer that resigns or is
terminated under any applicable servicing agreement to provide, an annual
assessment of compliance pursuant to this Section 9.13, coupled with an
attestation as required in this Section 9.13 with respect to the period of time
that the Trustee or the Servicer was
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subject to this Agreement or the period of time that the Sub-Servicer was
subject to such other servicing agreement.
(b) Not later than March 1 of each calendar year (other than the calendar
year during which the Closing Date occurs) with respect to any calendar year
during which the Issuing Entity's annual report on Form 10-K is required to be
filed in accordance with the Exchange Act and the rules and regulations of the
Commission, the Servicer and the Trustee each at its own expense, shall cause,
and each of the preceding parties, as applicable, shall cause any Sub-Servicer
or Subcontractor engaged by it to cause (unless in the case of a Subcontractor,
the Servicer or the Trustee, as applicable, has notified the Depositor and the
Trustee in writing that such report is not required for the Subcontractor) and
(ii) not later than April 15 of each calendar year with respect to any calendar
year during which the Issuing Entity's annual report on Form 10-K is not
required to be filed in accordance with the Exchange Act and the rules and
regulations of the Commission, the Servicer and the Trustee each at its own
expense, shall cause, and each of the preceding parties, as applicable, shall
cause any Sub-Servicer or Subcontractor engaged by it to cause, a nationally or
regionally recognized firm of independent registered public accountants (who may
also render other services to the Servicer, the Trustee, the Sponsor or any
affiliate thereof) which is a member of the American Institute of Certified
Public Accountants to furnish a report (the "Accountants Attestation") to the
Trustee and the Depositor to the effect that (i) it has obtained a
representation regarding certain matters from the management of such party,
which includes an assertion that such party has complied with the Relevant
Servicing Criteria, and (ii) on the basis of an examination conducted by such
firm in accordance with standards for attestation engagements issued or adopted
by the PCAOB, it is expressing an opinion as to whether such party's compliance
with the Relevant Servicing Criteria was fairly stated in all material respects,
or it cannot express an overall opinion regarding such party's assessment of
compliance with the Relevant Servicing Criteria. 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. Such
Accountant's 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.
(c) Promptly after receipt of such report from the Servicer and the
Trustee, and any Sub-Servicer or Subcontractor engaged by such parties, (i) the
Depositor may review the report and, if applicable, consult with such parties as
to the nature of any defaults by any of such parties, as the case may be, in the
fulfillment of such party's obligations hereunder or under any other applicable
agreement, and (ii) the Trustee shall confirm that each assessment submitted
pursuant to Section 9.13(a) is coupled with an attestation meeting the
requirements of Section 9.13(b) and notify the Depositor of any exceptions.
(d) Each of the parties hereto acknowledges and agrees that the purpose of
this Section 9.13 is to facilitate compliance by the Sponsor and the Depositor
with the provisions of Regulation AB, as such may be amended or clarified from
time to time. Therefore, each of the parties agrees that the parties'
obligations hereunder will be supplemented and modified as necessary to be
consistent with any such amendments, interpretive advice or guidance, convention
or consensus among active participants in the asset-backed securities markets,
advice of counsel, or otherwise in respect of the requirements of Regulation AB
and the parties shall comply with requests made by the Sponsor or the Depositor
for delivery of additional or different information as the Sponsor or the
Depositor may determine in good faith is necessary to comply with the provisions
of Regulation AB. Any such supplementation or modification shall be made in
accordance with Section 11.03 without the consent of the Certificateholders, and
may result in
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a change in the reports filed by the Trustee on behalf of the Issuing Entity
under the Exchange Act.
Section 9.14. Servicing Compensation.
(a) Subject to the following paragraph, as compensation for its services
hereunder, the Servicer shall be entitled to a Servicing Fee payable with
respect to each Mortgage Loan. As to each Mortgage Loan, the Servicing Fee shall
be payable monthly from payments of interest on such Mortgage Loan prior to the
deposit of such payments into the applicable Custodial Account, shall accrue at
the applicable Servicing Fee Rate, and shall be computed on the basis of the
same principal amount and for the same period respecting which such interest
payment was computed.
(b) The Servicing Fee for each Mortgage Loan shall be payable solely from
(i) the interest portion of the related Monthly Payment (to the extent paid by
the Mortgagor, but only if a full interest payment is received), or (ii) from
any payment of interest made with respect to the Mortgage Loan from the proceeds
of foreclosure or any judgment, writ of attachment or levy against the Mortgagor
or the Mortgagor's assets, or (iii) from funds paid in connection with any
prepayment in full, or (iv) from Insurance Proceeds or Liquidation Proceeds.
(c) As additional compensation hereunder, the Servicer may retain (i) all
net interest earnings on balances maintained in the Custodial Account and Escrow
Accounts and (ii) the Ancillary Fees.
(d) The Servicer's right to the Servicing Fee shall not be transferred in
whole or in part except in connection with any permitted transfer of all the
Servicer's obligations under this Agreement. The Servicer shall be required to
pay all expenses incurred by it in connection with its servicing activities
hereunder and shall not be entitled to reimbursement therefor except as
specifically provided for herein.
Section 9.15. Indemnification.
The Servicer shall indemnify and hold the Trustee, the Trust Fund and the
Depositor and their respective officers, directors, employees and agents
(collectively, the "Indemnified Parties") harmless from, and will reimburse the
Indemnified Parties for, any and all Losses incurred by any of the Indemnified
Parties to the extent that such Losses result from, are caused by or arise out
of any one or more of the following:
(i) Any material misrepresentations made by the Servicer in this
Agreement, or in any schedule, exhibit, or certificate furnished pursuant
hereto;
(ii) Any material breach of any of the representations and warranties
of the Servicer or the nonfulfillment of any term, covenant, condition or
obligation of the Servicer set forth in this Agreement or in any schedule,
statement, exhibit, or certificate furnished pursuant hereto, or any
default or failure to perform by the Servicer hereunder;
(iii) Any failure of the Servicer to comply with Accepted Servicing
Practices in connection with servicing the Mortgage Loans;
(iv) Any liabilities or obligations, contingent or otherwise, of the
Servicer of any nature whatsoever relating to the Servicer's obligations
under this Agreement, to the extent that any related Loss to the Trustee,
Trust Fund or Depositor is not increased by
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negligence, bad faith or willful misconduct on the part of the Trustee,
Trust Fund or Depositor; or
(v) Any non-compliance with the terms of the powers of attorney or the
use thereof that results in a Loss to the Trustee, Trust Fund or Depositor.
The indemnity provided in this Section 9.15 shall remain in full force and
effect regardless of any investigation made by the Trustee, Trust Fund or
Depositor or its representatives. The provisions of this Section 9.15 shall
survive the termination of this Agreement and the payment of the outstanding
Certificates.
Section 9.16. Non Solicitation.
For as long as the Servicer services the Mortgage Loans, the Servicer
covenants that it will not, and that it will ensure that its affiliates and
agents, will not, directly solicit or provide information for any other party to
solicit for prepayment or refinancing of any of the Mortgage Loans by the
related Mortgagors. It is understood that the promotions undertaken by the
Servicer which are directed to the general public at large, or certain segments
thereof, shall not constitute solicitation as that term is used in this Section
9.16.
Section 9.17. Successor to the Servicer.
Simultaneously with the termination of the Servicer's responsibilities and
duties under this Agreement (a) the Trustee shall, in accordance with the
provisions of this Agreement (i) succeed to and assume all of the Servicer's
responsibilities, rights, duties and obligations under this Agreement, or (ii)
appoint a successor meeting the eligibility requirements set forth herein and
which shall succeed to all rights and assume all of the responsibilities, duties
and liabilities of the Servicer under this Agreement with the termination of the
Servicer's responsibilities, duties and liabilities under this Agreement. If the
Trustee shall succeed to and assume the Servicer's responsibilities, rights,
duties and obligations under this Agreement, such succession shall not be
effective prior to 90 days after the Trustee's knowledge that the Servicer shall
be terminated hereunder. The Servicer shall not be removed hereunder prior to
the effectiveness of the assumption of its responsibilities, rights, duties and
obligations by the successor thereto. Any successor to the Servicer shall be
subject to the approval of the Depositor, the Trustee and each Rating Agency.
Each Rating Agency must deliver to the Trustee a letter to the effect that such
transfer of servicing will not result in a qualification, withdrawal or
downgrade of the then-current rating of any of the Certificates. In connection
with such appointment and assumption, the Trustee or the Depositor, as
applicable, may make such arrangements for the compensation of such successor
out of payments on the Mortgage Loans as it and such successor shall agree;
provided, however, that no such compensation shall be in excess of that
permitted the Servicer under this Agreement. In the event that the Servicer's
duties, responsibilities and liabilities under this Agreement should be
terminated pursuant to the aforementioned sections, the Servicer shall discharge
such duties and responsibilities during the period from the date it acquires
knowledge of such termination until the effective date thereof with the same
degree of diligence and prudence which it is obligated to exercise under this
Agreement, and shall take no action whatsoever that might impair or prejudice
the rights or financial condition of its successor. The resignation or removal
of the Servicer pursuant to the aforementioned sections shall not become
effective until a successor shall be appointed pursuant to this Section 9.17 and
shall in no event relieve the Servicer of the representations and warranties
made herein and the remedies available to the Trustee herein, it being
understood and agreed that the provisions of this Agreement
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regarding indemnification and nonsolicitation shall be applicable to the
Servicer notwithstanding any such resignation or termination of the Servicer, or
the termination of this Agreement.
Section 9.18. Statements to the Trustee.
(a) Not later than the 15th calendar day of each month (or if such calendar
day is not a Business Day, the immediately succeeding Business Day), the
Servicer shall furnish to the Trustee (i) a monthly remittance advice in the
format set forth in Exhibit D-1 hereto and a monthly defaulted loan report in
the format set forth in Exhibit D-2 hereto relating to the period ending on the
first day of the current calendar month and (ii) all such information required
on a magnetic tape or other similar media mutually agreed upon by the Trustee
and the Servicer.
(b) The Servicer shall provide the Trustee with such information concerning
the Mortgage Loans as is necessary for the Trustee to prepare its federal income
tax return as the Trustee may reasonably request from time to time.
Section 9.19. Merger or Consolidation of the Servicer.
Any entity into which the Servicer may be merged or consolidated, or any
entity resulting from any merger, conversion or consolidation to which the
Servicer shall be a party, or any corporation succeeding to the business of the
Servicer, shall be the successor of the Servicer 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 Servicer shall satisfy all the requirements of
Section 9.17 with respect to the qualifications of a successor Servicer.
Section 9.20. Limitation on Liability of the Servicer.
Neither the Servicer nor any of its directors, officers, employees or
agents 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 Servicer or any such Person against any breach
of representations or warranties made by it herein or protect the Servicer or
any such Person from any liability which would otherwise be imposed by reasons
of willful misfeasance, bad faith or negligence in the performance of its duties
or by reason of reckless disregard of its obligations and duties hereunder. The
Servicer and any director, officer, employee or agent of the 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 or any other unanticipated or
extraordinary expense, other than any loss, liability or expense incurred by
reason of willful misfeasance, bad faith or negligence in the performance of
duties hereunder or by reason of reckless disregard of obligations and duties
hereunder. The Servicer shall not 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 the 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 Servicer shall be
entitled to be reimbursed therefor out of the Custodial Account.
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Section 9.21. Periodic Filings.
(i) Within four (4) Business Days after the occurrence of an event
requiring disclosure on Form 8-K (each such event, a "Reportable Event"),
and if directed by the Depositor and to the extent it receives the Form 8-K
Disclosure Information described below, the Trustee shall prepare and file
on behalf of the Issuing Entity a Form 8-K, as required by the Exchange
Act, provided that the Depositor shall file the initial Form 8-K in
connection with the issuance of the Certificates. Any disclosure or
information related to a Reportable Event or that is otherwise required to
be included on Form 8-K (other than the initial Form 8-K) ("Form 8-K
Disclosure Information") shall, pursuant to the paragraph immediately
below, be reported by the parties set forth on Exhibit W and directed and
approved by the Depositor, and the Trustee will have no duty or liability
for any failure hereunder to determine or prepare any Form 8-K Disclosure
Information absent such reporting, direction and approval.
(ii) For so long as the Issuing Entity is subject to the reporting
requirements of the Exchange Act, following the occurrence of a Reportable
Event (A) each party listed on Exhibit W hereto shall use commercially
reasonable best efforts to provide immediate notice to the Trustee and the
Depositor, by fax and by phone or by e-mail and by phone (using the contact
information set forth in Section 11.07 or, in the case of the Trustee, set
forth on Exhibit U), (B) each such party shall be required to provide to
the Trustee and the Depositor, to the extent known, in ▇▇▇▇▇-compatible
format or in such other format as agreed upon by the Trustee, the Depositor
and such party, the Form 8-K Disclosure Information described on Exhibit W
applicable to such party, together with the form set forth on Exhibit U
(the "Additional Disclosure Notification") by Noon New York City time on
the 2nd Business Day following the occurrence of such Reportable Event and
(C) the Depositor, by the end of business New York City time on the 2nd day
following such Reportable Event, shall approve, as to form and substance,
or disapprove, as the case may be, the inclusion of the Form 8-K Disclosure
Information on Form 8-K. The Trustee has no duty under this Agreement to
monitor or enforce the performance by the parties listed on Exhibit W of
their duties under this paragraph or proactively solicit or procure from
such parties any Form 8-K Disclosure Information. The Depositor will be
responsible for any reasonable fees and expenses assessed or incurred by
the Trustee in connection with including any Form 8-K Disclosure
Information on Form 8-K pursuant to this paragraph.
(iii) After preparing the Form 8-K, the Trustee shall forward
electronically, no later than Noon New York City time on the third Business
Day after the Reportable Event (but in no event earlier than 24 hours after
having received the Form 8-K Disclosure Information pursuant to the
immediately preceding paragraph), a draft copy of the Form 8-K to the
Depositor for review. No later than the close of business on the third
Business Day after the Reportable Event, the Depositor shall notify the
Trustee of any changes to or approval of such Form 8-K. No later than 12:00
noon New York City time on the fourth Business Day after the Reportable
Event, a senior officer of the Depositor shall sign the Form 8-K and return
an electronic or fax copy of such signed Form 8-K (with an original
executed hard copy to follow by overnight mail) to the Trustee. If a Form
8-K cannot be filed on time or if a previously filed Form 8-K needs to be
amended, the Trustee will follow the procedures set forth in Section
9.21(xiv).
(iv) Promptly (but no later than one Business Day) after filing with
the Commission, the Trustee will make available on its internet website a
final executed copy
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of each Form 8-K prepared by the Trustee. The signing party at the
Depositor can be contacted at (▇▇▇) ▇▇▇-▇▇▇▇. The parties to this Agreement
acknowledge that the performance by the Trustee of its duties under this
Section 9.21 related to the timely preparation, arrangement for execution
and filing of Form 8-K is contingent upon the other parties hereto strictly
observing all applicable deadlines in the performance of their duties under
this Section 9.21. The Trustee shall not have any liability for any loss,
expense, damage or claim arising out of or with respect to any failure to
properly prepare, arrange for preparation and/or timely file such Form 8-K,
where such failure results from the Trustee's inability or failure to
receive, on a timely basis, any information from any other party hereto
needed to prepare, arrange for execution or file such Form 8-K.
(v) Within fifteen days after each Distribution Date (subject to
permitted extensions under the Exchange Act), the Trustee shall, on behalf
of the Issuing Entity and in accordance with industry standards, prepare
and file with the Commission via the Electronic Data Gathering and
Retrieval System (▇▇▇▇▇), a Form 10-D with (1) a copy of the report to the
Certificateholders for such Distribution Date as an exhibit thereto. Any
necessary disclosure in addition to the Monthly Statement that is required
to be included on Form 10-D ("Additional Form 10-D Disclosure") shall,
pursuant to the paragraph immediately below, be reported by the parties set
forth on Exhibit X to the Depositor and the Trustee and directed and
approved by the Depositor, and the Trustee will have no duty or liability
for any failure hereunder to determine or prepare any Additional Form 10-D
Disclosure absent such reporting, direction and approval.
(vi) As set forth in Exhibit X hereto, for so long as the Issuing
Entity is subject to the reporting requirements of the Exchange Act, within
five (5) calendar days after the related Distribution Date (i) each party
listed on Exhibit X hereto shall be required to provide to the Depositor
and the Trustee, to the extent known, in ▇▇▇▇▇-compatible format or in such
other format as agreed upon by the Trustee, the Depositor and such party,
any Additional Form 10-D Disclosure (including any breaches of pool asset
representations and warranties or transaction covenants of which the party
has written notice and which has not been included on the monthly
distribution report for the period), applicable to such party, and (ii) the
Depositor will approve, as to form and substance, or disapprove, as the
case may be, the inclusion of the Additional Form 10-D Disclosure and shall
forward such Additional Form 10-D Disclosure to the Trustee in
▇▇▇▇▇-compatible format or in such other format as agreed by the Trustee
and the Depositor, together with the Additional Disclosure Notification.
The Trustee and the Servicer have no duty under this Agreement to monitor
or enforce the performance by the parties listed on Exhibit X of their
duties under this paragraph or proactively solicit or procure from such
parties any Additional Form 10-D Disclosure Information. The Depositor will
be responsible for any reasonable fees and expenses incurred by the Trustee
in connection with including any Additional Form 10-D Disclosure on Form
10-D pursuant to this paragraph.
(vii) After preparing the Form 10-D at the direction of the Depositor,
the Trustee will forward electronically a draft copy of the Form 10-D to
the Depositor for review and execution. No later than two (2) Business Days
prior to the 15th calendar day after the related Distribution Date, a duly
authorized representative of the Depositor shall sign the Form 10-D and
return an electronic or fax copy of such Form 10-D (with an original
executed hard copy to follow by overnight mail) to the Trustee and the
Trustee shall file such Form 10-D. If a Form 10-D cannot be filed on time
or if a previously filed Form 10-D needs to be amended, the Trustee will
follow the procedures set forth in
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Section 9.21(xiv). Promptly (but not later than one Business Day) after
filing with the Commission, the Trustee will make available on its internet
website a final executed copy of each Form 10-D prepared and filed by the
Trustee. The parties to this Agreement acknowledge that the performance by
the Trustee of its duties under this Section 9.21 related to the timely
preparation, arrangement for execution and filing of Form 10-D is
contingent upon the other parties hereto strictly observing all applicable
deadlines in the performance of their duties under this Section 9.21. The
Trustee will not have any liability for any loss, expense, damage or claim
arising out of or with respect to any failure to properly prepare, arrange
for execution and/or timely file such Form 10-D resulting from the
Trustee's inability or failure to receive any information needed to
prepare, arrange for execution or file such Form 10-D on a timely basis.
(viii) On or prior to the 90th calendar day after the end of the
fiscal year for the Issuing Entity or such earlier date as may be required
by the Exchange Act (the "10-K Filing Deadline") (it being understood that
the fiscal year for the Issuing Entity ends on December 31st of each year)
commencing in March 2007, the Trustee shall, on behalf of the Issuing
Entity and in accordance with industry standards, prepare and file with the
Commission via ▇▇▇▇▇ a Form 10 -K with respect to the Issuing Entity. Such
Form 10-K shall include the following items, in each case, as applicable,
to the extent they have been delivered to the Trustee within the applicable
time frames set forth in this Agreement, (i) an annual compliance statement
for the Trustee, the Servicer and each Sub-Servicer, as described in
Section 9.11 of the Agreement, (ii)(A) the annual reports on assessment of
compliance with servicing criteria for the Trustee, the Servicer and each
Sub-Servicer and Subcontractor (unless the Depositor has determined that
such compliance statement is not required by Regulation AB), as described
in Section 9.13 of the Agreement, and (B) if any such party's report on
assessment of compliance with servicing criteria described in Section 9.13
identifies any material instance of noncompliance, disclosure identifying
such instance of noncompliance, or if any report on assessment of
compliance with servicing criteria described in Section 9.13 of the
Agreement is not included as an exhibit to such Form 10-K, disclosure that
such report is not included and an explanation why such report is not
included, (iii)(A) the registered public accounting firm attestation report
for the Trustee, the Servicer and each Sub-Servicer and Subcontractor (if
applicable), as described in Section 9.13 of this Agreement, and (B) if any
registered public accounting firm attestation report described under
Section 9.13 of this Agreement identifies any material instance of
noncompliance, disclosure identifying such instance of noncompliance, or if
any such registered public accounting firm attestation report is not
included as an exhibit to such Form 10-K, disclosure that such report is
not included and an explanation why such report is not included, and (iv) a
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Certification in the form attached hereto as Exhibit T,
executed by the senior officer in charge of securitizations of the
Depositor. Any disclosure or information in addition to (i) through (iv)
above that is required to be included on Form 10-K ("Additional Form 10-K
Disclosure") shall be reported by the parties as set forth in Exhibit Y to
the Depositor and the Trustee and directed and approved by the Depositor
pursuant to the following paragraph and the Trustee will have no duty or
liability for any failure hereunder to determine or prepare any Additional
Form 10-K Disclosure absent such reporting, direction or approval.
(ix) As set forth in Exhibit Y hereto, no later than March 1 of each
year that the Issuing Entity is subject to the Exchange Act reporting
requirements, commencing in March 2007, (i) the parties listed on Exhibit Y
hereto shall be required to provide to the Depositor and the Trustee, to
the extent known, in ▇▇▇▇▇-compatible format or in such
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other format as agreed upon by the Trustee, the Depositor and such party,
any Additional Form 10-K Disclosure, applicable to such party, and (ii) the
Depositor will approve, as to form and substance, or disapprove, as the
case may be, the inclusion of the Additional Form 10-K Disclosure and shall
forward such Additional Form 10-K Disclosure to the Trustee in
▇▇▇▇▇-compatible format or in such other format as agreed by the Trustee
and the Depositor, together with the Additional Disclosure Notification.
The Trustee has no duty under this Agreement to monitor or enforce the
performance by the parties listed on Exhibit Y of their duties under this
paragraph or proactively solicit or procure from such parties any
Additional Form 10-K Disclosure Information. The Depositor will be
responsible for any reasonable fees and expenses incurred by the Trustee in
connection with including any Additional Form 10-K Disclosure on Form 10-K
pursuant to this paragraph.
(x) After preparing the Form 10-K, the Trustee shall forward
electronically a draft copy of the Form 10-K to the Depositor for review.
No later than the Business Day prior to the date specified in the next
sentence, the Depositor shall notify the Trustee of any changes to or
approval of such Form 10-K. No later than the end of business New York City
time on the fourth Business Day after receipt thereof, a senior officer of
the Depositor shall sign the Form 10-K and return an electronic or fax copy
of such signed Form 10-K (with an original executed hard copy to follow by
overnight mail) to the Trustee, and the Trustee shall file such Form 10-K.
If a Form 10-K cannot be filed on time or if a previously filed Form 10-K
needs to be amended, the Trustee will follow the procedures set forth in
Section 9.21(xiv). Promptly (but no later than one Business Day) after
filing with the Commission, the Trustee will, pursuant to the Agreement,
make available on its internet website a final executed copy of each Form
10-K prepared and filed by the Trustee. The parties to this Agreement
acknowledge that the performance by the Trustee of its duties under this
Section 9.21 related to the timely preparation, arrangement for execution
and filing of Form 10-K is contingent upon such parties (and any
Sub-Servicer or Subcontractor) strictly observing all applicable deadlines
in the performance of their duties under this Section 9.21, Section 9.11
and Section 9.13. The Trustee shall have no liability for any loss,
expense, damage or claim arising out of or with respect to any failure to
properly prepare, arrange for execution and/or timely file such Form 10-K
resulting from the Trustee's inability or failure to receive any
information needed to prepare, arrange for execution or file such Form 10-K
on a timely basis.
(xi) Each Form 10-K shall include a certification (the "▇▇▇▇▇▇▇▇-▇▇▇▇▇
Certification"), which shall be in the form attached hereto as Exhibit T.
The Depositor will cause its senior officer in charge of securitization to
execute the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Certification required pursuant to Rule 13a -14
under the Exchange Act and to deliver the original executed Certification
to the Trustee by March 1 of each year in which the Issuing Entity is
subject to the reporting requirements of the Exchange Act. In connection
therewith, each of the Trustee, the Servicer and any Sub-Servicer, shall
sign and provide, and each such party shall cause any Sub-Servicer (to the
extent required by the Exchange Act and the rules and regulations of the
Commission) engaged by it to sign and provide, to the Depositor by March 1
of each year in which the Issuing Entity is subject to the reporting
requirements of the Exchange Act and otherwise within a reasonable period
of time upon request, a certification (a "Back-Up Certification") (in the
form attached hereto as Exhibit Q and Exhibit R, respectively) for the
benefit of the Depositor and its officers, directors and affiliates
regarding certain aspects of the Form 10-K Certification. In the event the
Servicer, any Sub-Servicer, the Trustee or any
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Subcontractor engaged by any such party is terminated or resigns (to the
extent the Servicer or Trustee, as applicable, can reasonably obtain such)
pursuant to the terms of this Agreement, or any other applicable agreement,
as the case may be, such party shall provide a Back-Up Certification to the
Depositor pursuant to this Section 9.21 with respect to the period of time
it was subject to this Agreement or any other applicable agreement, as the
case may be.
(xii) The Servicer agrees to furnish to the Trustee promptly, from
time to time upon request, such further information and reports within its
control related to this Agreement and the Mortgage Loans as the Depositor
reasonably deems appropriate to prepare and file all necessary reports with
the Commission. The Trustee shall have no responsibility to file any items
with the Commission other than those specified in this section and the
Depositor shall execute any and all Form 10-Ds, 8-Ks and 10-Ks required
hereunder.
(xiii) On or prior to January 30 of the first year in which the
Trustee is able to do so under applicable law, the Trustee shall prepare
and file a Form 15 Suspension Notification relating to the automatic
suspension of reporting in respect of the Issuing Entity under the Exchange
Act.
(xiv) In the event that the Trustee is unable to timely file with the
Commission all or any required portion of any Form 8-K, 10-D or 10-K
required to be filed by this Agreement because required disclosure
information was either not delivered to it or delivered to it after the
delivery deadlines set forth in this Agreement or for any other reason, the
Trustee will promptly notify the Depositor of such inability to make a
timely filing with the Commission. In the case of Form 10-D and 10-K, the
Depositor and Trustee will cooperate to prepare and file a Form 12b-25 and
a 10-DA and 10KA, as applicable, pursuant to Rule 12b-25 of the Exchange
Act. In the case of Form 8-K, the Trustee will, upon receipt of all
required Form 8-K Disclosure Information and upon the approval and
direction of the Depositor, include such disclosure information on the next
succeeding Form 10-D to be filed for the Issuing Entity. In the event that
any previously filed Form 8-K, 10-D or 10-K needs to be amended, the
Trustee will notify the Depositor, and such parties agree to cooperate to
prepare any necessary 8-K/A, 10-D/A or 10-K/A. Any Form 15, Form 12b-25 or
any amendment to Form 8-K, 10-D or 10-K shall be signed by a senior officer
of the Depositor. The Depositor and Servicer acknowledge that the
performance by the Trustee of its duties under this Section 9.21 related to
the timely preparation, arrangement for execution and filing of Form 15, a
Form 12b-25 or any amendment to Form 8-K, 10-D or 10-K is contingent upon
the Servicer and the Depositor performing their duties under this Section.
The Trustee shall have no liability for any loss, expense, damage or claim
arising out of or with respect to any failure to properly prepare, arrange
for execution and/or timely file any such Form 15, Form 12b-25 or any
amendments to Forms 8-K, 10-D or 10-K, where such failure results from the
Trustee's inability or failure to receive, on a timely basis, any
information from any other party hereto needed to prepare, arrange for
execution or file such Form 15, Form 12b-25 or any amendments to Forms 8-K,
10-D or 10-K.
(xv) If the Commission issues additional interpretative guidance or
promulgates additional rules or regulations with respect to Regulation AB
or otherwise, or if other changes in applicable law occur, that would
require the reporting arrangements, or the allocation of responsibilities
with respect thereto, described in this Section 9.21, to be conducted
differently than as described, the Depositor, the Servicer,
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and the Trustee will reasonably cooperate to amend the provisions of this
Section 9.21 in order to comply with such amended reporting requirements
and such amendment of this Section 9.21. Any such amendment shall be made
in accordance with Section 11.03 without the consent of the
Certificateholders, and may result in a change in the reports filed by the
Trustee on behalf of the Issuing Entity under the Exchange Act.
Notwithstanding the foregoing, the Depositor, the Servicer and the Trustee
shall not be obligated to enter into any amendment pursuant to this Section
9.21 that adversely affects its obligations and immunities under this
Agreement.
(xvi) The Depositor, the Servicer and the Trustee agree to use their
good faith efforts to cooperate in complying with the requirements of this
Section 9.21.
Section 9.22. Maintenance of Hazard Insurance and Errors and Omissions and
Fidelity Coverage.
(a) The Servicer shall cause to be maintained for each Mortgage Loan fire
insurance with extended coverage on the related Mortgaged Property in an amount
which is at least equal to the least of (i) the current principal balance of
such Mortgage Loan, (ii) the amount necessary to fully compensate for any damage
or loss to the improvements that are a part of such property on a replacement
cost basis and (iii) the maximum insurable value of the improvements which are a
part of such Mortgaged Property, in each case in an amount not less than such
amount as is necessary to avoid the application of any coinsurance clause
contained in the related hazard insurance policy. The Servicer shall also cause
to be maintained fire insurance with extended coverage on each REO Property in
an amount which is at least equal to the lesser of (w) the maximum insurable
value of the improvements which are a part of such property and (x) the
outstanding principal balance of the related Mortgage Loan at the time it became
an REO Property, plus accrued interest at the Loan Rate and related Servicing
Advances. The Servicer will comply in the performance of this Agreement with all
reasonable rules and requirements of each insurer under any such hazard
policies. Any amounts to be collected by the Servicer under any such policies
(other than amounts to be applied to the restoration or repair of the property
subject to the related Mortgage or amounts to be released to the Mortgagor in
accordance with the procedures that the Servicer would follow in servicing loans
held for its own account, subject to the terms and conditions of the related
Mortgage and Mortgage Note) shall be deposited in the Collection Account, within
two Business Days after receipt thereof, subject to withdrawal pursuant to
Section 4.01. Any cost incurred by the Servicer in maintaining any such
insurance shall not, for the purpose of calculating distributions to
Certificateholders, be added to the unpaid principal balance of the related
Mortgage Loan, notwithstanding that the terms of such Mortgage Loan so permit.
It is understood and agreed that no earthquake, windstorm or other additional
insurance is to be required of any Mortgagor 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 or REO Property is
at any time in an area identified in the Federal Register by the Federal
Emergency Management Agency as having special flood hazards, the Servicer will
cause to be maintained a flood insurance policy in respect thereof. Such flood
insurance shall be in an amount equal to the lesser of (y) the unpaid principal
balance of the related Mortgage Loan and (z) the maximum amount of such
insurance available for the related Mortgaged Property under the national flood
insurance program (assuming that the area in which such Mortgaged Property is
located is participating in such program).
(b) If the Servicer shall obtain and maintain a blanket fire insurance
policy with extended coverage 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 two sentences of
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this Section 9.22, it being understood and agreed that such policy may contain a
deductible clause, in which case the Servicer shall, in the event that there
shall not have been maintained on the related Mortgaged Property or REO Property
a policy complying with the first two sentences of this Section 9.22, and there
shall have been one or more losses which would have been covered by such policy,
deposit to the Distribution Account from its own funds the amount not otherwise
payable under the blanket policy because of such deductible clause. In
connection with its activities as administrator and servicer of the Mortgage
Loans, the Servicer agrees to prepare and present, on behalf of itself, the
Trustee and Certificateholders, claims under any such blanket policy in a timely
fashion in accordance with the terms of such policy.
ARTICLE X.
REMIC ADMINISTRATION
Section 10.01. REMIC Administration.
(a) REMIC elections as set forth in the Preliminary Statement shall be made
on Forms 1066 or other appropriate federal tax or information return for the
taxable year ending on the last day of the calendar year in which the
Certificates are issued. The regular interests and residual interest in each
REMIC shall be as designated in the Preliminary Statement and Section
(b) The Closing Date is hereby designated as the "Startup Day" of each
REMIC within the meaning of section 860G(a)(9) of the Code. The latest possible
maturity date for purposes of Treasury Regulation 1.860G-1(a)(4) will be the
Latest Possible Maturity Date.
(c) The Trustee shall represent the Trust Fund in any administrative or
judicial proceeding relating to an examination or audit by any governmental
taxing authority with respect thereto. The Trustee shall pay any and all
tax-related expenses (not including taxes) of each REMIC, including but not
limited to any professional fees or expenses related to audits or any
administrative or judicial proceedings with respect to such REMIC that involve
the Internal Revenue Service or state tax authorities, but only to the extent
that (i) such expenses are ordinary or routine expenses, including expenses of a
routine audit but not expenses of litigation (except as described in (ii)); or
(ii) such expenses or liabilities (including taxes and penalties) are
attributable to the negligence or willful misconduct of the Trustee in
fulfilling its duties hereunder (including its duties as tax return preparer).
The Trustee shall be entitled to reimbursement of expenses to the extent
provided in clause (i) above from the Distribution Account, provided, however,
the Trustee shall not be entitled to reimbursement for expenses incurred in
connection with the preparation of tax returns and other reports as required by
Section 6.19 and this Section.
(d) The Trustee shall prepare, sign and file all of each REMIC's federal
and appropriate state tax and information returns as such REMIC's direct
representative. The expenses of preparing and filing such returns shall be borne
by the Trustee.
(e) The Trustee or its designee shall perform on behalf of each REMIC all
reporting and other tax compliance duties that are the responsibility of such
REMIC under the Code, the REMIC Provisions, or other compliance guidance issued
by the Internal Revenue Service or any state or local taxing authority. Among
its other duties, if required by the Code, the REMIC Provisions, or other such
guidance, the Trustee shall provide, upon receipt of additional reasonable
compensation, to the Treasury or other governmental authority such information
as is necessary for the application of any tax relating to the transfer of a
Residual Certificate to any
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disqualified person or organization pursuant to Treasury Regulation
1.860E-2(a)(5) and any person designated in Section 860E(e)(3) of the Code.
(f) The Trustee and the Holders of Certificates shall take any action or
cause any REMIC to take any action necessary to create or maintain the status of
any REMIC as a REMIC under the REMIC Provisions and shall assist each other as
necessary to create or maintain such status. Neither the Trustee nor the Holder
of any Residual Certificate shall knowingly take any action, cause any REMIC to
take any action or fail to take (or fail to cause to be taken) any action that,
under the REMIC Provisions, if taken or not taken, as the case may be, could (i)
endanger the status of any REMIC as a REMIC or (ii) result in the imposition of
a tax upon any REMIC (including but not limited to the tax on prohibited
transactions as defined in Code Section 860F(a)(2) and the tax on prohibited
contributions set forth on Section 860G(d) of the Code) (either such event, an
"Adverse REMIC Event") unless the Trustee has received an Opinion of Counsel (at
the expense of the party seeking to take such action) to the effect that the
contemplated action will not endanger such status or result in the imposition of
such a tax. In addition, prior to taking any action with respect to any REMIC or
the assets therein, or causing any REMIC to take any action, which is not
expressly permitted under the terms of this Agreement, any Holder of a Residual
Certificate will consult with the Trustee, in writing, with respect to whether
such action could cause an Adverse REMIC Event to occur with respect to any
REMIC, and no such Person shall take any such action or cause any REMIC to take
any such action as to which the Trustee has advised it in writing that an
Adverse REMIC Event could occur; provided, however, that if no Adverse REMIC
Event would occur but such action could result in the imposition of additional
taxes on the Residual Certificateholders, no such Person shall take any such
action, or cause any REMIC to take any such action without the written consent
of the Residual Certificateholders.
(g) Each Holder of a Residual Certificate shall pay when due any and all
taxes imposed on the related REMIC by federal or state governmental authorities.
To the extent that such taxes are not paid by a Residual Certificateholder, the
Trustee or the Paying Agent shall pay any remaining REMIC taxes out of current
or future amounts otherwise distributable to the Holder of the Residual
Certificate in any such REMIC or, if no such amounts are available, out of other
amounts held in the Collection Account, and shall reduce amounts otherwise
payable to holders of regular interests in any such REMIC, as the case may be.
(h) The Trustee shall, for federal income tax purposes, maintain books and
records with respect to each REMIC on a calendar year and on an accrual basis.
(i) No additional contributions of assets shall be made to any REMIC,
except as expressly provided in this Agreement.
(j) The Trustee shall not enter into any arrangement by which any REMIC
will receive a fee or other compensation for services.
(k) Reserved.
(l) The Class A-R Holder shall act as "tax matters person" with respect to
each REMIC and irrevocably appoints the Trustee to act as its agent in such
roles.
(m) Neither the Trustee nor the Depositor, as assignees under this
Agreement, shall provide any consent pursuant to this Agreement or knowingly
take any action under this Agreement that would conflict with or violate the
provisions of this Article X.
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Section 10.02. Prohibited Transactions and Activities.
Neither the Depositor nor the Trustee shall sell, dispose of, or substitute
for any of the Mortgage Loans, except in a disposition pursuant to (i) the
foreclosure of a Mortgage Loan, (ii) the bankruptcy of the Trust Fund, (iii) the
termination of each REMIC pursuant to Article VII of this Agreement, (iv) a
substitution pursuant to Article II of this Agreement or (v) a repurchase of
Mortgage Loans pursuant to Article II of this Agreement, nor acquire any assets
for any REMIC, nor sell or dispose of any investments in the Distribution
Account for gain, nor accept any contributions to any REMIC after the Closing
Date, unless it has received an Opinion of Counsel (at the expense of the party
causing such sale, disposition, or substitution) that such disposition,
acquisition, substitution, or acceptance will not (a) affect adversely the
status of any such REMIC as a REMIC or of the interests therein other than the
Residual Certificate as the regular interests therein, (b) affect the
distribution of interest or principal on the Certificates, (c) result in the
encumbrance of the assets transferred or assigned to the Trust Fund (except
pursuant to the provisions of this Agreement) or (d) cause any such REMIC to be
subject to any tax including a tax on prohibited transactions or prohibited
contributions pursuant to the REMIC Provisions.
Section 10.03. Indemnification with Respect to Prohibited Transactions or
Loss of REMIC Status.
In the event that a REMIC fails to qualify as a REMIC, loses its status as
a REMIC, or incurs federal, state or local taxes as a result of a prohibited
transaction or prohibited contribution under the REMIC Provisions due to the
negligent performance by the Trustee of its duties and obligations set forth
herein, the Trustee shall indemnify the Certificateholders of the related
Residual Certificate against any and all losses, claims, damages, liabilities or
expenses ("Losses") resulting from such negligence; provided, however, that the
Trustee shall not be liable for any such Losses attributable to the action or
inaction of the Depositor or the Holder of the Residual Certificate, nor for any
such Losses resulting from misinformation provided by any of the foregoing
parties on which the Trustee has relied. Notwithstanding the foregoing, however,
in no event shall the Trustee have any liability (1) for any action or omission
that is taken in accordance with and in compliance with the express terms of, or
which is expressly permitted by the terms of, this Agreement or the Mortgage
Loan Sale and Assignment Agreement, (2) for any Losses other than arising out of
malfeasance, willful misconduct or negligent performance by the Trustee with
respect to its duties and obligations set forth herein, and (3) for any special
or consequential damages to Certificateholders of the related Residual
Certificate (in addition to payment of principal and interest on the
Certificates).
Section 10.04. REO Property.
(a) Notwithstanding any other provision of this Agreement, the Trustee
shall not, except to the extent provided in this Agreement, knowingly permit any
Servicer to rent, lease, otherwise earn income or take any other action on
behalf of any REMIC with respect to any REO Property which might cause such REO
Property to fail to qualify as "foreclosure property" within the meaning of
section 860G(a)(8) of the Code or result in the receipt by any REMIC of any
"income from non-permitted assets" within the meaning of section 860F(a)(2) of
the Code or any "net income from foreclosure property" which is subject to tax
under the REMIC Provisions unless the Servicer has provided to the Trustee an
Opinion of Counsel concluding that, under the REMIC Provisions, such action
would not adversely affect the status of any REMIC as a REMIC and any income
generated for any REMIC by the REO Property would not result in the imposition
of a tax upon such REMIC.
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(b) The Depositor shall cause the Servicer (to the extent provided in this
Agreement) to make reasonable efforts to sell any REO Property for its fair
market value. In any event, however, the Depositor shall, or shall cause the
Servicer (to the extent provided in this Agreement) to, dispose of any REO
Property within three years of its acquisition by the Trust Fund unless the
Depositor or the Servicer (on behalf of the Trust Fund) has received a grant of
extension from the Internal Revenue Service to the effect that, under the REMIC
Provisions and any relevant proposed legislation and under applicable state law,
the REMIC may hold REO Property for a longer period without adversely affecting
the REMIC status of such REMIC or causing the imposition of a Federal or state
tax upon such REMIC. If such an extension has been received, then the Depositor,
acting on behalf of the Trustee hereunder, shall, or shall cause the Servicer
to, continue to attempt to sell the REO Property for its fair market value for
such period longer than three years as such extension permits (the "Extended
Period"). If such an extension has not been received and the Depositor or the
Servicer, acting on behalf of the Trust Fund hereunder, is unable to sell the
REO Property within 33 months after its acquisition by the Trust Fund or if such
an extension, has been received and the Depositor or the Servicer is unable to
sell the REO Property within the period ending three months before the close of
the Extended Period, the Depositor shall cause the Servicer, before the end of
the three year period or the Extended Period, as applicable, to (i) purchase
such REO Property at a price equal to the REO Property's fair market value or
(ii) auction the REO Property to the highest bidder (which may be the Servicer)
in an auction reasonably designed to produce a fair price prior to the
expiration of the three-year period or the Extended Period, as the case may be.
ARTICLE XI.
MISCELLANEOUS PROVISIONS
Section 11.01. Binding Nature of Agreement; Assignment.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns.
Section 11.02. Entire Agreement.
This Agreement contains the entire agreement and understanding among the
parties hereto with respect to the subject matter hereof, and supersedes all
prior and contemporaneous agreements, understandings, inducements and
conditions, express or implied, oral or written, of any nature whatsoever with
respect to the subject matter hereof. The express terms hereof control and
supersede any course of performance and/or usage of the trade inconsistent with
any of the terms hereof.
Section 11.03. Amendment.
(a) This Agreement may be amended from time to time by the Depositor, the
Servicer and the Trustee, without notice to or the consent of any of the
Holders, (i) to cure any ambiguity or mistake, (ii) to cause the provisions
herein to conform to or be consistent with or in furtherance of the statements
made with respect to the Certificates, the Trust Fund or this Agreement in any
Offering Document, or to correct or supplement any provision herein which may be
inconsistent with any other provisions herein or with the provisions of this
Agreement, (iii) to add any other provisions with respect to matters or
questions arising under this Agreement, (iv) to modify alter, amend, add to or
rescind any of the terms or provisions contained in this Agreement or (v) to
add, delete, or amend any provisions to the extent necessary or desirable to
comply with any
98
requirements imposed by the Code and the REMIC Provisions. No such amendment
effected pursuant to the preceding sentence shall, as evidenced by an Opinion of
Counsel, adversely affect the status of any REMIC created pursuant to this
Agreement, nor shall such amendment effected pursuant to clauses (iii) or (iv)
of such sentence adversely affect in any material respect the interests of any
Holder unless such Holder has consented thereto. Prior to entering into any
amendment without the consent of Holders pursuant to this paragraph, the Trustee
shall be provided with an Opinion of Counsel (at the expense of the party
requesting such amendment) to the effect that such amendment is permitted under
this Section. Any such amendment shall be deemed not to adversely affect in any
material respect any Holder, if the Trustee receives written confirmation from
each Rating Agency that such amendment will not cause such Rating Agency to
reduce the then current rating assigned to the Certificates. In addition, this
Agreement may be amended from time to time by the Sponsor, the Depositor, the
Servicer and the Trustee without the consent of any of the Certificateholders to
comply with the provisions of Regulation AB.
(b) This Agreement may also be amended from time to time by the Depositor,
the Servicer and the Trustee, with the consent of the Holders of not less than
66-2/3% of the Class Principal Amount (or Percentage 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; provided, however, that no
such amendment shall be made unless the Trustee receives an Opinion of Counsel,
at the expense of the party requesting the change, that such change will not
adversely affect the status of any REMIC as a REMIC or cause a tax to be imposed
on such REMIC; and provided further, that no such amendment may (i) reduce in
any manner the amount of, or delay the timing of, payments received on Mortgage
Loans which are required to be distributed on any Certificate, without the
consent of the Holder of such Certificate or (ii) reduce the aforesaid
percentages of Class Principal Amount (or Percentage Interest) of Certificates
of each Class, the Holders of which are required to consent to any such
amendment without the consent of the Holders of 100% of the Class Principal
Amount (or Percentage Interest) of each Class of Certificates affected thereby.
For purposes of this paragraph, references to "Holder" or "Holders" shall be
deemed to include, in the case of any Class of Book-Entry Certificates, the
related Certificate Owners.
(c) Promptly after the execution of any such amendment, the Trustee shall
furnish written notification of the substance of such amendment to each Holder,
the Depositor, the Servicer and the Rating Agencies.
(d) It shall not be necessary for the consent of Holders under this Section
11.03 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 Holders shall be subject to such reasonable regulations as the
Trustee may prescribe.
(e) Notwithstanding anything to the contrary in this Agreement, the Trustee
shall not consent to any amendment of this Agreement except pursuant to the
standards provided in this Section with respect to amendment of this Agreement.
(f) Neither the Sponsor nor the Trustee shall consent to the assignment by
the Servicer of the Servicer's rights and obligations under this Agreement
without the prior written consent of the Depositor, which consent shall not be
unreasonably withheld.
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(g) Notwithstanding anything to the contrary in this Section 11.03, the
Trustee, the Sponsor and the Servicer shall reasonably cooperate with the
Depositor and its counsel to enter into such amendments or modifications to the
Agreement as may be necessary to comply with Regulation AB and any
interpretation thereof by the Commission.
Section 11.04. Voting Rights.
Except to the extent that the consent of all affected Certificateholders is
required pursuant to this Agreement, with respect to any provision of this
Agreement requiring the consent of Certificateholders representing specified
percentages of aggregate outstanding Certificate Principal Amount (or Percentage
Interest), Certificates owned by the Depositor, the Trustee, the Servicer or any
Affiliates thereof are not to be counted so long as such Certificates are owned
by the Depositor, the Trustee, the Servicer or any Affiliate thereof.
Section 11.05. Provision of Information.
(a) For so long as any of the Certificates of any Series or Class are
"restricted securities" within the meaning of Rule 144(a)(3) under the
Securities Act, each of the Depositor, the Servicer and the Trustee agree to
cooperate with each other to provide to any Certificateholders and to any
prospective purchaser of Certificates designated by such holder, upon the
request of such holder or prospective purchaser, any information required to be
provided to such holder or prospective purchaser to satisfy the condition set
forth in Rule 144A(d)(4) under the Securities Act. Any reasonable, out-of-pocket
expenses incurred by the Trustee or the Servicer in providing such information
shall be reimbursed by the Depositor.
(b) The Trustee shall provide to any person to whom a Prospectus was
delivered, upon the request of such person specifying the document or documents
requested, (i) a copy (excluding exhibits) of any report on Form 8-K or Form
10-K filed with the Commission and (ii) a copy of any other document
incorporated by reference in the Prospectus. Any reasonable out-of-pocket
expenses incurred by the Trustee in providing copies of such documents shall be
reimbursed by the Depositor.
(c) On each Distribution Date, the Trustee shall deliver or cause to be
delivered by first class mail or make available on its website to the Depositor,
a copy of the report delivered to Certificateholders pursuant to Section 4.02.
Section 11.06. Governing Law.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO CONFLICT OF
LAWS PRINCIPLES APPLIED IN NEW YORK.
Section 11.07. Notices.
All requests, demands, notices, authorizations, directions, consents,
waivers and communications hereunder shall be in writing and shall be deemed to
have been duly given when received by (a) in the case of the Depositor, ▇▇▇▇▇▇▇
▇▇▇▇▇ Mortgage Investors, Inc., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, 4 World ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇, telecopy number (▇▇▇) ▇▇▇-▇▇▇▇, Attention:
▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors Trust Series MLCC 2006-1, (b) in
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the case of the Servicer, PHH Mortgage Corporation, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇.
▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, telecopy number (▇▇▇) ▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, Chief Operating Officer, (c) in the case of the Sponsor, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Mortgage Lending, Inc., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, 4 World ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇▇▇, telecopy number (▇▇▇) ▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Mortgage Investors Trust Series MLCC 2006-1, and (d) with respect to the Trustee
or the Certificate Registrar, ▇.▇. ▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
Client Manager - MLMI Trust Series MLCC 2006-1, with a copy to it at its
respective Corporate Trust Office, or as to each party such other address as may
hereafter be furnished by such party to the other parties in writing. All
demands, notices and communications to a party hereunder shall be in writing and
shall be deemed to have been duly given when delivered to such party at the
relevant address, facsimile number or electronic mail address set forth above or
at such other address, facsimile number or electronic mail address as such party
may designate from time to time by written notice in accordance with this
Section 11.07.
Section 11.08. 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.
Section 11.09. Indulgences; No Waivers.
Neither the failure nor any delay on the part of a party to exercise any
right, remedy, power or privilege under this Agreement shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, remedy, power or
privilege preclude any other or further exercise of the same or of any other
right, remedy, power or privilege, nor shall any waiver of any right, remedy,
power or privilege with respect to any occurrence be construed as a waiver of
such right, remedy, power or privilege with respect to any other occurrence. No
waiver shall be effective unless it is in writing and is signed by the party
asserted to have granted such waiver.
Section 11.10. Headings Not To Affect Interpretation.
The headings contained in this Agreement are for convenience of reference
only, and they shall not be used in the interpretation hereof.
Section 11.11. Benefits of Agreement.
Nothing in this Agreement or in the Certificates, express or implied, shall
give to any Person, other than the parties to this Agreement and their
successors hereunder and the Holders of the Certificates, any benefit or any
legal or equitable right, power, remedy or claim under this Agreement, except to
the extent specified in Section 11.15.
Section 11.12. Special Notices to the Rating Agencies.
(a) The Depositor shall give prompt notice to the Rating Agencies of the
occurrence of any of the following events of which it has notice:
(i) any amendment to this Agreement pursuant to Section 11.03;
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(ii) the occurrence of any Event of Default;
(iii) any notice of termination given to the Servicer pursuant to
Section 6.14 or any resignation of the Servicer pursuant to this Agreement;
(iv) the appointment of any successor to the Servicer pursuant to
Section 6.14; and
(v) the making of a final payment pursuant to Section 7.02.
(b) All notices to the Rating Agencies provided for this Section shall be
in writing and sent by first class mail, telecopy or overnight courier, as
follows:
If to Moody's, to:
▇▇▇▇▇'▇ Investors Service, Inc.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ABS Monitoring
If to S&P, to:
Standard & Poor's Ratings Service,
a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Residential Mortgages
If to Fitch Ratings, to:
Fitch, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Surveillance Group
(c) The Trustee shall provide or make available to the Rating Agencies
reports prepared pursuant to Section 4.02. In addition, the Trustee shall, at
the expense of the Trust Fund, make available to each Rating Agency such
information as such Rating Agency may reasonably request regarding the
Certificates or the Trust Fund, to the extent that such information is
reasonably available to the Trustee.
Section 11.13. [RESERVED].
Section 11.14. Counterparts.
This Agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original, and all of which together shall constitute
one and the same instrument.
Section 11.15. No Petitions.
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The Trustee and the Servicer, by entering into this Agreement, hereby
covenants and agrees that it shall not at any time institute against the
Depositor, or join in any institution against the Depositor of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any United States federal or state bankruptcy or similar law
in connection with any obligations relating to this Agreement or any of the
documents entered into by the Depositor in connection with the transactions
contemplated by this Agreement.
Section 11.16. Compliance with Regulation AB.
Each of the parties hereto acknowledges and agrees that the purpose of
Sections 9.11, 9.13 and 9.21 of this Agreement is to facilitate compliance by
the Depositor with the provisions of Regulation AB, as such may be amended or
clarified from time to time. Therefore, each of the parties agrees that (a) the
obligations of the parties hereunder shall be interpreted in such a manner as to
accomplish compliance with Regulation AB, (b) the parties' obligations hereunder
will be supplemented and modified as necessary to be consistent with any such
amendments, interpretive advice or guidance, convention or consensus among
active participants in the asset-backed securities markets, advice of counsel,
or otherwise in respect of the requirements of Regulation AB and (c) the parties
shall comply with reasonable requests made by the Depositor for delivery of that
or different information as the Depositor may determine in good faith is
necessary to comply with the provisions of Regulation AB.
103
IN WITNESS WHEREOF, the parties hereto have caused their names to be signed
hereto by their respective officers hereunto duly authorized as of the day and
year first above written.
▇▇▇▇▇▇▇ ▇▇▇▇▇ MORTGAGE INVESTORS, INC.,
as Depositor
By:
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
PHH MORTGAGE CORPORATION,
as Servicer
By:
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Senior Vice President
▇▇▇▇▇ FARGO BANK, N.A.,
as Trustee
By:
------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
Solely for purposes of Section 2.04,
accepted and agreed to by:
▇▇▇▇▇▇▇ ▇▇▇▇▇ MORTGAGE LENDING, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
104
EXHIBIT A
FORMS OF CERTIFICATES
[INTENTIONALLY OMITTED]
A-1
EXHIBIT B
FORM OF RESIDUAL CERTIFICATE TRANSFER AFFIDAVIT (TRANSFEREE)
STATE OF ________________)
) ss.:
COUNTY OF ________________)
[NAME OF OFFICER], _________________ being first duly sworn, deposes and
says:
1. That he [she] is [title of officer] ________________________ of [name
of Purchaser] _________________________________________ (the
"Purchaser"), a _______________________ [description of type of
entity] duly organized and existing under the laws of the [State of
__________] [United States], on behalf of which he [she] makes this
affidavit.
2. That the Purchaser's Taxpayer Identification Number is [__________].
3. That the Purchaser is not a "disqualified organization" within the
meaning of Section 860E(e)(5) of the Internal Revenue Code of 1986, as
amended (the "Code") and will not be a "disqualified organization" as
of [date of transfer], and that the Purchaser is not acquiring a
Residual Certificate (as defined in the Agreement) for the account of,
or as agent (including a broker, nominee, or other middleman) for, any
person or entity from which it has not received an affidavit
substantially in the form of this affidavit. For these purposes, a
"disqualified organization" means the United States, any state or
political subdivision thereof, any foreign government, any
international organization, any agency or instrumentality of any of
the foregoing (other than an instrumentality if all of its activities
are subject to tax and a majority of its board of directors is not
selected by such governmental entity), any cooperative organization
furnishing electric energy or providing telephone service to persons
in rural areas as described in Code Section 1381(a)(2)(C), any
"electing large partnership" within the meaning of Section 775 of the
Code, or any organization (other than a farmers' cooperative described
in Code Section 521) that is exempt from federal income tax unless
such organization is subject to the tax on unrelated business income
imposed by Code Section 511.
4. That the Purchaser is not, and on __________________ [date of
transfer] will not be, an employee benefit plan subject to Title I of
the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), a plan subject to Section 4975 of the Code, or a plan
subject to any provisions under any federal, state, local, non-U.S. or
other laws or regulations that are substantively similar to foregoing
provisions of ERISA or the Code (collectively, a "Plan"), and is not
directly or indirectly acquiring a Residual Certificate for, on behalf
of or with any assets of any such Plan.
B-1
5. That the Purchaser hereby acknowledges that under the terms of the
Pooling and Servicing Agreement dated as of February 1, 2006 (the
"Agreement"), among ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors, Inc., as
Depositor, PHH Mortgage Corporation, as Servicer and ▇▇▇▇▇ Fargo Bank,
N.A., as Trustee with respect to ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors
Trust Series MLCC 2006-1 Mortgage Pass-Through Certificates, no
transfer of the Residual Certificates shall be permitted to be made to
any person unless the Certificate Registrar and Trustee have received
a certificate from such transferee containing the representations in
paragraphs 3 and 4 hereof.
6. That the Purchaser does not hold REMIC residual securities as nominee
to facilitate the clearance and settlement of such securities through
electronic book-entry changes in accounts of participating
organizations (such entity, a "Book-Entry Nominee").
7. That the Purchaser does not have the intention to impede the
assessment or collection of any federal, state or local taxes legally
required to be paid with respect to such Residual Certificate.
8. That the Purchaser will not transfer a Residual Certificate to any
person or entity (i) as to which the Purchaser has actual knowledge
that the requirements set forth in paragraph 3, paragraph 6 or
paragraph 10 hereof are not satisfied or that the Purchaser has reason
to believe does not satisfy the requirements set forth in paragraph 7
hereof, and (ii) without obtaining from the prospective Purchaser an
affidavit substantially in this form and providing to the Trustee and
the Certificate Registrar a written statement substantially in the
form of Exhibit C to the Agreement.
9. That the Purchaser understands that, as the holder of a Residual
Certificate, the Purchaser may incur tax liabilities in excess of any
cash flows generated by the interest and that it intends to pay taxes
associated with holding such Residual Certificate as they become due.
10. That the Purchaser (i) is not a Non-U.S. Person or (ii) is a Non-U.S.
Person that holds a Residual Certificate in connection with the
conduct of a trade or business within the United States and has
furnished the transferor, the Trustee and the Certificate Registrar
with an effective Internal Revenue Service Form W-8ECI (Certificate of
Foreign Person's Claim for Exemption From Withholding on Income
Effectively Connected With the Conduct of a Trade or Business in the
United States) or successor form at the time and in the manner
required by the Code. "Non-U.S. Person" means an individual,
corporation, partnership or other person other than (i) a citizen or
resident of the United States; (ii) a corporation, partnership or
other entity created or organized in or under the laws of the United
States or any state thereof, including for this purpose, the District
of Columbia; (iii) an estate that is subject to U.S. federal income
tax regardless of the source of its income; (iv) 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 trustees
have authority to control all substantial decisions of the trust; and,
(v) to the extent provided in Treasury regulations, certain trusts in
existence on August 20, 1996 that are treated as United States persons
prior to such date and elect to continue to be treated as United
States persons.
B-2
11. The Purchaser will not cause income from the Residual Certificate to
be attributable to a foreign permanent establishment or fixed base
(within the meaning of an applicable income tax treaty) of the
Purchaser or another U.S. taxpayer.
12. That the Purchaser agrees to such amendments of the Agreement as may
be required to further effectuate the restrictions on transfer of any
Residual Certificate to such a "disqualified organization," an agent
thereof, a Book-Entry Nominee, or a person that does not satisfy the
requirements of paragraph 7 and paragraph 10 hereof.
13. That the Purchaser consents to the designation of the Trustee to act
as agent for the "tax matters person" of each REMIC created by the
Trust Fund pursuant to the Agreement.
14. That the Purchaser agrees to be bound by Section 3.03(f) of the
Agreement.
B-3
IN WITNESS WHEREOF, the Purchaser has caused this instrument to be executed
on its behalf, pursuant to authority of its Board of Directors, by its [title of
officer] this _____ day of __________, 20__.
----------------------------------------
[Name of Purchaser]
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Personally appeared before me the above-named [name of officer]
________________, known or proved to me to be the same person who executed the
foregoing instrument and to be the [title of officer] _________________ of the
Purchaser, and acknowledged to me that he [she] executed the same as his [her]
free act and deed and the free act and deed of the Purchaser.
Subscribed and sworn before me this _____ day of __________ 20__.
NOTARY PUBLIC
-------------------------------------
COUNTY OF
---------------------------
STATE OF
----------------------------
My commission expires the _____ day of __________ 20__.
B-4
EXHIBIT C
RESIDUAL CERTIFICATE TRANSFER AFFIDAVIT (TRANSFEROR)
_______________________
Date
Re: ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors Trust Series MLCC 2006-1 Mortgage
Pass-Through Certificates
_______________________ (the "Transferor") has reviewed the attached
affidavit of _____________________________ (the "Transferee"), and has no actual
knowledge that such affidavit is not true and has no reason to believe that the
information contained in paragraph 7 thereof is not true, and has no reason to
believe that the Transferee has the intention to impede the assessment or
collection of any federal, state or local taxes legally required to be paid with
respect to a Residual Certificate. In addition, the Transferor has conducted a
reasonable investigation at the time of the transfer and found that the
Transferee had historically paid its debts as they came due and found no
significant evidence to indicate that the Transferee will not continue to pay
its debts as they become due.
Very truly yours,
Name:
----------------------------------
Title:
---------------------------------
C-1
EXHIBIT D-1
STANDARD LAYOUT FOR MONTHLY REMITTANCE ADVICE
[INTENTIONALLY OMITTED]
▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ FOR MONTHLY DEFAULTED LOAN REPORT
[INTENTIONALLY OMITTED]
D-2-1
EXHIBIT E
MORTGAGE LOAN SALE AND ASSIGNMENT AGREEMENT
[INTENTIONALLY OMITTED]
E-1
EXHIBIT F
LIST OF LIMITED PURPOSE SURETY BONDS
Ambac Assurance Corporation Surety Bond No. AB0039BE, issued February 26,
1996, for ▇▇▇▇▇▇▇ ▇▇▇▇▇ Credit Corporation.
F-1
EXHIBIT G
FORM OF RULE 144A TRANSFER CERTIFICATE
Re: ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors Trust Series MLCC 2006-1 Mortgage
Pass-Through Certificates
Reference is hereby made to the Pooling and Servicing Agreement, dated as
of February 1, 2006 (the "Agreement"), among ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors,
Inc., as Depositor, PHH Mortgage Corporation, as Servicer and ▇▇▇▇▇ Fargo Bank,
N.A., as Trustee. Capitalized terms used but not defined herein shall have the
meanings given to them in the Agreement.
This letter relates to $__________ initial Certificate Balance of Class ___
Certificates which are held in the form of Definitive Certificates registered in
the name of ________ (the "Transferor"). The Transferor has requested a transfer
of such Definitive Certificates for Definitive Certificates of such Class
registered in the name of [insert name of transferee].
In connection with such request, and in respect of such Certificates, the
Transferor hereby certifies that such Certificates are being transferred in
accordance with (i) the transfer restrictions set forth in the Agreement and the
Certificates and (ii) Rule 144A under the Securities Act to a purchaser that the
Transferor reasonably believes is a "qualified institutional buyer" within the
meaning of Rule 144A purchasing for its own account or for the account of a
"qualified institutional buyer," which purchaser is aware that the sale to it is
being made in reliance upon Rule 144A, in a transaction meeting the requirements
of Rule 144A and in accordance with any applicable securities laws of any state
of the United States or any other applicable jurisdiction.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Underwriters and the Depositor.
----------------------------------------
[Name of Transferor]
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Dated:
------------------------------
G-1
EXHIBIT H
FORM OF PURCHASER'S LETTER FOR
INSTITUTIONAL ACCREDITED INVESTOR
Date _________
Dear Sirs:
In connection with our proposed purchase of $______________ principal
amount of ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors Trust Series MLCC 2006-1 Mortgage
Pass-Through Certificates (the "Privately Offered Certificates") of ▇▇▇▇▇▇▇
▇▇▇▇▇ Mortgage Investors, Inc. (the "Depositor"), we confirm that:
(1) We understand that the Privately Offered Certificates have not been,
and will not be, registered under the Securities Act of 1933, as amended (the
"Securities Act"), and may not be sold except as permitted in the following
sentence. We agree, on our own behalf and on behalf of any accounts for which we
are acting as hereinafter stated, that if we should sell any Privately Offered
Certificates within two years of the later of the date of original issuance of
the Privately Offered Certificates or the last day on which such Privately
Offered Certificates are owned by the Depositor or any affiliate of the
Depositor we will do so only (A) to the Depositor, (B) to "qualified
institutional buyers" (within the meaning of Rule 144A under the Securities Act)
in accordance with Rule 144A under the Securities Act ("QIBs"), (C) pursuant to
the exemption from registration provided by Rule 144 under the Securities Act,
or (D) to an institutional "accredited investor" within the meaning of Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act that is not
a QIB (an "Institutional Accredited Investor") which, prior to such transfer,
delivers to the Certificate Registrar under the Pooling and Servicing Agreement,
dated as of February 1, 2006 (the "Agreement"), among ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage
Investors, Inc., as Depositor, PHH Mortgage Corporation, as Servicer and ▇▇▇▇▇
Fargo Bank, N.A., as Trustee, a signed letter in the form of this letter; and we
further agree, in the capacities stated above, to provide to any person
purchasing any of the Privately Offered Certificates from us a notice advising
such purchaser that resales of the Privately Offered Certificates are restricted
as stated herein.
(2) We understand that, in connection with any proposed resale of any
Privately Offered Certificates to an Institutional Accredited Investor, we will
be required to furnish to the Certificate Registrar a certification from such
transferee in the form hereof to confirm that the proposed sale is being made
pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act. We further understand that the
Privately Offered Certificates purchased by us will bear a legend to the
foregoing effect.
(3) We are acquiring the Privately Offered Certificates for investment
purposes and not with a view to, or for offer or sale in connection with, any
distribution in violation of the Securities Act. We have such knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risks of our investment in the Privately Offered Certificates,
H-1
and we and any account for which we are acting are each able to bear the
economic risk of such investment.
(4) We are an Institutional Accredited Investor and we are acquiring the
Privately Offered Certificates purchased by us for our own account or for one or
more accounts (each of which is an Institutional Accredited Investor) as to each
of which we exercise sole investment discretion.
(5) We have received such information as we deem necessary in order to make
our investment decision.
(6) If we are acquiring ERISA-Restricted Certificates, we are not a Plan
and we are not acquiring the ERISA-Restricted Certificates for, on behalf of or
with any assets of any such Plan except in accordance with Section 3.03(d) of
the Pooling and Servicing Agreement.
Terms used in this letter which are not otherwise defined herein have the
respective meanings assigned thereto in the Agreement.
You are entitled to rely upon this letter and are irrevocably authorized to
produce this letter or a copy hereof to any interested party in any
administrative or legal proceeding or official inquiry with respect to the
matters covered hereby.
Very truly yours,
----------------------------------------
[Purchaser]
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
H-2
EXHIBIT I
FORM OF ERISA TRANSFER AFFIDAVIT
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
The undersigned, being first duly sworn, deposes and says as follows:
1. The undersigned is the ______________________ of ______________ (the
"Investor"), a [corporation duly organized] and existing under the laws of
__________, on behalf of which he makes this affidavit.
2. With respect to the transfer of an ERISA-Restricted Certificate, the
Investor (A) is not an employee benefit plan subject to Title I of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), a plan subject to
Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code"), or a
plan or arrangement subject to any provisions under any federal, state, local,
non-U.S. or other laws or regulations that are substantively similar to
foregoing provisions of ERISA or the Code ("Similar Law") (collectively, a
"Plan"), and is not directly or indirectly acquiring the ERISA-Restricted
Certificate for, on behalf of or with any assets of any such Plan, (B) if the
Certificate has been the subject of an ERISA-Qualifying Underwriting, is an
insurance company that is acquiring the ERISA-Restricted Certificate with assets
contained in an "insurance company general account," as defined in Section V(E)
of Prohibited Transaction Class Exemption ("PTCE") 95-60, and the acquisition
and holding of the Certificate are covered and exempt under Sections I and III
of PTCE 95-60, or (C) solely in the case of a Definitive Certificate, shall
deliver herewith an Opinion of Counsel satisfactory to the Trustee and the
Depositor, and upon which the Trustee and the Depositor shall be entitled to
rely, to the effect that the acquisition and holding of such ERISA-Restricted
Certificate will not constitute or result in a nonexempt prohibited transaction
under ERISA or the Code, or a violation of Similar Law, and will not subject the
Trustee, the Certificate Registrar, the Servicer or the Depositor to any
obligation in addition to those expressly undertaken in the Agreement, which
Opinion of Counsel shall not be an expense of the Trustee, the Certificate
Registrar, the Servicer or the Depositor.
3. The Investor hereby acknowledges that under the terms of the Pooling and
Servicing Agreement dated as of February 1, 2006 (the "Agreement"), among
▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors, Inc., as Depositor, PHH Mortgage Corporation,
as Servicer and ▇▇▇▇▇ Fargo Bank, N.A., as Trustee, no transfer of the
ERISA-Restricted Certificates shall be permitted to be made to any person unless
the Certificate Registrar has received a certificate from such transferee in the
form hereof.
I-1
IN WITNESS WHEREOF, the Investor has caused this instrument to be executed
on its behalf, pursuant to proper authority, by its duly authorized officer,
duly attested, this ____ day of _______________ 20___.
----------------------------------------
[Investor]
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
ATTEST:
-------------------------------------
STATE OF ________________)
) ss.:
COUNTY OF ________________)
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 Investor, and acknowledged that he executed
the same as his free act and deed and the free act and deed of the Investor.
Subscribed and sworn before me this _____ day of _________ 20___.
----------------------------------------
NOTARY PUBLIC
My commission expires the
_____ day of __________, 20___.
I-2
EXHIBIT J
FORM OF LETTER OF REPRESENTATIONS
WITH THE DEPOSITORY TRUST COMPANY
[INTENTIONALLY OMITTED]
J-1
EXHIBIT K
FORM OF INITIAL CERTIFICATION
▇▇▇▇▇▇▇ ▇▇▇▇▇ MORTGAGE INVESTORS TRUST SERIES MLCC 2006-1
___________, 2006
To: ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
4 World Financial ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
PHH Mortgage Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇. ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Lending, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
4 World Financial ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Reference is made to the Pooling and Servicing Agreement among ▇▇▇▇▇▇▇
▇▇▇▇▇ Mortgage Investors, Inc. (the "Depositor"), PHH Mortgage Corporation (the
"Servicer") and ▇▇▇▇▇ Fargo Bank, N.A., as trustee (the "Trustee"), dated as of
February 1, 2006 (the "Agreement"), pursuant to which the Depositor has
delivered to the Trustee, with respect to each Mortgage Loan set forth on
Schedule A hereto (the "Mortgage Loan Schedule"), the documents set forth in
Section 2.01 of the Agreement.
With respect to each Mortgage Loan listed on the Mortgage Loan Schedule and
except as otherwise noted on the Schedule of Exceptions set forth on Schedule B
hereto, the Trustee confirms that (1) the Trustee has received all of the
documents required to be delivered to the Trustee pursuant to Section 2.01 of
the Agreement, (2) the Trustee has reviewed each Trustee's Mortgage File in
accordance with Section 2.02(a) of the Agreement, and the documents contained in
each Trustee's Mortgage File conform to the requirements set forth in such
Section 2.02(a), and (3) the Trustee has physical possession of the documents in
each Trustee's Mortgage File. The Trustee has not independently verified the
validity, enforceability, sufficiency, recordability, due authorization or
genuineness or any document in any Trustee's Mortgage File or any related
Mortgage Loan, nor the collectibility, insurability, effectiveness or
suitability of any related Mortgage Loan.
All terms used herein and not otherwise defined herein shall have the
respective meaning ascribed to such term in the Agreement.
▇▇▇▇▇ FARGO BANK, N.A.,
as Trustee
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
K-1
EXHIBIT L
FORM OF FINAL CERTIFICATION
▇▇▇▇▇▇▇ ▇▇▇▇▇ MORTGAGE INVESTORS TRUST SERIES MLCC 2006-1
_____________, 2006
To: ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
4 World Financial ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
PHH Mortgage Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇. ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Lending, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
4 World Financial ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Reference is made to the Pooling and Servicing Agreement among ▇▇▇▇▇▇▇
▇▇▇▇▇ Mortgage Investors, Inc. (the "Depositor"), PHH Mortgage Corporation (the
"Servicer") and ▇▇▇▇▇ Fargo Bank, N.A., as Trustee (the "Trustee"), dated as of
February 1, 2006 (the "Agreement"), pursuant to which the Depositor has
delivered to the Trustee, with respect to each Mortgage Loan set forth on
Schedule A hereto (the "Mortgage Loan Schedule"), the documents set forth in
Section 2.01 of the Agreement.
With respect to each Mortgage Loan listed on the Mortgage Loan Schedule and
except as otherwise noted on the Schedule of Exceptions set forth on Schedule B
hereto, the Trustee confirms that (1) the Trustee has received all of the
documents required to be delivered to it pursuant to Section 2.01 of the
Agreement, (2) the Trustee has reviewed each Trustee's Mortgage File in
accordance with Section 2.01 of the Agreement, and the documents contained in
each Trustee's Mortgage File conform to the requirements set forth in such
Section 2.01; provided, however, that notwithstanding anything to the contrary
contained herein the Trustee shall not be required to confirm the information
contained in item (viii) of the Mortgage Loan Schedule with respect to any
Mortgage Loan, and (3) the Trustee has physical possession of the documents in
each Trustee's Mortgage File. The Trustee has not independently verified the
validity, enforceability, sufficiency, recordability, due authorization or
genuineness or any document in any Trustee's Mortgage File or any related
Mortgage Loan, nor the collectibility, insurability, effectiveness or
suitability of any related Mortgage Loan.
All terms used herein and not otherwise defined herein shall have the
respective meaning ascribed to such term in the Agreement.
▇▇▇▇▇ FARGO BANK, N.A.,
as Trustee
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
L-1
EXHIBIT M
LIST OF SERVICING OFFICERS
[INTENTIONALLY OMITTED]
M-1
EXHIBIT N
REQUEST FOR RELEASE
To: ▇▇▇▇▇ Fargo Bank, N.A.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors Trust Series MLCC 2006-1)
Re: Pooling and Servicing Agreement, dated as of February 1, 2006, among
▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors, Inc., as Depositor, PHH Mortgage
Corporation, as Servicer and ▇▇▇▇▇ Fargo Bank, N.A., as Trustee
In connection with the administration of the pool of Mortgage Loans held by
you as Trustee for the benefit of Certificateholders, we request the release of
the (Trustee's Mortgage File/[specify documents]) for the Mortgage Loan
described below, for the reason indicated.
File/document to be sent to:
[Company]
[Address]
[Attn:]
[Telephone Number ____]
Mortgagor's Name, Address & Zip Code: __________________________________________
Mortgage Loan Number: __________________
Reason for Requesting Documents (check one)
______ 1. Mortgage Loan Paid in Full
([Sponsor/Depositor] [Servicer], hereby certifies that all amounts
received in connection therewith have been credited to the Custodial
Account or the Distribution Account, as applicable.)
______ 2. Mortgage Loan in Foreclosure
______ 3. Mortgage Loan Repurchased or Substituted For
([Sponsor/Depositor] [Servicer], hereby certifies that any
applicable repurchase price or substitution shortfall amount has
been credited to the Custodial Account or the Distribution Account,
as applicable.)
______ 4. Mortgage Loan Liquidated
([Sponsor/Depositor] [Servicer], hereby certifies that all proceeds
of foreclosure, insurance or other liquidation have been finally
received and credited to the Custodial Account or the Distribution
Account, as applicable.)
______ 5. Other (explain) ____________________________________________________
If box 1, 2 or 3 above is checked, and if all or part of the
Trustee's Mortgage File
N-1
was previously released to us, please release to us our previous
receipt on file with you, as well as any additional documents in
your possession relating to the above specified Mortgage Loan.
If box 4 or 5 above is checked, upon our return of all of the above
documents to you as Trustee, please acknowledge your receipt by
signing in the space indicated below, and returning this form.
[SPONSOR/DEPOSITOR]
[SERVICER]
By:
------------------------------------
Date:
----------------------------------
Documents returned to Trustee:
_____________________________________
as Trustee
By:
---------------------------------
Date:
-------------------------------
N-2
EXHIBIT O
[RESERVED]
O-1
EXHIBIT P
[RESERVED]
P-1
EXHIBIT Q
FORM OF TRUSTEE BACK-UP CERTIFICATION
Re: The [____________] agreement dated as of [___________ l, 200[__] (the
"Agreement"), among [IDENTIFY PARTIES]
I, ____________________________, the _______________________ of [NAME
OF COMPANY] (the "Company"), certify to [the Depositor] and their officers,
with the knowledge and intent that they will rely upon this certification,
that:
I have reviewed the annual 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[_], or any portion thereof,
that were delivered by the Company to the [Depositor] pursuant to the
Agreement (collectively, the "Company Servicing Information");
Based on 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 the 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;
Based on my knowledge, all of the Company Servicing Information
required to be provided by the Company under the Agreement has been
provided to the [Depositor];
I am responsible for reviewing the activities performed by the Company
as servicer under the 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 Agreement in all material respects; and
The Compliance Statement required to be delivered by the Company
pursuant to this Agreement, and the Servicing Assessment and Attestation
Report required to be provided by the Company and by any Subservicer and
Subcontractor pursuant to the Agreement, have been provided to the
[Depositor]. Any material instances of noncompliance described in such
reports have been disclosed to the [Depositor]. Any material instance of
noncompliance with the Servicing Criteria has been disclosed in such
reports.
Date:
----------------------------------
By:
------------------------------------
Name:
----------------------------------
Q-1
Title:
---------------------------------
Q-2
EXHIBIT R
FORM OF OFFICER'S CERTIFICATE OF SERVICER
[DATE]
▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
4 World Financial ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Re: ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors Trust Series MLCC 2006-1
The undersigned, the [____________] of PHH Mortgage Corporation (the
"Servicer") certifies to the Depositor and the Trustee, and their officers,
directors and affiliates, and with the knowledge and intent that they will rely
upon this certification, that:
(1) I am responsible for reviewing the activities performed by the
Servicer under the Pooling and Servicing Agreement and I have reviewed, or
persons under my supervision have reviewed, the servicer compliance statement of
the Servicer and the compliance statements of each Sub-Servicer, if any, engaged
by the Servicer provided to the Depositor and the Trustee for the Trust's fiscal
year [___] in accordance with Item 1123 of Regulation AB (each a "Compliance
Statement"), the report on assessment of the Servicer's compliance with the
servicing criteria set forth in Item 1122(d) of Regulation AB (the "Servicing
Criteria") and reports on assessment of compliance with servicing criteria for
asset-backed securities of the Servicer and of each Sub-Servicer [or
Subcontractor], if any, engaged or utilized by the Servicer provided to the
Depositor and the Trustee for the Trust's fiscal year [___] 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 (each a "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 related to each Servicing Assessment (each a
"Attestation Report"), and all servicing reports, officer's certificates and
other information relating to the servicing of the Mortgage Loans by the
Servicer during 200[_] that were delivered or caused to be delivered by the
Servicer pursuant to the Agreement (collectively, the "Servicing Information");
(2) Based on my knowledge, the 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 the light of the
circumstances under which such statements were made, not misleading with respect
to the period of time covered by the Servicing Information;
(3) Based on my knowledge, the Servicing Information required to be
provided to the Trustee by the Servicer pursuant to the Pooling and Servicing
Agreement has been provided to the Trustee;
(4) I am responsible for reviewing the activities performed by the
Servicer under the Agreement and based on my knowledge and the compliance review
conducted in preparing each Compliance Statement of the Servicer and, if
applicable, reviewing each Compliance Statement of each Sub-Servicer, if any,
engaged by the Servicer, and except as disclosed in such Compliance
Statement[(s)], the Servicer [(directly and through its Sub-
R-1
Servicers, if any)] has fulfilled its obligations under the Pooling and
Servicing Agreement in all material respects.
(5) Each Servicing Assessment of the Servicer and of each Sub-Servicer
[or Subcontractor], if any, engaged or utilized by the Servicer and its related
Attestation Report required to be included in the Annual Report in accordance
with Item 1122 of Regulation AB and Exchange Act Rules 13a-18 and 15d-18 has
been provided to the Depositor and the Trustee. Any material instances of
non-compliance are described in any such Servicing Assessment or Attestation
Report.
Date: PHH Mortgage Corporation, as Servicer
-------------------------------
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
R-2
EXHIBIT S-1
FORM OF ASSESSMENT OF COMPLIANCE
[DATE]
▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
4 World Financial Center, 10th Floor
New York, New York 10080
▇▇▇▇▇ Fargo Bank, N.A.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Services - ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors Trust
Series MLCC 2006-1
Re: Pooling and Servicing Agreement (the "Agreement"), dated as of
February 1, 2006, among ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors, Inc., as
depositor, PHH Mortgage Corporation, as servicer, and ▇▇▇▇▇ Fargo
Bank, N.A., as trustee, relating to ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors
Trust, Series MLCC ▇▇▇▇-▇ (▇▇▇ "▇▇▇▇▇▇▇ ▇▇▇▇▇▇")
For the calendar year ending December 31, [2006] or portion thereof, [PHH
Mortgage Corporation, as Servicer] [▇▇▇▇▇ Fargo Bank, N.A., as Trustee] for the
Issuing Entity has complied in all material respects with the Relevant Servicing
Criteria in Exhibit S-2 of the Agreement.
All capitalized terms used herein but not defined herein shall have the
meanings assigned to them in the Agreement.
Date:
-------------------------------
[PHH MORTGAGE CORPORATION][▇▇▇▇▇ FARGO
BANK NATIONAL ASSOCIATION]
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
ACKNOWLEDGED AND AGREED:
[▇▇▇▇▇ FARGO BANK NATIONAL ASSOCIATION][PHH MORTGAGE CORPORATION]
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
S-1-1
▇▇▇▇▇▇▇ ▇▇▇▇▇ MORTGAGE INVESTORS, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
SERVICING CRITERIA TO BE ADDRESSED
IN ASSESSMENT OF COMPLIANCE
(RMBS UNLESS OTHERWISE NOTED)
DEFINITIONS
PRIMARY SERVICER - transaction party having borrower contact
TRUSTEE - fiduciary of the transaction
WHERE THERE ARE MULTIPLE CHECKS FOR CRITERIA THE ATTESTING PARTY WILL IDENTIFY
IN ITS MANAGEMENT ASSERTION THAT SUCH PARTY IS ATTESTING ONLY TO THE PORTION OF
THE DISTRIBUTION CHAIN IT IS RESPONSIBLE FOR IN THE RELATED TRANSACTION
AGREEMENTS.
PHH MORTGAGE
CORPORATION ▇▇▇▇▇ FARGO
REG AB REFERENCE SERVICING CRITERIA (SERVICER) (TRUSTEE) ADDITIONAL INFORMATION
---------------- ---------------------------------- ------------ ----------- ------------------------------------
GENERAL SERVICING CONSIDERATIONS
1122(d)(1)(i) Policies and procedures are X X
instituted to monitor any
performance or other triggers and
events of default in accordance
with the transaction agreements.
1122(d)(1)(ii) If any material servicing X X
activities are outsourced to third
parties, policies and procedures
are instituted to monitor the
third party's performance and
compliance with such servicing
activities.
1122(d)(1)(iii) Any requirements in the N/A N/A
transaction agreements to maintain
a back-up servicer for the Pool
Assets are maintained.
1122(d)(1)(iv) A fidelity bond and errors and X
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.
CASH COLLECTION AND ADMINISTRATION
1122(d)(2)(i) Payments on pool assets are X X
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.
1122(d)(2)(ii) Disbursements made via wire X X Servicer disburses funds to
transfer on behalf of an obligor trustee. Trustee disburses funds to
or to an investor are made only by certificateholders.
authorized personnel.
1122(d)(2)(iii) Advances of funds or guarantees X
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.
S-2-1
PHH MORTGAGE
CORPORATION ▇▇▇▇▇ FARGO
REG AB REFERENCE SERVICING CRITERIA (SERVICER) (TRUSTEE) ADDITIONAL INFORMATION
---------------- ---------------------------------- ------------ ----------- ------------------------------------
1122(d)(2)(iv) The related accounts for the X X
transaction, such as cash reserve
accounts or accounts established
as a form of over
collateralization, are separately
maintained (e.g., with respect to
commingling of cash) as set forth
in the transaction agreements.
1122(d)(2)(v) Each custodial account is X X
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.
1122(d)(2)(vi) Unissued checks are safeguarded so X X
as to prevent unauthorized access.
1122(d)(2)(vii) Reconciliations are prepared on a X X
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.
INVESTOR REMITTANCES AND REPORTING
1122(d)(3)(i) Reports to investors, including X X
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 Pool Assets serviced by
the Servicer.
1122(d)(3)(ii) Amounts due to investors are X X Servicer remits cash and loan level
allocated and remitted in data to trustees based on timelines
accordance with timeframes, established in the PSA. The trustee
distribution priority and other is responsible for the allocation of
terms set forth in the transaction funds to certificateholders using
agreements. the appropriate distribution
priority as established by the PSA.
S-2-2
PHH MORTGAGE
CORPORATION ▇▇▇▇▇ FARGO
REG AB REFERENCE SERVICING CRITERIA (SERVICER) (TRUSTEE) ADDITIONAL INFORMATION
---------------- ---------------------------------- ------------ ----------- ------------------------------------
1122(d)(3)(iii) Disbursements made to an investor X X Trustee disburses funds to
are posted within two business certificateholders.
days to the Servicer's investor
records, or such other number of
days specified in the transaction
agreements.
1122(d)(3)(iv) Amounts remitted to investors per X X Servicer remits funds and provides
the investor reports agree with certain investor reports to trustees
cancelled checks, or other form of within guidelines and timeframes
payment, or custodial bank established in PSA. Trustee
statements. disburses funds to
certificateholders.
POOL ASSET ADMINISTRATION
1122(d)(4)(i) Collateral or security on pool X X
assets is maintained as required
by the transaction agreements or
related pool asset documents.
1122(d)(4)(ii) Pool assets and related documents X X
are safeguarded as required by the
transaction agreements
1122(d)(4)(iii) Any additions, removals or X X
substitutions to the asset pool
are made, reviewed and approved in
accordance with any conditions or
requirements in the transaction
agreements.
1122(d)(4)(iv) Payments on pool assets, including X
any payoffs, made in accordance
with the related pool asset
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 pool asset documents.
1122(d)(4)(v) The Servicer's records regarding X
the pool assets agree with the
Servicer's records with respect to
an obligor's unpaid principal
balance.
1122(d)(4)(vi) Changes with respect to the terms X
or status of an obligor's pool
assets (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.
1122(d)(4)(vii) Loss mitigation or recovery X
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.
S-2-3
PHH MORTGAGE
CORPORATION ▇▇▇▇▇ FARGO
REG AB REFERENCE SERVICING CRITERIA (SERVICER) (TRUSTEE) ADDITIONAL INFORMATION
---------------- ---------------------------------- ------------ ----------- ------------------------------------
1122(d)(4)(viii) Records documenting collection X
efforts are maintained during the
period a pool asset 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 pool assets including,
for example, phone calls, letters
and payment rescheduling plans in
cases where delinquency is deemed
temporary (e.g., illness or
unemployment).
1122(d)(4)(ix) Adjustments to interest rates or X
rates of return for pool assets
with variable rates are computed
based on the related pool asset
documents.
1122(d)(4)(x) Regarding any funds held in trust X
for an obligor (such as escrow
accounts): (A) such funds are
analyzed, in accordance with the
obligor's pool asset 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 pool
asset documents and state laws;
and (C) such funds are returned to
the obligor within 30 calendar
days of full repayment of the
related pool assets, or such other
number of days specified in the
transaction agreements.
1122(d)(4)(xi) Payments made on behalf of an X
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.
1122(d)(4)(xii) Any late payment penalties in X
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.
1122(d)(4)(xiii) Disbursements made on behalf of an X
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.
1122(d)(4)(xiv) Delinquencies, charge-offs and X X
uncollectible accounts are
recognized and recorded in
accordance with the transaction
agreements.
S-2-4
PHH MORTGAGE
CORPORATION ▇▇▇▇▇ FARGO
REG AB REFERENCE SERVICING CRITERIA (SERVICER) (TRUSTEE) ADDITIONAL INFORMATION
---------------- ---------------------------------- ------------ ----------- ------------------------------------
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.
S-2-5
EXHIBIT T
FORM OF ▇▇▇▇▇▇▇▇-▇▇▇▇▇ CERTIFICATION
▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
4 World Financial ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
PHH Mortgage Corporation
[__________________]
[__________________]
Re: ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors Trust Series MLCC 2006-1
I, [identify the certifying individual], certify that:
1. 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 [identify the issuing entity] (the "Exchange Act periodic
reports");
2. Based on my knowledge, the Exchange Act periodic 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;
3. 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 periodic reports;
4. [I am responsible for reviewing the activities performed by the
servicer(s) 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, and except as disclosed in the Exchange Act periodic
reports, the servicer(s) [has/have] fulfilled [its/their] obligations under the
servicing agreement(s); and]
5. All of the reports on assessment of compliance with servicing
criteria for ABS 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].]
T-1
Date:
------------------------
----------------------------------------
[Signature]
[Title]
--------------------------------
T-2
EXHIBIT U
ADDITIONAL DISCLOSURE NOTIFICATION
**SEND VIA FAX TO ▇▇▇-▇▇▇-▇▇▇▇ AND VIA EMAIL TO
▇▇▇.▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇ AND VIA OVERNIGHT MAIL TO THE ADDRESS
IMMEDIATELY BELOW**
▇▇▇▇▇ Fargo Bank, N.A., as Trustee
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Corporate Trust Services- [DEAL NAME]--SEC REPORT PROCESSING
RE: **Additional Form [10-D][10-K][8-K] Disclosure** Required
Ladies and Gentlemen:
In accordance with Section [_____] of the Pooling and Servicing Agreement,
dated as of February 1, 2006, among ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors, Inc., as
Depositor, PHH Mortgage Corporation, as Servicer, and ▇▇▇▇▇ Fargo Bank, National
Association, as Trustee, the undersigned, as [_______], hereby notifies you that
certain events have come to our attention that [will] [may] need to be disclosed
on Form [10-D][10-K][8-K].
Description of Additional Form [10-D][10-K][8-K] Disclosure:
List of any Attachments hereto to be included in the Additional Form
[10-D][10-K][8-K] Disclosure:
Any inquiries related to this notification should be directed to
[_________], phone number: [_________]; email address: [__________________].
[NAME OF PARTY],
as [role]
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
U-1
EXHIBIT V
FORM OF OFFICER'S CERTIFICATE OF [SERVICER] [TRUSTEE]
[DATE]
▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
4 World Financial Center, 10th Floor
New York, New York 10080
▇▇▇▇▇ Fargo Bank, N.A.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Services - ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors Trust
Series MLCC 2006-1
Re: Pooling and Servicing Agreement (the "Agreement"), dated as of February 1,
2006, among ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors, Inc., as depositor, PHH
Mortgage Corporation, as servicer, and ▇▇▇▇▇ Fargo Bank, National
Association, as trustee, relating to ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors Trust
Series MLCC 2006-1
I, [identify name of certifying individual], [title of certifying individual] of
[PHH Mortgage Corporation (the "Servicer")] [▇▇▇▇▇ Fargo Bank, N.A. (the
"Trustee")], hereby certify that:
(1) A review of the activities of the [Servicer] [Trustee] during the
preceding calendar year, or portion thereof, and of the performance of the
[Servicer] [Trustee] under the Agreement has been made under my supervision; and
(2) To the best of my knowledge, based on such review, the [Servicer]
[Trustee] has fulfilled all its obligations under the Agreement in all material
respects throughout such year or a portion thereof [, or, if there has been a
failure to fulfill any such obligation in any material respect, I have specified
below each such failure known to me and the nature and status thereof].
Date:
------------------
[PHH Mortgage Corporation,
as Servicer
By:
-----------------------------------
Name:
---------------------------------
Title: ]
--------------------------------
[▇▇▇▇▇ Fargo Bank, N.A.,
as Trustee
By:
-----------------------------------
Name:
---------------------------------
Title: ]
--------------------------------
V-1
EXHIBIT W
ITEM ON FORM 8-K PARTY RESPONSIBLE
---------------- -----------------
Item 1.01 - Entry into a Material Definitive Agreement All parties
Item 1.02 - Termination of a Material Definitive Agreement All parties
Item 1.03 - Bankruptcy or Receivership Depositor
Item 2.04 - Triggering Events that Accelerate or Increase a Depositor, Trustee, Servicer
Direct Financial Obligation or an Obligation under an Off-
Balance Sheet Arrangement
Item 3.03 - Material Modification to Rights of Security Trustee
Holders
Item 5.03 - Amendments of Articles of Incorporation or Depositor
Bylaws; Change of Fiscal Year
Item 6.01 - ABS Informational and Computational Material Depositor
Item 6.02 - Change of Servicer or Trustee Servicer, Trustee
Item 6.03 - Change in Credit Enhancement or External Support Depositor/Trustee
Item 6.04 - Failure to Make a Required Distribution Trustee
Item 6.05 - Securities Act Updating Disclosure Depositor
Item 7.01 - Reg FD Disclosure Depositor
Item 8.01 Depositor
Item 9.01 Depositor
W-1
EXHIBIT X
ITEM ON FORM 10-D PARTY RESPONSIBLE
----------------- -----------------
Item 1: Distribution and Pool Performance Information Trustee, Depositor
Plus any information required by 1121 which is NOT Servicer and Trustee (to the extent required by
included on the monthly statement to Certificateholders Regulation AB)
Item 2: Legal Proceedings per Item 1117 of Reg AB All parties to the PSA (as to themselves), the
depositor/trustee/servicer (to the extent known) as to
the issuing entity, the depositor as to the sponsor,
any 1110(b) originator, any 1100(d)(1) party
Item 3: Sale of Securities and Use of Proceeds Depositor
Item 4: Defaults Upon Senior Securities Trustee
Item 5: Submission of Matters to a Vote of Security Holders Trustee
Item 6: Significant Obligors of Pool Assets Depositor/Sponsor/ Servicer
Item 7: Significant Enhancement Provider Information Depositor/Sponsor
Item 8: Other Information Trustee and any other party responsible for disclosure
items on Form 8-K
Item 9: Exhibits Trustee/Depositor
X-1
EXHIBIT Y
ITEM ON FORM 10-K PARTY RESPONSIBLE
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Item 1B: Unresolved Staff Comments Depositor
Item 9B: Other Information Trustee and any other party responsible for
disclosure items on Form 8-K
Item 15: Exhibits, Financial Statement Schedules Trustee/Sub-Servicers. Depositor
Additional Item: All parties to the PSA (as to themselves), the
depositor/trustee/servicer (to the extent known) as
Disclosure per Item 1117 of Reg AB to the issuing entity, the depositor as to the
sponsor, any 1110(b) originator, any 1100(d)(1) party
Additional Item: All parties to the PSA as to themselves, the
depositor as to the sponsor, originator, significant
Disclosure per Item 1119 of Reg AB obligor, enhancement or support provider
Additional Item: Depositor/Sponsor/Mortgage Loan Sponsor/Servicer
Disclosure per Item 1112(b) of Reg AB
Additional Item: Depositor/Sponsor
Disclosure per Items 1114(b) and 1115(b) of Reg AB
Y-1
SCHEDULE A
MORTGAGE LOAN SCHEDULE
On file at the offices of Dechert LLP
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Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Schedule A-1