EXECUTION COPY
SALE AND SERVICING AGREEMENT
Dated as of September 14, 2006
among
INDYMAC BANK, F.S.B.
(Seller and Servicer)
INDYMAC MBS, INC.
(Depositor)
INDYMAC HOME EQUITY MORTGAGE LOAN ASSET-BACKED TRUST,
SERIES 2006-H3
(Trust)
and
DEUTSCHE BANK NATIONAL TRUST COMPANY
(Indenture Trustee)
ARTICLE I.
DEFINITIONS
Section 1.01 Definitions............................................................................ 2
Section 1.02 Other Definitional Provisions.......................................................... 33
Section 1.03 Interest Calculations.................................................................. 34
ARTICLE II.
CONVEYANCE OF THE MORTGAGE LOANS
Section 2.01 Conveyance of the Mortgage Loans....................................................... 34
Section 2.02 Acceptance by Indenture Trustee, Review of Documentation............................... 40
Section 2.03 Representations and Warranties Regarding the Seller, the Depositor and the Servicer.... 41
Section 2.04 Representations and Warranties of the Seller Regarding the Mortgage Loans.............. 44
Section 2.05 Substitution of Mortgage Loans......................................................... 51
Section 2.06 Tax Treatment.......................................................................... 53
Section 2.07 Representations, Warranties and Covenants of the Depositor............................. 53
ARTICLE III.
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 3.01 The Servicer........................................................................... 55
Section 3.02 Collection of Certain Mortgage Loan Payments........................................... 59
Section 3.03 Withdrawals from the Collection Account................................................ 61
Section 3.04 Maintenance of Hazard Insurance; Property Protection Expenses.......................... 62
Section 3.05 Maintenance of Mortgage Impairment Insurance Policy.................................... 62
Section 3.06 Maintenance of Fidelity Bond and Errors and Omissions Insurance........................ 63
Section 3.07 Management of and Realization upon Defaulted Mortgage Loans............................ 63
Section 3.08 Indenture Trustee to Cooperate......................................................... 65
Section 3.09 Servicing Compensation; Payment of Certain Expenses by Servicer........................ 66
Section 3.10 Annual Statement as to Compliance...................................................... 67
Section 3.11 Assessment of Compliance and Attestation Report........................................ 67
Section 3.12 Access to Certain Documentation and Information Regarding the Mortgage Loans........... 69
Section 3.13 Early Termination Fees................................................................. 69
Section 3.14 Commission Reporting................................................................... 70
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Section 3.15 Reports of Foreclosures and Abandonments of Mortgaged Properties, Returns Relating
to Mortgage Interest Received from Individuals and Returns Relating to
Cancellation of Indebtedness........................................................... 73
Section 3.16 Assumption Agreements.................................................................. 74
Section 3.17 Payment of Taxes, Insurance and Other Charges.......................................... 74
Section 3.18 Servicing Advances..................................................................... 74
Section 3.19 Allocation of Charge-Off Amounts....................................................... 75
ARTICLE IV.
INSURER
Section 4.01 Claims upon the Policy................................................................. 75
Section 4.02 Effect of Payments by the Insurer; Subrogation......................................... 76
ARTICLE V.
PRIORITY OF DISTRIBUTIONS; STATEMENTS TO CLASS A NOTEHOLDERS; RIGHTS OF CLASS A NOTEHOLDERS
Section 5.01 Distributions.......................................................................... 77
Section 5.02 Calculation of the Note Rate........................................................... 80
Section 5.03 Servicing Certificate and Statement to Noteholders.................................... 80
Section 5.04 Other Receipts......................................................................... 81
Section 5.05 Payment Account........................................................................ 82
Section 5.06 Reserve Account........................................................................ 82
Section 5.07 The Certificate Account................................................................ 83
Section 5.08 Rapid Amortization Event............................................................... 83
Section 5.09 Indenture Trustee Fees and Indemnification Expenses.................................... 86
ARTICLE VI.
THE SELLER, THE SERVICER AND THE DEPOSITOR
Section 6.01 Liability of the Seller, the Servicer and the Depositor................................ 86
Section 6.02 Merger or Consolidation of, or Assumption of the Obligations of, the Seller, the
Servicer or the Depositor.............................................................. 86
Section 6.03 Limitation on Liability of the Seller, the Depositor, the Servicer and Others.......... 86
Section 6.04 Servicer Not to Resign................................................................. 87
Section 6.05 Delegation of Duties................................................................... 88
Section 6.06 Indemnification of the Trust by the Servicer........................................... 88
ARTICLE VII.
SERVICER TERMINATION
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Section 7.01 Events of Servicer Termination......................................................... 88
Section 7.02 Indenture Trustee to Act; Appointment of Successor..................................... 91
Section 7.03 Waiver of Defaults..................................................................... 92
Section 7.04 Notification to Noteholders............................................................ 92
ARTICLE VIII.
TERMINATION
Section 8.01 Termination............................................................................ 93
ARTICLE IX.
THE INDENTURE TRUSTEE
Section 9.01 Indenture Trustee Not Liable for the Notes or Mortgage Loans........................... 94
Section 9.02 Indenture Trustee May Own Notes........................................................ 95
Section 9.03 Indenture Trustee's Fees and Expenses.................................................. 95
ARTICLE X.
MISCELLANEOUS PROVISIONS
Section 10.01 Amendment.............................................................................. 96
Section 10.02 Recordation of Agreement............................................................... 97
Section 10.03 Duration of Agreement.................................................................. 97
Section 10.04 Governing Law.......................................................................... 98
Section 10.05 Notices................................................................................ 98
Section 10.06 Severability of Provisions............................................................. 98
Section 10.07 No Partnership......................................................................... 98
Section 10.08 Counterparts........................................................................... 98
Section 10.09 Successors and Assigns................................................................. 98
Section 10.10 Headings............................................................................... 99
Section 10.11 Reports to Rating Agencies............................................................. 99
Section 10.12 Inconsistencies Among Transaction Documents............................................ 99
Section 10.13 Rights of the Insurer to Exercise Rights of Class A Noteholders........................ 99
Section 10.14 Enforceability Rights of the Indenture Trustee......................................... 99
Section 10.15 Matters Regarding the Trust............................................................ 100
Section 10.16 Reports to Insurer..................................................................... 100
Section 10.17 Matters Regarding the Indenture Trustee................................................ 100
Section 10.18 Limitation of Owner Trustee Liability.................................................. 100
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EXHIBITS
EXHIBIT A Mortgage Loan Schedule
EXHIBIT B List of Servicing Officers
EXHIBIT C Form of Annual Officer's Certificate
EXHIBIT D Form of Advance Notice
EXHIBIT E Form of Mortgage Note
EXHIBIT F Form of Mortgage
EXHIBIT G Specimen of the Policy
EXHIBIT H Form of Lost Note Affidavit
EXHIBIT I Form of Request for Release
EXHIBIT J Form of Initial Certification
EXHIBIT K Form of Interim Certification
EXHIBIT L Form of Final Certification
EXHIBIT M Form of Certification to be Provided by the Depositor with Form 10-K
EXHIBIT N Indenture Trustee's Officer's Certificate
EXHIBIT O Originators' Appraisal Matrix
EXHIBIT P Servicing Criteria
EXHIBIT Q Form of Statement to Noteholders
EXHIBIT R Form 10-D, Form 8-K and Form 10-K Reporting Responsibility
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This Sale and Servicing Agreement (the "Agreement") is entered into
effective as of September 14, 2006, among INDYMAC BANK, F.S.B., a federal
savings bank, as seller (in such capacity, the "Seller"), and as servicer (in
such capacity, the "Servicer"), INDYMAC MBS, INC., a Delaware corporation, as
the depositor (the "Depositor"), INDYMAC HOME EQUITY MORTGAGE LOAN ASSET-BACKED
TRUST, SERIES 2006-H3, a Delaware statutory trust (the "Trust"), and DEUTSCHE
BANK NATIONAL TRUST COMPANY, a national banking association, as Indenture
Trustee on behalf of the Class A Noteholders (in such capacity, the "Indenture
Trustee").
PRELIMINARY STATEMENT
In consideration of the mutual agreements herein contained, the parties
hereto hereby agree as follows:
The following table sets forth the Class Designation, Note Rate, Initial
Note Principal Amount and minimum denomination for the Notes of each Class
issued pursuant to the Indenture.
Class Initial Note Minimum
Designation Note Rate Principal Amount Denominations
----------- --------- ---------------- -------------
Class A (1) $ 496,786,000 $100,000
Class M1 (2) $ 2,509,000 $100,000
Class M2 (3) $ 2,509,000 $100,000
----------
(1) The Note Rate with respect to any Payment Date (and the related Interest
Accrual Period) for the Class A Notes is the per annum rate equal to the
lesser of (i) LIBOR plus 0.17% and (ii) the Maximum Rate for such Payment
Date.
(2) The Note Rate with respect to any Payment Date (and the related Interest
Accrual Period) for the Class M1 Notes is the per annum rate equal to the
lesser of (i) LIBOR plus 3.00% and (ii) the Maximum Rate for such Payment
Date.
(3) The Note Rate with respect to any Payment Date (and the related Interest
Accrual Period) for the Class M2 Notes is the per annum rate equal to the
lesser of (i) LIBOR plus 3.00% and (ii) the Maximum Rate for such Payment
Date.
ARTICLE I.
DEFINITIONS
Section 1.01 Definitions. Whenever used in this Agreement, the following
words and phrases, unless the context otherwise requires, shall have the
meanings specified in this Article.
Accelerated Principal Payment: With respect to any Payment Date a payment
received as a payment of principal by the Noteholders of any Class of Notes, for
the purpose of increasing the Overcollateralization Amount, and to be paid from
the Excess Cashflow for such Class, and equal to for any Payment Date the lesser
of (x) the amount of the Excess Cashflow for such Class and (y) the
Overcollateralization Deficiency Amount for such Payment Date (after giving
effect to any Class of Notes senior to such Class).
Accepted Servicing Practices: The Servicer's normal servicing practices in
servicing and administering revolving home equity line of credit mortgage loans
for its own account, which in general will conform to the mortgage servicing
practices of prudent mortgage lending institutions which service for their own
account, mortgage loans of the same type as the Mortgage Loans in the
jurisdictions in which the related Mortgaged Properties are located.
Accountant's Opinion: A written opinion of the Servicer's internal
accountants, delivered and acceptable to the Indenture Trustee.
Accrual Period: With respect to each Mortgage Loan and Due Date, the
period from and including the preceding Due Date to but not including such Due
Date.
Additional Balance: As to any Mortgage Loan and day, the aggregate amount
of all Draws conveyed to the Trust pursuant to Section 2.01(a).
Additional Balance Advance Amount: As to any Payment Date during the
Managed Amortization Period, the excess, if any, of (i) the aggregate principal
amount of all Additional Balances created during the Collection Period relating
to such Payment Date over (ii) the Principal Collections in respect of the
Mortgage Loans received during the Collection Period relating to such Payment
Date.
Administration Agreement: The Administration Agreement dated as of
September 29, 2006 among the Issuer, the Administrator, the Owner Trustee and
the Depositor, as may be amended or supplemented from time to time.
Advance Notice: A notice to the Class L Certificateholder substantially in
the form of Exhibit D.
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Affiliate: With respect to any Person, any other Person controlling,
controlled by or under common control with such Person. For purposes of this
definition, "control" means the power to direct the management and policies of a
Person, directly or indirectly, whether through ownership of voting securities,
by contract or otherwise and "controlling" and "controlled" shall have meanings
correlative to the foregoing.
Aggregate Draw Amount - As of any day during the Managed Amortization
Period, the sum of (x) the Floating Allocation Percentage of the aggregate
principal balance of all Draws on such day and (y) the amount of any Daily Draw
Deficits remaining from the preceding day of the related Collection Period (if
such preceding day is not within the related Collection Period, the Daily Draw
Deficit from the preceding day shall be zero).
Agreement: This Sale and Servicing Agreement and all amendments hereof and
supplements hereto.
Anniversary Year: Means the one-year period beginning on the Closing Date
and ending on the first anniversary thereof, and each subsequent one-year period
beginning on the day after the end of the preceding Anniversary Year and ending
on the next succeeding anniversary of the Closing Date.
Appraised Value: The appraised value of a Mortgaged Property based upon
the appraisal made by or for the originator, in compliance with the Servicer's
underwriting criteria (which criteria may permit an electronic appraisal or
other abbreviated appraisal process), in each case at the time of the
origination of the related Mortgage Loan or, if new appraisals are obtained, the
appraised value based upon the most recent appraisal.
Assessment of Compliance: As defined in Section 3.11.
Assignment of Mortgage: With respect to any Mortgage, an assignment,
notice of transfer or equivalent instrument, in recordable form, sufficient
under the laws of the jurisdiction in which the related Mortgaged Property is
located to effect the sale of the Mortgage to the Indenture Trustee, on behalf
of the Trust, which assignment, notice of transfer or equivalent instrument may
be in the form of one or more blanket assignments covering the Mortgage Loans
secured by Mortgaged Properties located in the same jurisdiction.
Available Funds: With respect to any Payment Date, the sum of (i) the
Principal Collections for the related Collection Period, (ii) the Interest
Collections for the related Collection Period, (iii) Early Termination Fees
recovered from any Mortgagor during the related Collection Period and (iv) any
other amounts remitted by the Servicer with respect to that Payment Date on the
Servicer Remittance Date pursuant to Section 3.03(ii).
Avoided Payment: As defined in the Policy.
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Book-Entry Note: Any Class A Note registered in the name of the Depository
or its nominee, ownership of a security entitlement with respect to which is
reflected on the books of the Depository or on the books of a Person maintaining
an account with such Depository (directly or as an indirect participant in
accordance with the rules of such Depository).
Business Day: Any day other than (i) a Saturday or Sunday, or (ii) a day
on which banking institutions in the States of New York or California or the
city in which the Corporate Trust Office or the office of the Insurer is located
are required or authorized by law to be closed.
Certificate Account: The account maintained by the Administrator pursuant
to Section 5.07
Certificate Principal Balance: The Class Principal Balance of the Class B
Certificates, the Class Principal Balance of the Class L Certificates or the
Class Principal Balance of the Class R Certificates, as applicable.
Certificate Register and Certificate Registrar: The register which
provides for the registration of the Certificates and the registration of
transfers of Certificates, which shall be maintained by the Indenture Trustee,
as Certificate Registrar.
Certificateholders: The holders of the Class B Certificates, the Class L
Certificates or the Class R Certificates.
Certificates: The Class B Certificates, Class L Certificates and Class R
Certificates.
Charge-Off Amount: With respect to any Charged-Off HELOC under clause (i)
of the definition thereof, the amount of the Principal Balance that has been
written down (including, for any Mortgage Loan that became a Liquidated Mortgage
Loan during the related Collection Period, any unrecovered portion of its
Principal Balance that is written down during that Collection Period after
giving effect to the Net Liquidation Proceeds applied in reduction of the
Principal Balance of such Mortgage Loan) and with respect to any Charged-Off
HELOC that became a Charged-Off HELOC during the related Collection Period under
clause (ii) of the definition thereof, the entire Principal Balance of such
Mortgage Loan minus the Appraised Value of the related Mortgaged Property
reduced by the principal balance of any senior mortgage loan also secured by
such Mortgaged Property.
Charged-Off HELOC: Means (i) a Mortgage Loan with a Principal Balance that
has been written down on the Servicer's servicing system in accordance with its
policies and procedures (including, any Mortgage Loan that became a Liquidated
Mortgage Loan during the related Collection Period, and had an unrecovered
portion of its related Principal Balance written down during that Collection
Period) and (ii) any Mortgage Loan that is more than 180 days past due.
Class: All Notes and Certificates bearing the same class designation.
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Class A Note: Any Note designated as a "Class A Asset-Backed Note" on the
face thereof, substantially in the form of Exhibit A-1 to the Indenture.
Class A Noteholder: The owner of the Class A Notes, as shown on the Note
Register.
Class A Principal Payment Amount: With respect to each Payment Date, (a)
prior to the Stepdown Date or if a Trigger Event is in effect or a Rapid
Amortization Trigger Event has occurred, the Principal Payment Amount for such
Payment Date and (b) on or after the Stepdown Date unless a Trigger Event is in
effect or a Rapid Amortization Trigger Event has occurred, the lesser of (A) the
excess of (i) the Note Principal Amount of the Class A Notes immediately prior
to the applicable Payment Date over (ii) the Class A Target Amount for such
Payment Date and (B) the Principal Payment Amount for such Payment Date.
Class A Target Amount: For each Payment Date, the lesser of (a) the
product of (i) 94.80% and (ii) the Invested Amount for such Payment Date and (b)
the excess if any of (i) the Invested Amount for such Payment Date over (ii)
0.50% of the Cut-off Date Pool Balance.
Class B Certificate: A Certificate, substantially in the form of Exhibit
A-1 to the Trust Agreement.
Class L Certificate: A Certificate, substantially in the form of Exhibit
A-2 to the Trust Agreement.
Class L Interest: The beneficial ownership interest in the assets of the
Trust not represented by the Class B Certificate and the Class R Certificate and
is evidenced by the Class L Certificate.
Class L Interest Collections: With respect to any Payment Date and the
Class L Certificate, an amount equal to the Interest Collections allocable to
such Payment Date times the Class L Percentage.
Class L Percentage: For any Payment Date, 100% minus the Floating
Allocation Percentage for such Payment Date.
Class R Certificate: A Residual Certificate, substantially in the form of
Exhibit A-3 to the Trust Agreement.
Class M1 Note: Any Note designated as a "Class M1 Asset-Backed Note" on
the face thereof, substantially in the form of Exhibit A-2 to the Indenture.
Class M1 Principal Payment Amount: With respect to any Payment Date, (a)
prior to the Stepdown Date or if a Trigger Event is in effect or a Rapid
Amortization Trigger Event has occurred, the Principal Payment Amount for such
Payment Date remaining after the Note
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Principal Amount of the Class A Notes has been reduced to zero and (b) on or
after the Stepdown Date unless a Trigger Event is in effect or a Rapid
Amortization Trigger Event has occurred, the lesser of (i) the excess of (A) the
aggregate of the Note Principal Amount of the Class A Notes (after giving effect
to payments of principal on such Payment Date) and the Note Principal Amount of
the Class M1 Notes immediately prior to such Payment Date over (B) the Class M1
Target Amount for such Payment Date and (ii) the Principal Payment Amount for
such Payment Date after giving effect to payments of principal to the Holders of
the Class A Notes therefrom.
Class M1 Target Amount: With respect to each Payment Date, the lesser of
(a) the product of (i) 95.80% and (ii) the Invested Amount for such Payment Date
and (b) the excess if any of (i) the Invested Amount for such Payment Date over
(ii) 0.50% of the Cut-off Date Pool Balance.
Class M2 Note: Any Note designated as a "Class M2 Asset-Backed Note" on
the face thereof, substantially in the form of Exhibit A-3 to the Indenture.
Class M2 Principal Payment Amount: With respect to any Payment Date, (a)
prior to the Stepdown Date or if a Trigger Event is in effect or a Rapid
Amortization Trigger Event has occurred, the Principal Payment Amount for such
Payment Date remaining after the Note Principal Amount of the Class A Notes and
the Class M1 Notes has been reduced to zero and (b) on or after the Stepdown
Date unless a Trigger Event is in effect or a Rapid Amortization Trigger Event
has occurred, the lesser of (i) excess of (A) the aggregate of the Note
Principal Amount of the Class A Notes (after giving effect to payments of
principal on such Payment Date), the Note Principal Amount of the Class M1 Notes
(after giving effect to payments of principal on such Payment Date) and the Note
Principal Amount of the Class M2 Notes immediately prior to such Payment Date
over (B) the Class M2 Target Amount for such Payment Date and (ii) the Principal
Payment Amount for such Payment Date after giving effect to payments of
principal to the Holders of the Class A Notes and the Class M1 Notes therefrom.
Class M2 Target Amount: With respect to each Payment Date, the lesser of
(a) the product of (i) 96.80% and (ii) the Invested Amount for such Payment Date
and (b) the excess if any of (i) the Invested Amount for such Payment Date over
(ii) 0.50% of the Cut-off Date Pool Balance.
Class Principal Balance: With respect to the Class L Certificates and any
Payment Date during the Managed Amortization Period, the sum of the Additional
Balance Advance Amount for such Payment Date and any prior Payment Date, less
(x) the sum of the amount, calculated for such Payment Date and any prior
Payment Date, equal to all Charge-off Amounts for such Payment Date multiplied
by the Class L Percentage for such Payment Date, and (y) distributions to such
Class pursuant to Section 3.11 of the Trust Agreement representing principal
payments on the Mortgage Loans for such Payment Date and any prior Payment Date.
With respect to the Class L Certificates and any Payment Date during the Rapid
Amortization Period, the sum of (a) the Class Principal Balance of the Class L
Certificates on the last Payment Date prior to the commencement of the Rapid
Amortization Period (after giving effect to the payment of all
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distributions, and the allocation of Charge-Off Amounts on such Payment Date)
plus (b) the aggregate amount of Draws conveyed to the Issuer during the Rapid
Amortization Period, less (x) the sum of the amount, calculated for such Payment
Date and any prior Payment Date during the Rapid Amortization Period, equal to
all Charge-off Amounts for such Payment Dates multiplied by the Class L
Percentage and (y) distributions to such Class pursuant to Section 3.11 of the
Trust Agreement representing principal payments on the Mortgage Loans during the
Rapid Amortization Period.
With respect to the Class B Certificates and any Payment Date, an amount
equal to the excess of the Invested Amount on the last day of the related
Collection Period (after taking into account all Interest Collections and
Principal Collections for such Payment Date) over the sum of the aggregate Note
Principal Amount of the Notes immediately prior to such Payment Date.
With respect to the Class R Certificates and any Payment Date, zero.
Close of Business: With respect to any Business Day, 5:00 p.m. (New York
time).
Closing Date: September 29, 2006.
Code: The Internal Revenue Code of 1986, as amended from time to time, and
Treasury Regulations promulgated thereunder.
Collection Account: The custodial account or accounts created and
maintained for the benefit of the Noteholders, the Certificateholders and the
Insurer pursuant to Section 3.02(b).
Collection Period: With respect to any Payment Date and Mortgage Loan, the
15th day of the calendar month immediately preceding such Payment Date to the
14th day of the calendar month of such Payment Date.
Combined Loan-to-Value Ratio or CLTV: With respect to any Mortgage Loan
the sum of the Credit Limit of such Mortgage Loan at the time such Mortgage Loan
was originated or at the time such Mortgage Loan is modified pursuant to Section
3.01(h) and the outstanding principal balance of any Senior Liens as of the date
of origination of the Mortgage Loan, divided by (i) in the case of a purchase,
the lesser of the selling price of the Mortgaged Property or its Appraised Value
at the time of sale, or (ii) in the case of a refinance, the Appraised Value of
the Mortgaged Property at the time of the refinance.
Commission: The Securities and Exchange Commission.
Controlling Class Notes: The Class A Notes, so long as any Class A Notes
are Outstanding, then the Class M1 Notes, so long as any Class M1 Notes are
Outstanding after the Class A Notes are no longer Outstanding, and finally the
Class M2 Notes.
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Controlling Party: The Insurer, so long as the Class A Notes are
Outstanding or any Reimbursement Amounts remain due and owing to the Insurer and
no Insurer Default shall have occurred and be continuing, and the Majority
Securityholders, after the Class A Notes are no longer Outstanding and no
Reimbursement Amounts are due and owing to the Insurer or for so long as an
Insurer Default shall have occurred and is continuing.
Conveyed Assets: As defined in Section 2.01(a).
Corporate Trust Office: The principal office of the Indenture Trustee at
which at any particular time its corporate business shall be administered, which
office on the Closing Date is located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: IN06H3 or with respect to the Certificate
Registrar, the designated office for presentment and surrender of Certificates
for registration, transfer or exchange thereof located at DB Services Tennessee,
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attn: Transfer Unit.
Credit Enhancement Percentage: With respect to the Class A Notes and any
Payment Date, a percentage equal to (x) the sum of (i) the Note Principal Amount
of the Class M1 Notes and the Class M2 Notes (after taking into account any
payments of principal on such Payment Date) and (ii) the Overcollateralization
Amount for such Payment Date, divided by (y) the Invested Amount for such
Payment Date.
Credit Limit: As to any Mortgage Loan, the maximum principal balance
permitted under the terms of the related Mortgage Note.
Credit Line Agreement: The Mortgage Note.
Cut-off Date: As to any Mortgage Loan, the close of business on September
14, 2006.
Cut-off Date Pool Balance: $501,804,955.
Cut-off Date Principal Balance: With respect to any Mortgage Loan, the
unpaid principal balance thereof as of the Cut-off Date (or as of the applicable
date of substitution with respect to an Eligible Substitute Mortgage Loan
pursuant to Section 2.02 or 2.05).
Daily Draw Deficit: As of any day during any Collection Period preceding
the commencement of the Rapid Amortization Period, the excess, if any, of the
Aggregate Draw Amount on such day over the Floating Allocation Percentage of
Principal Collections in respect of the Mortgage Loans received during such
Collection Period and remaining on deposit in the Collection Account.
Defective Mortgage Loan: Any Mortgage Loan subject to repurchase or
substitution by the Seller pursuant to Section 2.02 or 2.05.
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Deferred Interest: With respect to the Notes of each Class and any Payment
Date, the excess, if any, of interest due at the applicable Formula Note Rate
over interest due at the applicable Note Rate.
Deficiency Amount: As defined in the Policy.
Definitive Notes: As defined in the Indenture.
Delinquent Mortgage Loan and Delinquent: A Mortgage Loan is a Delinquent
Mortgage Loan if the Monthly Payment due thereon is not received by the close of
business on the Due Date in accordance with the related Mortgage Note and until
such delinquency is subsequently cured.
Depositor: IndyMac MBS Inc., a Delaware corporation.
Depositor Certification: As defined in Section 3.14(e).
Depository: The initial Depository shall be The Depository Trust Company,
the nominee of which is Cede & Co. The Depository shall at all times be a
"clearing corporation" as defined in Section 8-102(a)(5) of the UCC of the State
of New York.
Depository Agreement: The agreement dated as of September 29, 2006, among
the Indenture Trustee, acting on behalf of the Trust, and The Depository Trust
Company, as the initial Depository, relating to the Book-Entry Notes.
Depository Participant: A broker, dealer, bank or other financial
institution or other Person for whom from time to time the Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
Determination Date: With respect to any Payment Date, the date which is
five (5) Business Days prior to such Payment Date.
Distribution Report: As defined in Section 3.14.
Draw: With respect to any Mortgage Loan, an additional borrowing by the
related Mortgagor subsequent to the Cut-off Date in accordance with the related
Mortgage Note.
Draw Period: With respect to any Mortgage Loan, the period during which
the related Mortgagor is permitted to make Draws.
Due Date: With respect to any Mortgage Loan and any Monthly Payment, the
date on which such Monthly Payment is due from the related Mortgagor.
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Early Termination Fee: As to a Mortgage Loan, any charge owed by a
Mortgagor in connection with the termination of the related Credit Line
Agreement within a specified period following the origination of such Mortgage
Loan.
Eligible Account: Any of (i) an account or accounts maintained with a
federal or state chartered depository institution or trust company the
short-term unsecured debt obligations of which (or, in the case of a depository
institution or trust company that is the principal subsidiary of a holding
company, the debt obligations of such holding company) have the highest
short-term ratings of Moody's or Fitch and one of the two highest short-term
ratings of Standard & Poor's, if Standard & Poor's is a Rating Agency at the
time any amounts are held on deposit therein, or (ii) an account or accounts in
a depository institution or trust company in which such accounts are insured by
the FDIC (to the limits established by the FDIC) and the uninsured deposits in
which accounts are otherwise secured such that, as evidenced by an Opinion of
Counsel delivered to the Indenture Trustee and to each Rating Agency, the
Noteholders have a claim with respect to the funds in such account or a
perfected first priority security interest against any collateral (which shall
be limited to Eligible Investments) securing such funds that is superior to
claims of any other depositors or creditors of the depository institution or
trust company in which such account is maintained, or (iii) a trust account or
accounts maintained with (a) the trust department of a federal or state
chartered depository institution or (b) a trust company, acting in its fiduciary
capacity, or (iv) any other account acceptable to each Rating Agency. Eligible
Accounts may bear interest, and may include, if otherwise qualified under this
definition, accounts maintained with the Indenture Trustee.
Eligible Institution: Shall mean (1) any depository institution (which may
be the Indenture Trustee) organized under the laws of the United States or any
one of the States thereof, including the District of Columbia (or any domestic
branch of a foreign bank) which at all times (a) has a short-term unsecured debt
rating of "P-1" by Moody's, (b) has a short-term unsecured debt rating of "A-1"
by Standard & Poor's and (c) has its accounts fully insured by the FDIC or
maintains trust accounts in a fiduciary capacity, or (2) any other institution
that is acceptable to each Rating Agency; provided, however, that if such other
institution does not satisfy the rating criteria set forth in clause (1), such
other institution shall also be acceptable to the Insurer. If so qualified, the
Indenture Trustee or the Servicer may be considered an Eligible Institution for
the purposes of this definition.
Eligible Investments: One or more of the following:
(i) obligations of or guaranteed as to principal and interest by the
United States or any agency or instrumentality thereof when such obligations are
backed by the full faith and credit of the United States;
(ii) repurchase agreements on obligations specified in clause (i)
maturing not more than one month from the date of acquisition thereof, provided
that the unsecured obligations of the party agreeing to repurchase such
obligations are at the time rated by each Rating Agency in its highest
short-term rating available;
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(iii) federal funds, certificates of deposit, demand deposits, time
deposits and bankers' acceptances (which shall each have an original maturity of
not more than 90 days and, in the case of bankers' acceptances, shall in no
event have an original maturity of more than 365 days or a remaining maturity of
more than 30 days) denominated in United States dollars of any U.S. depository
institution or trust company incorporated under the laws of the United States or
any state thereof or of any domestic branch of a foreign depository institution
or trust company; provided that the debt obligations of such depository
institution or trust company (or, if the only Rating Agency is Standard &
Poor's, in the case of the principal depository institution in a depository
institution holding company, debt obligations of the depository institution
holding company) at the date of acquisition thereof have been rated by each
Rating Agency in its highest short-term rating available; and provided further
that, if the only Rating Agency is Standard & Poor's and if the depository or
trust company is a principal subsidiary of a bank holding company and the debt
obligations of such subsidiary are not separately rated, the applicable rating
shall be that of the bank holding company; and, provided further that, if the
original maturity of such short-term obligations of a domestic branch of a
foreign depository institution or trust company shall exceed 30 days, the
short-term rating of such institution shall be A-1+ in the case of Standard &
Poor's if Standard & Poor's is the Rating Agency;
(iv) commercial paper and demand notes (having original maturities
of not more than 365 days) of any corporation incorporated under the laws of the
United States or any state thereof which on the date of acquisition has been
rated by each Rating Agency in its highest short-term rating available; provided
that such commercial paper shall have a remaining maturity of not more than 30
days;
(v) a money market fund or a qualified investment fund rated by each
Rating Agency in its highest long-term rating available; and
(vi) other obligations or securities that are acceptable to each
Rating Agency and the Insurer as an Eligible Investment hereunder and will not
reduce the rating assigned to any Class of Notes by such Rating Agency below the
lower of the then-current rating or the rating assigned to such Notes as of the
Closing Date by such Rating Agency, as evidenced in writing;
provided, however, no instrument shall be an Eligible Investment if
it represents, either (1) the right to receive only interest payments with
respect to the underlying debt instrument or (2) the right to receive both
principal and interest payments derived from obligations underlying such
instrument and the principal and interest payments with respect to such
instrument provide a yield to maturity greater than 120% of the yield to
maturity at par of such underlying obligations. References herein to the highest
rating available on unsecured long-term debt shall mean AAA in the case of
Standard & Poor's and Fitch and Aaa in the case of Moody's, and references
herein to the highest rating available on unsecured commercial paper and
short-term debt obligations shall mean A-1 in the case of Standard & Poor's, P-1
in the case of Moody's and either A-1 by Standard & Poor's, P-1 by Moody's or
F-1 by Fitch in the case of Fitch; provided, however, that any Eligible
Investment that is a short-term debt obligation rated A-1 by Standard & Poor's
must satisfy the following additional conditions: (i) the total amount
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of debt from A-1 issuers must be limited to the investment of monthly principal
and interest payments (assuming fully amortizing collateral); (ii) the total
amount of A-1 investments must not represent more than 20% of the aggregate
outstanding Note Principal Amount of the Notes and each investment must not
mature beyond 30 days; and (iii) if the investments may be liquidated prior to
their maturity or are being relied on to meet a certain yield, interest must be
tied to a single interest rate index plus a single fixed spread (if any) and
must move proportionately with that index.
Eligible Substitute Mortgage Loan: With respect to Mortgage Loans, a
Mortgage Loan substituted by the Seller for a Mortgage Loan that constitutes a
Defective Mortgage Loan which must, on the date of such substitution, (i) have
an outstanding Principal Balance that is approximately equal to the Principal
Balance of such Defective Mortgage Loan; (ii) have a Loan Rate not less than the
Loan Rate of the Defective Mortgage Loan and not more than 1% in excess of the
Loan Rate of such Defective Mortgage Loan; (iii) have a Loan Rate Cap based on
the Index, determined in accordance with then current underwriting standards;
(iv) have a Margin that is not less than the Margin of the Defective Mortgage
Loan and not more than 1% in excess of the Margin for the Defective Mortgage
Loan; (v) have a Mortgage of the same or higher level of priority as the
Mortgage relating to the Defective Mortgage Loan at the time such Mortgage was
transferred to the Trust; (vi) have a maturity not later than the Final
Scheduled Payment Date; (vii) comply with each representation and warranty set
forth in Section 2.04 (deemed to be made as of the date of substitution); (viii)
have an original Combined Loan-to-Value Ratio not greater than that of the
Defective Mortgage Loan; and (ix) have a Mortgagor that has a credit score at
least equal to that of the Mortgagor under the Defective Mortgage Loan.
More than one Eligible Substitute Mortgage Loan may be substituted for a
Defective Mortgage Loan if such Eligible Substitute Mortgage Loans meet the
foregoing attributes in the aggregate.
ERISA: Employee Retirement Income Security Act of 1974, as amended.
Errors and Omissions Insurance Policy: As defined in Section 3.06.
Event of Servicer Termination: As defined in Section 7.01.
Excess Cashflow: With respect to any Payment Date and each Class of Notes,
the Floating Allocation Percentage of Net Available Funds for such Payment Date
which remain on deposit in the Payment Account after taking into account the
payments on such Payment Date listed in (x) in the case of the Class A Notes,
clauses (i) through (vii) of Section 5.01(a)(I), (y) in the case of the Class M1
Notes, clauses (i) through (viii) of Section 5.01(a)(I) and the Class M1
Principal Payment Amount paid to the Holders of the Class M1 Notes pursuant to
clause (I) of Section 5.01(a) and (z) in the case of the Class M2 Notes, clauses
(i) through (ix) of Section 5.01(a)(I) and the Class M2 Principal Payment Amount
paid to the Holders of the Class M2 Notes pursuant to clause (x) of Section
5.01(a)(I).
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Exchange Act: The Securities Exchange Act of 1934, as amended.
Expense Fee Rate: Is an amount equal to the sum of (i) the Servicing Fee
Rate, (ii) the fees of the Owner Trustee, (iii) a per annum rate equal to a
fraction, the numerator of which is the product of (a) 12 and the sum of (b)(1)
current interest shortfalls resulting from the application of the Servicemembers
Civil Relief Act, or any similar state law, (2) any interest shortfalls
resulting from prepayments of the Mortgage Loans and (3) payments to the
Indenture Trustee in respect of the Indenture Trustee Expense Amount and the
denominator of which is the Pool Balance at the beginning of the related
Collection Period and (iv) the product of (a) the rate at which the Insurer
Premium is calculated and (b) a fraction, the numerator of which is the Note
Principal Amount of the Class A Notes immediately before the Payment Date and
the denominator of which is the Pool Balance at the beginning of the related
Collection Period.
▇▇▇▇▇▇ ▇▇▇: Federal National Mortgage Association, a federally chartered
and privately owned corporation organized and existing under the Federal
National Mortgage Association Charter Act, or any successor thereto.
FDIC: The Federal Deposit Insurance Corporation and any successor thereto.
Fidelity Bond: As defined in Section 3.06.
Final Recovery Determination: With respect to any defaulted Mortgage Loan
or any REO Property (other than a Mortgage Loan or REO Property purchased by the
Seller or the Servicer pursuant to or as contemplated by Sections 2.02, 2.04,
2.05, 3.07 or 8.01), a determination made by the Servicer that all Insurance
Proceeds, Liquidation Proceeds and other payments or recoveries which the
Servicer, in its reasonable good faith judgment, expects to be finally
recoverable in respect thereof have been so recovered. The Servicer shall
maintain records, prepared by a Servicing Officer, of each Final Recovery
Determination made thereby.
Final Scheduled Payment Date: The Payment Date in September 2036, whereby
the Holders of each Class of Notes shall be entitled to receive a payment of
principal in an amount equal to the Note Principal Amount of such Class of Notes
and any accrued and unpaid interest thereon.
Floating Allocation Percentage: With respect to any Payment Date, the
percentage equivalent of a fraction the numerator of which is the Invested
Amount for the preceding Payment Date (or in the case of the first Payment Date,
the Initial Invested Amount) and the denominator of which is the Pool Balance at
the end of the Collection Period preceding the previous Payment Date (or in the
case of the first Payment Date, the Cut-off Date Pool Balance), provided such
percentage shall not be greater than 100%.
Foreclosure Profit: With respect to a Liquidated Mortgage Loan, the
amount, if any, by which (i) the related aggregate Net Recoveries exceed (ii)
the related Principal Balance (without giving effect to any reduction thereto in
respect of any prior Charge-Off Amounts) immediately
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prior to receipt of the final Recoveries plus accrued and unpaid interest
thereon at the applicable Loan Rate from the date interest was last paid through
the date of receipt of the final Recoveries.
Formula Note Rate: (i) with respect to the Class A Notes and any Interest
Accrual Period, the per annum rate equal to LIBOR plus 0.17%; (ii) with respect
to the Class M1 Notes and any Interest Accrual Period, the per annum rate equal
to LIBOR plus 3.00%; and (iii) with respect to the Class M2 Notes and any
Interest Accrual Period, the per annum rate equal to LIBOR plus 3.00%.
Holders: The holders of the Class A Notes, the Class M Notes, the Class B
Certificates, the Class L Certificates or the Class R Certificates.
Indenture: The Indenture dated as of September 29, 2006, between the
Issuer and the Indenture Trustee, as such may be amended, modified or
supplemented from time to time.
Indenture Trustee: Deutsche Bank National Trust Company, a national
banking association, as Indenture Trustee under this Agreement, or any successor
Indenture Trustee appointed in accordance with this agreement.
Indenture Trustee Expense Amount: Means, any costs, expenses or
liabilities reimbursable to the Indenture Trustee to the extent provided in the
Indenture; provided, however, such reimbursable amounts may not exceed $20,000
on any Payment Date or $150,000 during any Anniversary Year (excluding, for this
purpose, costs and expenses of the indenture trustee incurred in connection with
any transfer of servicing following a default by the Servicer). In the event
that the Indenture Trustee incurs reimbursable amounts in excess of $150,000, it
may seek reimbursement for such amounts in subsequent Anniversary Years, but
(subject to the immediately preceding sentence) in no event shall more than
$150,000 be reimbursed to the Indenture Trustee per Anniversary Year.
Indenture Trustee Fee: An amount equal to 0.0055% per annum of the
outstanding Principal Balance of each Mortgage Loan.
Index: Means the Prime Rate.
Initial Invested Amount: $501,804,955.
Initial LIBOR Rate: 5.32438%.
Initial Note Principal Amount: (i) with respect to the Class A Notes,
$496,786,000, (ii) with respect to the Class M1 Notes, $2,509,000, and (iii)
with respect to the Class M2 Notes, $2,509,000.
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Insurance and Indemnity Agreement or Insurance Agreement: The Insurance
and Indemnity Agreement dated as of September 29, 2006 among the Indenture
Trustee, the Insurer, the Depositor and the Seller and Servicer, including any
amendments and supplements thereto in accordance with the terms thereof.
Insurance Agreement Event of Default: For purposes of Section 7.01
hereunder, and notwithstanding the definition of the same set forth in the
Insurance and Indemnity Agreement, the occurrence of one or more of the
following events:
(a) Any representation or warranty (other than a representation or
warranty in respect of the Mortgage Loans contained in Section 3.01 of the
Mortgage Loan Purchase Agreement or Section 2.04 of the Sale and Servicing
Agreement, so long as the party breaching such representation or warranty shall
have performed its obligations with respect thereto in accordance with the
Mortgage Loan Purchase Agreement or the Sale and Servicing Agreement, as the
case may be) made by the Sponsor, the Seller, the Servicer, the Depositor or the
Trust under the Insurance and Indemnity Agreement or under any other Transaction
Document, or in any certificate furnished under the Insurance and Indemnity
Agreement or under any other Transaction Document, shall prove to be untrue or
incomplete in any material respect; provided, however, that if the Sponsor, the
Seller, the Servicer, the Depositor or the Trust effectively cures any such
defects in any representation or warranty under any Transaction Document or
certificate or report furnished under any Transaction Document, within the time
period specified in the related document as the cure period therefor, such
defect shall not in and of itself constitute an Insurance Agreement Event of
Default;
(b) (i) The Sponsor, the Seller, the Servicer, the Depositor or the Trust
shall fail to pay when due any amount payable by the Sponsor, the Seller, the
Servicer, the Depositor or the Trust unless such amounts are paid in full within
the cure period therefor, respectively, under the Insurance and Indemnity
Agreement or (ii) a legislative body has enacted any law that declares or a
court of competent jurisdiction shall find or rule that the Insurance Agreement
or any other Transaction Document are not valid and binding on the Sponsor, the
Seller, the Servicer, the Depositor or the Trust;
(c) Any failure on the part of the Sponsor, the Seller, the Servicer, the
Depositor or the Trust duly to observe or perform in any material respect any
other of the covenants or agreements on the part of the Sponsor, the Seller, the
Servicer, the Depositor or the Trust contained in the Insurance and Indemnity
Agreement or in any other Transaction Document which continues unremedied beyond
any cure period provided therein, or, in the case of the Insurance and Indemnity
Agreement, for a period of 30 days after the date on which written notice of
such failure, requiring the same to be remedied, shall have been given to the
Sponsor, the Seller, the Servicer, the Depositor or the Trust by the Insurer
(with a copy to the Indenture Trustee) or by the Indenture Trustee (with a copy
to the Insurer). Such failure shall not constitute an Insurance Agreement Event
of Default hereunder, if within such 30-day period the Sponsor, the Seller, the
Servicer, the Depositor or the Trust, as the case may be, shall have given
notice to the Insurer of corrective action it proposes to take, which corrective
action is agreed, in
15
writing by the Insurer to be satisfactory and the Sponsor, the Seller, the
Servicer, the Depositor or the Trust shall thereafter pursue such corrective
action diligently until such default is cured;
(d) A decree or order of a court or agency or supervisory authority having
jurisdiction in the premises in an involuntary case under any present or future
federal or state insolvency or similar law or the appointment of a conservator
or receiver or liquidator or other similar official in any insolvency,
readjustment of debt, marshaling of assets and liabilities or similar
proceedings, or for the winding-up or liquidation of its affairs, shall have
been entered against the Sponsor, the Seller or the Servicer and such decree or
order shall have remained in force undischarged or unstayed for a period of 90
consecutive days;
(e) The Sponsor, the Seller or the Servicer shall consent to the
appointment of a conservator or receiver or liquidator or other similar official
in any involuntary insolvency, readjustment of debt, marshaling of assets and
liabilities or similar proceedings of or relating to the Sponsor, the Seller or
the Servicer or of or relating to all or substantially all of its property and
if the Sponsor, the Seller or the Servicer, shall fail to take appropriate
action resulting in the withdrawal or dismissal of such proceeding within 60
Business Days; or
(f) The Sponsor, the Seller or the Servicer shall admit in writing its
inability to pay its debts generally as they become due, file a petition to take
advantage of or otherwise voluntarily commence a case or proceeding under any
applicable insolvency, reorganization or other similar statute, make an
assignment for the benefit of its creditors or voluntarily suspend payment of
its obligations.
Insurance Proceeds: Proceeds of any title policy or other insurance policy
covering a Mortgage Loan, to the extent such proceeds are not to be applied to
the restoration of the related Mortgaged Property or released to the Mortgagor
in accordance with the procedures that the Servicer would follow in servicing
mortgage loans held for its own account, subject to the terms and conditions of
the related Mortgage Note and Mortgage.
Insured Amount: As defined in the Policy with respect to the Class A Notes
and each Payment Date.
Insured Payments: As defined in the Policy with respect to the Class A
Notes and each Payment Date.
Insurer: XL Capital Assurance Inc., a monoline financial guaranty
insurance company incorporated under the laws of the State of New York.
Insurer Default: The failure by the Insurer to make a payment required
under the Policy in accordance with the terms thereof.
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Interest Accrual Period: with respect to each Payment Date will be the
period from and including the preceding Payment Date (or, in the case of the
first Payment Date, from the Closing Date) to, but excluding the current Payment
Date.
Interest Collections: with respect to any Payment Date, is equal to the
sum of (a) all payments by or on behalf of mortgagors and any other amounts
constituting interest, including the portion of Net Liquidation Proceeds and
Insurance Proceeds allocated to interest pursuant to the terms of the related
Mortgage Note (excluding the fees or late charges or similar administrative fees
paid by Mortgagors) collected during the related Collection Period and all
Recoveries, less the Servicing Fee for the related Collection Period and (b) the
interest portion of (i) the purchase price paid for a Mortgage Loan repurchased
by the Seller during the related Collection Period, (ii) any Substitution
Amounts in respect of an Eligible Substitute Mortgage Loan which is substituted
by the Seller during the related Collection Period for a removed Mortgage Loan,
and (iii) the Optional Redemption Price in connection with any Optional
Redemption of the Notes during the related Collection Period. The terms of the
related Mortgage Note shall determine the portion of each payment in respect of
such Mortgage Loan that constitutes principal or interest.
Interest Payment Amount: With respect to the Notes of each Class and any
Payment Date, (x) the Note Rate applicable to such Class and Payment Date
multiplied by (y) the Note Principal Amount of such Class immediately prior to
such Payment Date multiplied by (z) a fraction, the numerator of which is the
actual number of days in the related Interest Accrual Period and the denominator
of which is 360.
Invested Amount: On any Payment Date, is the Invested Amount for the
preceding Payment Date (or in the case of the First Payment Date, the Initial
Invested Amount) reduced by (i) the Floating Allocation Percentage of Principal
Collections for such Payment Date and (ii) the Investor Charge-Off Amounts for
such Payment Date.
Investor Charge-Off Amount: For any Payment Date, the Charge-Off Amounts
incurred during the related Collection Period multiplied by the Floating
Allocation Percentage for such Payment Date.
Late Payment Rate: For any Payment Date, the lesser of (a) the greater of
(i) the rate of interest, as it is publicly announced by Citibank, N.A., as its
prime rate (any change in such prime rate of interest to be effective on the
date such change is announced by Citibank, N.A.), plus 2% per annum and (ii) the
then applicable highest rate of interest on the Notes and (b) the maximum rate
permissible under applicable usury or similar laws limiting interest rates, as
determined by the Insurer. The Late Payment Rate shall be computed on the basis
of the actual number of days elapsed over a year of 360 days.
LIBOR: With respect to the first Interest Accrual Period, the Initial
LIBOR Rate. With respect to each subsequent Interest Accrual Period, a per annum
rate determined on the LIBOR Determination Date in the following manner by the
Indenture Trustee on the basis of the
17
"Interest Settlement Rate" set by the British Bankers' Association (the "BBA")
for one-month United States dollar deposits, as such rates appear on the
Telerate Page 3750, as of 11:00 a.m. (London time) on such LIBOR Determination
Date.
(a) If on such a LIBOR Determination Date, the BBA's Interest Settlement
Rate does not appear on the Telerate Page 3750 as of 11:00 a.m. (London time),
or if the Telerate Page 3750 is not available on such date, the Indenture
Trustee will obtain such rate from Reuters' "page LIBOR 01" or Bloomberg's page
"BBAM". If such rate is not published for such LIBOR Determination Date, LIBOR
for such date will be the most recently published Interest Settlement Rate. In
the event that the BBA no longer sets an Interest Settlement Rate, the Indenture
Trustee will designate an alternative index that has performed, or that the
Indenture Trustee expects to perform, in a manner substantially similar to the
BBA's Interest Settlement Rate.
(b) The establishment of LIBOR by the Indenture Trustee and the Indenture
Trustee's subsequent calculation of the Note Rate for the relevant Interest
Accrual Period, in the absence of manifest error, will be final and binding.
LIBOR Business Day: Any day on which banking institutions in the State of
New York or in the city of London, England are open for conducting transactions
in foreign currency and exchange.
LIBOR Determination Date: With respect to any Interest Period, the second
LIBOR Business Day preceding the first day of such Interest Period.
Lien: Any lien, charge, mortgage, claim, participation interest, equity,
pledge or security interest of any nature, encumbrances or right of others.
Liquidation Expenses: Expenses that are incurred by the Servicer in
connection with the liquidation of any defaulted Mortgage Loan and are not
recoverable under the applicable primary mortgage insurance policy, if any,
including, without limitation, foreclosure and rehabilitation expenses, legal
expenses and unreimbursed amounts, if any, expended pursuant to Sections 3.07 or
3.08.
Liquidated Mortgage Loan: Any Mortgage Loan as to which the Servicer has
made a Final Recovery Determination.
Liquidation Event: With respect to any Mortgage Loan, any of the following
events: (i) such Mortgage Loan is paid in full; (ii) a Final Recovery
Determination is made as to such Mortgage Loan or (iii) such Mortgage Loan is
removed from the Trust Fund by reason of its being purchased, sold or replaced
pursuant to or as contemplated by Sections 2.02, 2.04, 2.05 3.07 or 8.01. With
respect to any REO Property, either of the following events: (i) a Final
Recovery Determination is made as to such REO Property or (ii) such REO Property
is removed from the Trust Fund by reason of its being sold or purchased pursuant
to Sections 3.07(a) or 8.01.
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Liquidation Proceeds: The amount (other than amounts received in respect
of the rental of any REO Property prior to REO Disposition) received by the
Servicer in connection with (i) the taking of all or a part of a Mortgaged
Property by exercise of the power of eminent domain or condemnation, (ii) the
liquidation of a defaulted Mortgage Loan by means of a trustee's foreclosure
sale or otherwise or (iii) the repurchase, substitution or sale of a Mortgage
Loan or an REO Property pursuant to or as contemplated by Sections 2.02, 2.04,
2.05, 3.07 or 8.01.
Loan Rate: With respect to any Mortgage Loan as of any day, the variable
interest rate applicable under the related Mortgage Note.
Loan Rate Cap: With respect to any Mortgage Loan, the lesser of (i) the
maximum Loan Rate permitted by the related Mortgage Note over the life of the
Mortgage Loan, and (ii) the applicable state usury ceiling.
Lost Note Affidavit: An affidavit in the form of Exhibit H.
Majority Securityholders: During the period that any Notes are
outstanding, the holder or holders of in excess of 50% of the Note Principal
Amount of the Controlling Class Notes; and thereafter, the holders of the
Certificates (voting collectively as a single class).
Managed Amortization Period: With respect to the Notes, the period
commencing on the first Payment Date and ending on the earlier to occur of (x)
the 120th Payment Date and (y) the Payment Date which immediately follows the
occurrence of a Rapid Amortization Trigger Event.
Margin: With respect to each Mortgage Loan, the fixed percentage amount
set forth in the related Credit Line Agreement which amount is added to the
Prime Rate in accordance with the terms of such Credit Line Agreement to
determine the Loan Rate for such Mortgage Loan, subject to the Loan Rate Cap.
Material Adverse Change: As defined in the Insurance and Indemnity
Agreement.
Maximum Principal Payment: With respect the Notes, (i) during the Managed
Amortization Period, the Net Principal Collections with respect to such Payment
Date, and (ii) during the Rapid Amortization Period, the Floating Allocation
Percentage of Principal Collections for such Payment Date.
Maximum Rate: With respect to the Notes on any Payment Date, the quotient
of (A) the excess of (x) the Interest Collections for that Payment Date over (y)
the sum of (i) the fees of the Owner Trustee for that Payment Date; (ii)
payments to the Indenture Trustee in respect of the Indenture Trustee Expense
Amount; (iii) the Indenture Trustee Fee; and (iv) the Premium Amount payable to
the Insurer on that Payment Date divided by (B) the product of (x) the Pool
Balance on the first day of the related Collection Period, and (y) a fraction,
the numerator of
19
which is the actual number of days in the related Interest Accrual Period for
the Notes and the denominator of which is 360.
MERS: Mortgage Electronic Registration Systems, Inc., a Delaware
corporation, or any successor in interest thereto.
MERS Mortgage Loan: Any Mortgage Loan as to which the related Mortgage, or
an Assignment of Mortgage, has been or will be recorded in the name of MERS, as
nominee for the holder from time to time of the Credit Line Agreement.
Monthly Payment: With respect to a Mortgage Loan, the scheduled monthly
payment of principal and/or interest required to be made by a Mortgagor on such
Mortgage Loan.
Moody's: ▇▇▇▇▇'▇ Investors Service, Inc., or any successor thereto.
Mortgage: The mortgage, deed of trust or other instrument creating a
first, second or third lien on an estate in fee simple interest in real property
securing a Mortgage Loan.
Mortgage File: The mortgage documents listed in Section 2.01(e)(i) and
(ii), pertaining to a particular Mortgage Loan and any additional documents
required to be added to the Mortgage File pursuant to this Agreement.
Mortgage Loan: Each of the home equity line of credit mortgage loans that
is transferred and assigned to the Trust pursuant to Sections 2.01 and 2.05,
together with the Related Documents, exclusive of home equity line of credit
mortgage loans that are transferred to the Seller, from time to time pursuant to
Sections 2.02 and 2.05.
Mortgage Loan Purchase Agreement: The mortgage loan purchase agreement,
dated as of September 29, 2006, between the Seller and the Depositor, relating
to the sale of the Mortgage Loans from the Seller to the Depositor.
Mortgage Loan Schedule: With respect to the Cut-off Date, the schedule of
Mortgage Loans constituting assets of the Trust and thereafter as amended or
supplemented pursuant to the terms hereof. The Mortgage Loan Schedule is the
schedule set forth herein as Exhibit A, which schedule sets forth as to each
Mortgage Loan: (i) the Cut-off Date Principal Balance, (ii) the loan number,
(iii) the Credit Limit, (iv) the CLTV as of the date of the origination of the
related Mortgage Loan, (v) occupancy and loan purpose, (vi) the Loan Rate as of
the Cut-off Date, (vii) the Margin, (viii) the type of property, (ix) the
debt-to-income ratio, (x) the credit score, (xi) the Originator, (xii) the Loan
Rate Cap, (xiii) documentation type, (xiv) zip code, (xv) term of the draw
period, (xvi) lien position, (xvii) maximum rate, (xviii) original term, (xix)
remaining term, and (xx) any related Early Termination Fee.
20
Mortgage Note: With respect to a Mortgage Loan, the related credit line
account agreement executed by the related Mortgager and any amendment or
modification thereof.
Mortgaged Property: With respect to each Mortgage Loan, the underlying
real property, including improvements thereon.
Mortgagee: With respect to any Mortgage Loan as of any date of
determination, the holder of the related Mortgage Note and any related Mortgage
as of such date.
Mortgagor: With respect to any Mortgage Loan, the obligor or obligors
under the related Mortgage Note.
Net Available Funds: With respect to each Payment Date, the excess of (A)
the Available Funds for that Payment Date, over (B) the sum of (i) the payment
of the Indenture Trustee Expense Amount, (ii) the payment of the Indenture
Trustee Fee, (iii) the payment to the Owner Trustee of its fee for services
rendered pursuant to the Trust Agreement, (iv) all Early Termination Fees (which
are distributable only to the Class L Certificates), and (v) during the Managed
Amortization Period, the amount of Principal Collections for that Payment Date
applied to purchase additional Draws under the Mortgage Loans.
Net Charge-Off Amount: With respect to any Mortgage Loan, the Charge-Off
Amount, less any Net Recoveries with respect to such Mortgage Loan.
Net Liquidation Proceeds: With respect to any Liquidated Mortgage Loan or
any other disposition of related Mortgaged Property (including REO Property),
the related Liquidation Proceeds net of Servicing Advances, Servicing Fees and
any other accrued and unpaid servicing fees received and retained in connection
with the liquidation of such Mortgage Loan or Mortgaged Property.
Net Loan Rate: With respect to any Mortgage Loan on any day, the Loan Rate
less the Expense Fee Rate.
Net Principal Collections: With respect to the Mortgage Loans and any
Payment Date, an amount equal the positive difference between (x) the Floating
Allocation Percentage of Principal Collections with respect to such Payment Date
and (y) the Floating Allocation Percentage of the aggregate principal amount of
all Additional Balances arising during the related Collection Period; provided,
however, that in no event will Net Principal Collections be less than zero with
respect to any Payment Date.
Net Recoveries: With respect to any Charged-Off HELOC, Recoveries net of
unreimbursed Servicing Fees with respect thereto.
Non-MERS Mortgage Loan: Any Mortgage Loan other than a MERS Mortgage Loan.
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Nonrecoverable Advance: Any Advance previously made or proposed to be made
by the Servicer in respect of a Mortgage Loan which, in the good faith judgment
of the Servicer, will not, or, in the case of a proposed Advance, would not, be
ultimately recoverable by the Servicer from related late collections, Insurance
Proceeds, Liquidation Proceeds or proceeds from the disposition of any REO
Property. To the extent that any Mortgagor is not obligated under the related
Mortgage documents to pay or reimburse any portion of any Servicing Advances
that are outstanding with respect to the related Mortgage Loan as a result of a
modification of such Mortgage Loan by the Servicer, which forgives amounts which
the Servicer or Subservicer had previously advanced, and the Servicer determines
that no other source of payment or reimbursement for such advances is available
to it, such Servicing Advances shall be deemed to be Nonrecoverable Advances.
The determination by the Master Servicer that it has made a Nonrecoverable
Advance or that any proposed Advance would constitute a Nonrecoverable Advance,
shall be evidenced by an Officer's Certificate delivered to the Company, the
Indenture Trustee and the Insurer.
Note Principal Amount: With respect to any Class of Notes and any date,
the Initial Note Principal Amount, less the amount of all principal
distributions previously distributed with respect to such Note and, in the case
of the Class M1 and Class M2 Notes, any Investor Charge-Off Amounts allocated to
such Class pursuant to Section 3.19(b).
Note Rate: With respect to each Class of Notes and any Payment Date, the
lesser of the applicable Formula Note Rate and the Maximum Rate for such Payment
Date.
Note Register and Note Registrar: The register which provides for the
registration of the Class A Notes and the registration of transfers of the Class
A Notes, which shall be maintained by the Indenture Trustee, as Note Registrar.
Noteholder: Any owner of the Notes, as shown on the Note Register.
Notes: The Class A Notes, the Class M1 Notes and the Class M2 Notes,
collectively.
Officer's Certificate: A certificate signed by the President, an Executive
Vice President, a Senior Vice President, a Vice President, an Assistant Vice
President, the Treasurer, Assistant Treasurer, Cashier, Assistant Cashier,
Controller or Assistant Controller of the Servicer, Seller or the Depositor, as
the case may be, and delivered to the Indenture Trustee and the Insurer.
Opinion of Counsel: A written opinion of counsel, who may be in-house
counsel for the Servicer (or its affiliate), the Depositor (or its affiliate),
the Seller (or its affiliate) or the Depositor (or its affiliate) (except that
any opinion pursuant to Section 2.01 or 6.04 or relating to taxation or
otherwise as required by the Insurer must be an opinion of independent outside
counsel) and who, in the case of opinions delivered to the Insurer, the
Indenture Trustee and the Rating Agency, is reasonably acceptable to each of
them.
Optional Redemption Date: As defined in Section 8.01(b) of this Agreement.
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Optional Redemption Holder: The Servicer.
Optional Redemption Price: An amount equal to the greater of: (a) the sum
of (i) the aggregate outstanding Principal Balance of each Mortgage Loan, plus
accrued interest at the applicable Loan Rate, (ii) any costs and damages
incurred by the Trust in connection with a violation of any applicable federal,
state or local predatory or abusive lending law, (iii) the lesser of (A) the
fair market value of all other property being purchased and (B) the unpaid
Principal Balance of the related Mortgage Loan that was secured by such property
and (iv) any unreimbursed Servicing Advances, unreimbursed expenses and any
unpaid fees due to the Servicer, the Insurer (including premiums and
Reimbursement Amounts), the Indenture Trustee and the Owner Trustee for the
related Payment Date and (b) the sum of (i) the Note Principal Amount of the
Class A Notes, the Class M1 Notes and the Class M2 Notes with interest due
thereon (including Deferred Interest), (ii) any costs and damages incurred by
the Trust in connection with a violation of any federal, state or local
predatory or abusive lending laws, (iii) any unreimbursed Servicing Advances,
unreimbursed expenses and any unpaid fees due to the Servicers, the Insurer, the
Indenture Trustee, and the Owner Trustee and (iv) any Reimbursement Amounts.
Originator: With respect to each Mortgage Loan sold by the Seller, the
originator of such Mortgage Loan as specified in the Mortgage Loan Schedule.
Outstanding: The meaning specified in the Indenture.
Overcollateralization Amount: With respect to the Notes and any Payment
Date, the excess, if any, of (x) the Invested Amount for that Payment Date over
(y) the sum of the Note Principal Amount of the Notes as of such Payment Date
(after taking into account any reductions to such Note Principal Amount
resulting from payments made pursuant to clauses (iii), (iv), (viii), (ix) and
(x) of Section 5.01(a)(I) of this Agreement on such Payment Date).
Overcollateralization Deficiency Amount: With respect to the Notes and any
Payment Date, the excess, if any, of (i) the Specified Overcollateralization
Amount for such Payment Date over (ii) the Overcollateralization Amount for such
Payment Date.
Overcollateralization Deficit: With respect to the Class A Notes and any
Payment Date, the amount, if any, by which (a) the Note Principal Amount of the
Class A Notes, after taking into account the payment to the Holders of the Class
A Notes of all principal from all sources other than the Policy on such Payment
Date, exceeds (b) the Invested Amount for such Payment Date (without taking into
account any payment made under the Policy).
Overcollateralization Reduction Amount: With respect to the Notes and any
Payment Date, the excess, if any, of (i) the Overcollateralization Amount for
such Payment Date over (ii) the Specified Overcollateralization Amount for such
Payment Date, assuming that the Maximum Principal Payment has been distributed
to the Noteholders on such Payment Date.
23
Owner Trustee: Wilmington Trust Company, a Delaware banking corporation,
not in its individual capacity but solely as owner trustee under the Trust
Agreement, and any successor owner trustee under the Trust Agreement appointed
in accordance with the terms thereof.
Payment Account: The segregated non-interest bearing trust account
established by the Indenture Trustee pursuant to Section 5.05.
Payment Date: The 25th day of each month or, if such day is not a Business
Day, then the next Business Day, beginning in October 2006.
Permitted Activities: The activities allowed under Paragraph 35 of SFAS
140.
Percentage Interest: With respect to the Notes of any Class, the
percentage obtained by dividing the principal denomination of such Note by the
aggregate of the principal denominations of all Notes of such Class. With
respect to a Certificate, the percentage set forth on the face of such
Certificate.
Person: Any individual, corporation, partnership, joint venture, limited
partnership, limited liability company, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
Plan: An employee benefit plan or other retirement arrangement which is
subject to Section 406 of ERISA and/or Section 4975 of the Code or any entity
whose underlying assets include such plan's or arrangement's assets by reason of
their investment in the entity.
Policy: The financial guaranty insurance policy (No.CA03295A) with respect
to the Class A Notes and all endorsements thereto, if any, dated the Closing
Date, issued by the Insurer for the benefit of the Holders of the Class A Notes,
a copy of which is attached hereto as Exhibit G.
Pool Balance: With respect to any date, the aggregate of the Principal
Balances of all of the Mortgage Loans as of such date.
Premium Amount: The premium payable to the Insurer for the Policy pursuant
to the Premium Letter.
Premium Letter: The premium letter between the Insurer, the Indenture
Trustee and the other parties thereto dated September 29, 2006.
Prime Rate: As of any date, the prime rate of the United States money
center commercial banks as published in the latest edition of The Wall Street
Journal, Northeast Edition.
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Principal Balance: As of any date of determination and any Mortgage Loan,
an amount equal to the Cut-off Date Principal Balance of the Mortgage Loan, plus
(i) any Additional Balances transferred to the trust in respect of the Mortgage
Loan, minus (ii) all collections credited against the principal balance of the
Mortgage Loan in accordance with the related Credit Line Agreement prior to that
day, and minus (iii) all prior related Charge-Off Amounts. For purposes of this
definition, a Liquidated Mortgage Loan will have a Principal Balance equal to
the Principal Balance of that Mortgage Loan prior to the final recovery of
liquidation proceeds and a Principal Balance of zero thereafter.
Principal Collections: with respect to any Payment Date, is equal to the
sum of amounts allocated to principal collected during the related Collection
Period, the portion of Net Liquidation Proceeds and Insurance Proceeds allocated
to principal pursuant to the terms of the Credit Line Agreements, any amounts
allocable to principal with respect to any Mortgage Loans that are repurchased
out of the trust, the principal portion of any Substitution Amount and the
principal portion of any Optional Redemption Price.
Principal Payment Amount: With respect to the Notes on any Payment Date,
the excess of (a) the Maximum Principal Payment over (b) the
Overcollateralization Reduction Amount, if any, in each case, with respect to
such Payment Date.
Principal Prepayment: Any payment of principal made by the Mortgagor on a
Mortgage Loan which is received in advance of its scheduled Due Date and which
is not accompanied by an amount of interest representing the full amount of
scheduled interest due on any Due Date in any month or months subsequent to the
month of prepayment.
Purchase Price: An amount equal to the principal balance of the Mortgage
Loan at the time of any transfer Pursuant to Sections 2.03 or 2.04 plus (a) the
greater of (i) accrued and unpaid interest at the applicable mortgage loan rate
net of the servicing fee to the date of repurchase and (ii) 30 days' interest,
computed at the applicable mortgage loan rate and (b) any expenses incurred by
the trust as a result of the defect, including any costs and damages actually
incurred and paid by or on behalf of the trust in connection with any violation
of such mortgage loan of any predatory or abusive lending laws.
Purchaser: The Depositor, as purchasers of the Mortgage Loans under the
Mortgage Loan Purchase Agreement.
Qualifying SPE: As set forth in SFAS 140.
Rapid Amortization Event: As defined in Section 5.08.
Rapid Amortization Period: The period commencing on the day immediately
following the end of the Managed Amortization Period and continuing until the
termination of the Trust pursuant to Section 8.01.
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Rapid Amortization Trigger Event: A "Rapid Amortization Trigger Event"
shall occur if a Rapid Amortization Event is declared to have occurred or has
occurred automatically as set forth in Section 5.08.
Rating Agency: Any statistical credit rating agency, or its successor,
that rated the Class A Notes at the request of the Depositor at the time of the
initial issuance of the Class A Notes. If such agency or a successor is no
longer in existence, "Rating Agency" shall be such statistical credit rating
agency, or other comparable Person, designated by the Servicer and the Insurer,
notice of which designation shall be given to the Indenture Trustee. References
herein to the highest short term unsecured rating category of a Rating Agency
shall mean "A-1+" or better in the case of Standard & Poor's and "P-1" or better
in the case of Moody's and in the case of any other Rating Agency shall mean the
ratings such other Rating Agency deems equivalent to the foregoing ratings.
References herein to the highest long-term rating category of a Rating Agency
shall mean "AAA" in the case of Standard & Poor's and "Aaa" in the case of
Moody's and in the case of any other Rating Agency, the rating such other Rating
Agency deems equivalent to the foregoing ratings.
Ratings: The ratings initially assigned to the Notes and the Certificates
by the Rating Agencies, as evidenced by letters from the Rating Agencies.
Record Date: With respect to the Class A Notes for so long as the Class A
Notes are held in book-entry form, the Business Day immediately preceding the
related Payment Date following the date on which Definitive Notes are issued for
the Class A Notes, and with respect to any other Class of Notes or Certificates,
the last Business Day of the calendar month preceding the month in which the
related Payment Date occurs
Recordation Event: Any of (i) the long-term senior unsecured debt rating
of the Seller (or any successor in interest thereto) is reduced to below "BBB-"
by Standard & Poor's, (ii) an Event of Servicer Termination has occurred and is
continuing, or (iii) the occurrence of a bankruptcy, insolvency or foreclosure
relating to the Servicer; provided, that any Recordation Event may be waived by
the Insurer (so long as the Class A Notes are Outstanding or any Reimbursement
Amounts remain due and owing to the Insurer and no Insurer Default has occurred
and is continuing) by its providing written notice of such waiver to the
Servicer and the Indenture Trustee; and (iv) at the written request of the
Insurer (so long as the Class A Notes are Outstanding or any Reimbursement
Amounts remain due and owing to the Insurer and no Insurer Default has occurred
and is continuing) to the Indenture Trustee to cause the Custodian to record
Assignments of Mortgages because the Insurer has determined, in the exercise of
its reasonable judgment, that such recordation is necessary to protect the
Insurer's interest with respect to such Mortgage Loans because (a) a Material
Adverse Change with respect to the Seller or the Servicer has occurred, (b) the
Insurer has been so advised by counsel as a result of a change that occurred
after the Closing Date in applicable law or the interpretation thereof or (c)
with respect to a particular Mortgage Loan, the insolvency of the related
Mortgagor.
Recoveries: With respect to a Charged-Off HELOC, the proceeds (including
Released Mortgaged Property Proceeds but not including amounts drawn under the
Policy) received by the
26
Servicer in connection with such Charged-Off HELOC minus related Servicing
Advances and any amount due the holder of any Senior Lien that has not been
previously paid.
Reference Banks: Three major banks that are engaged in the London
interbank market, selected by the Servicer and identified in writing to the
Indenture Trustee.
Regulation AB: Subpart 229.1100 - Asset Backed Securities (Regulation AB),
17 C.F.R. Sections 229.1100-229.1123, as such may be amended from time to time,
and subject to such clarification and interpretation as have been provided by
the Commission in the adopting release (Asset-Backed Securities, Securities Act
Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531 (Jan. 7, 2005)) or by the staff
of the Commission, or as may be provided by the Commission or its staff from
time to time.
Reimbursement Amount: As to any Payment Date with respect to the Class A
Notes, the sum of (x)(i) all Insured Payments and Avoided Payments paid by the
Insurer, but for which the Insurer has not been reimbursed prior to such Payment
Date pursuant to Section 5.01(a)(I)(v) of this Agreement, plus (ii) interest
accrued on such Insured Payments and Avoided Payments not previously repaid
calculated at the Late Payment Rate from the date the Indenture Trustee received
the related Insured Payments or Avoided Payments and (y), without duplication,
(i) any other amounts then due and owing to the Insurer under the Insurance
Agreement but for which the Insurer has not been paid or reimbursed prior to
such Payment Date, plus (ii) interest on such amounts at the Late Payment Rate.
Related Documents: With respect to each Mortgage Loan, the documents
listed in Section 2.01(e)(ii)(B) through (D).
Released Mortgaged Property Proceeds: As to any Mortgage Loan, proceeds
received by the Servicer in connection with (a) a taking of an entire Mortgaged
Property by exercise of the power of eminent domain or condemnation or (b) any
release of part of the Mortgaged Property from the lien of the related Mortgage,
whether by partial condemnation, sale or otherwise, which are not released to
the Mortgagor in accordance with (i) applicable law, (ii) mortgage servicing
standards employed by the Servicer in servicing home equity line of credit
mortgage loans for its own account and (iii) this Agreement.
Relief Act: The Servicemembers Civil Relief Act, as amended.
Relief Act Interest Shortfall: With respect to any Payment Date, for any
Mortgage Loan with respect to which there has been a reduction in the amount of
interest collectible thereon for the most recently ended Collection Period or
(without duplication) any earlier Collection Period as a result of the
application of the Relief Act, the amount by which (i) interest collectible on
such Mortgage Loan during each such Collection Period is less than (ii) one
month's interest on the Stated Principal Balance of such Mortgage Loan at the
Loan Rate for such Mortgage Loan before giving effect to the application of the
Relief Act.
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REMIC: A "real estate mortgage investment conduit" within the meaning of
Section 860D of the Code.
REO Account: The account or accounts maintained by the Servicer in respect
of an REO Property pursuant to Section 3.07.
REO Disposition: The sale or other disposition of an REO Property on
behalf of the Trust.
REO Imputed Interest: As to any REO Property, for any calendar month
during which such REO Property was at any time part of the Trust Fund, one
month's interest at the applicable Net Loan Rate on the Stated Principal Balance
of such REO Property (or, in the case of the first such calendar month, of the
related Mortgage Loan if appropriate) as of the close of business on the Payment
Date in such calendar month.
REO Principal Amortization: With respect to any REO Property, for any
calendar month, the excess, if any, of (a) the aggregate of all amounts received
in respect of such REO Property during such calendar month, whether in the form
of rental income, sale proceeds (including, without limitation, that portion of
the Optional Redemption Price paid in connection with a purchase of all of the
Mortgage Loans and REO Properties pursuant to Section 8.01 that is allocable to
such REO Property) or otherwise, net of any portion of such amounts (i) payable
pursuant to Section 3.07 in respect of the proper operation, management and
maintenance of such REO Property or (ii) payable or reimbursable to the Servicer
pursuant to Section 3.07 for unpaid Servicing Fees in respect of the related
Mortgage Loan and unreimbursed Servicing Advances, over (b) the REO Imputed
Interest in respect of such REO Property for such calendar month.
REO Property: A Mortgaged Property that is acquired by the Trust in
foreclosure or by deed in lieu of foreclosure.
Reserve Account: The account designated as the "Reserve Account" and
established pursuant to Section 5.06 hereof.
Residual Certificate: The Class L or Class R Certificate, as applicable.
Residual Certificateholder: Any holder of a Residual Certificate.
Responsible Officer: With respect to the Indenture Trustee, any Managing
Director, any Director, any Vice President, any Assistant Vice President, any
Associate, any Assistant Secretary, any Trust Officer, or any other officer of
the Indenture Trustee customarily performing functions similar to those
performed by any of the above designated officers who at such time shall be
officers to whom with respect to a particular matter, the matter is referred
because of such officer's knowledge of and familiarity with the particular
subject and who has
28
direct responsibility for administration of this Agreement. When used with
respect to a Seller, the Depositor or the Servicer, the Chief Executive Officer
or any Vice President, Assistant Vice President, Treasurer, Assistant Treasurer,
Cashier, Assistant Cashier or any Secretary or Assistant Secretary.
Securities Act: The Securities Act of 1933, as amended.
Securityholders: The Noteholders and the Certificateholders.
Seller: IndyMac Bank, F.S.B., a federal savings bank, as seller under the
Mortgage Loan Purchase Agreement.
Senior Lien: With respect to any Mortgage Loan that is not a first
priority lien, the mortgage loan or mortgage loans relating to the corresponding
Mortgaged Property having priority senior to that of such Mortgage Loan.
Servicer: IndyMac Bank, F.S.B., a federal savings bank, as Servicer, or
any successor hereunder appointed in accordance with the terms hereof.
Servicer Employees: As defined in Section 3.06.
Servicer Remittance Date: With respect to any Payment Date, the Business
Day prior to such Payment Date.
Servicing Advances: All reasonable and customary unanticipated "out of
pocket" costs and expenses incurred in the performance by the Servicer of its
servicing obligations, including, but not limited to, the cost of (i) the
preservation, restoration and protection of the Mortgaged Property, (ii) any
enforcement or judicial proceedings, including foreclosures, (iii) the
management and liquidation of the REO Property, including reasonable fees paid
to any independent contractor in connection therewith, and (iv) compliance with
the obligations under Sections 3.04, 3.07 or 3.17 hereunder; provided however,
that such obligation with respect to any related Mortgage Loan shall cease if
the Servicer determines, in its sole discretion, that Servicing Advances with
respect to such Mortgage Loan are or would be Nonrecoverable Advances.
Servicing Certificate: As defined in Section 5.03(a).
Servicing Fee: With respect to any Payment Date and Mortgage Loans, the
product of (i) the Servicing Fee Rate, (ii) the aggregate Principal Balance of
Mortgage Loans as of the opening of business on the first day of the related
Collection Period (or at the Cut-off Date with respect to the first Payment
Date), and (iii) 1/12; a portion of such Servicing Fee may be retained by a
Sub-Servicer as its servicing compensation.
Servicing Fee Rate: 0.50% per annum, with respect to Mortgage Loans.
29
Servicing Officer: Any officer of the Servicer involved in, or responsible
for, the administration and servicing of the Mortgage Loans whose name and
specimen signature appear on a list of servicing officers furnished to the
Indenture Trustee (with a copy to the Insurer) by the Servicer on the Closing
Date, as such list may be amended from time to time, initially set forth in
Exhibit B.
SFAS 140: Statement of Financial Accounting Standards No. 140 of the
Financial Accounting Standards Board, as in effect on the date hereof.
60+ Day Delinquent Mortgage Loan: For any Collection Period, any Mortgage
Loan that is (i) more than 60 days delinquent, (ii) for which the related
Mortgagor has filed for bankruptcy protection or is otherwise the subject of a
bankruptcy or similar insolvency preceding, (iii) that is in foreclosure, or
(iv) with respect to which the related Mortgaged Property is characterized as
REO Property as of the end of such Collection Period.
Specified Overcollateralization Amount: on any Payment Date prior to the
Stepdown Date, is an amount equal to 1.60% of the Initial Invested Amount and on
any Payment Date on or after the Stepdown Date is an amount equal to the greater
of (i) 0.50% of the Initial Invested Amount and (ii) 3.20% of the Invested
Amount for such Payment Date.
Sponsor: IndyMac Bank, F.S.B., a federal savings bank.
Stated Principal Balance: With respect to any Mortgage Loan: (a) as of any
date of determination up to but not including the Payment Date on which the
proceeds, if any, of a Liquidation Event with respect to such Mortgage Loan
would be distributed, the outstanding Stated Principal Balance of such Mortgage
Loan as of the Cut-off Date, as shown in the Mortgage Loan Schedule, plus any
Additional Balances transferred to the trust in respect of the Mortgage Loan,
minus the sum of (i) the principal portion of each Monthly Payment due on a Due
Date subsequent to the Cut-off Date, (ii) the portion of all Principal
Prepayments received after the Cut-off Date, to the extent paid pursuant to
Section 5.01 on or before such date of determination, (iii) all Liquidation
Proceeds and Insurance Proceeds allocable to Principal to the extent paid
pursuant to Section 5.01 on or before such date of determination, and (iv) any
Charge-off Amount incurred with respect thereto during or prior to the
Collection Period for the most recent Payment Date coinciding with or preceding
such date of determination; and (b) as of any date of determination coinciding
with or subsequent to the Payment Date on which the proceeds, if any, of a
Liquidation Event with respect to such Mortgage Loan would be paid, zero. With
respect to any REO Property: (a) as of any date of determination up to but not
including the Payment Date on which the proceeds, if any, of a Liquidation Event
with respect to such REO Property would be paid, an amount (not less than zero)
equal to the Stated Principal Balance of the related Mortgage Loan as of the
date on which such REO Property was acquired on behalf of the Trust Fund, minus
the aggregate amount of REO Principal Amortization in respect of such REO
Property for all previously ended calendar months, to the extent paid pursuant
to Section 5.01 on or before such date of determination; and (b) as of any date
of determination coinciding with or subsequent to the Payment on which the
proceeds, if any, of a Liquidation Event with respect to such REO Property would
be paid, zero.
30
Statement to Noteholders: As defined in Section 5.03(b).
Stepdown Date: With respect to the Notes, the later to occur of (a) the
31st Payment Date and (b) the first Payment Date following the Payment Date on
which the Credit Enhancement Percentage is greater than or equal to 5.20%.
Subsequent Recoveries: As of any Payment Date, amounts received by the
Servicer (net of any related expenses permitted to be reimbursed to the
Servicer) specifically related to a Charged-Off HELOC.
Subservicer: Any Person with whom the Servicer has entered into a
Subservicing Agreement and who satisfies the requirements set forth in Section
3.01(a) in respect of the qualification of a Subservicer.
Subservicing Agreement: Any agreement between the Servicer and any
Subservicer relating to subservicing and/or administration of certain Mortgage
Loans as provided in Section 3.01, a copy of which shall be delivered, along
with any modifications thereto, to the Indenture Trustee and the Insurer.
Substitution Adjustment: As to any date on which a substitution occurs
pursuant to Section 2.05, the sum of (a) the excess of (i) the aggregate
Principal Balances of all Defective Mortgage Loans to be replaced by Eligible
Substitute Mortgage Loans (after application of principal payments received on
or before the date of substitution of any Eligible Substitute Mortgage Loans as
of the date of substitution) over (ii) the Principal Balance of such Eligible
Substitute Mortgage Loans and (b) the greater of (x) accrued and unpaid interest
(accruing at the Loan Rate for such Defective Mortgage Loan) on such excess
through the Collection Period relating to the Payment Date for which such
Substitution Adjustment will be included as part of Available Funds and (y) 30
days' interest on such excess calculated on a 360-day year in each case at the
Loan Rate (or Loan Rate net of the Servicing Fee Rate if the related Seller is
the Servicer) and (c) if the Servicer is not the related Seller the amount of
any unreimbursed Servicing Advances made by the Servicer with respect to such
Defective Mortgage Loan and (d) the amounts referred to in clause (b) of the
definition of Purchase Price in respect of such Defective Mortgage Loan.
Substitution Date: As defined in Section 2.05(b).
Supplemental Mortgage Loan Schedule: As defined in Section 2.05(b).
Telerate Page 3750: The display designated as page 3750 on the Moneyline
Telerate Service (or such other page as may replace page 3750 on that service
for the purpose of displaying London interbank offered rates of major banks).
31
Three Month Rolling Delinquency Rate: With respect to any Payment Date on
and after the third Payment Date, the average of the Principal Balances of 60+
Day Delinquent Mortgage Loans for the related Collection Period and the two
preceding Collection Periods divided by the Pool Balance, in each case on the
last day of those Collection Periods, respectively.
Transaction Documents: This Agreement, the Mortgage Loan Purchase
Agreement, the Indenture, the Insurance and Indemnity Agreement, the Trust
Agreement, the Administration Agreement and the Premium Letter.
Trigger Event: With respect to any Payment Date, will be in effect if:
(a) the sum of the Investor Charge-Off Amounts for that Payment Date and
all prior Payment Dates, expressed as a percentage of the Initial Invested
Amount, is greater than
(i) with respect to the first Payment Date to and including the 48th
Payment Date, 1.75%,
(ii) with respect to the 49th Payment Date to and including the 60th
Payment Date, 1.75% initially, plus 0.0625% per month thereafter,
(iii) with respect to the 61st Payment Date to and including the
72nd Payment Date, 2.50% initially, plus 0.0417% per month thereafter,
(iv) with respect to the 73rd Payment Date to and including the 84th
Payment Date, 3.00% initially, plus 0.0208% per month thereafter,
(v) with respect to the 85th Payment Date and thereafter, 3.25% or
(b) the Three Month Rolling Delinquency Rate for such Payment Date is
greater than 3.50%.
Trust, Trust Estate or Trust Fund: IndyMac Home Equity Mortgage Loan
Asset-Backed Trust, Series 2006-H3, a Delaware statutory trust, established
pursuant to the Trust Agreement, the corpus of which consists of the Mortgage
Loans and Mortgage Files, such other assets as shall from time to time be
identified as deposited in the Trust Accounts in accordance with this Agreement,
property that secured a Mortgage Loan and that has become REO Property, the
interest of the Seller in certain hazard insurance policies maintained by the
Mortgagors or the Servicer in respect of the Mortgage Loans, the Depositor's
rights under the Mortgage Loan Purchase Agreement and all proceeds of the
foregoing.
Trust Accounts: The Collection Account, the Certificate Account, the
Payment Account and the Reserve Account.
32
Trust Agreement: The Trust Agreement, dated as of September 19, 2006,
among the Depositor and the Owner Trustee, as amended and restated as of
September 29, 2006, among the Administrator, the Depositor and the Owner
Trustee.
UCC: The Uniform Commercial Code, as amended from time to time, as in
effect in any specified jurisdiction.
Uninsured Cause: Any cause of damage to a Mortgaged Property such that the
complete restoration of such property is not fully reimbursable by the insurance
policies required to be maintained pursuant to Section 3.04 hereof.
Utilization Rate: As of any date, the percentage of the line of credit
relating to a Mortgage Loan that has been drawn upon.
Section 1.02 Other Definitional Provisions.
(a) Capitalized terms used herein and not otherwise defined herein have
the meanings assigned to them in the Indenture and the Trust Agreement, as
applicable.
(b) All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or other document
made or delivered pursuant hereto or thereto, accounting terms not defined in
this Agreement or in any such certificate or other document, and accounting
terms partly defined in this Agreement or in any such certificate or other
document to the extent not defined, shall have the respective meanings given to
them under generally accepted accounting principles. To the extent that the
definitions of accounting terms in this Agreement or in any such certificate or
other document are inconsistent with the meanings of such terms under generally
accepted accounting principles, the definitions contained in this Agreement or
in any such certificate or other document shall control.
(d) The words "hereof," "herein," "hereunder" and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement; Article, Section, Schedule and
Exhibit references contained in this Agreement are references to Articles,
Sections, Schedules and Exhibits in or to this Agreement unless otherwise
specified; and the term "including" shall mean "including without limitation."
(e) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine genders of such terms.
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(f) Any agreement, instrument or statute defined or referred to herein or
in any instrument or certificate delivered in connection herewith means such
agreement, instrument or statute as from time to time amended, modified or
supplemented and includes (in the case of agreements or instruments) references
to all attachments thereto and instruments incorporated therein; references to a
Person are also to its permitted successors and assigns.
Section 1.03 Interest Calculations.
All calculations of interest that are made in respect of the Principal
Balance of a Mortgage Loan shall be made on a daily basis using a 365-day year
and the actual number of days elapsed. All calculations of interest that are
made in respect of the Notes and the Certificates, shall be calculated on the
basis of a 360 day year and the actual number of days elapsed in the related
Interest Accrual Period. The calculation of the Premium Amount, the Owner
Trustee Fee and the Indenture Trustee Fee shall be made on the basis of the
actual number of days in each Collection Period divided by 360. All dollar
amounts calculated hereunder shall be rounded to the nearest ▇▇▇▇▇ with one-half
of one ▇▇▇▇▇ being rounded up.
ARTICLE II.
CONVEYANCE OF THE MORTGAGE LOANS
Section 2.01 Conveyance of the Mortgage Loans.
(a) The Depositor, concurrently with the execution and delivery of this
Agreement, does hereby transfer, assign, set over and otherwise convey to the
Trust, without recourse (subject to Sections 2.02 and 2.04) all of its right,
title and interest in and to (i) each Mortgage Loan listed on the Mortgage Loan
Schedule on the Closing Date and the related Mortgage File (including the
related Mortgage Note and Mortgage), including its Cut-off Date Principal
Balance (including all rights of the Depositor pursuant to the Mortgage Loan
Purchase Agreement to purchase Additional Balances resulting from Draws made
pursuant to the related Mortgage Note prior to the termination of this
Agreement) and all related collections in respect of such Mortgage Loan received
after the Cut-off Date (excluding scheduled interest payments due on or prior to
the Cut-off Date); (ii) related property that secured a Mortgage Loan and which
has been acquired by foreclosure or deed in lieu of foreclosure; (iii) its
rights under any related insurance policies maintained in respect of the
Mortgage Loans (including any Insurance Proceeds) provided, however, that
neither the Indenture Trustee nor the Trust assumes any obligation under any
Mortgage Note for the funding of future Draws to the Mortgagor thereunder, and
neither the Indenture Trustee nor the Trust will be obligated or permitted to
fund any such future Draws; and (vi) any and all proceeds of the foregoing
(collectively, the "Conveyed Assets"). Additional Balances shall be included in
the related Principal Balance transferred to the Trust pursuant to this Section
2.01 and therefore will be part of the corpus of the Trust.
The Seller, the Depositor and the Trust agree to take or cause to be taken
such actions (including without limitation the filing of the UCC-1 financing
statements in the States of
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California, in the case of the Seller, and the State of Delaware, in the case of
the Depositor (which shall have been filed on or before the Closing Date)
describing the Cut-off Date Principal Balances and Additional Balances related
to the Mortgage Loans, and naming the Seller as debtor and the Depositor as
secured party, in the case of the Seller, and naming the Depositor as debtor and
the Trust as secured party, in the case of the Depositor, and any amendments to
such UCC-1 financing statements required to reflect a change in the name or
corporate structure of the Seller, the Depositor, or the Trust, as the case may
be, or the filing of any additional financing statement due to the change in the
jurisdiction of formation of the Seller, the Depositor or the Trust, as the case
may be, within 30 days of any event necessitating such filing) as are necessary
to perfect and protect the Depositor's interest in the case of the Seller and
the Trust and the Insurer's interest in the case of the Depositor, in each case
describing Cut-off Date Principal Balance and the Additional Balances related to
the Mortgage Loans, the remainder of the trust estate and the proceeds thereof.
In addition, the Servicer agrees to file continuation statements with respect to
such UCC-1 financing statements as required and as long as this Agreement
remains outstanding with such authorization and information as may be necessary
to make such filing to be provided by the applicable parties.
In the event any loss is suffered by the Insurer or the Indenture Trustee,
on behalf of the Trust, in respect of any Mortgage Loan, as a result of a
failure by the Seller or the Depositor to file the UCC-1 financing statements
when required to perfect or maintain the perfection of the Indenture Trustee's
security interest hereunder and afford it first priority, the Seller shall, on
the Business Day next preceding the Payment Date in the month following the
Collection Period during which such loss occurred, purchase such Mortgage Loan.
Such purchase shall be accomplished in the same manner as set forth in Section
2.02.
In addition, on or prior to the Closing Date, the Depositor shall cause
the Insurer to deliver the Policy to the Indenture Trustee, for the benefit of
the Class A Noteholders.
(b) In exchange for the transfer of the Mortgage Loans on the Closing
Date, the Class B, Class L and Class R Certificates and the Class M1 and Class
M2 Notes shall be issued to or at the direction of the Depositor.
(c) In consideration of the sale of any Additional Balance from the
Depositor to the Trust on any day, the Trust shall pay or cause to be paid to
the Depositor or its designee an amount equal to the aggregate principal
balances of the related Draws on such day. The Trust shall fund the amount
specified in the preceding sentence in one of the following ways, as applicable:
(i) with respect to any Collection Period preceding the commencement of the
Rapid Amortization Period, (a) on each day during such Collection Period, a cash
payment, to the extent then available from the Floating Allocation Percentage of
Principal Collections on the Mortgage Loans received during such Collection
Period and remaining on deposit in the Collection Account, in an amount equal to
the Aggregate Draw Amount on such day, and (b) on the last day of such
Collection Period, to the extent there exists an Additional Balance Advance
Amount for such Collection Period, an increase in the Class Principal Balance of
the Class L Certificate, equal to such Additional Balance Advance Amount, and
(ii) for any day on and after the first day of the Collection Period in which
the commencement of the Rapid Amortization Period occurs,
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and any Collection Period thereafter, an increase in the Class Principal Balance
of the Class L Certificate in an amount equal to the aggregate principal balance
of Additional Balances on such day.
(d) Prior to the last day of each Collection Period preceding the
commencement of the Rapid Amortization Period, the Holder of the Class L
Certificate shall purchase the Additional Balance Advance Amount for the related
Payment Date, if any, and the Seller shall deliver to the Indenture Trustee and
the Holder of the Class L Certificates two Business Days prior to the following
Servicer Remittance Date an Advance Notice including the aggregate amount of the
expected Additional Balance Advance Amount for that date. Upon receipt of such
notice and in any event no later than two Business Days prior to the following
Payment Date, the Holder of the Class L Certificate shall make an advance to the
Trust in the amount specified in such Advance Notice by depositing such amount
into the Reserve Account. The Indenture Trustee shall cause such amount to be
remitted to the Seller on such following Payment Date. In addition, on and after
the first day of the Collection Period in which the commencement of the Rapid
Amortization Period occurs, the Holder of the Class L Certificate shall purchase
Additional Balances that are transferred to the Trust (as such Additional
Balances are conveyed and in the amounts specified by the Servicer) by
depositing into the Reserve Account the amount of the Draws relating to such
Additional Balances, which amount shall be disbursed by the Indenture Trustee to
the Seller. The Class Principal Balance of the Class L Certificates will be
increased by the amount of any such purchased Additional Balance Advance Amounts
or Additional Balances, as applicable, as described in Section 2.01(c) above.
(e) (i) In connection with such transfer, assignment, sale and conveyance
by the Depositor will deliver or have delivered to, and deposit with, the
Indenture Trustee (or its designee), on or before the Closing Date, the Mortgage
Loan Schedule in computer readable format.
(ii) In connection with such transfer, assignment, sale and conveyance by
the Depositor, the Depositor shall cause the Seller to deliver to and
deposit with the Indenture Trustee (x) the Mortgage Note in respect of
each Mortgage Loan and (y) the Related Documents within 90 days following
the occurrence of the Closing Date. The Mortgage Note and the Related
Documents shall be in the following form:
(A) the original Mortgage Note, endorsed in blank, or a copy
of such original Mortgage Note with an accompanying Lost Note
Affidavit;
(B) the original Assignment of Mortgage, from the Seller
either in blank or to "Deutsche Bank National Trust Company, as
Indenture Trustee for IndyMac Home Equity Mortgage Loan Asset-Backed
Trust, Series 2006-H3 under the Sale and Servicing Agreement dated
September 14, 2006," which assignment shall be in form and substance
acceptable for recording;
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(C) the original Mortgage, with evidence of recording thereon,
provided that if the original Mortgage has been delivered for
recording to the appropriate public recording office of the
jurisdiction in which the Mortgaged Property is located but has not
yet been returned to the Seller by such recording office, the Seller
shall deliver to the Indenture Trustee a certified true copy of such
original Mortgage so certified by or on behalf of the Seller,
together with a certificate by or on behalf of the Seller certifying
that such original Mortgage has been so delivered to such recording
office; in all such instances, the Seller shall deliver or cause to
be delivered the original recorded Mortgage to the Indenture Trustee
promptly upon receipt of the original recorded Mortgage;
(D) intervening assignments, if any, with evidence of
recording thereon, provided that if such intervening assignment has
been delivered for recording to the appropriate public recording
office of the jurisdiction in which the Mortgaged Property is
located but has not yet been returned to the Seller by such
recording office, the Seller shall deliver to the Indenture Trustee
a certified true copy of such intervening assignment so certified by
the Seller, together with a certificate by or on behalf of the
Seller certifying that such intervening assignment has been so
delivered to such recording office; in all such instances, the
Seller shall deliver or cause to be delivered the original
intervening assignment to the Indenture Trustee promptly upon
receipt of the original intervening assignment; and
provided, however, that as to any Mortgage Loan, if as evidenced by an
Opinion of Counsel delivered to and in form and substance satisfactory to the
Indenture Trustee, the Insurer, and the Rating Agencies (x) an optical image or
other representation of the related document specified in clause (d)(ii)(C)
above is enforceable in the relevant jurisdictions to the same extent as the
original of such document and (y) such optical image or other representation
does not impair the ability of an owner of such Mortgage Loan to transfer or
perfect its interest in such Mortgage Loan, such optical image or other
representation may be delivered as required in clause (d)(ii).
The Seller and the Depositor each hereby confirms to the Indenture Trustee
and the Insurer that it has made the appropriate entries in its general
accounting records, to indicate that such Mortgage Loans have been sold to the
Depositor by the Seller, and sold by the Depositor to the Trust. The Servicer
hereby confirms to the Indenture Trustee and the Insurer that it has clearly and
unambiguously made appropriate entries in its general accounting records
indicating that such Mortgage Loans constitute part of the Trust and are
serviced by it on behalf of the Trust in accordance with the terms hereof.
The Seller shall deliver to the Indenture Trustee, as initial custodian
and bailee for the benefit of the Trust, the documents and instruments listed
above in this clause (e).
The Assignments of Mortgage will be held by the Indenture Trustee, subject
to the conditions provided below in clause (f).
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(f) It is the express intent of the parties hereto that the conveyance of
the Mortgage Loans and the other property described above by the Depositor to
the Trust, as provided in this Agreement be, and be construed as, a sale of all
of the Depositor's right, title and interest in the Mortgage Loans and the other
property described above by the Depositor to the Trust. It is, further, not the
intention of the parties that such conveyance be deemed a pledge of the Mortgage
Loans and the other property described above by the Depositor to the Trust to
secure a debt or other obligation of the Depositor. However, in the event that,
notwithstanding the intent of the parties, the Mortgage Loans and the other
property described above are held to be property of the Depositor, or if for any
reason this Agreement is held or deemed to create a security interest in the
Mortgage Loans and the other property described above, then, (x) this Agreement
shall also be deemed to be a security agreement within the meaning of Articles 8
and 9 of the UCC; and (y) the Depositor hereby grants to the Trust a security
interest in and to all of the Depositor's right, title, and interest, whether
now owned or hereafter acquired, in and to the Conveyed Assets.
The possession by the Indenture Trustee or its designee, of Mortgage
Files, including the Mortgage Notes and the Mortgages and such other goods,
letters of credit, advices of credit, instruments, money, documents, chattel
paper (tangible and electronic) or certificated securities in accordance with
the terms of this Agreement shall be deemed to be "possession by the secured
party," or possession by a purchaser or a person designated by him or her, for
purposes of perfecting the security interest pursuant to the UCC (including,
without limitation, Sections 9-313, 8-313 or 8-321 thereof); and notifications
to persons holding such property, and acknowledgments, receipts or confirmations
from persons holding such property, shall be deemed to be notifications to, or
acknowledgments, receipts or confirmations from, securities intermediaries,
bailees or agents of, or persons holding for, the Indenture Trustee or its
designee, as applicable, for the purpose of perfecting such security interest
under applicable law. The Seller, the Servicer and the Depositor shall, to the
extent consistent with this Agreement, take such actions as may be necessary to
ensure that, if this Agreement were deemed to create a security interest in the
Mortgage Loans and the proceeds thereof, such security interest would be deemed
to be a perfected security interest of first priority under applicable law and
will be maintained as such throughout the term of the Agreement. In connection
herewith, the Trust shall have all of the rights and remedies of a secured party
and creditor under the UCC. Notwithstanding the foregoing, in taking such
actions as may be necessary to ensure that, if this Agreement were deemed to
create a security interest in the Mortgage Loans and the proceeds thereof, such
security interest would be deemed to be a perfected security interest of first
priority under applicable law, and maintaining such throughout the term of this
Agreement.
(g) On the Closing Date, the Indenture Trustee, will, for the benefit of
Noteholders and the Insurer, review each Mortgage Loan and the related Mortgage
File to ascertain that all required documents set forth in Section
2.01(e)(ii)(A) have been received and shall deliver to the Depositor, the
Servicer, and the Insurer an initial certification (the "Initial Certification")
in the form annexed hereto as Exhibit J to the effect that as to each Mortgage
Loan listed in the Mortgage Loan Schedule (other than any Mortgage Loan prepaid
in full or any specifically identified in such certification as not covered by
such certification), all of the applicable documents specified in Section
2.01(e)(ii)(A) are in its possession. Within 90 days after the Closing Date, the
Indenture Trustee, will, for the benefit of Noteholders and the Insurer, review
38
each Mortgage File to ascertain that all required documents set forth in Section
2.01(e)(ii) have been received and appear on their face to contain the requisite
signatures by or on behalf of the respective parties thereto, and shall deliver
to the Depositor, the Servicer and the Insurer an interim certification (the
"Interim Certification") in the form annexed hereto as Exhibit K to the effect
that, as to each Mortgage Loan listed in the Mortgage Loan Schedule (other than
any Mortgage Loan prepaid in full or any specifically identified in such
certification as not covered by such certification), (i) all of the applicable
documents specified in Section 2.01(e) are in its possession and (ii) such
documents have been reviewed by it and appear to relate to such Mortgage Loan.
The Indenture Trustee shall determine whether such documents are executed and
endorsed, but shall be under no duty or obligation to inspect, review or examine
any such documents, instruments, certificates or other papers to determine that
the same are valid, binding, legally effective, properly endorsed, genuine,
enforceable or appropriate for the represented purpose or that they have
actually been recorded or are in recordable form or that they are other than
what they purport to be on their face. The Indenture Trustee shall not have any
responsibility for verifying the genuineness or the legal effectiveness of or
authority for any signatures of or on behalf of any party or endorser.
(h) If in the course of the review described in paragraph (e) above the
Indenture Trustee discovers any document or documents constituting a part of a
Mortgage File that is missing, does not appear regular on its face (i.e., is
mutilated, damaged, defaced, torn or otherwise physically altered) or appears to
be unrelated to the Mortgage Loans identified in the Mortgage Loan Schedule, as
applicable (each, a "Material Defect"), the Indenture Trustee, upon discovering
such Material Defect shall promptly identify the Mortgage Loan to which such
Material Defect relates in the Interim Certification delivered to each of the
Depositor and the Servicer and give notice thereof to the Seller.
(i) Within 180 days following the Closing Date, the Indenture Trustee
shall deliver to the Depositor, the Servicer and the Insurer a final
certification (the "Final Certification") substantially in the form attached as
Exhibit L evidencing the completeness of the Mortgage Files in its possession or
control, with any exceptions noted thereto.
(j) Nothing in this Agreement shall be construed to constitute an
assumption by the Trust Estate, the Indenture Trustee, the Administrator, any
Custodian or the Noteholders of any unsatisfied duty, claim or other liability
on any Mortgage Loan or to any Mortgagor. The Indenture Trustee shall have no
responsibility for reviewing any Mortgage File except as expressly provided in
this Section 2.01. In reviewing any Mortgage File pursuant to this Section, the
Indenture Trustee shall have no responsibility for determining whether any
document is valid and binding, whether the text of any assignment or endorsement
is in proper or recordable form (except, if not assigned to the Indenture
Trustee or endorsed in blank, to determine if the Indenture Trustee is the
assignee or endorsee), whether any document has been recorded in accordance with
the requirements of any applicable jurisdiction, or whether a blanket assignment
is permitted in any applicable jurisdiction, whether any Person executing any
document is authorized to do so or whether any signature thereon is genuine, but
shall only be required to determine whether a document has been executed, that
it appears regular on its face and is
39
related to such Mortgage Loan, and, upon the return of such document from the
county recorder's office in accordance with this section, that it purports to be
recorded.
(k) The Indenture Trustee shall have the right to appoint a custodian to
act on its behalf with respect to its obligations under Section 2.01(g) through
(i).
(l) (i) Upon the occurrence of a Recordation Event, the Indenture Trustee
shall within 90 days of such Recordation Event submit, at the expense of the
Seller, to the appropriate recording offices Assignments of Mortgage to the
Indenture Trustee on behalf of the Trust, which may be blanket assignments if
permitted by applicable law, for the Mortgage Loans. In lieu of recording any
such Assignments of Mortgage, the Servicer may provide to the Indenture Trustee
and the Insurer an Opinion of Counsel in a form reasonably acceptable to the
Owner Trustee, Indenture Trustee and the Insurer, to the effect that recordation
of an Assignment of Mortgage in the state where the related Mortgaged Property
is located is not necessary to protect the interests of the Owner Trustee, the
Indenture Trustee or the Securityholders in the related Mortgage. In the event
that any such Assignment of Mortgage is lost or returned unrecorded because of a
defect therein, the Indenture Trustee shall promptly prepare, at the expense of
the Seller, a substitute Assignment of Mortgage or cure such defect, as the case
may be, and thereafter the Indenture Trustee shall, at the expense of the
Seller, submit each such Assignment of Mortgage for recording.
(ii) With respect to each MERS Mortgage Loan, the Servicer shall, at the
expense of the Depositor, take such actions as are necessary to cause the
Indenture Trustee to be clearly identified as the owner of each such Mortgage
Loan on the records of MERS for purposes of the system of recording transfers of
beneficial ownership of mortgages maintained by MERS.
Section 2.02 Acceptance by Indenture Trustee, Review of Documentation.
(a) The Indenture Trustee hereby acknowledges the issuance of the Policy
by the Insurer for the benefit of the Class A Noteholders and the sale and
assignment of the Mortgage Loans, and, subject to the review provided for in
Section 2.01, and declares that, when delivered to the Indenture Trustee in
accordance with Section 2.01(e), the Indenture Trustee will hold the documents
constituting the Mortgage Files and that all amounts received by it under the
Indenture in trust, upon the terms herein set forth, for the use and benefit of
all present and future Class A Noteholders and the Insurer.
(b) If the Seller is given notice under Section 2.01(h) and if the Seller
does not correct or cure the omission or defect within the 90-day period
specified in Section 2.01(h), the Seller shall purchase the Mortgage Loan from
the Trust or substitute an Eligible Substitute Mortgage Loan, as provided in
Section 2.05, for such Mortgage Loan. Any such purchase by the Seller shall be
at the Purchase Price and in each case shall be accomplished in the manner set
forth in Section 2.04. It is understood and agreed that the obligation of the
Seller to purchase any Mortgage Loan or substitute an Eligible Substitute
Mortgage Loan for such Mortgage Loan as to which a material defect in or
omission of a constituent document exists shall constitute the sole
40
remedy against the Seller respecting such defect or omission available to the
Insurer, the Noteholders, the Indenture Trustee or the Certificateholders.
The Servicer, promptly following the transfer of (i) a Mortgage Loan with
a Material Defect or (ii) an Eligible Substitute Mortgage Loan to the Indenture
Trustee pursuant to this Section and Section 2.05, as the case may be, shall
amend the Mortgage Loan Schedule and make appropriate entries in its general
account records to reflect such transfer and the addition of any Eligible
Substitute Mortgage Loan, if applicable.
Section 2.03 Representations and Warranties Regarding the Seller, the
Depositor and the Servicer.
(a) The Seller, the Depositor and the Servicer each represents and
warrants as to itself to the parties hereto and the Insurer that, as of the
Closing Date:
(i) Each of the Seller, the Depositor and the Servicer is duly
organized, validly existing and in good standing under the laws of its
respective jurisdiction of organization and has the power and authority to
own its assets and to transact the business in which it is currently
engaged. Each of the Seller, the Depositor and the Servicer is duly
qualified to do business and is in good standing in each jurisdiction in
which the character of the business transacted by it or properties owned
or leased by it requires such qualification and in which the failure so to
qualify would have a material adverse effect on (a) its business,
properties, assets or condition (financial or other), (b) its performance
of its obligations under this Agreement, (c) the value or marketability of
the Mortgage Loans or (d) the ability to foreclose on the related
Mortgaged Properties;
(ii) Each of the Seller, the Depositor and the Servicer has the
power and authority to make, execute, deliver and perform this Agreement
and to consummate all of the transactions contemplated under this
Agreement, and has taken all necessary action to authorize the execution,
delivery and performance of this Agreement. When executed and delivered,
this Agreement will constitute its legal, valid and binding obligation
enforceable in accordance with its terms, except as enforcement of such
terms may be limited by bankruptcy, insolvency, reorganization,
receivership, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by the availability of equitable remedies;
(iii) Each of the Seller, the Depositor and the Servicer holds all
necessary licenses, certificates and permits from all government
authorities necessary for conducting its business as it is presently
conducted. Neither the Seller, the Depositor, nor the Servicer is required
to obtain the consent of any other party or any consent, license, approval
or authorization from, or registration or declaration with, any
governmental authority, bureau or agency in connection with the execution,
delivery, performance, validity or enforceability of this Agreement,
except for such consents, licenses, approvals
41
or authorizations, or registrations or declarations, as shall have been
obtained or filed, as the case may be, prior to the Closing Date;
(iv) The execution, delivery and performance of this Agreement by
each of the Seller, the Depositor and the Servicer will not conflict with
or result in a breach of, or constitute a default under, any provision of
its charter documents, or constitute a material breach of or result in the
creation or imposition of any lien, charge or encumbrance upon any of its
properties pursuant to, any mortgage, indenture, contract or any other
agreement to which it is a party or by which it may be bound;
(v) No certificate of an officer, statement furnished in writing or
report delivered pursuant to the terms hereof by the Seller, the Depositor
or the Servicer contains any untrue statement of a material fact or omits
to state any material fact necessary to make the certificate, statement or
report not misleading;
(vi) The transactions contemplated by this Agreement are in the
ordinary course of the Seller's, the Depositor's and the Servicer's
business;
(vii) None of the Seller, the Depositor nor the Servicer is
insolvent, nor will the Seller, the Depositor or the Servicer be made
insolvent by the transfer of the Mortgage Loans, nor are the Seller, the
Depositor or the Servicer aware of any pending insolvency;
(viii) None of the Seller, the Depositor or the Servicer is in
violation of, and the execution and delivery of this Agreement by it and
its performance and compliance with the terms of this Agreement will not
constitute a violation with respect to, any provision of any existing law,
any order or decree of any court or any order or regulation of any
federal, state, municipal or governmental agency having jurisdiction over
the Seller, the Depositor or the Servicer, which violation would
materially and adversely affect the Seller's, the Depositor's or the
Servicer's ability to perform or meet any of their respective obligations
under this Agreement;
(ix) There are no actions or proceedings against, or investigations
of it, pending or, to the best of its knowledge, threatened, before any
court, administrative agency or other tribunal (A) that, if determined
adversely, would prohibit the Seller, the Depositor or the Servicer from
entering into this Agreement, (B) seeking to prevent the consummation of
any of the transactions contemplated by this Agreement or (C) that, if
determined adversely, would prohibit or materially and adversely affect
the Seller's, the Depositor's and the Servicer's performance of any of
their respective obligations under, or the validity or enforceability of,
this Agreement;
(x) The Servicer represents and warrants that the collection
practices used by the Servicer with respect to the Mortgage Loans have
been, in all material respects, legal, proper, prudent and customary in
the home equity mortgage servicing business and in accordance with
Accepted Servicing Practices;
42
(xi) The Servicer represents and warrants that it believes that the
Servicing Fee Rate provides a reasonable level of base compensation to the
Servicer for servicing the Mortgage Loans on the terms set forth herein;
(xii) The Seller represents and warrants that it did not sell the
Mortgage Loans to the Depositor, and the Depositor represents and warrants
that it did not sell the Mortgage Loans to the Trust, in each case, with
any intent to hinder, delay or defraud any of its creditors; and neither
the Seller nor the Depositor will be rendered insolvent as a result of
their sales under the Mortgage Loan Purchase Agreement and this Agreement,
as applicable;
(xiii) The Seller and the Depositor each represents and warrants
that it acquired title to the Mortgage Loans in good faith, without notice
of any adverse claim;
(xiv) The Seller and the Depositor each represents and warrants that
the transfer, assignment and conveyance of the Mortgage Notes and the
Mortgages by the Seller and the Depositor pursuant to the Mortgage Loan
Purchase Agreement and this Agreement are not subject to the bulk transfer
laws or any similar statutory provisions in effect in any applicable
jurisdiction;
(xv) The Seller represents, warrants and covenants that so long as
the Notes remain outstanding, this Agreement shall be treated as an
official record of the Seller within the meaning of Section 13(e) of the
Federal Deposit Insurance Act (12 U.S.C. Section 1823(e));
(xvi) The Seller and the Depositor each represents and warrants that
it has caused the filing of all appropriate financing statements in the
proper filing office in the appropriate jurisdictions under applicable law
in order to perfect the security interest in the Mortgage Loans sold to
the Depositor and transferred to the Indenture Trustee on behalf of the
Trust, respectively, pursuant to the Mortgage Loan Purchase Agreement and
this Agreement;
(xvii) This Agreement creates a valid and continuing security
interest (as defined in the applicable Uniform Commercial Code) in the
Mortgage Loans in favor of the Noteholders and the Certificateholders,
which security interest is prior to all other liens, and is enforceable as
such as against creditors of and purchasers from the Seller;
(xviii) Each of the Seller and the Depositor has caused or will have
caused, within ten days, the filing of all appropriate financing
statements in the proper filing office in the appropriate jurisdictions
under applicable law in order to perfect the security interest in the
Mortgage Loans granted to the Depositor and the Indenture Trustee,
respectively, under the Mortgage Loan Purchase Agreement and hereunder;
and
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(b) The representations and warranties set forth in Section 2.03(a) shall
survive the sale and assignment of the Mortgage Loans to the Trust. Upon
discovery of a breach of any representations and warranties which materially and
adversely affect the interests of the Indenture Trustee, the Noteholders, the
Certificateholders, the Depositor or the Insurer, the Person discovering such
breach shall give prompt written notice to the other parties and to the Insurer.
Within 60 days of its discovery or its receipt of notice of breach, or, with the
prior written consent of the Insurer, such longer period specified in such
consent, the Seller, the Depositor or the Servicer, as appropriate, shall cure
such breach in all material respects.
Section 2.04 Representations and Warranties of the Seller Regarding the
Mortgage Loans.
(a) The Seller hereby represents and warrants to the Depositor and the
Insurer, and the Depositor hereby assigns its rights with respect to such
representations and warranties to the Trust, the Indenture Trustee on behalf of
the Noteholders and the Certificateholders and the Insurer as follows as of the
Closing Date, and with respect to each Eligible Substitute Mortgage Loan, as of
the date of such substitution (and to the extent expressly stated therein as of
such other time):
(i) The information with respect to each Mortgage Loan set forth in
the Mortgage Loan Schedule is complete, true and correct in all material
respects as of the Closing Date;
(ii) As of the Closing Date, for each Mortgage Loan, the related
Mortgage File contains the documents and instruments referred to in
Section 2.01(e)(ii);
(iii) Each Mortgaged Property relating to a Mortgage Loan is
improved by a residential dwelling, which does not include cooperatives or
mobile homes and does not constitute other than real property under state
law;
(iv) Each Mortgage Loan is being serviced by the Servicer or one or
more Subservicers according to Accepted Servicing Practices;
(v) Each Mortgage Note provides for (a) Monthly Payments which are
at least equal to accrued interest during such Accrual Period and (b) at
the maturity of the related Mortgage Loan, payment in full of the
principal balance of such Mortgage Note;
(vi) The Mortgage Notes related to Mortgage Loans bear a variable
Loan Rate and there is only one original of each such Mortgage Note;
(vii) Each Mortgage is a valid and subsisting first or second lien
of record on the Mortgaged Property subject, in the case of any second
Mortgage Loan, only to a Senior Lien or Senior Liens on such Mortgaged
Property and subject in all cases to the
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exceptions to title set forth in the title insurance policy, if any, with
respect to the related Mortgage Loan, which exceptions are generally
acceptable to second mortgage lending companies (or first mortgage lending
companies in the case of first lien Mortgage Loans), and such other
exceptions to which similar properties are commonly subject and which do
not individually, or in the aggregate, materially and adversely affect the
benefits of the security intended to be provided by such Mortgage;
(viii) No Mortgage Note and related Mortgage has been assigned or
pledged and immediately prior to the transfer and assignment contemplated
in the Mortgage Loan Purchase Agreement, the Seller held good, marketable
and indefeasible title to, and was the sole owner and holder of, each
Mortgage Loan subject to no Liens; the Seller has full right and authority
under all governmental and regulatory bodies having jurisdiction over the
Seller, subject to no interest or participation of, or agreement with, any
party, to sell and assign the same pursuant to the Mortgage Loan Purchase
Agreement; and immediately upon the transfer and assignment therein
contemplated, the Seller shall have transferred all of its right, title
and interest in and to each Mortgage Loan to the Purchaser (or its
assignee) and the Purchaser (or its assignee) will hold good, equitable,
and when recorded, marketable title to, and be the sole owner of, each
Mortgage Loan subject to no Liens; without limiting the generality of the
foregoing, the Seller has taken all steps necessary to effect the release
of each Mortgage Loan from any lien thereon held by a Federal Home Loan
Bank;
(ix) None of the Mortgage Loans is subject to a bankruptcy
proceeding;
(x) As of the Cut-off Date, none of the Mortgage Loans was more than
30 days Delinquent;
(xi) No Mortgage Loan is subject to any right of rescission, set
off, counterclaim or defense, including the defense of usury, nor will the
operation of any of the terms of any Mortgage Note or Mortgage, or the
exercise of any right thereunder, render either the Mortgage Note or the
Mortgage unenforceable in whole or in part, or subject to any right of
rescission, set off, counterclaim or defense, including the defense of
usury, and no such right of rescission, set off, counterclaim or defense
has been asserted with respect thereto;
(xii) There is no mechanics' lien or claim for work, labor or
material affecting any Mortgaged Property which is or may be a lien prior
to, or equal or coordinate with, the lien of the related Mortgage, and no
rights are outstanding that under law could give rise to such a lien
except those which are insured against by the title insurance policy;
(xiii) (a) Each Mortgage Loan at the time it was made complied with,
and each Mortgage Loan at all times was serviced in compliance with, in
each case, in all material respects, applicable state, local and federal
laws and regulations, including, without limitation, usury, equal credit
opportunity, consumer credit, applicable predatory and
45
abusive lending laws, truth in lending and disclosure laws and (b) no
Mortgage Loan is classified as (1) a "high cost" loan under the Home
Ownership and Equity Protection Act of 1994 or (2) a "high cost,"
"threshold," "covered," "predatory" or similar loan under any other
applicable state, federal or local law which applies to mortgage loans
originated by a state-chartered bank or any state or local law, rule or
regulation applicable to the Mortgage Loans (or a similar classified loan
using different terminology under a law imposing heightened regulatory
scrutiny or additional legal liability for residential mortgage loans
having high interest rates, points and/or fees);
(xiv) (a) No Mortgage Loan is a "High Cost Loan" or "Covered Loan,"
as applicable (as such terms are defined in Standard & Poor's LEVELS(R)
Version 5.7 Glossary Revised, Appendix E), (b) no Mortgage Loan originated
on or after October 1, 2002 through March 6, 2003 is governed by the
Georgia Fair Lending Act and (c) no Mortgage Loan originated in the State
of Illinois is governed by the Illinois Interest Act (815 ILCS 205);
(xv) The improvements upon each Mortgaged Property relating to
Mortgage Loans are covered by a valid and existing hazard insurance policy
with a generally acceptable carrier that provides for fire and extended
coverage representing coverage described in Sections 3.04 and 3.05;
(xvi) A flood insurance policy is in effect with respect to each
Mortgaged Property with a generally acceptable carrier in an amount
representing coverage described in Sections 3.04 or 3.05, if and to the
extent required by Sections 3.04 or 3.05;
(xvii) Each Mortgage and Mortgage Note is the legal, valid and
binding obligation of the related Mortgagor and is enforceable in
accordance with its terms, except only as such enforcement may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and by
general principles of equity (whether considered in a proceeding or action
in equity or at law), and all parties to each Mortgage Loan and the
Mortgagee had full legal capacity to execute all Mortgage Loan documents
and to convey the estate therein purported to be conveyed. To the best of
the Seller's knowledge, there was no fraud involved in the origination of
any Mortgage Loan by the mortgagee or by the Mortgagor, any appraiser or
any other party involved in the origination of the Mortgage Loan;
(xviii) As of the Closing Date, approximately 93.14% of the Mortgage
Loans (measured by the Cut-off Date Pool Balance) are secured by Mortgaged
Properties that are owner-occupied residences, based on representations by
the related Mortgagors made by such Mortgagors at origination.
(xix) The terms of the Mortgage Note and the Mortgage have not been
impaired, altered or modified in any material respect, except by a written
instrument
46
which has been recorded or is in the process of being recorded and which
has been or will be held by the Seller or delivered to the Indenture
Trustee in accordance with the provisions of this Agreement. The substance
of any such alteration or modification is reflected on the related
Mortgage Loan Schedule and was approved, if required, by the related
primary mortgage guaranty insurer, if any. Each original Mortgage was
recorded, and all subsequent assignments of the original Mortgage have
been recorded in the appropriate jurisdictions wherein such recordation is
necessary to perfect the lien thereof as against creditors of the Seller,
or are in the process of being recorded;
(xx) As of the Closing Date, no Mortgage has been satisfied,
cancelled or subordinated, in whole, or rescinded, and no instrument of
release or waiver has been executed in connection with any Mortgage Loan,
and no Mortgage has been released in whole or in part, in either case,
that would have a material adverse affect on the related Mortgage Loan;
(xxi) There is no proceeding pending or threatened for the total or
partial condemnation of any Mortgaged Property, nor is such a proceeding
currently occurring, and as of the Cut-off Date and the Closing Date, each
Mortgaged Property is in good repair and is free of damage by waste, fire,
earthquake or earth movement, flood, tornado, hurricane or other casualty
that would affect adversely the value of the Mortgaged Property as
security for the related Mortgage Loan or the use for which the premises
were intended;
(xxii) All of the improvements which were included for the purpose
of determining the Appraised Value of the Mortgaged Property lie wholly
within the boundaries and building restriction lines of such property, and
no improvements on adjoining properties encroach upon the Mortgaged
Property;
(xxiii) No improvement located on or being part of the Mortgaged
Property is in violation of any applicable zoning law or regulation and
all inspections, licenses and certificates required to be made or issued
with respect to all occupied portions of the Mortgaged Property, including
but not limited to certificates of occupancy and fire underwriting
certificates, have been made or obtained from the appropriate authorities;
(xxiv) All costs, fees and expenses incurred in making or closing or
recording the Mortgage Loans were paid, and no Mortgagor is entitled to
any refund of any such amount paid or due under the related Mortgage or
Mortgage Note;
(xxv) No Mortgage Note is or was secured by any collateral, pledged
account or other security except the lien of the corresponding Mortgage;
(xxvi) There is no obligation on the part of the Seller or any other
party to make payments in addition to those made by the Mortgagor;
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(xxvii) With respect to each Mortgage constituting a deed of trust,
a trustee, duly qualified under applicable law to serve as such, has been
properly designated and currently so serves and is named in such Mortgage,
and no fees or expenses are or will become payable by the Trust, the
Indenture Trustee or the Noteholders to the Indenture Trustee under the
deed of trust, except in connection with a trustee's sale after default by
the Mortgagor;
(xxviii) No Mortgage Loan has a shared appreciation feature, or
other contingent interest feature;
(xxix) There is no delinquent tax or assessment lien or judgment on
any Mortgaged Property;
(xxx) Each Mortgage contains customary and enforceable provisions
which, subject to clause (xvii) above, render the rights and remedies of
the holder thereof adequate for the realization against the related
Mortgaged Property of the benefits of the security, including (A) in the
case of a Mortgage designated as a deed of trust, by trustee's sale and
(B) otherwise by judicial or non-judicial foreclosure, as applicable in
the relevant jurisdiction;
(xxxi) Each Mortgage contains a customary provision for the
acceleration of the payment of the unpaid principal balance of the
Mortgage Loan in the event the related security for the Mortgage Loan is
sold without the prior consent of the mortgagee thereunder;
(xxxii) Except as set forth in clause (x) above, there is no
default, breach, violation or event of acceleration existing under any
Mortgage or the related Mortgage Note and no event which, with the passage
of time or with notice and the expiration of any grace or cure period,
would constitute a default, breach, violation or event of acceleration;
and the Seller has not waived any default, breach, violation or event of
acceleration;
(xxxiii) All parties to the Mortgage Note and the Mortgage had legal
capacity to execute the Mortgage Note and the Mortgage and each Mortgage
Note and Mortgage have been duly and properly executed by such parties;
(xxxiv) All of the Mortgage Loans were originated in all material
respects in accordance with the applicable Originator's underwriting
criteria in effect at the time of origination;
(xxxv) The Mortgage Loans were not selected by the Seller for
inclusion in the Trust on any basis intended to adversely affect the
Trust, the Noteholders the Certificateholders or the Insurer; and each
Mortgage Note and Mortgage is in substantially one of the forms attached
as Exhibit E and Exhibit F;
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(xxxvi) As of the Cut-off Date, approximately 0.72% of the Mortgage
Loans (measured by the Cut-off Date Pool Balance) were secured by
Mortgaged Properties that had a Combined Loan to Value Ratio of more than
100%;
(xxxvii) Each Mortgage Loan was originated by the Originator listed
on the Mortgage Loan Schedule and was acquired in the ordinary course of
business by the Seller;
(xxxviii) As of the Closing Date, the Seller has not received a
notice of default of a Senior Lien which has not been cured;
(xxxix) Each of the documents and instruments included in a Mortgage
File referred to in Section 2.01(e)(ii)(A) and (C) through (D) is, and at
such time as Assignments of Mortgage are required to have been prepared,
such Assignments of Mortgage will have been, duly executed and in due and
proper form and each such document or instrument is or will be in a form
generally acceptable to prudent institutional mortgage lenders that
regularly originate or purchase mortgage loans similar to the Mortgage
Loans;
(xl) The Conveyed Assets constitute either "instruments" or "general
intangibles" within the meaning of the New York UCC;
(xli) All consents and approvals required by the terms of each
Mortgage Loan to the sale of such Mortgage Loan to the Purchaser under the
Mortgage Loan Purchase Agreement have been obtained;
(xlii) Other than the security interest granted by the Seller to the
Purchaser pursuant to the Mortgage Loan Purchase Agreement and other than
any security interest which shall have been released immediately prior to
the consummation of the transactions contemplated hereby, the Seller has
not pledged, assigned, released, sold, granted a security interest in, or
otherwise conveyed any of the Mortgage Loans. The Seller has not
authorized the filing of and is not aware of any financing statements
against the Seller that include a description of collateral covering the
Mortgage Loans other than any financing statement relating to the security
interest granted to the Purchaser under the Mortgage Loan Purchase
Agreement. The Seller is not aware of any judgment or tax lien filings
against the Seller;
(xliii) The Servicer has in its possession all original copies of
the Mortgage Notes that constitute or evidence the Mortgage Loans. The
Mortgage Notes that constitute or evidence the Mortgage Loans do not have
any marks or notations indicating that they have been pledged, assigned or
otherwise conveyed to any Person other than the Purchaser. All financing
statements filed or to be filed in favor of the Purchaser in connection
herewith describing the Mortgage Loans contain a statement to the
following
49
effect: "A purchase of or security interest in any collateral described in
this financing statement will violate the rights of the Indenture
Trustee;"
(xliv) As of the Closing Date, no Mortgage Loans are subject to
assumption or modification agreements that are not included in the related
Mortgage File;
(xlv) Each Mortgage Loan contains an appraisal conforming to the
standards of the applicable Originator as described on Exhibit O to this
Agreement; and
(xlvi) No Mortgage Loan contains "subsidized buydown," graduated
payment or convertible loan features; and
(xlvii) Each Mortgage Loan constitutes a "qualified mortgage" within
the meaning of Section 860G(a)(3) of the Code.
It is understood and agreed that each of the foregoing representations and
warranties of the Seller may not be waived and shall survive the issuance of the
Notes.
(b) With respect to the representations and warranties set forth in this
Section that are made to the best of the Seller's knowledge or as to which the
Seller has no knowledge, if it is discovered by the Seller, the Depositor, the
Servicer, the Owner Trustee, the Insurer or the Indenture Trustee (in the case
of the Indenture Trustee, upon a Responsible Officer of the Indenture Trustee
obtaining actual knowledge) 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 Seller's lack of
knowledge with respect to the substance of such representation and warranty
being inaccurate at the time the representation or warranty was made, such
inaccuracy shall be deemed a breach of the applicable representation or
warranty.
(c) It is understood and agreed that the representations and warranties
set forth in this Section shall survive the transfer of the Mortgage Loans to
the Trust and the termination of the rights and obligations of the Servicer
pursuant to Section 6.04 or 7.01 herein. Upon discovery by the Seller, the
Depositor, the Servicer, the Owner Trustee, the Insurer or the Indenture Trustee
(in the case of the Indenture Trustee, upon a Responsible Officer of the
Indenture Trustee obtaining actual knowledge) of a breach of any of the
foregoing representations and warranties, which materially and adversely affects
the value of the related Mortgage Loan or the interests of the Trust, the
Noteholders, the Certificateholders or the Insurer in the related Mortgage Loan,
the party discovering such breach shall give prompt written notice to the other
parties and the Insurer. Within 90 days of its discovery or its receipt of
notice of breach, the Seller shall use all reasonable efforts to cure such
breach in all material respects and if such breach is not cured by the end of
such 90-day period, the Seller shall purchase such Mortgage Loan from the Trust
or substitute an Eligible Substitute Mortgage Loan for such Mortgage Loan on the
Determination Date in the month following the month in which such 90-day period
expired at the Purchase Price of such Mortgage Loan or, in the case of a
substitution, in accordance with Section 2.05.
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The Purchase Price and any Substitution Adjustments for the purchased Mortgage
Loan shall be remitted to the Servicer for deposit in the Collection Account on
the Determination Date immediately following such 90-day period, as certified by
the Seller to the Indenture Trustee; provided that the Servicer shall remit to
the Indenture Trustee, who shall then remit to the Insurer, the portion of the
amount, if any, of the Purchase Price referred to in clause (b) of the
definition thereof to the extent such amount is incurred by or imposed on the
Insurer. It is understood and agreed that the obligation of the Seller to
purchase any Mortgage Loan or substitute an Eligible Substitute Mortgage Loan
for such Mortgage Loan as to which a material defect in or omission of a
constituent document exists shall constitute the sole remedy against the Seller
respecting such defect or omission available to the Insurer, the Noteholders,
the Indenture Trustee or the Certificateholders.
The Servicer, promptly following the transfer of (i) a Defective Mortgage
Loan from or (ii) an Eligible Substitute Mortgage Loan to the Trust pursuant to
this Section and Section 2.05, as the case may be, shall amend the Mortgage Loan
Schedule through a Supplemental Mortgage Loan Schedule and make appropriate
entries in its general account records to reflect such transfer and the addition
of any Eligible Substitute Mortgage Loan, if applicable. It is understood and
agreed that the obligation of the Seller to cure, substitute or purchase any
Mortgage Loan as to which a breach has occurred and is continuing shall
constitute the sole remedy against the Seller respecting such breach available
to the Noteholders, the Insurer and the Indenture Trustee on behalf of the
Noteholders and the Certificateholders in respect of their respective interests
in the Trust.
(d) Upon discovery by the Seller, the Depositor, the Servicer, the Owner
Trustee, the Insurer or the Indenture Trustee (in the case of the Indenture
Trustee, upon a Responsible Officer of the Indenture Trustee obtaining actual
knowledge) 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
breach shall give prompt written notice to the other parties and the Insurer. In
connection therewith, the Indenture Trustee shall require the Seller, at the
Seller's option, to either (i) substitute, if the conditions in Section 2.05
with respect to substitutions are satisfied, an Eligible Substitute Mortgage
Loan for the affected Mortgage Loan, or (ii) repurchase the affected Mortgage
Loan within ninety (90) days of such discovery in the same manner as it would a
Mortgage Loan for a breach of representation or warranty made pursuant to
Section 2.04. The Indenture Trustee shall reconvey to the Seller the Mortgage
Loan to be released pursuant hereto in the same manner, and on the same terms,
as it would a Mortgage Loan repurchased for breach of a representation or
warranty contained in Section 2.04.
Section 2.05 Substitution of Mortgage Loans.
(a) On a Determination Date which is on or before the date on which the
Seller would otherwise be required to repurchase a Mortgage Loan under Section
2.02 or 2.04, the Seller may deliver to the Trust one or more Eligible
Substitute Mortgage Loans in substitution for any one or more of the Defective
Mortgage Loans which the Seller would otherwise be required to repurchase
pursuant to Sections 2.02 or 2.04, provided that no substitution pursuant to
Section 2.02 or 2.04 shall be made more than two years after the Closing Date
unless the Seller
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delivers to the Indenture Trustee and the Insurer (so long as the Class A Notes
are Outstanding or any Reimbursement Amounts remain due and owing to the
Insurer) an Opinion of Counsel, which Opinion of Counsel shall not be at the
expense of either the Indenture Trustee or the Trust Fund, addressed to the
Indenture Trustee and the Insurer (so long as the Class A Notes are Outstanding
or any Reimbursement Amounts remain due and owing to the Insurer), to the effect
that such substitution will not (i) result in the imposition of the tax on
"prohibited transactions" on the Trust Fund or contributions after the Startup
Date, as defined in Sections 860F(a)(2) and 860G(D) of the Code, respectively,
or (ii) cause any REMIC created under the Trust Agreement to fail to qualify as
a REMIC at any time that any Notes are outstanding. A substitution pursuant to
Section 2.02 or 2.04 that is made within two years after the Closing Date to
replace a "defective obligation" within the meaning of Section 860G(a)(4) of the
Code shall not require the Seller to deliver to the Indenture Trustee an Opinion
of Counsel. In connection with any such substitution, the Seller shall calculate
the Substitution Adjustment, if any, and shall deposit such amount to the
Collection Account by 12:00 p.m. New York City time on the third Business Day
prior to the Payment Date in the month succeeding the calendar month in which
the related cure period expired.
(b) The Seller shall notify the Servicer, the Insurer and the Indenture
Trustee in writing not less than five Business Days before the related
Determination Date which is on or before the date on which the Seller would
otherwise be required to repurchase such Mortgage Loan pursuant to Section 2.02
or 2.04 of its intention to effect a substitution under this Section 2.05. On
such Determination Date (the "Substitution Date"), the Seller shall deliver to
the Insurer, the Servicer, the Depositor and the Indenture Trustee (1) a list of
the Eligible Substitute Mortgage Loans to be substituted for the Defective
Mortgage Loans, (2) a list of the Defective Mortgage Loans to be substituted for
by such Eligible Substitute Mortgage Loans, (3) if such substitution is more
than two years after the Closing Date, an Opinion of Counsel that the
substitution of the Eligible Substitute Mortgage Loans will not (A) result in
the imposition of the tax on "prohibited transactions" on the Trust or (B) cause
any REMIC created under the Trust Agreement to fail to qualify as a REMIC at any
time the Notes are outstanding, (4) an Officer's Certificate (A) stating that no
Event of Servicer Termination shall have occurred and be continuing, (B) stating
that all conditions precedent to such substitution specified in subsection (a)
have been satisfied and attaching as an exhibit a supplemental Mortgage Loan
schedule (the "Supplemental Mortgage Loan Schedule") setting forth the same type
of information as appears on the Mortgage Loan Schedule and representing as to
the accuracy thereof and (C) confirming that the representations and warranties
contained in Section 2.04 are true and correct in all material respects with
respect to the Eligible Substitute Mortgage Loans on and as of such
Determination Date, provided that remedies for the inaccuracy of such
representations are limited as set forth in Sections 2.02, 2.04 and this Section
2.05 and (5) a certificate stating that cash in the amount of the related
Substitution Adjustment, if any, has been deposited to the Collection Account;
provided that the Servicer shall remit to the Indenture Trustee, who shall then
remit to the Insurer, the portion of the amount, if any, of the Substitution
Adjustment referred to in clause (d) of the definition thereof to the extent
such amount is incurred by the Insurer. Upon receipt of the foregoing, the
Indenture Trustee shall release such Defective Mortgage Loan to the Trust and
the Trust shall release such Defective Mortgage Loans to the Seller without
recourse, representation or warranty.
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(c) Concurrently with the satisfaction of the conditions set forth in
Sections 2.05(a) above and the transfer of such Eligible Substitute Mortgage
Loans to the Indenture Trustee pursuant to Section 2.05(a), Exhibit A to this
Agreement shall be deemed to be amended to exclude all Mortgage Loans being
replaced by such Eligible Substitute Mortgage Loans and to include the
information set forth on the Supplemental Mortgage Loan Schedule with respect to
such Eligible Substitute Mortgage Loans, and all references in this Agreement to
Mortgage Loans shall include such Eligible Substitute Mortgage Loans and be
deemed to be made on or after the related substitution date, as the case may be,
as to such Eligible Substitute Mortgage Loans.
(d) As to any Eligible Substitute Mortgage Loan or Loans, the Seller shall
cause to be delivered to the Indenture Trustee with respect to such Eligible
Substitute Mortgage Loan or Loans such documents and agreements as are required
to be held by the Indenture Trustee in accordance with Section 2.01. For any
Collection Period during which the Seller purchases one or more Defective
Mortgage Loans, the Servicer shall determine the amount that shall be deposited
by the Seller in the Collection Account at the time of substitution. Any amounts
received in respect of the Eligible Substitute Mortgage Loan during the
Collection Period in which the circumstances giving rise to such substitution
occur shall not be a part of the Trust and shall not be deposited by the
Servicer in the Collection Account. All amounts received by the Servicer during
the Collection Period in which the circumstances giving rise to such
substitution occur in respect of any Defective Mortgage Loan so removed by the
Indenture Trustee shall be deposited by the Servicer in the Collection Account.
Upon such substitution, the Eligible Substitute Mortgage Loan shall be subject
to the terms of this Agreement in all respects, and the Seller shall be deemed
to have made with respect to such Eligible Substitute Mortgage Loan, as of the
date of substitution, the covenants, representations and warranties set forth in
Section 2.04. The procedures applied by the Seller in selecting each Eligible
Substitute Mortgage Loan shall not be materially adverse to the interests of the
Indenture Trustee, the Noteholders, the Certificateholders or the Insurer.
Section 2.06 Tax Treatment. The Trust shall be treated as comprising two
segregated accounts each of which will be a real estate mortgage investment
conduit (each a "REMIC" or, in the alternative, the "Lower Tier REMIC" and the
"Upper Tier REMIC"); each of the Notes and the Class B Certificates shall
represent ownership of a regular interest in the Upper Tier REMIC; the Class L
Certificate shall represent the sole class of residual interest in the Lower
Tier REMIC; and the Class R Certificate represents ownership of the sole class
of residual interest in the Upper Tier REMIC.
Section 2.07 Representations, Warranties and Covenants of the Depositor.
(a) The Depositor represents and warrants to the Depositor, the Trust and
the Indenture Trustee on behalf of the Noteholders, the Certificateholders and
the Insurer as follows:
(i) This Agreement constitutes a legal, valid and binding obligation
of the Depositor, enforceable against the Depositor in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization
53
moratorium or other similar laws now or hereafter in effect affecting the
enforcement of creditors' rights in general and except as such
enforceability may be limited by general principles of equity (whether
considered in a proceeding at law or in equity);
(ii) Immediately prior to the transfer by the Depositor to the Trust
of each Mortgage Loan, the Depositor had good and equitable title to each
Mortgage Loan (insofar as such title was conveyed to it by the Depositor)
acquired in good faith and subject to no prior lien, claim, participation
interest, mortgage, security interest, pledge, charge or other encumbrance
or other interest of any nature;
(iii) As of the Closing Date, the Depositor has transferred all
right, title and interest in the Mortgage Loans to the Trust;
(iv) The Depositor has not transferred the Mortgage Loans to the
Trust with any intent to hinder, delay or defraud any of its creditors;
(v) The Depositor has been duly organized and is validly existing as
a corporation in good standing under the laws of Delaware, with full power
and authority to own its assets and conduct its business as presently
being conducted and the Depositor will not change its jurisdiction of
organizations without prior notice to the Rating Agencies, the Servicer,
the Indenture Trustee and the Insurer;
(vi) Other than the security interest granted to the Indenture
Trustee hereunder, the Depositor has not pledged, assigned, sold, granted
a security interest in, or otherwise conveyed any of the Mortgage Loans.
The Depositor has not authorized the filing of and is not aware of any
financing statements against the Depositor that include a description of
collateral covering the Mortgage Loans other than any financing statement
relating to the security interest granted to the Indenture Trustee
hereunder or that has been terminated. The Depositor is not aware of any
judgment or tax lien filings against the Depositor;
(vii) The transfer, assignment and conveyance of the Mortgage Notes
and the Mortgages by the Depositor pursuant to this Agreement are not
subject to the bulk transfer laws or any similar statutory provisions in
effect in any applicable jurisdiction; and
(viii) The Depositor represents and warrants that it has caused the
filing of all appropriate financing statements in the proper filing office
in the appropriate jurisdictions under applicable law in order to perfect
the security interest in the Mortgage Loans transferred to the Indenture
Trustee on behalf of the Trust, pursuant to this Agreement.
It is understood and agreed that the representations and warranties set
forth in (i) through (viii) above shall survive the transfer of the Mortgage
Loans to the Trust.
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(b) The Depositor represents and covenants to the parties hereto and the
Insurer that:
(i) Other than the security interest granted by the Depositor to the
Trust under this Agreement, the Depositor has not pledged, assigned, sold,
granted a security interest in, or otherwise conveyed any of the Mortgage
Loans. The Depositor has not authorized the filing of and is not aware of
any financing statements against the Depositor that includes a description
of collateral covering the Mortgage Loans other than any financing
statement relating to the security interest granted to the Trust under
this Agreement. The Depositor is not aware of any judgment or tax lien
filings against the Depositor;
(ii) The Depositor will not engage in any activity that would result
in a downgrading of the Class A Notes without regard to the Policy; and
(iii) The Depositor's location under the applicable UCC is in
Delaware and it will not change its principal place of business or its
jurisdiction of organization without prior notice to the Rating Agencies,
the Servicer, the Indenture Trustee and the Insurer.
ARTICLE III.
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 3.01 The Servicer.
(a) The Servicer, as independent contract servicer, shall service and
administer the Mortgage Loans in accordance with Accepted Servicing Practices
and shall have full power and authority, acting alone, to do any and all things
in connection with such servicing and administration which the Servicer may deem
necessary or desirable and consistent with the terms of this Agreement. The
Servicer may enter into Subservicing Agreements for any servicing and
administration of Mortgage Loans with Card Management Corporation and First Data
Resources, Inc. and any other institution which (i) is in compliance with the
laws of each state necessary to enable it to perform its obligations under such
Subservicing Agreement, and (ii) (x) has been designated an approved
Seller-Servicer by ▇▇▇▇▇▇▇ Mac or ▇▇▇▇▇▇ Mae for first and second mortgage loans
or (y) is an affiliate of the Servicer or (z) is otherwise approved by the
Insurer. The Servicer shall give written notice to the Insurer and the Indenture
Trustee prior to the appointment of any Subservicer. Any such Subservicing
Agreement shall be consistent with and not violate the provisions of this
Agreement and shall be in form and substance acceptable to the Insurer. The
Servicer shall be entitled to terminate any Subservicing Agreement in accordance
with the terms and conditions of such Subservicing Agreement and either itself
directly service the related Mortgage Loans or enter into a Subservicing
Agreement with a successor subservicer which qualifies hereunder.
(b) Notwithstanding any Subservicing Agreement or any of the provisions of
this Agreement relating to agreements or arrangements between the Servicer and a
Subservicer or reference to actions taken through a Subservicer or otherwise,
the Servicer shall remain obligated
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and primarily liable for the servicing and administering of the Mortgage Loans
in accordance with the provisions of this Agreement without diminution of such
obligation or liability by virtue of such Subservicing Agreements or
arrangements or by virtue of indemnification from the Subservicer and to the
same extent and under the same terms and conditions as if the Servicer alone
were servicing and administering the Mortgage Loans. For purposes of this
Agreement, the Servicer shall be deemed to have received payments on Mortgage
Loans when the Subservicer has received such payments. The Servicer shall be
entitled to enter into any agreement with a Subservicer for indemnification of
the Servicer by such Subservicer, and nothing contained in this Agreement shall
be deemed to limit or modify such indemnification.
(c) Any Subservicing Agreement that may be entered into and any
transactions or services relating to the Mortgage Loans involving a Subservicer
in its capacity as such and not as an originator shall be deemed to be between
the Subservicer and the Servicer alone, and the Depositor, the Owner Trustee,
the Indenture Trustee, the Noteholders and the Certificateholders shall not be
deemed parties thereto and shall have no claims, rights, obligations, duties or
liabilities with respect to the Subservicer except as set forth in Section
3.01(d) herein. The Servicer shall be solely liable for all fees owed by it to
any Subservicer irrespective of whether the Servicer's compensation pursuant to
this Agreement is sufficient to pay such fees.
(d) In the event the Servicer shall for any reason no longer be the
Servicer (including by reason of an Event of Servicer Termination), the
Indenture Trustee or its designee approved by the Insurer or a successor
Servicer under Section 7.02(a) shall thereupon assume all of the rights and
obligations of the Servicer under each Subservicing Agreement that the Servicer
may have entered into, unless the Indenture Trustee or designee approved by the
Insurer or any successor Servicer elects to terminate any Subservicing Agreement
(except with respect to Subservicing Agreements that only allow for termination
of the related Subservicer for cause or require a termination fee for
termination without cause) in accordance with the terms of such Subservicing
Agreement. The Indenture Trustee shall not be responsible for any termination
fees under any Subservicing Agreement. In no event shall any Subservicing
Agreement require the Insurer or the Indenture Trustee as Successor Servicer to
pay compensation to a Subservicer or order the termination of such Subservicer.
Any fee payable or expense incurred in connection with such a termination will
be payable by the outgoing Servicer. If the Indenture Trustee does not terminate
a Subservicing Agreement, the Indenture Trustee, its designee or a successor
Servicer shall be deemed to have assumed all of the Servicer's interest therein
and to have replaced the Servicer as a party to each Subservicing Agreement to
the same extent as if the Subservicing Agreements had been assigned to the
assuming party, except that the Servicer shall not thereby be relieved of any
liability or obligations under the Subservicing Agreements with regard to events
that occurred prior to the date the Servicer ceased to be the Servicer
hereunder. The Servicer, at its expense and without right of reimbursement
therefor, shall, upon the request of the Indenture Trustee, deliver to the
assuming party all documents and records relating to each Subservicing Agreement
and the Mortgage Loans then being serviced and an accounting of amounts
collected and held by it and otherwise use its best efforts to effect the
orderly and efficient transfer of the Subservicing Agreements to the assuming
party.
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(e) No costs incurred by the Servicer or any Subservicer in respect of
Servicing Advances shall, for the purposes of payments to the Noteholders and
distributions to the Certificateholders, be added to the amount owing under the
related Mortgage Loan. Without limiting the generality of the foregoing, the
Servicer shall continue, and is hereby authorized and empowered to execute and
deliver on behalf of the Trust, each Noteholder and each Certificateholder, all
instruments of satisfaction or cancellation, or of partial or full release,
discharge and all other comparable instruments with respect to the Mortgage
Loans and with respect to the Mortgaged Properties. If reasonably required by
the Servicer and requested in writing, the Indenture Trustee shall furnish the
Servicer and, if directed by a Servicing Officer, any Subservicer with any
powers of attorney and other documents reasonably necessary or appropriate to
enable the Servicer and any such Subservicer to carry out its servicing and
administrative duties under this Agreement.
(f) On and after such time as the Indenture Trustee receives the
resignation of, or notice of the removal of, the Servicer from its rights and
obligations under this Agreement, and with respect to resignation pursuant to
Section 6.04 herein, after receipt by the Indenture Trustee and the Insurer of
the Opinion of Counsel required pursuant to Section 6.04, the Indenture Trustee,
if it so elects, and with the consent of the Insurer, shall assume all of the
rights and obligations of the Servicer, subject to Section 7.02 herein. The
Servicer shall at its expense, deliver to the Indenture Trustee, all documents
and records relating to the Mortgage Loans and an accounting of amounts
collected and held by the Servicer and otherwise use its best efforts to effect
the orderly and efficient transfer of servicing rights and obligations to the
assuming party.
The defaulting Servicer agrees to cooperate with the Indenture Trustee and
any successor servicer in effecting the termination of the defaulting Servicer's
responsibilities and rights hereunder as Servicer including, without limitation,
notifying each Subservicer of the assignment of the servicing function and
providing the Indenture Trustee or its designee all documents and records in
electronic or other form reasonably requested by it to enable the Indenture
Trustee or its designee to assume the defaulting Servicer's functions hereunder
and the transfer to the Indenture Trustee for administration by it of all
amounts which shall at the time be or should have been deposited by the
defaulting Servicer in the Collection Account maintained by such defaulting
Servicer and any other account or fund maintained with respect to the Notes or
thereafter received with respect to the Mortgage Loans. The Servicer being
terminated (unless such Servicer is the Indenture Trustee, in which case the
initial Servicer) shall bear all costs of a servicing transfer, including but
not limited to those of the Indenture Trustee reasonably allocable to specific
employees and overhead, legal fees and expenses, accounting and financial
consulting fees and expenses, and costs of amending the Transaction Documents,
if necessary.
The Indenture Trustee shall be entitled to be reimbursed from the Servicer
(or by the Trust pursuant to Section 5.01(a)(I)(xiii), if the Servicer is unable
to fulfill its obligations hereunder) for all costs associated with the transfer
of servicing from the predecessor Servicer, including, without limitation, any
costs or expenses associated with the complete transfer of all servicing data
and the completion, correction or manipulation of such servicing data as may be
reasonably required by the Indenture Trustee to correct any errors or
insufficiencies in the servicing data or otherwise to enable the Indenture
Trustee or other successor Servicer to service
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the Mortgage Loans properly and effectively. If the terminated Servicer does not
pay such reimbursement within thirty (30) days of its receipt of an invoice
therefore, such reimbursement shall be an expense of the Indenture Trustee
pursuant to Section 5.01(a)(I)(xiii); provided that the terminated Servicer
unless the terminated Servicer is the Indenture Trustee shall reimburse the
Trust for any such expense incurred by the Trust.
(g) The Servicer shall deliver a list of Servicing Officers to the
Indenture Trustee and the Insurer on or before the Closing Date and shall revise
such list from time to time, as appropriate, and shall deliver all revisions
promptly to the Indenture Trustee and the Insurer.
(h) Except as is set forth in the following sentence, the Servicer may not
modify any Mortgage Loan unless that Mortgage Loan is in default or if default
is reasonably foreseeable, and if the Servicer has determined the modification
of that Mortgage Loan to be in the best interests of the Noteholders and the
Insurer. In addition, the Servicer may modify a Mortgage Loan that is not in
default and default is not reasonably foreseeable if it has delivered to the
Indenture Trustee and the Insurer (so long as the Class A Notes are Outstanding
or any Reimbursement Amounts remain due and owing to the Insurer) an Opinion of
Counsel to the effect that such modification would not cause any REMIC created
under the Trust Agreement to fail to qualify as a REMIC or result in the
imposition of any prohibited transaction tax; provided it complies with accepted
servicing practices of prudent mortgage loan servicers and no rate modification
is greater than 0.25% per annum on any Mortgage Loan, and provided that the
modification does not materially and adversely affect the interests of the
Noteholders, the Certificateholders or the Insurer (taking into account the
aggregate effect of all previous modifications to date).
The Servicer's ability to permit or effect servicing modifications
contemplated by this clause (h) of Section 3.01 shall be subject to the
following limitations:
(i) Any amounts added to the credit limit of a Mortgage Loan will be
required to be fully amortized over the remaining term, or the extended
term, of the Mortgage Loan.
(ii) The final maturity of any Mortgage Loan may not be extended
beyond the third Payment Date prior to the Final Scheduled Payment Date.
(iii) The aggregate current principal balance of all Mortgage Loans
subject to modifications can be no more than 3.5% of the aggregate
principal balance of the Mortgage Loans as of the Cut-off Date, but this
limit may be increased from time to time with the consent of the Insurer.
(iv) The Servicer covenants and agrees to indemnify the Trust Fund
against any liability for any taxes (including prohibited transaction
taxes) and any related interest, additions, and penalties imposed on the
Trust Fund established hereunder as a result of any modification of a
Mortgage Loan effected pursuant to this Section 3.01.
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(v) With respect to any Mortgage Loan that is modified to increase
the Credit Limit thereof resulting in a higher Combined Loan-to-Value
Ratio, (i) the aggregate Principal Balance of all Mortgage Loans so
modified shall not exceed 10% of the Cut-off Date Principal Balance, and
(ii) the increased Combined Loan-to-Value Ratio for any Mortgage Loan so
modified may not exceed 100%; provided, in any case, the limitation set
forth in clause (iii) above has been satisfied in connection with any such
modification.
(i) If the Mortgage relating to a Mortgage Loan was not subject to a
Senior Lien on the Cut-off Date, then the Servicer may not consent to the
placing of a lien senior to that of the Mortgage on the related Mortgaged
Property. If the Mortgage relating to a Mortgage Loan was subject to a Senior
Lien on the Cut-off Date, then the Servicer may consent to the refinancing of
such prior Senior Lien provided that such refinancing (i) either (x) does not
result in the Combined Loan-to-Value Ratio of such Mortgage Loan exceeding the
Combined Loan-to-Value Ratio of such Mortgage Loan prior to such refinancing; or
(y) does not result in the Combined Loan-to-Value Ratio of such Mortgage Loan
exceeding the Combined Loan-to Value Ratio that would have permitted such
Mortgage Loan to remain in the same pricing category in connection with the
Servicer's underwriting criteria; and (ii) does not result in the Combined
Loan-to-Value Ratio of such Mortgage Loan exceeding 100%.
Section 3.02 Collection of Certain Mortgage Loan Payments.
(a) The Servicer shall make reasonable efforts to collect all payments
called for under the terms and provisions of the Mortgage Loans and shall, to
the extent such procedures shall be consistent with this Agreement, follow such
collection procedures as it follows with respect to mortgage loans in its
servicing portfolio comparable to the Mortgage Loans. Consistent with the
foregoing, and without limiting the generality of the foregoing, the Servicer
may in its discretion (i) subject to Section 3.13, waive any Early Termination
Fee or late payment charge or any assumption fees or other fees which may be
collected in the ordinary course of servicing such Mortgage Loan, (ii) arrange
with a Mortgagor a schedule for the payment of principal and interest due and
unpaid; provided that such arrangement is consistent with the Servicer's
policies with respect to the mortgage loans it owns or services; provided,
further, that notwithstanding such arrangement such Mortgage Loans will be
included in the monthly information delivered by the Servicer to the Indenture
Trustee and the Insurer pursuant to Section 5.03 herein
(b) The Servicer shall establish and maintain an Eligible Account (the
"Collection Account") entitled "Deutsche Bank National Trust Company, in trust
for the registered holders of IndyMac Home Equity Mortgage Loan Asset-Backed
Trust, Series 2006-H3." The Servicer shall notify the Indenture Trustee of the
Eligible Institution with which the Collection Account is maintained. The
Servicer shall, on the Closing Date, deposit any amounts representing payments
on and any collections in respect of the Mortgage Loans received after the
Cut-off Date (excluding scheduled interest payments due on or prior to the
Cut-off Date) and prior to the Closing Date, and thereafter, subject to Section
3.02(c), deposit within two Business Days following receipt thereof, the
following payments and collections received or made by it (without duplication)
to the Collection Account:
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(i) all payments received by the Servicer after the Cut-off Date on
account of principal on the Mortgage Loans;
(ii) all payments, net of related Servicing Fees, received by the
Servicer after the Cut-off Date on account of interest on the Mortgage
Loans;
(iii) all Net Recoveries;
(iv) all Early Termination Fees;
(v) any amounts required to be deposited pursuant to Section 3.07 in
connection with any REO Property;
(vi) the Purchase Price of any Mortgage Loan and the amount of any
Substitution Adjustment paid by a Seller during the related Collection
Period pursuant to Sections 2.02, 2.04 and 2.05;
(vii) all Released Mortgaged Property Proceeds; and
(viii) any amount required to be deposited therein pursuant to
Sections 3.02(c) and 5.08(e) herein;
The foregoing requirements respecting deposits to the Collection Account
are exclusive, it being understood that, without limiting the generality of the
foregoing, the Servicer need not deposit in the Collection Account amounts
representing fees (including annual fees, assumption fees, modification fees,
insufficient funds charges and other ancillary income) or late charge penalties
payable by Mortgagors or amounts received by the Servicer for the accounts of
Mortgagors for application toward the payment of taxes, insurance premiums,
assessments and similar items.
(c) The Servicer shall use its best efforts to cause the institution
maintaining the Collection Account to invest only the Interest Collections on
deposit in the Collection Account attributable to the Mortgage Loans in Eligible
Investments which shall mature not later than the Servicer Remittance Date next
following the date of such investment and which shall not be sold or disposed of
prior to their maturities. All income and gain realized from any such investment
shall be for the benefit of the Servicer as additional servicing compensation
and shall be subject to its withdrawal or order from time to time. The amount of
any losses incurred in respect of any such investments attributable to the
investment of amounts in respect of the Mortgage Loans shall be deposited in the
Collection Account by the Servicer out of its own funds immediately as realized
without any right of reimbursement.
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Section 3.03 Withdrawals from the Collection Account. The Servicer shall
withdraw or cause to be withdrawn funds from the Collection Account for the
stated purposes in the following order of priority:
(i) to reimburse the Servicer for any accrued and unpaid Servicing
Fees;
(ii) on each Servicer Remittance Date, to transfer the following
amounts to the Indenture Trustee for deposit in the Payment Account:
(A) the portion of the Interest Collections and Principal
Collections for the related Collection Period then in the Collection
Account;
(B) any amounts required to be deposited pursuant to Section
3.07 in connection with any REO Property;
(C) any amounts to be paid in connection with a purchase of
Mortgage Loans and REO Properties pursuant to Section 9.01;
(iii) to withdraw any amount received from a Mortgagor that is
recoverable and sought to be recovered as a voidable preference by a
trustee in bankruptcy pursuant to the United States Bankruptcy Code 11
U.S.C. 101 et seq., as amended in accordance with a final, nonappealable
order of a court having competent jurisdiction;
(iv) to pay the Servicer as servicing compensation (in addition to
the Servicing Fee) on the Servicer Remittance Date any interest earned on
funds deposited in the Collection Account;
(v) to withdraw any funds deposited in the Collection Account that
were not required to be deposited therein or were deposited therein in
error and to pay such funds to the appropriate Person, including
collections received on any Defective Mortgage Loan that has been
repurchased by the Seller pursuant to Section 2.04 or substituted for by
the Seller pursuant to Section 2.05 that should be paid to the Seller
pursuant to Article II;
(vi) to pay the Servicer the servicing compensation for the related
Collection Period that it is entitled to receive pursuant to Section 3.09
herein;
(vii) to reimburse the Servicer for any Servicing Advance previously
made which the Servicer has determined to be a Nonrecoverable Advance;
(viii) to withdraw funds necessary for the conservation and
disposition of REO Property pursuant to Section 3.07 to the extent not
advanced by the Servicer; and
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(ix) to clear and terminate the Collection Account upon the
termination of this Agreement.
Prior to making any withdrawal from the Collection Account pursuant to
subclause (vii), the Servicer shall have delivered to the Indenture Trustee and
the Insurer a certificate of a Servicing Officer indicating the amount of any
previous Servicing Advance determined by the Servicer to be a Nonrecoverable
Advance and identifying the related Mortgage Loans(s), and their respective
portions of such Nonrecoverable Advance.
Section 3.04 Maintenance of Hazard Insurance; Property Protection
Expenses. The Servicer verifies the existence at the origination of each
Mortgage Loan fire and hazard insurance naming the Servicer or its designee as
loss payee thereunder providing extended coverage in an amount which is at least
equal to the lesser of (i) the maximum insurable value of the improvements
securing such Mortgage Loan from time to time, (ii) the combined principal
balance owing on such Mortgage Loan and any mortgage loan senior to such
Mortgage Loan and (iii) the minimum amount required to compensate for damage or
loss on a replacement cost basis. The Servicer shall also maintain on property
acquired upon foreclosure, or by deed in lieu of foreclosure, fire and hazard
insurance with extended coverage in an amount which is at least equal to the
lesser of (i) the maximum insurable value from time to time of the improvements
which are a part of such property, (ii) the combined principal balance owing on
such Mortgage Loan and any mortgage loan senior to such Mortgage Loan at the
time of such foreclosure, or deed in lieu of foreclosure plus accrued interest
and the good-faith estimate of the Servicer of related Servicing Advances to be
incurred in connection therewith. Amounts collected by the Servicer under any
such policies shall be deposited in the Collection Account to the extent called
for by Section 3.02. In cases in which any Mortgaged Property is located in an
area identified in a federally designated flood area, the hazard insurance to be
maintained for the related Mortgage Loan shall include flood insurance to the
extent such flood insurance is available and the Servicer has determined such
insurance to be necessary in accordance with Accepted Servicing Practices of
prudent lending institutions. All such flood insurance shall be in amounts not
less than the lesser of (A) the amount in clause (i) above, (B) the amount in
clause (ii) above and (C) the maximum amount of insurance available under the
National Flood Insurance Reform Act of 1994, as amended. The Servicer shall be
under no obligation to require that any Mortgagor maintain earthquake or other
additional insurance and shall be under no obligation itself to maintain any
such additional insurance on property acquired in respect of a Mortgage Loan,
other than pursuant to such applicable laws and regulations as shall at any time
be in force and as shall require such additional insurance.
Section 3.05 Maintenance of Mortgage Impairment Insurance Policy. In the
event that the Servicer shall obtain and maintain a blanket insurance policy
consistent with Accepted Servicing Practices, insuring against fire and hazards
of extended coverage on all of the Mortgage Loans, then, to the extent such
insurance policy names the Servicer or its designee as loss payee and provides
coverage in an amount equal to the aggregate unpaid principal balance on the
Mortgage Loans without coinsurance, and otherwise complies with the requirements
of Section 3.04, the Servicer shall be deemed conclusively to have satisfied its
obligations with respect to fire and hazard insurance coverage under Section
3.04. Upon the request of the
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Insurer or the Indenture Trustee, the Servicer shall cause to be delivered to
the Insurer or the Indenture Trustee, as the case may be, a certified true copy
of such insurance policy. 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 Indenture Trustee, the Insurer and the Trust, claims under
any such insurance policy in a timely fashion in accordance with the terms of
such insurance policy.
If such insurance policy contains a deductible clause, the Servicer shall,
in the event that there shall not have been maintained on the related Mortgage
Property an insurance policy comply with this Section, and there shall have been
a loss that would have been covered by such insurance policy, deposit into the
Collection Account the amount not otherwise payable under such insurance policy
because of such deductible clause.
Section 3.06 Maintenance of Fidelity Bond and Errors and Omissions
Insurance. The Servicer shall maintain with responsible companies, at its own
expense, a blanket fidelity bond ("Fidelity Bond") and an errors and omissions
insurance policy ("Errors and Omissions Insurance Policy"), with broad coverage
on all officers, employees or other persons acting in any capacity requiring
such persons to handle funds, money, documents or papers relating to the related
Mortgage Loans ("Servicer Employees"). Any such Fidelity Bond and Errors and
Omissions Insurance Policy may contain a deductible clause on terms
substantially equivalent to those commercially available and maintained by
comparable servicers. Any such Fidelity Bond and Errors and Omissions Insurance
Policy shall be in the form of the Mortgage Banker's Blanket Bond and shall
protect and insure the Servicer against losses, including forgery, theft,
embezzlement, fraud, errors and omissions and negligent acts of the Servicer
Employees. Such Fidelity Bond and Errors and Omissions Insurance Policy also
shall protect and insure the Servicer against losses in connection with the
release or satisfaction of a related Mortgage Loan without having obtained
payment in full of the indebtedness secured thereby. No provision of this
Section 3.06 requiring such Fidelity Bond and Errors and Omissions Insurance
Policy shall diminish or relieve the Servicer from its duties and obligations as
set forth in this Agreement. The minimum coverage under any such bond and
insurance policy shall be at least equal to the corresponding amounts required
by ▇▇▇▇▇▇ ▇▇▇. Upon the request of the Indenture Trustee or the Insurer, the
Servicer shall cause to be delivered to the Indenture Trustee or the Insurer a
certificate of insurance of the insurer and the surety including a statement
from the surety.
Section 3.07 Management of and Realization upon Defaulted Mortgage Loans.
(a) Management of REO Property. In the event the Trust acquires ownership
of any REO Property in respect of any Mortgage Loan, the deed or certificate of
sale shall be issued to the Indenture Trustee, or to its nominee, on behalf of
the Securityholders. The Servicer shall use its reasonable best efforts to sell,
any REO Property as expeditiously as possible and in accordance with the
provisions of this Agreement, as applicable, but in all events within the time
period, and subject to the conditions set forth in Section 5.09 and prior to the
close of the third taxable year after its acquisition by the Trust unless the
Indenture Trustee and (so long as any Class A Notes are Outstanding or any
Reimbursement Amounts remain due and owing to the Insurer and no Insurer Default
has occurred and is continuing) the Insurer shall have been
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supplied with an Opinion of Counsel to the effect that the holding by the Trust
of such REO Property subsequent to such three-year period will not result in the
imposition of taxes on "prohibited transactions" of any REMIC created under the
Trust Agreement as defined in section 860F of the Code or cause any REMIC
created hereunder to fail to qualify as a REMIC at any time that any Notes or
Certificates are Outstanding, in which case the Trust may continue to hold such
REO Property (subject to any conditions contained in such Opinion of Counsel and
the other requirements of this Section 3.07(a)). Pursuant to its efforts to sell
such REO Property, the Servicer shall protect and conserve, such REO Property in
the manner and to such extent required by this Agreement, subject to Section
5.09 hereof. The decision of the Servicer to foreclose, or to continue the
foreclosure process, on a defaulted Mortgage Loan shall be subject to a
determination by the Servicer that the related Mortgaged Property will not fail
to qualify as "foreclosure property" within meaning of Section 860G(a)(8) of the
Code and that the proceeds of such foreclosure would more likely than not exceed
the costs and expenses of bringing such a proceeding and liquidating the REO
Property expected to be obtained through such foreclosure. Notwithstanding any
other provision of this Agreement, no Mortgaged Property acquired by the Trust
shall be rented (or allowed to continue to be rented) or otherwise used for the
production of income by or on behalf of the Trust in such a manner or pursuant
to any terms that would (i) cause such Mortgaged Property to fail to qualify as
"foreclosure property" within the meaning of Section 860G(a)(8) of the Code or
(ii) subject any REMIC created under the Trust Agreement to the imposition of
any federal, state or local income taxes on the income earned from such
Mortgaged Property, unless the Servicer has agreed to indemnify and hold
harmless the Trust and the Trust Estate with respect to the imposition of any
such taxes..
The Servicer shall cause to be deposited, within the time period
specified in Section 3.02(b), as applicable, in the Collection Account, all
revenues net of Servicing Advances received with respect to the related REO
Property and shall retain, or cause to be withdrawn therefrom, funds necessary
for the proper operation, management and maintenance of the REO Property and the
fees of any managing agent acting on behalf of the Servicer.
The disposition of REO Property shall be carried out by the Servicer
for cash at such price, and upon such terms and conditions, as the Servicer
deems to be in the best interest of the Noteholders, the Certificateholders, the
Trust and the Insurer and, as soon as practicable thereafter, the expenses of
such sale shall be paid. The cash proceeds of the sale of the REO Property shall
be promptly deposited in the Collection Account, pursuant to Section 3.02(b), as
applicable, net of any related unreimbursed Servicing Advances (without
duplication of amounts paid pursuant to Section 3.03(vi)), payable to the
Servicer in accordance with Section 3.03, for payment in accordance with Section
5.01 herein.
(b) Realization Upon Defaulted Mortgage Loans. The Servicer shall
foreclose upon or otherwise comparably convert to ownership Mortgaged Properties
securing such of the Mortgage Loans as come into and continue in default when no
satisfactory arrangements can be made for collection of delinquent payments
pursuant to Section 3.01, subject to the provisions contained in the second
succeeding paragraph of this Section 3.07 and only if the Servicer determines
that there is sufficient equity in the related Mortgaged Property to justify
such foreclosure. In connection with foreclosure or other conversion, the
Servicer will follow Accepted Servicing
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Practices, including the practice that the Servicer will not be required to
expend its own funds in connection with foreclosure or other conversion,
correction of default on a related senior mortgage loan or restoration of any
Mortgaged Property unless, in its sole judgment, foreclosure, correction or
restoration will increase net liquidation proceeds and that, in the event that
the related Mortgaged Property shall have suffered damage from an Uninsured
Cause, the Servicer shall not be required to expend its own funds toward the
restoration of such Mortgaged Property unless it shall determine in its
discretion that such restoration will increase the proceeds of liquidation of
the Mortgage Loan after reimbursement to itself for such expenses.
In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be issued to the Indenture Trustee or its nominee on behalf of the Trust
and the Insurer.
If the Servicer has actual knowledge that a Mortgaged Property which the
Servicer is contemplating acquiring in foreclosure or by deed in lieu of
foreclosure is located within 1 mile of any site with environmental or hazardous
waste risks, the Servicer will notify the Insurer prior to acquiring the
Mortgaged Property and shall not take any action without prior written approval
of the Insurer.
Section 3.08 Indenture Trustee to Cooperate. Upon the payment in full of
any Mortgage Loan, the Servicer is authorized to execute (on behalf of the
Indenture Trustee pursuant to the authorization contained in Section 3.01(f) if
the related Assignment of Mortgage has been recorded) an instrument of
satisfaction regarding the related Mortgage, which instrument of satisfaction
shall be recorded by the Servicer if required by applicable law and be delivered
to the Person entitled thereto. It is understood and agreed that no expenses
incurred in connection with such instrument of satisfaction or transfer shall be
reimbursed from amounts deposited in the Collection Account. If the Indenture
Trustee is holding any portion of the Mortgage Files, from time to time and as
appropriate for the servicing or foreclosure of any Mortgage Loan, the Indenture
Trustee shall, upon request of the Servicer and delivery to the Indenture
Trustee of a request for release, in the form attached hereto as Exhibit I,
signed by a Servicing Officer, release the related portion of the Mortgage File
to the Servicer, and the Indenture Trustee shall execute such documents, at the
expense of and in the forms provided by the Servicer, as shall be necessary for
the prosecution of any such proceedings or the taking of other servicing
actions. Such Request for Release shall obligate the Servicer to return the
portion of the Mortgage File released to it to the Indenture Trustee when the
need therefor by the Servicer no longer exists unless the Mortgage Loan shall be
liquidated, in which case, upon receipt of a certificate of a Servicing Officer
similar to that hereinabove specified (including a certification that the
Servicer has deposited the proceeds of such liquidated Mortgage Loan in the
Collection Account), a copy of the Request for Release shall be released by the
Indenture Trustee to the Servicer.
In order to facilitate the foreclosure of the Mortgage securing any
Mortgage Loan that is in default following recordation of the related Assignment
of Mortgage in accordance with the provisions hereof, the Indenture Trustee
shall, if so requested in writing by the Servicer execute an appropriate
assignment in the form provided to the Trust and the Indenture Trustee by the
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Servicer to assign such Mortgage Loan for the purpose of collection to the
Servicer (any such assignment shall unambiguously indicate that the assignment
is for the purpose of collection only) and, upon such assignment, such assignee
for collection will thereupon bring all required actions in its own name and
otherwise enforce the terms of the Mortgage Loan and deposit or credit the Net
Recoveries received with respect thereto in the Collection Account. In the event
that all delinquent payments due under any such Mortgage Loan are paid by the
Mortgagor and any other defaults are cured then the assignee for collection
shall promptly reassign such Mortgage Loan to the Indenture Trustee and return
it to the place where the related Mortgage File was being maintained.
Section 3.09 Servicing Compensation; Payment of Certain Expenses by
Servicer. The Servicer shall be entitled to retain the Servicing Fee in
accordance with Section 3.02 as compensation for its services in connection with
servicing the Mortgage Loans. Moreover, additional servicing compensation in the
form of late payment charges or other receipts not considered interest or
principal payments under the Mortgage Notes and Foreclosure Profits shall be
retained by the Servicer. The Servicer shall be required to pay all expenses
incurred by it in connection with its activities hereunder (including payment of
all other fees and expenses not expressly stated hereunder to be for the account
of the Trust) and shall not be entitled to reimbursement therefor except as
specifically provided herein.
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Section 3.10 Annual Statement as to Compliance. The Servicer shall deliver
to the Indenture Trustee (via electronic mail to ▇▇▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇@▇▇.▇▇▇),
the Depositor, the Insurer (so long as the Class A Notes are Outstanding or any
Reimbursement Amounts remain due and owing to the Insurer) and the Rating
Agencies on or before March 15 of each year, commencing in 2007, unless and
until a Form 15 Suspension Notice shall have been filed an officer's
certificate, an officer's certificate in the form of Exhibit C hereof,
certifying that with respect to the period ending December 31st of the prior
year: (i) the Servicer or such Servicing Officer, as applicable, has reviewed
the activities of the Servicer during the preceding calendar year or portion
thereof and its performance under this Agreement and (ii) to the best of the
Servicer's or such Servicing Officer's knowledge, as applicable based on such
review, the Servicer has performed and fulfilled its duties, responsibilities
and obligations under this Agreement in all material respects throughout such
year, or, if there has been a default in the fulfillment of any such duties,
responsibilities or obligations, specifying each such default known to such
Servicing Officer and the nature and status thereof. Copies of any such
statement shall be provided by the Indenture Trustee to any Noteholder and to
any Person identified to the Indenture Trustee as a prospective transferee of a
Note, upon request at the expense of the requesting party, provided such
statement is delivered by the Servicer to the Indenture Trustee. In addition to
the foregoing, the Servicer will, to the extent reasonable, give any other
servicing information required by the Commission pursuant to applicable law. The
Servicer shall indemnify and hold harmless the Depositor and its officers,
directors and Affiliates from and against any actual losses, damages, penalties,
fines, forfeitures, reasonable and necessary legal fees and related costs,
judgments and other costs and expenses that such Person may sustain based upon a
breach of the Servicer's obligations under this Section 3.10.
Section 3.11 Assessment of Compliance and Attestation Report.
The Servicer shall service and administer the Mortgage Loans in accordance with
all requirements of the Servicing Criteria applicable to the Servicer (as set
forth in Exhibit P hereto). Pursuant to Rules 13a-18 and 15d-18 of the Exchange
Act and Item 1122 of Regulation AB, the Servicer, unless a Form 15 Suspension
Notice shall have been filed, shall deliver to the Indenture Trustee and the
Insurer (so long as the Class A Notes are Outstanding or any Reimbursement
Amounts remain due and owing to the Insurer), via electronic mail to
▇▇▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇@▇▇.▇▇▇, on or before March 15th of each calendar year
beginning in 2007, a report regarding the Servicer's assessment of compliance
(an "Assessment of Compliance") with the Servicing Criteria during the preceding
calendar year. The Assessment of Compliance must be reasonably satisfactory to
the Indenture Trustee, and as set forth in Regulation AB, the Assessment of
Compliance must contain the following:
(a) A statement by such officer of its responsibility for assessing
compliance with the Servicing Criteria applicable to the Servicer;
(b) A statement by such officer that such officer used the Servicing
Criteria, and which will also be attached to the Assessment of Compliance, to
assess compliance with the Servicing Criteria applicable to the Servicer;
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(c) An assessment by such officer of the Servicer's compliance with
the applicable Servicing Criteria for the period consisting of the preceding
calendar year, including disclosure of any material instance of noncompliance
with respect thereto during such period, which assessment shall be based on the
activities it performs with respect to asset-backed securities transactions
taken as a whole involving the Servicer, that are backed by the same asset type
as the Mortgage Loans;
(d) A statement that a registered public accounting firm has issued
an attestation report on the Servicer's Assessment of Compliance for the period
consisting of the preceding calendar year; and
(e) A statement as to which of the Servicing Criteria, if any, are
not applicable to the Servicer, which statement shall be based on the activities
it performs with respect to asset-backed securities transactions taken as a
whole involving the Servicer, that are backed by the same asset type as the
Mortgage Loans.
Such report at a minimum shall address each of the Servicing
Criteria specified on Exhibit P hereto which are indicated as applicable to the
Servicer.
On or before March 15th of each calendar year beginning in 2007, the
Servicer shall furnish to the Indenture Trustee and the Insurer (so long as the
Class A Notes are Outstanding or any Reimbursement Amounts remain due and owing
to the Insurer) a report (an "Attestation Report") by a registered public
accounting firm that attests to, and reports on, the Assessment of Compliance
made by the Servicer, as required by Rules 13a-18 and 15d-18 of the Exchange Act
and Item 1122(b) of Regulation AB, which Attestation Report must be made in
accordance with standards for attestation reports issued or adopted by the
Public Company Accounting Oversight Board.
The Servicer shall cause and any Subservicer, and each subcontractor
determined by the Servicer to be "participating in the servicing function"
within the meaning of Item 1122 of Regulation AB, to deliver to the Indenture
Trustee and the Depositor an Assessment of Compliance and Attestation Report as
and when provided above.
Such Assessment of Compliance, as to any Subservicer, shall at a
minimum address each of the Servicing Criteria specified on Exhibit P hereto
which are indicated as applicable to any "primary servicer." Notwithstanding the
foregoing, as to any subcontractor, an Assessment of Compliance is not required
to be delivered unless it is required as part of a Form 10-K with respect to the
Trust Fund.
If the Servicer cannot deliver any Assessment of Compliance or
Attestation Report by March 15th of such year, the Indenture Trustee, at its
sole option, may permit a cure period for the Servicer to deliver such
Assessment of Compliance or Attestation Report, but in no event later than March
25th of such year.
Failure of the Servicer to timely comply with this Section 3.11 may
be deemed an Event of Servicer Termination. The Indenture Trustee shall, with
the consent of the Depositor,
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in addition to whatever rights the Indenture Trustee may have under this
Agreement and at law or equity or to damages, including injunctive relief and
specific performance, give notice to Noteholders and the Insurer (so long as the
Class A Notes are Outstanding or any Reimbursement Amounts remain due and owing
to the Insurer and no Insurer Default has occurred and is continuing) that each
has ten Business Days to object. If no such objection is received, the Indenture
Trustee shall immediately terminate all the rights and obligations of the
Servicer under this Agreement and in and to the Mortgage Loans and the proceeds
thereof without compensating the Servicer for the same. This paragraph shall
supersede any other provision in this Agreement or any other agreement to the
contrary.
The Indenture Trustee shall also provide an Assessment of Compliance
and Attestation Report, as and when provided above, which shall at a minimum
address each of the Servicing Criteria specified on Exhibit P hereto which are
indicated as applicable to the "trustee."
Section 3.12 Access to Certain Documentation and Information Regarding the
Mortgage Loans. The Servicer shall provide to the Indenture Trustee, the
Insurer, Noteholders that are federally insured savings and loan associations,
the Office of Thrift Supervision, the FDIC and the supervisory agents and
examiners of the Office of Thrift Supervision access to the documentation
regarding the Mortgage Loans required by applicable regulations of the Office of
Thrift Supervision and the FDIC, such access being afforded without charge but
only upon reasonable request and during normal business hours at the offices of
the Servicer. Nothing in this Section 3.12 shall derogate from the obligation of
the Servicer to observe any applicable law prohibiting disclosure of information
regarding the Mortgagors and the failure of the Servicer to provide access as
provided in this Section 3.12 as a result of such obligation shall not
constitute a breach of this Section 3.12; provided that the Servicer makes
reasonable efforts to provide such information without violation of law.
Section 3.13 Early Termination Fees
(a) Servicer shall not waive any part of any Early Termination Fee unless
the waiver relates to a default or a reasonably foreseeable default, the
collection of any Early Termination Fee would violate any relevant law or
regulation or the waiving of the Early Termination Fee would otherwise benefit
the Trust Fund and it is expected that the waiver would maximize recovery of
total proceeds taking into account the value of the Early Termination Fee and
related Mortgage Loan and doing so is standard and customary in servicing
similar Mortgage Loans (including any waiver of a Early Termination Fee in
connection with a refinancing of a Mortgage Loan that is related to a default or
a reasonably foreseeable default). The Servicer shall not waive a Early
Termination Fee in connection with a refinancing of a Mortgage Loan that is not
related to a default or a reasonably foreseeable default.
(c) The Seller represents and warrants to the Depositor and the Indenture
Trustee, as of the Closing Date, that the information in the Mortgage Loan
Schedule (including the attached Early Termination Fee summary) is complete and
accurate in all material respects at the dates as of which the information is
furnished and each Early Termination Fee is permissible and enforceable in
accordance with its terms under applicable state law.
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(d) Upon discovery by the Seller or a Responsible Officer of the Indenture
Trustee of a breach of the foregoing clause (b) that materially and adversely
affects right of the Holders of the Class L Certificate to any Early Termination
Fee, the party discovering the breach shall give prompt written notice to the
other parties. Within sixty (60) days of the earlier of discovery by the
Servicer or receipt of notice by the Servicer of breach, the Servicer shall cure
the breach in all material respects or shall pay into the Collection Account the
amount of the scheduled Early Termination Fee, less any amount previously
collected and paid by the Servicer into the Collection Account. If the covenant
made by the Servicer in clause (a) above is breached, the Servicer must pay into
the Collection Account the amount of the waived Early Termination Fee.
Section 3.14 Commission Reporting.
(a) Unless and until a Form 15 Suspension Notice shall have been filed,
the Indenture Trustee shall, within 15 days after each Distribution Date and in
accordance with industry standards, file with the Commission via the Electronic
Data Gathering and Retrieval System ("▇▇▇▇▇"), a Distribution Report on Form
10-D (the "Distribution Report") with a copy of the statement to be furnished by
the Indenture Trustee to the Noteholders for such Distribution Date and, if
applicable, including the information required by each of the items set forth in
Part II thereof, subject to the receipt of the information set forth in (f)
below, in the case of information not required to be provided by the Indenture
Trustee.
(b) The Indenture Trustee shall prepare each Distribution Report and, no
later than 5 Business Days prior to the date on which such Distribution Report
is required to be filed, deliver a copy of such Distribution Report to the
Depositor for review. No later than the Business Day following the receipt
thereof, the Depositor shall notify the Indenture Trustee of any changes to made
to the Distribution Report. The Indenture Trustee shall make any changes thereto
requested by the Depositor and deliver the final Distribution Report to the
Depositor for signature no later than three Business Days prior to the date on
which such Distribution Report must be filed by the Indenture Trustee in
accordance with clause (a) above. The Depositor shall execute the final
Distribution Report and deliver the same to the Indenture Trustee via electronic
mail to ▇▇▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇@▇▇.▇▇▇ or facsimile no later than the Business Day
following receipt of the same (which, unless not received within such time frame
from the Indenture Trustee, shall be no later than two Business Days prior to
the date on which the Distribution Report is required to be filed), with an
original executed hard copy to follow by overnight mail. With respect to the
Distribution Report to be filed following the first Distribution Date, the
Depositor shall prepare and execute such Distribution Report and, no later than
5 Business Days prior to the date on which such Distribution Report is required
to be filed, deliver a copy of such Distribution Report to the Indenture
Trustee. The Indenture Trustee shall attach thereto the Statement to Noteholders
furnished by the Indenture Trustee to the Certificateholders for such
Distribution Date and file such Distribution Report in accordance with clause
(a) above.
(c) The Depositor shall prepare and file Current Reports on Form 8-K, as
and when required.
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(d) Prior to January 30th of the first year in which the Indenture Trustee
is able to do so under applicable law, the Indenture Trustee shall, in
accordance with industry standards, file a Form 15 Suspension Notice with
respect to the Trust Fund.
(e) Prior to (x) March 15, 2007 and (y) unless and until a Form 15
Suspension Notice shall have been filed, prior to March 15th of each year
thereafter, the Servicer shall provide the Indenture Trustee with an Annual
Compliance Statement, together with a copy of the Assessment of Compliance and
Attestation Report to be delivered by the Servicer pursuant to Sections 3.10 and
3.11. Prior to (x) March 31, 2007 and (y) unless and until a Form 15 Suspension
Notice shall have been filed, March 31 of each year thereafter, the Indenture
Trustee shall, subject to subsection (e) below, file a Form 10-K, with respect
to the Trust Fund. The Indenture Trustee shall prepare each Form 10-K and, no
later than 5 Business Days prior to the date on which such Form 10-K is required
to be filed, deliver a copy of such Form 10-K to the Depositor for review. No
later than the second Business Day following the receipt thereof, the Depositor
shall notify the Indenture Trustee of any changes to made to the Form 10-K. The
Indenture Trustee shall make any changes thereto requested by the Depositor and
deliver the final Form 10-K to the Depositor for signature no later than three
Business Days prior to the date on which such Form 10-K must be filed by the
Indenture Trustee in accordance with this clause (d). The Depositor shall
execute the final Form 10-K and deliver the same to the Indenture Trustee via
electronic mail to ▇▇▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇@▇▇.▇▇▇ or facsimile no later than Business
Day following receipt of the same (which, unless not received within such time
frame from the Indenture Trustee, shall be no later than two Business Days prior
to the date on which the From 10-K is required to be filed), with an original
executed hard copy to follow by overnight mail. Such Form 10-K shall include the
Assessment of Compliance, Attestation Report, Annual Compliance Statements and
other documentation provided by the Servicer, Subservicer and Indenture Trustee
pursuant to Sections 3.10 and 3.11 and a certification in the form attached
hereto as Exhibit M (the "Depositor Certification"), which shall be signed by
the senior officer of the Depositor in charge of securitization.
(f) As to each item of information required to be included in any Form
10-D, Form 8-K or Form 10-K, the Indenture Trustee's or Depositor's obligation
to include the information in the applicable report is subject to receipt from
the entity that is indicated in Exhibit R as the responsible party for providing
that information, if other than the Indenture Trustee or the Depositor, as
applicable, as and when required as described above. Each of the Indenture
Trustee, the Servicer and the Depositor, as applicable, hereby agree to notify
and provide to the Indenture Trustee and the Depositor all information that is
required to be included in any Form 10-D, Form 8-K or Form 10-K, with respect to
which that entity is indicated in Exhibit R as the responsible party for
providing that information. In the case of information to be included in the
From 10-D, such information shall be delivered to the Indenture Trustee via
email to ▇▇▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇@▇▇.▇▇▇ no later than no later than 5 calendar days
following each Distribution Date. In the case of information to be included in
the Form 8-K, such information shall be delivered to the Depositor no later than
no later 2 Business Days following the occurrence of a reportable event. In the
case of information to be included in the From 10-K, such information, other
than the documentation provided pursuant to Sections 3.10, 3.11 and 3.14(f),
shall be delivered to the Indenture Trustee via email to
▇▇▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇@▇▇.▇▇▇ no later than no later than (x) March 1, 2007 and (y)
unless and until a Form 15 Suspension
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Notice shall have been filed, March 1 of each year thereafter. The
Servicer shall be responsible for determining the pool concentration applicable
to any subservicer or originator at any time, for purposes of disclosure as
required by Items 1117 and 1119 of Regulation AB. The Indenture Trustee shall
provide electronic or paper copies of all Form 10-D, 8-K and 10-K filings free
of charge to any Certificateholder upon request.
(g) Unless and until a Form 15 Suspension Notice shall have been filed,
the Indenture Trustee shall sign a certification (in the form attached hereto as
Exhibit N) for the benefit of the Depositor and its officers, directors and
Affiliates. The Indenture Trustee's certification shall be delivered to the
Depositor by no later than March 18 of each year (or if such day is not a
Business Day, the immediately preceding Business Day) and the Depositor shall
deliver the Depositor Certification to the Indenture Trustee for filing no later
than March 20 of each year (or if such day is not a Business Day, the
immediately preceding Business Day).
(h) The Indenture Trustee shall indemnify and hold harmless the Depositor
and its officers, directors and Affiliates from and against any losses, damages,
penalties, fines, forfeitures, reasonable and necessary legal fees and related
costs, judgments and other costs and expenses arising out of or based upon (i) a
breach of the Indenture Trustee's obligations under this Section 3.14 or Section
3.11 or (ii) any material misstatement or omission contained in any information
provided by the Indenture Trustee including, without limitation, in the
certification provided by the Indenture Trustee in the form of Exhibit N or the
Assessment of Compliance provided pursuant to Section 3.11. If the
indemnification provided for herein is unavailable or insufficient to hold
harmless the Depositor, then the Indenture Trustee, in connection with (i) a
breach of the Indenture Trustee's obligations under this Section 3.14, Section
3.11 or (ii) any material misstatement or omission contained in any information
provided by the Indenture Trustee including, without limitation, in the
certification provided by the Indenture Trustee in the form of Exhibit N, or in
the Assessment of Compliance provided pursuant to Section 3.11, agrees that it
shall contribute to the amount paid or payable by the Depositor as a result of
the losses, claims, damages or liabilities of the Depositor in such proportion
as is appropriate to reflect the relative fault of the Depositor on the one hand
and the Indenture Trustee on the other. This indemnification shall survive the
termination of this Agreement or the termination of any party to this Agreement.
(i) The Servicer shall indemnify and hold harmless the Depositor, the
Indenture Trustee and their respective officers, directors and Affiliates from
and against any actual losses, damages, penalties, fines, forfeitures,
reasonable and necessary legal fees and related costs, judgments and other costs
and expenses that such Person may sustain based upon (i) a breach of the
Servicer's obligations under Sections 3.10, 3.11 or 3.14 or (ii) any material
misstatement or omission contained in any information provided by the Servicer
including, without limitation, in the information provided pursuant to Sections
3.10 and 3.11. This indemnification shall survive the termination of this
Agreement or the termination of any party to this Agreement.
(j) The Depositor shall indemnify and hold harmless the Servicer, the
Indenture Trustee and their respective officers, directors and Affiliates from
and against any actual losses, damages, penalties, fines, forfeitures,
reasonable and necessary legal fees and related costs,
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judgments and other costs and expenses that such Person may sustain based
upon (i) a breach of the Depositor's obligations under this Section 3.14 or (ii)
any material misstatement or omission contained in any information provided by
the Depositor.
(k) The Indenture Trustee will have no duty or liability to verify the
accuracy or sufficiency of any information not prepared by it included in any
Form 10-D, Form 10-K or Form 8-K. The Indenture Trustee shall have no liability
with respect to any failure to properly file any Form 10-D or 10-K resulting
from or relating to the Depositor's failure to timely comply with the provisions
of this section. Nothing herein shall be construed to require the Indenture
Trustee or any officer, director or Affiliate thereof to sign any Form 10-D,
Form 10-K or Form 8-K. Copies of all reports filed by the Indenture Trustee
under the Exchange Act shall be sent to the Depositor electronically or at the
address set forth herein. Fees and expenses incurred by the Indenture Trustee in
connection with this Section 3.14 shall not be reimbursable from the Trust Fund.
(l) Upon any filing with the Commission, the Indenture Trustee shall
promptly deliver to the Depositor a copy of any executed report, statement or
information.
(m) To the extent that, following the Closing Date, the Depositor
certifies that reports and certifications differing from those required under
this Section 3.14 are necessary to comply with the reporting requirements under
the Exchange Act, the parties hereto hereby agree that each will reasonably
cooperate to amend the provisions of this Section 3.14(b) in order to comply
with such amended reporting requirements and such amendment of this Section
3.14. Any such amendment may result in the reduction of the reports executed by
and filed on behalf of the Depositor under the Exchange Act. Notwithstanding the
foregoing, the Indenture Trustee shall not be obligated to enter into any
amendment pursuant to this Section that adversely affects its obligations and
immunities under this Agreement in any material respect.
(n) Each of the parties acknowledges and agrees that the purpose of
Sections 3.10, 3.11 and this Section 3.14 of this Agreement is to facilitate
compliance by the Depositor with the provisions of Regulation AB. Therefor, each
of the parties agree that (a) the obligations of the parties hereunder shall be
interpreted in such a manner as to accomplish that purpose, (b) the parties'
obligations hereunder will be supplemented and modified as necessary to be
consistent with any such amendments, interpretive advice or guidance in respect
of the requirements of Regulation AB, (c) the parties shall comply with
reasonable requests made by the Depositor for delivery of additional or
different information as the Depositor may determine in good faith is necessary
to comply with the provisions of Regulation AB, and (d) no amendment of this
Agreement shall be required to effect any such changes in the parties'
obligations as are necessary to accommodate evolving interpretations of the
provisions of Regulation AB.
Section 3.15 Reports of Foreclosures and Abandonments of Mortgaged
Properties, Returns Relating to Mortgage Interest Received from Individuals and
Returns Relating to Cancellation of Indebtedness. The Servicer shall, beginning
in 2007, make annual reports of foreclosures and abandonments of any Mortgaged
Property. The Servicer shall file or cause to be filed reports relating to each
instance occurring during the previous calendar year in which the
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Servicer (i) on behalf of the Trust acquires an interest in any Mortgaged
Property through foreclosure or other comparable conversion in full or partial
satisfaction of a Mortgage Loan or (ii) knows or has reason to know that any
Mortgaged Property has been abandoned. The reports shall be in form and
substance sufficient to meet the reporting requirements imposed by Sections
6050J, 6050H and 6050P of the Code.
Section 3.16 Assumption Agreements. When a Mortgaged Property has been or
is about to be conveyed by the Mortgagor, the Servicer shall, to the extent it
has knowledge of such conveyance or prospective conveyance, exercise its right
to accelerate the maturity of the related Mortgage Loan under any "due-on-sale"
clause contained in the related Mortgage or Mortgage Note; provided, however,
that the Servicer shall not exercise any such right if the "due-on-sale" clause,
in the reasonable belief of the Servicer, is not enforceable under applicable
law. In such event, the Servicer shall enter into an assumption and modification
agreement with the person to whom such property has been or is about to be
conveyed, provided that pursuant to which assumption agreement, such person
shall become liable under the Mortgage Note and, unless prohibited by applicable
law, the Mortgagor shall remain liable thereon and, in connection with such
assumption, no material term of the Mortgage Note may be changed. The Servicer,
in accordance with accepted mortgage loan servicing standards for mortgage loans
similar to the Mortgage Loans, is also authorized to enter into a substitution
of liability whereby such person is substituted as mortgagor and becomes liable
under the Mortgage Note. The Servicer shall notify the Indenture Trustee and the
Insurer in writing that any such substitution or assumption agreement has been
completed, and add such agreement to the related Mortgage File and shall, for
all purposes, be considered a part of such Mortgage File to the same extent as
all other documents and instruments constituting a part thereof. In connection
with any assumption or substitution agreement entered into pursuant to this
Section 3.16, the Servicer shall not change the Loan Rate or the Monthly
Payment, defer or forgive the payment of principal or interest, reduce the
outstanding principal amount or extend the final maturity date on such Mortgage
Loan.
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Servicer shall not be deemed to be in default, breach or any
other violation of its obligations hereunder by reason of any assumption of a
Mortgage Loan by operation of law or any assumption which the Servicer may be
restricted by law from preventing, for any reason whatsoever.
Section 3.17 Payment of Taxes, Insurance and Other Charges. With respect
to each Mortgage Loan, the Servicer shall not be required to maintain records
relating to payment of taxes.
Section 3.18 Servicing Advances. Notwithstanding anything herein to the
contrary, no Servicing Advance shall be required to be made hereunder by the
Servicer if such Servicing Advance would, if made, constitute a Nonrecoverable
Advance. The determination by the Servicer that it has made a Nonrecoverable
Advance or that any proposed Servicing Advance, if made, would constitute a
Nonrecoverable Advance, shall be evidenced by an Officer's Certificate of the
Servicer delivered to the Depositor, the Indenture Trustee and the Insurer.
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Section 3.19 Allocation of Charge-Off Amounts.
(a) On each Payment Date, the Servicer shall calculate the amount of
Charge-off Amounts for the preceding Collection Period, and shall include such
calculation in its Servicing Certificate.
(b) On each Payment Date, the Investor Charge-off Amounts for such Payment
Date shall be allocated as follows:
(i) first, to Excess Cashflow until the Excess Cashflow is reduced
to zero;
(ii) second, to the Overcollateralization Amount until the
Overcollateralization Amount is reduced to zero;
(iii) third, to the Class M2 Notes until the Note Principal Amount
of the Class M2 Notes is reduced to zero; and
(iv) fourth, to the Class M1 Notes until the Note Principal Amount
of the Class M1 Notes is reduced to zero.
(c) Investor Charge-off Amounts shall not be allocated to the Class A
Notes on any Payment Date.
ARTICLE IV.
INSURER
Section 4.01 Claims upon the Policy.
(a) As soon as possible, and in no event later than 10:00 a.m. New York
City time on the second Business Day immediately preceding the Payment Date, the
Indenture Trustee shall furnish the Insurer and the Servicer with a completed
notice in the form set forth as Exhibit A to the Policy (the "Notice") in the
event that the Insured Amount for such Payment Date is an amount greater than
zero. The Notice shall specify the amount of the Insured Amount and shall
constitute a claim for an Insured Amount pursuant to the Policy. Upon receipt of
an Insured Amount on behalf of the Holders of the Class A Notes under the
Policy, the Indenture Trustee shall deposit such Insured Amount in the Payment
Account and shall distribute such Insured Amount on the Payment Date or on the
date of receipt by the Indenture Trustee, if received after the Payment Date, to
the Class A Noteholders as a payment of interest or principal, as the case may
be (provided that any amount paid under clause (2) of the definition of
"Deficiency Amount" in the Policy shall be paid to the Class A Noteholders as a
payment of principal).
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(b) The Indenture Trustee shall keep a complete and accurate record of the
amount of interest and principal paid from moneys received under the Policy. The
Insurer shall have the right to inspect such records at reasonable times during
normal business hours of the Indenture Trustee upon four Business Days' prior
written notice to the Indenture Trustee.
(c) If a payment of principal or interest previously paid to a Class A
Noteholder which would have been covered under the Policy as an Insured Amount
is voided under any applicable bankruptcy, insolvency, receivership or similar
law in an insolvency proceeding (as such term is used in the Policy), and as a
result, the Indenture Trustee is required to return such voided payment, or any
portion of such voided payment, made in respect of the Class A Notes (a "Avoided
Payment"), the Indenture Trustee or any Holder shall furnish to the Insurer (i)
a certified copy of a final order of a court or other body exercising
jurisdiction in an insolvency proceeding to the effect that the Indenture
Trustee, or Holder, as applicable, is required to return such Avoided Payment
paid during the term of the Policy because such payments were avoided under
applicable law with respect to which order the appeal period has expired without
an appeal being filed (the "Final Order"), (ii) an assignment, substantially in
the form attached to the Policy, duly executed and delivered by the Holder,
irrevocably assigning to the Insurer all rights and claims of such Holder
relating to or arising under such Avoided Payment, and (iii) a Notice
appropriately completed and executed by the Indenture Trustee; provided, that if
such documents are received by the Insurer after 10:00 a.m., New York City time,
on such Business Day, they will be deemed to be received on the following
Business Day; provided, further, that the Insurer shall not be obligated to make
any payment in respect of any Avoided Payment representing a payment of
principal on the Class A Notes prior to the time the Insurer would have been
required to make a payment in respect of such principal pursuant to the Policy.
Such payment shall be disbursed to the receiver, conservator,
debtor-in-possession or trustee in bankruptcy named in the Final Order, and not
to the Indenture Trustee or the Holder directly, unless the Indenture Trustee or
the Holder has made a payment of the Avoided Payment to such receiver,
conservator, debtor-in-possession or trustee in bankruptcy named in the Final
Order, in which case the Insurer will pay the Indenture Trustee on behalf of
such Holder, subject to the delivery of (a) the items referred to in clauses
(i), (ii) and (iii) above to the Insurer and (b) evidence satisfactory to the
Insurer that payment has been made to such receiver, conservator,
debtor-in-possession or trustee in bankruptcy named in the Final Order). The
Indenture Trustee is not permitted to make a claim on the Trust or on any Class
A Noteholder for payments made to any Class A Noteholder which are characterized
as preference payments by any bankruptcy court having jurisdiction over any
bankrupt Mortgagor unless ordered to do so by such bankruptcy court.
(d) Any amounts received by the Indenture Trustee pursuant to the Policy
in respect of the Class A Notes shall be deposited to the Payment Account and be
used solely to make a payment to the Class A Noteholders.
Section 4.02 Effect of Payments by the Insurer; Subrogation. Anything
herein to the contrary notwithstanding, any payment with respect to principal of
or interest on any of the Class A Notes which are made with moneys received
pursuant to the terms of the Policy shall not be considered payment of such
Class A Notes, as applicable, from the Trust and shall not
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result in the payment of or the provision for the payment of the principal
of or interest on such Class A Notes, as applicable, within the meaning of
Section 5.01 herein. The Seller, the Depositor, the Servicer and the Indenture
Trustee acknowledge, and each Holder by its acceptance of a Class A Note agrees,
that without the need for any further action on the part of the Insurer, the
Seller, the Depositor, the Servicer, the Indenture Trustee or the Certificate
Registrar (a) to the extent the Insurer makes payments, directly or indirectly,
on account of principal of or interest on any Class A Notes to the Holders of
such Class A Notes, the Insurer will be fully subrogated to the rights of such
Holders to receive such principal and interest, as applicable, from the Trust
and (b) the Insurer shall be paid such principal and interest but only from the
sources and in the manner provided herein and in the Insurance Agreement for the
payment of such principal and interest.
The Indenture Trustee and the Servicer shall cooperate in all respects
with any reasonable request by the Insurer for action to preserve or enforce the
Insurer's rights or interests under this Agreement without limiting the rights
or affecting the interests of the Holders of the Class A Notes as otherwise set
forth herein.
ARTICLE V.
PRIORITY OF DISTRIBUTIONS; STATEMENTS TO
CLASS A NOTEHOLDERS; RIGHTS OF CLASS A NOTEHOLDERS
Section 5.01 Distributions.
(a) Distributions on the Notes and Certificates. On each Payment Date, the
Indenture Trustee, shall distribute out of the Payment Account, Available Funds
net of the Servicing Fee (which shall be paid or withdrawn by the Servicer),
payment to the Owner Trustee for services rendered pursuant to the Trust
Agreement (which shall be paid to the Owner Trustee), Early Termination Fees
(which are distributable only to the holders of the Class L Certificates), the
Indenture Trustee Expense Amount (which shall be paid to the Indenture Trustee),
the following amounts and in the following order of priority to the following
Persons (based on the information set forth in the Servicing Certificate):
I. From Net Available Funds, the Floating Allocation Percentage of
the Interest Collections and the Maximum Principal Payment:
(i) to the Insurer, the Premium Amount with respect to the Class A
Notes for such Payment Date;
(ii) to the Class A Noteholders, the Interest Payment Amount with
respect to the Class A Notes for such Payment Date;
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(iii) to the Class A Noteholders, the Class A Principal Payment
Amount for such Payment Date, until the Note Principal Amount of the Class
A Notes has been reduced to zero;
(iv) to the Class A Noteholders, as a payment of principal, in the
following order, (a) the Investor Charge-Off Amounts for that Payment Date
and (b) the Investor Charge-Off Amounts for all preceding Payment Dates
that were not subsequently funded by the Floating Allocation Percentage of
the Interest Collections, overcollateralization or draws under the Policy
in respect of an Overcollateralization Deficit until the Note Principal
Amount of the Class A Notes has been reduced to zero;
(v) to the Insurer, the Reimbursement Amount, if any, then due to
it;
(vi) to the Class M1 Noteholders, the Interest Payment Amount with
respect to the Class M1 Notes for such Payment Date;
(vii) to the Class M2 Noteholders, the Interest Payment Amount with
respect to the Class M2 Notes for such Payment Date;
(viii) to the Class A Noteholders, the Accelerated Principal Payment
for the Class A Notes on such Payment Date, if any until the Note
Principal Amount of the Class A Notes has been reduced to zero;
(ix) to the Class M1 Noteholders, the Class M1 Principal Payment
Amount for such Payment Date, together with any Accelerated Principal
Payment for the Class M1 Notes on such Payment Date, until the Note
Principal Amount of the Class M1 Note has been reduced to zero;
(x) to the Class M2 Noteholders, the Class M2 Principal Payment
Amount for such Payment Date, together with any Accelerated Principal
Payment for the Class M2 Notes on such Payment Date, until the Note
Principal Amount of the Class M2 Note has been reduced to zero;
(xi) to the Servicer, to pay certain amounts that may be required to
be paid to the Servicer (including expenses associated with the transition
to any new servicer) and not previously reimbursed pursuant to the terms
of this Agreement;
(xii) sequentially, to the Class A, Class M1 and Class M2
Noteholders (in that order) to pay current Deferred Interest and any
previously unreimbursed Deferred Interest for any prior Payment Date and
interest thereon at the applicable Note Rate (determined for this purpose
without regard to the Maximum Rate);
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(xiii) pari passu, (a) to the Indenture Trustee, any unreimbursed
expenses due and owing to the Indenture Trustee and not otherwise
previously paid on such Payment Date, and (b) to the Owner Trustee, any
unpaid fees and unreimbursed expenses due and owing to the Owner Trustee
and not otherwise previously paid on such Payment Date; and
(xiv) to the Holders of each applicable class of Certificates, any
amount remaining on deposit in the Payment Account.
II. To the Owner Trustee, amounts remaining in the Payment Account after
all amounts distributable under Section 5.01(a)(I) have been made, to be
deposited in the Certificate Account for payment to the Certificateholders
as set forth in Section 3.11 of the Trust Agreement.
(b) Early Termination Fees. On each Distribution Date, an amount equal to
all Early Termination Fees received during the related Collection Period
together with the amounts paid in respect thereof pursuant to Section 3.13 will
be distributed to the holders of the Class L Certificates. The payment of the
foregoing amounts to the Holders of the Class L Certificates shall not reduce
the Certificate Principal Balances thereof.
(c) Method of Distribution. The Indenture Trustee shall make payments and
distributions in respect of a Payment Date to the Noteholders and the
Certificateholders of record on the related Record Date (other than as provided
in Section 8.01 respecting the final payment) by check or money order mailed to
such Noteholders and Certificateholders at the address appearing in the Note
Register and the Certificate Register, respectively, or upon written request by
a Noteholder or Certificateholder, as applicable, delivered to the Indenture
Trustee at least five Business Days prior to such Record Date, by wire transfer,
or by such other means of payment as such Noteholder or Certificateholder and
the Indenture Trustee shall agree. Distributions among Class A Noteholders,
Class M Noteholders and the Certificateholders shall be made in proportion to
the Percentage Interests evidenced by the Class A Notes or Class M Notes held by
such Noteholder, as applicable, and the Percentage Interests evidenced by the
Certificates held by such Certificateholders.
(d) Payments on Book-Entry Notes. Each payment with respect to a
Book-Entry Note shall be paid to the Depository, which shall credit the amount
of such payment to the accounts of its Depository Participants in accordance
with its normal procedures. Each Depository Participant shall be responsible for
disbursing such payment to the Class A Notes that it represents and to each
indirect participating brokerage firm (a "brokerage firm" or "indirect
participating firm") for which it acts as agent. Each brokerage firm shall be
responsible for disbursing funds to the Class A Note Owners that it represents.
All such credits and disbursements with respect to a Book-Entry Note are to be
made by the Depository and the Depository Participants in accordance with the
provisions of the Class A Notes. None of the Indenture Trustee, the Note
Registrar, the Seller, the Insurer, the Trust or the Servicer shall have any
responsibility therefor except as otherwise provided by applicable law.
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Section 5.02 Calculation of the Note Rate. With respect to the Notes, on
the second LIBOR Business Day immediately preceding each Payment Date, the
Indenture Trustee shall determine LIBOR for the Interest Period commencing on
such Payment Date and inform the Servicer (at the facsimile number given to the
Indenture Trustee in writing) of such rates. On or prior to each Payment Date,
the Indenture Trustee shall determine the applicable Note Rate for the following
Interest Accrual Period.
Section 5.03 Servicing Certificate and Statement to Noteholders.
(a) Not later than 12:00 noon, New York time, on the Determination Date
prior to the related Payment Date, the Servicer shall deliver to the Indenture
Trustee, the Paying Agent, the Insurer (so long as the Class A Notes are
Outstanding or any Reimbursement Amounts remain due and owing to the Insurer)
and the Depositor an electronic file, in the form agreed to by the Servicer and
the Indenture Trustee, containing the information needed to determine the
payments to be made pursuant to Section 5.01, the information needed by the
Indenture Trustee to complete the Statement to Noteholders with respect to the
Mortgage Loans on an aggregate basis as of the end of the preceding Collection
Period and such other information as the Indenture Trustee shall reasonably
require (the "Servicing Certificate").
(b) Not later than 12:00 noon, New York time, on each Payment Date, the
Indenture Trustee shall make available on its website to the Depositor, the
Insurer (so long as the Class A Notes are Outstanding or any Reimbursement
Amounts remain due and owing to the Insurer), the Servicer, the Paying Agent,
and the Insurer, a statement (the "Statement to Noteholders") containing the
information set forth in Exhibit Q with respect to such Payment Date:
The Indenture Trustee shall make available the Statement to Noteholders
via its website (▇▇▇▇▇://▇▇▇.▇▇▇.▇▇.▇▇▇/▇▇▇▇) on the related Payment Date. The
Indenture Trustee may fully and conclusively rely upon and shall have no
liability with respect to information provided by the Servicer.
(b) Within 90 days, or such shorter period as may be required by statute
or regulation, after the end of each calendar year, the Indenture Trustee shall
have prepared and shall make available to each Person who at any time during the
calendar year was a Noteholder or Certificateholder of record, and make
available to Security Owners (identified as such by the Clearing Agency) in
accordance with applicable regulations, a report summarizing the items provided
to the such Noteholders or Certificateholders pursuant to Section 5.03(a) on an
annual basis as may be required to enable such Holders to prepare their federal
income tax returns. Such information shall include the amount of original issue
discount accrued on each Class of Securities and information regarding the
expenses of the Issuer. The Servicer shall provide the Indenture Trustee with
such information as is necessary for the Indenture Trustee to prepare such
reports.
The Indenture Trustee shall furnish any other information that is required
by the Code and regulations thereunder to be made available to the Noteholders
or Certificateholders. The Servicer shall provide the Indenture Trustee with
such information as is necessary for the
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Indenture Trustee to prepare such reports (and the Indenture Trustee may rely
solely upon such information).
(c) The Indenture Trustee shall furnish to each Noteholder,
Certificateholder and to the Insurer (if requested in writing), during the term
of this Agreement, such periodic, special or other reports or information (so
long as the Indenture Trustee has such information), whether or not provided for
herein, as shall be necessary, reasonable or appropriate with respect to the
Noteholder, Certificateholder or the Insurer, as the case may be, or otherwise
with respect to the purposes of this Agreement, all such reports or information
to be provided by and in accordance with such applicable instructions and
directions (if requested in writing) as the Noteholder, Certificateholder or the
Insurer, as the case may be, may reasonably require; provided that the Indenture
Trustee shall be entitled to be reimbursed by such Noteholder, Certificateholder
or the Insurer, as the case may be, for its fees and actual expenses associated
with providing such reports, if such reports are not generally produced in the
ordinary course of their respective businesses or readily obtainable.
(d) Reports and computer tapes furnished by the Servicer pursuant to this
Agreement shall be deemed confidential and of a proprietary nature, and shall
not be copied or distributed except to the extent provided in this Agreement and
to the extent required by law or to the Rating Agencies, the Depositor, the
Insurer's attorneys, reinsurers, parent, regulators, liquidity providers and
auditors and to the extent the Servicer instructs the Indenture Trustee in
writing to furnish information regarding the Trust or the Mortgage Loans to
third-party information providers; notwithstanding anything herein to the
contrary, the foregoing shall not be construed to prohibit (i) disclosure of any
and all information that is or becomes publicly known, or information obtained
by Indenture Trustee from sources other than the other parties hereto, (ii)
disclosure of any and all information (A) if required to do so by any applicable
law, rule or regulation, (B) to any government agency or regulatory body having
or claiming authority to regulate or oversee any respects of Indenture Trustee's
business or that of its affiliates, (C) pursuant to any subpoena, civil
investigative demand or similar demand or request of any court, regulatory
authority, arbitrator or arbitration to which Indenture Trustee or any affiliate
or an officer, director, employer or shareholder thereof is a party or (D) to
any affiliate, independent or internal auditor, agent, employee or attorney of
Indenture Trustee having a need to know the same, provided that the Indenture
Trustee advises such recipient of the confidential nature of the information
being disclosed or (iii) any other disclosure authorized by the Transaction
Documents, the Depositor, the Seller or the Servicer. No Person entitled to
receive copies of such reports or tapes or lists of Noteholders or
Certificateholders shall use the information therein for the purpose of
soliciting the customers of the Seller or for any other purpose except as set
forth in this Agreement.
Section 5.04 Other Receipts. To the extent that the Indenture Trustee
receives any amounts on behalf of the Trust that are not otherwise part of the
Interest Principal Collections or Insured Amounts, the Indenture Trustee shall
distribute such amounts to the Servicer on the following Payment Date.
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Section 5.05 Payment Account. The Indenture Trustee shall establish a
separate non-interest bearing trust account (the "Payment Account") designated
"Deutsche Bank National Trust Company, as Indenture Trustee, in trust for the
registered holders of the IndyMac Asset-Backed Notes, Series 2006-H3." The
Payment Account shall be an Eligible Account. The Indenture Trustee shall invest
or cause the institution maintaining the Payment Account to invest the funds in
the Payment Account, other than any funds that were drawn on the Policy in
respect of Insured Amounts, in Eligible Investments designated in the name of
the Indenture Trustee for the benefit of the Noteholders, which shall mature or
be payable on demand or on such Payment Date. All income and gain realized from
any such investment shall be for the benefit of the Indenture Trustee and shall
be subject to its withdrawal or order from time to time. The amount of any
losses incurred in respect of any such investments shall be deposited in the
Payment Account by the Indenture Trustee out of its own funds immediately as
realized without any right of reimbursement. The Indenture Trustee shall deposit
any amounts representing payments on and any collections in respect of the
Mortgage Loans received by it immediately following receipt thereof to the
Payment Account including, without limitation, all amounts (i) withdrawn by the
Servicer from the Collection Account pursuant to Section 3.03 herein for deposit
to the Payment Account, (ii) any amount, required to be deposited by the
Indenture Trustee in connection with any losses on funds in the Payment Account
and Avoided Payments (to the extent paid to the Indenture Trustee) and (iii)
drawn under the Policy in respect of Insured Amounts.
Section 5.06 Reserve Account
(a) The Indenture Trustee shall establish and maintain an account (the
"Reserve Account") entitled "Reserve Account, Deutsche Bank National Trust
Company, as Indenture Trustee, in trust for the benefit of the Holders of the
IndyMac Home Equity Mortgage Loan Asset-Backed Trust, Series 2006-H3
Asset-Backed Certificates, Class L" The Reserve Account shall be an Eligible
Account.
(b) If the existing Reserve Account ceases to be an Eligible Account, the
Indenture Trustee shall establish a new Reserve Account that is an Eligible
Account within 10 Business Days and transfer all funds and investment property
on deposit in such existing Reserve Account into such new Reserve Account. The
Reserve Account shall relate solely to the Notes and the Certificates and funds
therein shall be held separate and apart from and shall not be commingled with
any other monies including, without limitation, other monies of the Indenture
Trustee held under this Agreement. The Indenture Trustee shall make withdrawals
from the Reserve Account only for the following purposes:
(i) to pay such amounts required to be paid pursuant to Section
2.01(d) of this Agreement; and
(ii) to withdraw amounts deposited in the Reserve Account in error.
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Section 5.07 The Certificate Account
(a) The Administrator, for the benefit of the Certificateholders, shall
establish and maintain in the name of the Owner Trustee on behalf of the
Certificateholders an account (the "Certificate Account") entitled "Certificate
Account, Deutsche Bank National Trust Company, as Administrator, in trust for
the holders of IndyMac Home Equity Mortgage Loan-Asset Backed Trust Series
2006-H3, Certificates."
(b) On each Payment Date, the Indenture Trustee shall withdraw from the
Payment Account all amounts required to be deposited in the Certificate Account
pursuant to Section 5.01 and remit such amount to the Owner Trustee or the
Administrator for deposit into the Certificate Account. On each Payment Date,
the Owner Trustee or the Administrator shall distribute all amounts on deposit
in the Certificate Account to the Certificateholders in respect of the
Certificates as provided in the Trust Agreement. On the Payment Date on which
the Note Principal Amount is reduced to zero, the Administrator shall distribute
all amounts remaining on deposit in the Certificate Account to the
Certificateholders in respect of the Certificates in order to clear and
terminate the Certificate Account in connection with the termination of this
Agreement.
(c) All distributions made on the Certificates shall be made by wire
transfer of immediately available funds to the account of such
Certificateholders. The final distribution on the Certificates will be made in
like manner, but only upon presentment and surrender of such Certificates at the
location specified in the notice to the Certificateholders of such final
distribution.
Section 5.08 Rapid Amortization Event. The occurrence of any one of the
following events (each, a "Rapid Amortization Event"):
(a) default in the payment of any interest on any Class of Notes when the
same becomes due and payable or the failure to pay any installment of principal
on any class of Notes in accordance with Section 5.01 and such default continues
for a period of two Business Days, or a failure to pay the entire Note Principal
Amount of any Note when the same becomes due and payable under the Indenture or
on the Final Scheduled Payment Date.
(b) failure on the part of the Issuer, the Depositor, the Seller or the
Servicer, as the case may be, to observe or perform in any material respect any
other material covenants or agreements set forth in the Mortgage Loan Purchase
Agreement, this Agreement, the Indenture or the Trust Agreement, as the case may
be, which failure materially and adversely affects the Noteholders or the
Insurer and which continues unremedied for a period of 30 days after the date on
which written notice of such failure, requiring the same to be remedied, shall
have been given to the Issuer, the Depositor, the Servicer, or the Seller, as
the case may be, by the Indenture Trustee, or to the Issuer, the Depositor, the
Servicer, or the Seller, as the case may be, by the Indenture Trustee or the
Insurer in accordance with Section 11.04 of the Indenture;
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(c) the Trust or the Depositor files a petition to take advantage or
otherwise voluntarily commences a case or proceeding under any applicable
bankruptcy, insolvency, reorganization or other similar statute;
(d) a decree or order of a court of agency or supervisory authority having
jurisdiction in the premises in an involuntary case under any present or future
federal or state bankruptcy, insolvency or similar law or the appointment of a
conservator or receiver or liquidator or other similar official in any
bankruptcy, insolvency or similar proceedings for the winding-up or liquidation
of its affairs, is entered against the Trust or the Depositor;
(e) the Trust becomes subject to regulation by the SEC as an "investment
company" within the meaning of the Investment Company Act of 1940, as amended;
(f) any draw is made under the Policy which remains unreimbursed for 90
days;
(g) the Trust loses its status as one or more REMICs and such loss in
status results in the imposition of an entity level tax on the Trust; or
(h) the rights and obligations of the Servicer under this Agreement are
terminated by the Insurer following an Insurance Agreement Event of Default or
an Event of Servicer Termination has occurred.
In the case of any event described in clauses (a), (b), (e), (f), (g) or
(h) above, a Rapid Amortization Event will be deemed to have occurred only if,
after the applicable grace period, if any, described in this Agreement, the
Insurer, or if any Insurer Default has occurred and is continuing, the Indenture
Trustee or Holders holding Notes evidencing more than 50% of the Note Principal
Amount of the Controlling Class Notes, by written notice to the Trust, the
Insurer, the Seller and the Servicer (and to the Indenture Trustee, if given by
the Noteholders or the Insurer) declare that a Rapid Amortization Event has
occurred as of the date of such notice.
If a Rapid Amortization Event occurs due to the occurrence of an event
described in either clause (c) or (d) above, a Rapid Amortization Event will
automatically occur.
The Indenture Trustee or the Servicer will be obligated to provide notice
to the Insurer of the occurrence of a Rapid Amortization Event.
Following the occurrence of a Rapid Amortization Trigger Event, the
Insurer (so long as the Class A Notes are Outstanding or any Reimbursement
Amounts remain due and owing to the Insurer and no Insurer Default has occurred
and is continuing) shall have the right to direct the Indenture Trustee, and the
Indenture Trustee or its designated agent shall have the right if an Insurer
Default has occurred and is continuing, to sell, dispose of or otherwise
liquidate the Collateral with respect to the Mortgage Loans in a commercially
reasonable manner and on commercially reasonable terms.
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With respect to the Notes, the net proceeds of such sale will be paid
(i) first, pro rata to the Indenture Trustee, the Indenture Trustee
Expense Amount (without regard to the caps included in the definition of
Indenture Trustee Expense Amount) and to the Owner Trustee any unpaid fees
due and owing to it,
(ii) second, the Floating Allocation Percentage of any remaining
sale proceeds, to the Holders of the Class A Notes, insofar as may be
necessary to reduce the Note Principal Amount of such Class, together with
all accrued and unpaid interest due thereon, to zero,
(iii) third, the Floating Allocation Percentage of any remaining
sale proceeds, to reimburse the Insurer to the extent of unreimbursed
draws under the Policy and other amounts owing to the Insurer, including
the Premium Amount,
(iv) fourth, the Floating Allocation Percentage of any remaining
sale proceeds, to the Holders of the Class M1 and Class M2 Notes
sequentially in that order, pro rata within each Class based on Note
Principal Amounts, insofar as may be necessary to reduce the Note
Principal Amount of each such Class, together with all accrued and unpaid
interest due thereon, to zero,
(v) fifth, pro rata to the Indenture Trustee and the Owner Trustee,
any unreimbursed expenses due and owing to them, and
(vi) sixth, to the Owner Trustee, for deposit into the Certificate
Account and distribution to the Certificateholders as set forth in Section
3.11 of the Trust Agreement.
In addition to the consequences of a Rapid Amortization Event discussed
above, if the Seller, the Depositor or the Servicer or any other their
respective affiliates voluntarily files a bankruptcy petition or goes into
liquidation or any person is appointed a receiver or bankruptcy trustee of such
entity, on the day of any such filing or appointment with respect to (i) the
Seller, or any of its Subsidiaries or Affiliates, no further Additional Balances
will be transferred to the Issuer and the Seller, the Depositor or the Servicer,
as applicable, will promptly give notice of any such filing or appointment to
the Indenture Trustee and the Insurer (so long as the Class A Notes are
Outstanding or any Reimbursement Amounts remain due and owing to the Insurer),
(ii) the Servicer or any of its Subsidiaries or Affiliates, no further
Additional Balances relating to Mortgage Loans serviced by such Servicer will be
transferred to the Issuer and such Servicer will promptly give notice to the
Indenture Trustee and the Insurer (so long as the Class A Notes are Outstanding
or any Reimbursement Amounts remain due and owing to the Insurer) of any such
filing or appointment and (iii) the Depositor or any of its Subsidiaries or
Affiliates, the Depositor will promptly give notice of any such filing or
appointment to the Indenture Trustee. Within 15 days, the Indenture Trustee
shall notify the Holders of the Notes of the occurrence of such event.
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Upon the occurrence of a Rapid Amortization Trigger Event, the Seller
shall only receive payments in respect of the purchase price for any Additional
Balance from the Reserve Account, funded by the Holder of the Class L
Certificate. The Holder of the Class L Certificate will be reimbursed for such
payments to the extent of available funds distributed on the Class L
Certificate.
Section 5.09 Indenture Trustee Fees and Indemnification Expenses. The
Indenture Trustee shall be entitled to receive the Indenture Trustee Fee on each
Payment Date. The Indenture Trustee also shall be entitled to receive payment of
all expenses and indemnities due to it pursuant to Section 9.03.
ARTICLE VI.
THE SELLER, THE SERVICER AND THE DEPOSITOR
Section 6.01 Liability of the Seller, the Servicer and the Depositor. The
Seller, the Depositor and the Servicer shall be liable in accordance herewith
only to the extent of the obligations specifically imposed upon and undertaken
by the Seller, the Depositor or Servicer, as the case may be, herein.
Section 6.02 Merger or Consolidation of, or Assumption of the Obligations
of, the Seller, the Servicer or the Depositor. Any corporation into which the
Seller, the Servicer or the Depositor may be merged or consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Seller, the Servicer or the Depositor shall be a party, or any corporation
succeeding to the business of a Seller, the Servicer or the Depositor shall be
the successor of the Seller, the Servicer or the Depositor, as the case may be,
hereunder, without the execution or filing of any paper or any further act on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding; provided, however, that the successor Servicer shall satisfy
all the requirements of Section 7.02 with respect to the qualifications of a
successor Servicer, and such merger, conversion or consolidation could not be
reasonably expected to result in a Material Adverse Change with respect to the
Servicer, unless approved by the Insurer (which approval shall not be
unreasonably withheld).
Section 6.03 Limitation on Liability of the Seller, the Depositor, the
Servicer and Others. None of the Seller, the Depositor or the Servicer nor any
of the directors or officers or employees or agents of the Seller, the Depositor
or the Servicer shall be under any liability to the Trust, the Noteholders or
the Certificateholders for any action taken or for refraining from the taking of
any action by the Seller, the Depositor or the Servicer in good faith pursuant
to this Agreement, or for errors in judgment; provided, however, that this
provision shall not protect the Seller, the Depositor or the Servicer or any
such Person against any liability which would otherwise be imposed by reason of
its willful misfeasance, bad faith or negligence in the performance of duties of
the Seller, the Depositor or the Servicer or by reason of its reckless disregard
of its obligations and duties of the Seller, the Depositor or the Servicer
hereunder; provided, further, that this provision shall not be construed to
entitle the Seller, the Depositor or the Servicer to indemnity in the event that
amounts advanced by the Seller, the Depositor or the
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Servicer to retire any senior lien exceed Net Recoveries realized with respect
to the related Mortgage Loan. The Seller, the Depositor or the Servicer and any
director or officer or employee or agent of the Seller, the Depositor or the
Servicer may rely in good faith on any document of any kind prima facie properly
executed and submitted by any Person respecting any matters arising hereunder.
The Seller, the Depositor or the Servicer and any director or officer or
employee or agent of the Seller, the Depositor or the Servicer shall be
indemnified by the Trust and held harmless against any loss, liability or
expense incurred in connection with any legal action relating to this Agreement
or the Notes or the Certificates, other than any loss, liability or expense
related to any specific Mortgage Loan or Mortgage Loans (except as any such
loss, liability or expense shall be otherwise reimbursable pursuant to this
Agreement) and any loss, liability or expense incurred by reason of its willful
misfeasance, bad faith or negligence in the performance of duties hereunder or
by reason of its reckless disregard of obligations and duties hereunder; and
such amounts shall be payable only pursuant to Section 5.01. None of the Seller,
the Depositor or the Servicer shall be under any obligation to appear in,
prosecute or defend any legal action that is not incidental to their respective
duties hereunder and which in its opinion may involve it in any expense or
liability; provided, however, the Seller, the Depositor or the Servicer may with
the consent of the Insurer (which consent shall not be unreasonably withheld)
undertake any such action which it may deem necessary or desirable in respect of
this Agreement, and the rights and duties of the parties hereto and the
interests of the Class A Noteholders hereunder. In such event, the reasonable
legal expenses and costs of such action and any liability resulting therefrom
shall be expenses, costs and liabilities of the Trust and the Servicer shall be
entitled to be reimbursed therefor only pursuant to Section 5.01. The Servicer's
right to indemnity or reimbursement pursuant to this Section 6.03 shall survive
any resignation or termination of the Servicer pursuant to Section 6.04 or 7.01
below with respect to any losses, expenses, costs or liabilities arising prior
to such resignation or termination (or arising from events that occurred prior
to such resignation or termination).
Section 6.04 Servicer Not to Resign. Subject to the provisions of Section
6.02 above, the Servicer shall not resign from the obligations and duties hereby
imposed on it except (i) upon determination that the performance of its
obligations or duties hereunder are no longer permissible under applicable law
or are in material conflict by reason of applicable law with any other
activities carried on by it or its subsidiaries or Affiliates, the other
activities of the Servicer so causing such a conflict being of a type and nature
carried on by the Servicer or its subsidiaries or Affiliates at the date of this
Agreement or (ii) upon satisfaction of the following conditions: (a) the
Servicer has proposed a successor servicer in writing and such proposed
successor servicer is reasonably acceptable to the Indenture Trustee; (b) each
Rating Agency shall have delivered a letter to the Indenture Trustee prior to
the appointment of the successor servicer stating that the proposed appointment
of such successor servicer as Servicer hereunder will not result in the
reduction or withdrawal of the then current rating of the Notes without regard
to the Policy; and (c) such proposed successor servicer is reasonably acceptable
to the Insurer, as evidenced by a letter to the Indenture Trustee; provided,
however, that no such resignation by the Servicer shall become effective until
such successor servicer or, in the case of (i) above, the Indenture Trustee
shall have assumed the Servicer's responsibilities and obligations hereunder or
the Indenture Trustee shall have designated a successor servicer in accordance
with Section 7.02 below. Any such resignation shall not relieve the Servicer of
responsibility for any of the obligations specified in Sections 7.01 and 7.02
below as obligations that survive the resignation
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or termination of the Servicer. Any such determination permitting the
resignation of the Servicer pursuant to clause (i) above shall be evidenced by
an Opinion of Counsel to such effect delivered to the Indenture Trustee and the
Insurer.
Section 6.05 Delegation of Duties. In the ordinary course of business, the
Servicer at any time may delegate any of its duties hereunder to any Person,
including any of its Affiliates, who agrees to conduct such duties in accordance
with standards comparable to those set forth in Section 3.01 herein. Such
delegation shall not relieve the Servicer of its liabilities and
responsibilities with respect to such duties and shall not constitute a
resignation within the meaning of Section 6.04 above. The Servicer shall provide
the Insurer and the Indenture Trustee with written notice prior to the
delegation of any of its duties to any Person other than any of the Servicer's
Affiliates or their respective successors and assigns (provided that the
Servicer may retain agents and contractors in accordance with Acceptable
Servicing Practices), and the Insurer shall have consented to the appointment of
any Subservicer to the extent required by Section 3.01 hereof.
Section 6.06 Indemnification of the Trust by the Servicer. The Servicer
shall indemnify and hold harmless the Trust, the Indenture Trustee and the
Insurer and its officers, directors, agents and employees from and against any
loss, liability, expense, damage or injury suffered or sustained by reason of
the Servicer's willful misfeasance, bad faith or gross negligence in the
performance of its activities in servicing or administering the Mortgage Loans
pursuant to this Agreement, including, but not limited to, any judgment, award,
settlement, reasonable fees of, counsel of its selection and other costs or
expenses incurred in connection with the defense of any actual or threatened
action, proceeding or claim related to the Servicer's misfeasance, bad faith or
gross negligence. Any such indemnification shall not be payable from the assets
of the Trust. The provisions of this indemnity shall run directly to and be
enforceable by an injured party subject to the limitations hereof. The
provisions of this Section 6.06 shall survive termination of the Agreement or
the earlier of the resignation or removal of the Indenture Trustee.
ARTICLE VII.
SERVICER TERMINATION
Section 7.01 Events of Servicer Termination.
(a) If any one of the following events (each, an "Event of Servicer
Termination") shall occur and be continuing:
(i) Any failure by the Servicer to furnish to the Indenture Trustee
the Mortgage Loan data sufficient to prepare the reports described in
Sections 3.19 or 5.03 which continues unremedied for a period of two (2)
Business Days after the date upon which written notice of such failure
shall have been given to the Servicer by the Indenture Trustee or to the
Servicer and the Indenture Trustee by the Insurer (so long as the Class A
Notes are Outstanding or any Reimbursement Amounts remain due and
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owing to the Insurer and no Insurer Default has occurred and is
continuing) and, if (i) the Class A Notes are no longer Outstanding and no
amounts remain due and owing to the Insurer or (ii) an Insurer Default has
occurred and is continuing, by Holders of not less than 25% of the Note
Principal Amount of the Controlling Class Notes; or
(ii) Any failure on the part of the Servicer duly to observe or
perform in any material respect any other of the covenants or agreements
on the part of the Servicer contained in this Agreement which continues
unremedied for a period of 30 days after the date on which written notice
of such failure, requiring the same to be remedied, shall have been given
to the Servicer by the Indenture Trustee or to the Servicer and the
Indenture Trustee by the Majority Securityholders or the Insurer; or
(iii) The Servicer shall consent to the appointment of a conservator
or receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities, voluntary liquidation or similar
proceedings of or relating to the Servicer or of or relating to all or
substantially all of its property; or
(iv) The Servicer shall admit in writing its inability to pay its
debts generally as they become due, file a petition to take advantage of
any applicable insolvency or reorganization statute, make an assignment
for the benefit of its creditors or voluntarily suspend payment of its
obligations; or
(v) The Servicer shall be dissolved, or shall dispose of all or
substantially all of its assets, or consolidate with or merge into another
entity or shall permit another entity to consolidate or merge into it,
such that the resulting entity does not meet the criteria for a successor
servicer as specified herein; or
(vi) If a representation or warranty set forth in Section 2.03
hereof shall prove to be incorrect as of the time made in any respect that
materially and adversely affects the interests of the Securityholders or
the Insurer, and the circumstance or condition in respect of which such
representation or warranty was incorrect shall not have been eliminated or
cured within 30 days after the date on which written notice of such
incorrect representation or warranty shall have been given to the Servicer
by the Indenture Trustee, or to the Servicer and the Indenture Trustee by
the Controlling Party; or
(vii) A sale or pledge of any of the rights of the Servicer
hereunder or an assignment of this Agreement by the Servicer or a
delegation of the rights or duties of the Servicer hereunder shall have
occurred in any manner not otherwise permitted hereunder and without the
prior written consent of the Controlling Party; or
(viii) After receipt of notice from the Indenture Trustee, any
failure of the Servicer to remit to the Indenture Trustee any payment
required to be made to the Indenture Trustee for the benefit of
Noteholders and the Certificateholders or to the Insurer under the terms
of this Agreement on any Servicer Remittance Date which failure continues
unremedied for a period of two (2) Business Days after the date upon which
notice of such failure shall have been given to the Servicer by the
Indenture Trustee or
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the Insurer (so long as the Class A Notes are Outstanding or any
Reimbursement Amounts remain due and owing to the Insurer and no Insurer
Default has occurred and is continuing).
If an Event of Servicer Termination described in clauses (i) through
(viii) of this Section 7.01 shall occur, then, in each and every case, subject
to applicable law, so long as any such Event of Servicer Termination shall not
have been remedied within any period of time prescribed by this Section 7.01,
the Indenture Trustee, by notice in writing to the Servicer may, with the
consent of the Insurer, and shall at the direction of the Insurer (or if an
Insurer Default has occurred and is continuing, at the direction of the
Noteholders evidencing not less than 66-2/3% of the aggregate Note Principal
Amount of the Controlling Class Notes), terminate all of the rights and
obligations of the Servicer hereunder and in and to the Mortgage Loans and the
proceeds thereof.
On or after the receipt by the Servicer of such written notice, all
authority and power of the Servicer, and only in its capacity as Servicer under
this Agreement, whether with respect to the Mortgage Loans or otherwise, shall
pass to and be vested in the Indenture Trustee pursuant to and under the terms
of this Agreement; and the Indenture 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. The defaulting Servicer agrees to cooperate with the Indenture
Trustee in effecting the termination of the defaulting Servicer's
responsibilities and rights hereunder as Servicer including, without limitation,
notifying the Servicers of the assignment of the master servicing function and
providing the Indenture Trustee or its designee all documents and records in
electronic or other form reasonably requested by it to enable the Indenture
Trustee or its designee to assume the defaulting Servicer's functions hereunder
and the transfer to the Indenture Trustee for administration by it of all
amounts which shall at the time be or should have been deposited by the
defaulting Servicer in the Collection Account maintained by such defaulting
Servicer and any other account or fund maintained with respect to the Securities
or thereafter received with respect to the Mortgage Loans. The Servicer being
terminated shall bear all costs of a servicing transfer, including but not
limited to those of the Indenture Trustee reasonably allocable to specific
employees and overhead, legal fees and expenses, accounting and financial
consulting fees and expenses, and costs of amending the Agreement, if necessary.
Notwithstanding any termination of the Servicer hereunder, the Servicer
shall be entitled to receive, on a first in-first out basis, out of any late
collection of a Monthly Payment on a Mortgage Loan that was due prior to the
notice terminating the Servicer's rights and obligations as the Servicer
hereunder and received after such notice, that portion of the Servicing Fee
thereof or any unreimbursed Servicing Advance made by the terminated Servicer
relating to such Mortgage Loan; provided however such right of reimbursement
shall be net of any amounts owed to the terminated Servicer and required to be
reimbursed pursuant to Section 3.10(f) hereof.
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(b) In addition, upon the occurrence of any Insurance Agreement Event of
Default, as defined herein, and upon the direction of the Insurer in connection
therewith, the Indenture Trustee shall terminate the rights and responsibilities
of the Servicer hereunder and shall appoint a successor Servicer in accordance
with the provisions of Section 7.02.
Section 7.02 Indenture Trustee to Act; Appointment of Successor.
(a) On and after the time the Servicer receives a notice of termination
pursuant to Section 7.01 or resigns pursuant to 6.04 herein, the Indenture
Trustee or a previously agreed upon successor Servicer shall be the successor in
all respects to the Servicer in its capacity as servicer under this Agreement
and the transactions set forth or provided for herein and shall be subject to
all the responsibilities, duties and liabilities relating thereto placed on the
Servicer by the terms and provisions hereof. As compensation therefor, the
Indenture Trustee shall be entitled to such compensation as the Servicer would
have been entitled to hereunder if no such notice of termination had been given.
Notwithstanding the above, (i) if the Indenture Trustee is unwilling to act as
successor Servicer, or (ii) if the Indenture Trustee is legally unable so to
act, the Indenture Trustee shall appoint or petition a court of competent
jurisdiction to appoint, or the Insurer can direct the Indenture Trustee to
appoint or petition a court of competent jurisdiction for the appointment of,
any established housing and home finance institution, bank or other mortgage
loan or home equity loan servicer having a net worth of not less than
$50,000,000 as the successor to the Servicer hereunder in the assumption of all
or any part of the responsibilities, duties or liabilities of the Servicer
hereunder; provided that any such successor Servicer shall be acceptable to the
Insurer, as evidenced by the Insurer's prior written consent (which consent
shall not be unreasonably withheld); and provided, further, that the appointment
of any such successor Servicer will not result in the qualification, reduction
or withdrawal of the ratings assigned to the Notes by the Rating Agencies.
Pending appointment of a successor to the Servicer hereunder, unless the
Indenture Trustee is prohibited by law from so acting, the Indenture Trustee
shall act in such capacity as hereinabove provided. Notwithstanding anything
herein to the contrary, in no event shall the Indenture Trustee be held liable
for any Servicing Fee or for any differential in the amount necessary to induce
any successor servicer to act as successor servicer under this Agreement and the
transactions set forth or provided for therein. In connection with such
appointment and assumption, the successor shall be entitled to receive
compensation out of payments on Mortgage Loans in an amount equal to the
compensation which the Servicer would otherwise have received pursuant to
Section 3.09 herein (or such lesser compensation as the Indenture Trustee and
such successor may agree). The appointment of a successor Servicer shall not
affect any liability of the predecessor Servicer which may have arisen under
this Agreement prior to its termination as Servicer to pay any deductible under
any insurance policy obtained and maintained pursuant to Section 3.05 herein or
to indemnify the Trust and the Indenture Trustee pursuant to Section 6.06), nor
shall any successor Servicer be liable for any acts or omissions of the
predecessor Servicer or for any breach by such Servicer of any of its
representations or warranties contained herein or in any related document or
agreement. The Indenture Trustee and such successor shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession.
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(b) Any successor, including the Indenture Trustee, to the Servicer as
servicer shall during the term of its service as servicer (i) continue to
service and administer the Mortgage Loans for the benefit of the Trust, and (ii)
maintain in force an insurance policy or policies of insurance covering errors
and omissions in the performance of its obligations as Servicer hereunder and a
fidelity bond in respect of its officers, employees and agents to the same
extent as the Servicer maintained as of the date hereof, as the same may have
been increased from time to time. No successor servicer shall have the right to
retain and commingle payments on, and collections in respect of, the Mortgage
Loans with its own funds pursuant to Section 3.02(c) unless (i) consented to in
writing by the Insurer and (ii) such commingling will not result in a downgrade,
qualification or withdrawal of the then current ratings of the Notes, without
regard to the Policy, as evidenced in writing by each Rating Agency.
Section 7.03 Waiver of Defaults. While the Class A Notes are outstanding,
the Insurer or the Majority Securityholders with the consent of the Insurer (so
long as the Class A Notes are Outstanding or any Reimbursement Amounts remain
due and owing to the Insurer and no Insurer Default has occurred and is
continuing) may by written notice to the Indenture Trustee, on behalf of such
Class A Noteholders, waive any events permitting removal of the Servicer as
servicer pursuant to this Article VII, provided, however, that the Insurer and
the Majority Securityholders may not waive a default in making a required
payment on a Note without the consent of 100% of the Holders of such Notes. Upon
any waiver of a past default, such default shall cease to exist and any Event of
Servicer Termination 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 thereto except to the extent
expressly so waived. Notice of any such waiver shall be given by the Indenture
Trustee to the Rating Agencies.
Once the Class A Notes are no longer outstanding and no Reimbursement
Amounts are then due and owing to the Insurer and no Insurer Default has
occurred and is continuing, the Majority Securityholders may by written notice
to the Indenture Trustee, on behalf of all Noteholders of such Class, waive any
events permitting removal of the Servicer as servicer pursuant to this Article
VII. Upon any waiver of a past default, such default shall cease to exist and
any Event of Servicer Termination 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 thereto except to the
extent expressly so waived. Notice of any such waiver shall be given by the
Indenture Trustee to the Rating Agencies.
Section 7.04 Notification to Noteholders. Upon any termination or
appointment of a successor to the Servicer pursuant to this Article VII or
Section 6.04 above, the Indenture Trustee shall give prompt written notice
thereof to the Noteholders at their respective addresses appearing in the Note
Register, the Insurer and each Rating Agency.
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ARTICLE VIII.
TERMINATION
Section 8.01 Termination.
(a) The respective obligations and responsibilities of the Seller, the
Servicer, the Depositor and the Indenture Trustee created hereby (other than the
obligation of the Indenture Trustee to make certain payments to the Noteholders
and distributions to the Certificateholders after the Final Scheduled Payment
Date, the indemnity obligations of the Servicer and the obligation of the
Servicer to send certain notices as hereinafter set forth) shall terminate upon
notice to the Indenture Trustee of the later of (A) payment in full of all
amounts owing to the Insurer unless the Insurer shall otherwise consent and (B)
the earliest of (i) the final payment or other liquidation of the last Mortgage
Loan remaining in the Trust; (ii) the optional purchase by the Servicer of the
Mortgage Loans as described below and (iii) the Final Scheduled Payment Date.
(b) On any Payment Date on which the Note Principal Amount, prior to
giving effect to payments on such date, is less than or equal to 10% of the
aggregate Initial Note Principal Amount (such date, the "Optional Redemption
Date"), the Servicer may, at its option, terminate this Agreement, subject to
(i) the consent of the Insurer if such termination will cause a draw on the
Policy and (ii) no Reimbursement Amounts remaining due to the Insurer under the
Insurance Agreement, by purchasing, on such Payment Date, all of the outstanding
Mortgage Loans and all other property remaining in the Trust. The purchase price
will equal the Optional Redemption Price.
In connection with any such purchase pursuant to the preceding paragraph,
the Servicer shall deposit in the Payment Account all amounts then on deposit in
the Collection Account (less amounts permitted to be withdrawn by the Servicer
pursuant to Section 3.03), which deposit shall be deemed to have occurred
immediately preceding such purchase.
Any such purchase shall be accomplished by deposit into the Payment
Account on the Determination Date before such Payment Date of the Optional
Redemption Price.
(c) Notice of any termination, specifying the Payment Date (which shall be
a date that would otherwise be a Payment Date) upon which the Noteholders may
surrender their Notes to the Indenture Trustee for payment of the final payment
and cancellation, shall be given promptly by the Indenture Trustee (upon receipt
of written directions from the Servicer, if the Servicer is exercising its right
to purchase the Mortgage Loans, given not later than the first day of the month
preceding the month of such final payment) to the Insurer and to the Servicer by
letter to such parties not earlier than the 15th day and not later than the 25th
day of the month next preceding the month of such final payment specifying (i)
the Payment Date upon which final payment on the Notes will be made upon
presentation and surrender of the Notes at the office or agency of the Indenture
Trustee therein designated, (ii) the amount of any such final payment
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and (iii) that the Record Date otherwise applicable to such Payment Date is not
applicable, payments being made only upon presentation and surrender of the
Notes at the office or agency of the Indenture Trustee therein specified.
(d) Upon presentation and surrender of the Notes and the Certificates, the
Indenture Trustee shall cause to be paid to the Holders of the Notes and the
Certificates on the Payment Date for such final payment, in proportion to the
Percentage Interests and to the extent that funds are available for such
purpose, an amount equal to the amount required to be paid to the Noteholders
and the Certificateholders in the order of priority specified in and otherwise
pursuant to Section 5.01 for such Payment Date. On the final Payment Date, all
amounts on deposit in the Payment Account shall be applied in accordance with
Sections 5.01(a) and (b).
(e) In the event that all of the Noteholders and the Certificateholders
shall not surrender their Notes or Certificates for final payment and
cancellation on or before such final Payment Date, the Indenture Trustee shall
promptly following such date cause all funds in the Payment Account not paid or
distributed in final payment to such Noteholder or Certificateholders to be
withdrawn therefrom and credited to the remaining Noteholders or
Certificateholders by depositing such funds in a separate non-interest bearing
trust account (which funds shall be held uninvested) for the benefit of such
Noteholders or Certificateholders and the Servicer (if the Servicer has
exercised its right to purchase the Mortgage Loans) or the Indenture Trustee (in
any other case) shall give a second written notice to the remaining Noteholders
or Certificateholders to surrender their Notes or Certificates for cancellation
and receive the final payment with respect thereto.
(f) Upon payment of all amounts owed under the Policy and cancellation of
the Class A Notes, the Indenture Trustee shall provide the Insurer notice of
cancellation of the Class A Notes and surrender the Policy to the Insurer.
ARTICLE IX.
THE INDENTURE TRUSTEE
Section 9.01 Indenture Trustee Not Liable for the Notes or Mortgage Loans.
The recitals contained herein and in the Notes shall be taken as the statements
of the Servicer and the Seller, as the case may be, and the Indenture Trustee
assumes no responsibility for their correctness. The Indenture Trustee makes no
representations as to the validity or sufficiency of this Agreement or of the
Notes or of any Mortgage Loan or related document, other than with respect to
the Indenture Trustee's execution and authentication of the Notes. The Indenture
Trustee shall not be accountable for the use or application by the Servicer of
any funds paid to the Servicer in respect of the Mortgage Loans or deposited in
or withdrawn from the Collection Account by the Servicer.
Except as provided in Section 2.01(e) and 2.01(l), the Indenture Trustee
shall have no responsibility for filing or recording any financing or
continuation statement in any public office
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at any time or to otherwise perfect or maintain the perfection of any security
interest or lien granted to it hereunder (unless the Indenture Trustee shall
have become the successor Servicer).
The Indenture Trustee executes the Notes not in its individual capacity
but solely as Indenture Trustee of the Trust created by this Agreement, in the
exercise of the powers and authority conferred and vested in it by this
Agreement. Each of the undertakings and agreements made on the part of the
Indenture Trustee on behalf of the Trust in the Notes is made and intended not
as a personal undertaking or agreement by the Indenture Trustee but is made and
intended for the purpose of binding only the Trust.
Notwithstanding anything to the contrary herein, in connection with its
activities provided for in this Agreement, the Indenture Trustee shall be
entitled to the same rights, protections, immunities and indemnities afforded to
it under the terms of the Indenture.
Section 9.02 Indenture Trustee May Own Notes. The Indenture Trustee in its
individual or any other capacity may become the owner or pledgee of any Class of
Notes and may transact business with the Seller, the Servicer and their
affiliates, with the same rights as it would have if it were not the Indenture
Trustee.
Section 9.03 Indenture Trustee's Fees and Expenses. Subject to the side
letter, dated September 29, 2006, among the Indenture Trustee, the Seller and
the Servicer, the Indenture Trustee Fee shall be paid to the Indenture Trustee,
as compensation for its activities hereunder, pursuant to Section 5.01. The
Indenture Trustee and any director, officer, employee or agent of the Indenture
Trustee shall be indemnified by the Seller and held harmless against any loss,
liability or expense (including reasonable attorney's fees and expenses)
incurred in connection with any claim or legal action relating to (a) this
Agreement or the Insurance and Indemnity Agreement, (b) the Notes, or (c) the
performance of any of the Indenture Trustee's duties hereunder, other than any
loss, liability or expense incurred by reason of willful misfeasance, bad faith
or negligence in the performance of any of the Indenture Trustee's duties
hereunder or incurred by reason of any action of the Indenture Trustee taken at
the direction of the Insurer or (i) if the Notes are no longer Outstanding and
no Reimbursement Amounts remain due and owing to the Insurer or (ii) an Insurer
Default has occurred and is continuing, the Noteholders. Such indemnity shall
survive the termination of this Agreement or the resignation or removal of the
Indenture Trustee hereunder. Without limiting the foregoing, the Seller
covenants and agrees, and except for any such expense, disbursement or advance
as may arise from the Indenture Trustee's negligence, bad faith or willful
misconduct, to pay or reimburse the Indenture Trustee, for all reasonable
expenses, disbursements and advances incurred or made by the Indenture Trustee
in accordance with any of the provisions of this Agreement with respect to: (A)
the reasonable compensation and the expenses and disbursements of its counsel
not associated with the closing of the issuance of the Notes, (B) the reasonable
compensation, expenses and disbursements of any accountant, engineer or
appraiser that is not regularly employed by the Indenture Trustee, to the extent
that the Indenture Trustee must engage such persons to perform acts or services
hereunder, (C) printing and engraving expenses in connection with preparing any
Definitive Notes and (D) any other reasonable expenses incurred other than in
the ordinary course of its business by the Indenture Trustee in connection with
its duties
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hereunder. Except as otherwise provided herein, the Indenture Trustee shall not
be entitled to payment or reimbursement for any routine ongoing expenses
incurred by the Indenture Trustee in the ordinary course of its duties as
Indenture Trustee hereunder or for any other expenses.
ARTICLE X.
MISCELLANEOUS PROVISIONS
Section 10.01 Amendment
(a) This Agreement may be amended from time to time by the Depositor, the
Issuer, the Servicer, the Indenture Trustee and the Holder of the Certificates,
without notice to or the consent of any of the Holders of the Notes but, so long
as the Class A Notes are Outstanding or any Reimbursement Amounts remain due and
owing to the Insurer and no Insurer Default has occurred and is continuing) with
the consent of the Insurer, (i) to cure any ambiguity, (ii) to cause the
provisions herein to conform to or be consistent with or in furtherance of the
statements made with respect to the Securities, the Issuer or this Agreement in
any Prospectus or Offering Document, or to correct or supplement any provision
herein which may be inconsistent with any other provisions herein or in any
other Transaction Document, (iii) to make any other provisions with respect to
matters or questions arising under this Agreement or (iv) to add, delete, or
amend any provisions to the extent necessary or desirable to comply with any
requirements imposed by the Code, ERISA and their related regulations. No such
amendment effected pursuant to the preceding sentence shall, as evidenced by an
Opinion of Counsel (which shall be an expense of the party requesting such
amendment and shall not be an expense of the Trust) and addressed to the Insurer
(so long as the Class A Notes are Outstanding or any Reimbursement Amounts
remain due and owing to the Insurer), adversely affect the tax status of the
REMICs created by the Trust Agreement, nor shall such amendment adversely affect
in any material respect the interests of any Holder or adversely affect the
Insurer without the consent of the Insurer. Prior to entering into any amendment
without the consent of Holders pursuant to this paragraph, the Indenture Trustee
may require an Opinion of Counsel which shall also be addressed to the Insurer
(so long as the Class A Notes are Outstanding or any Reimbursement Amounts
remain due and owing to the Insurer) (at the expense of the party requesting
such amendment) to the effect that such amendment is permitted under this
paragraph. Any such amendment shall be deemed not to adversely affect in any
material respect any Holder and the opinion to such effect will not be required
to be given, if the Indenture 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 Notes without taking into account the
Policy.
(b) This Agreement may also be amended from time to time by the Depositor,
the Issuer, the Servicer and the Indenture Trustee with the consent of the
Holders of not less than 66-2/3% of the Note Principal Amount of each Class of
Notes, the Insurer (so long as the Class A Notes are Outstanding or any
Reimbursement Amounts remain due and owing to the Insurer) and of the Holders of
not less than 66-2/3% of the Class Principal Balance of the Certificates 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,
96
however, that no such amendment shall be made unless the Indenture Trustee and
the Insurer (so long as the Class A Notes are Outstanding or any Reimbursement
Amounts remain due and owing to the Insurer) receive an Opinion of Counsel
(which shall be an expense of the party requesting such amendment and shall not
be an expense of the Trust), to the effect that such amendment will now
adversely affect the tax status of the REMICs created by the Trust Agreement;
provided, further, that no such amendment may (i) reduce in any manner the
amount of, or delay the timing of, payments which are required to be distributed
on any Class of Securities or the Insurer, without the consent of the Holders of
such Class or the Insurer (so long as the Class A Notes are Outstanding or
Reimbursement Amounts remain due and owing to the Insurer) or (ii) reduce the
aforesaid percentages of Note Principal Amount of Notes or Class Principal
Balance of Certificates, the Holders of which are required to consent to any
such amendment without the consent of the Holders of 100% of the Note Principal
Amount of the Notes and 100% of the Class Principal Balance of the Certificates
affected thereby. For purposes of this paragraph, references to "Holder" or
"Holders" shall be deemed to include, in the case of Book-Entry Notes, the
related Note Owners.
(c) Promptly after the execution of any such amendment, the Indenture
Trustee shall furnish written notification of the substance of such amendment to
each Holder, the Insurer (so long as the Class A Notes are Outstanding or any
Reimbursement Amounts remain due and owing to the Insurer and no Insurer Default
has occurred and is continuing), the Depositor and to each Rating Agency.
(d) It shall not be necessary for the consent of Holders under this
Section 10.01 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 Indenture Trustee may prescribe.
Section 10.02 Recordation of Agreement. To the extent permitted by
applicable law, this Agreement, or a memorandum thereof if permitted under
applicable law, is subject to recordation in all appropriate public offices for
real property records in all of the counties or other comparable jurisdictions
in which any or all of the Mortgaged Properties are situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected by the Servicer at the Servicer's expense on direction of the Indenture
Trustee acting at the direction of the Controlling Party, but only when
accompanied by an opinion of counsel delivered by counsel to the Controlling
Party to the effect that such recordation materially and beneficially affects
the interests of the Class A Noteholders or is necessary for the administration
or servicing of the Mortgage Loans.
Section 10.03 Duration of Agreement. This Agreement shall continue in
existence and effect until terminated as herein provided.
97
Section 10.04 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
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 GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF
LAW (OTHER THAN SECTION 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS
LAW).
Section 10.05 Notices. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if personally
delivered at or mailed by overnight mail, certified mail or registered mail,
postage prepaid, to: (i) in the case of the Seller, the Depositor and the
Servicer, c/o IndyMac Bank, F.S.B., ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Treasurer, (ii) in the case of the Indenture
Trustee or the Trust, at the Corporate Trust Office, (iii) in the case of the
Insurer, XL Capital Assurance Inc., ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: Surveillance, (iv) in the case of ▇▇▇▇▇'▇, ▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ Attention: Residential Mortgage
Monitoring, (v) in the case of Standard & Poor's, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, (vi) in the case of the Noteholders, as set forth in the Note
Register, and (vii) in the case of the Certificateholders, as set forth in the
Certificate Register. Any such notices shall be deemed to be effective with
respect to any party hereto upon the receipt of such notice by such party,
except that notices to the Noteholders and the Certificateholders shall be
effective upon mailing or personal delivery.
Section 10.06 Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be held
invalid for any reason whatsoever, 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 covenants, agreements, provisions or terms of this
Agreement.
Section 10.07 No Partnership. Nothing herein contained shall be deemed or
construed to create any partnership or joint venture between the parties hereto
and the services of the Servicer shall be rendered as an independent contractor.
Section 10.08 Counterparts. This Agreement may be executed in one or more
counterparts and by the different parties hereto on separate counterparts, each
of which, when so executed, shall be deemed to be an original; such
counterparts, together, shall constitute one and the same Agreement.
Section 10.09 Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the Servicer, the Seller, the Depositor, the
Trust, the Indenture Trustee, the Noteholders and the Certificateholders and
their respective successors and permitted assigns. The Insurer is an express
third party beneficiary of this Agreement.
98
Section 10.10 Headings. The headings of the various sections of this
Agreement have been inserted for convenience of reference only and shall not be
deemed to be part of this Agreement.
Section 10.11 Reports to Rating Agencies. The Indenture Trustee shall
provide to each Rating Agency, upon request, copies of statements, reports and
notices, to the extent received or prepared by the Servicer hereunder, as
follows:
(i) copies of amendments to this Agreement;
(ii) notice of any substitution or repurchase of any Mortgage Loans;
(iii) notice of any termination, replacement, succession, merger or
consolidation of either the Servicer or the Trust;
(iv) notice of final payment on any Class of Note;
(v) notice of any Event of Servicer Termination;
(vi) copies of the annual independent auditor's report delivered
pursuant to Section 3.11 herein, and copies of any compliance reports
delivered by the Servicer hereunder pursuant to Section 3.10 herein; and
(vii) via access to the Indenture Trustee's website, copies of any
Statement to Noteholders pursuant to Section 5.03 herein.
Section 10.12 Inconsistencies Among Transaction Documents. In the event
certain provisions of a Transaction Document conflict with the provisions of
this Sale and Servicing Agreement, the parties hereto agree that the provisions
of this Sale and Servicing Agreement shall be controlling.
Section 10.13 Rights of the Insurer to Exercise Rights of Class A
Noteholders. By accepting its Class A Note, each Class A Noteholder agrees that
unless an Insurer Default exists, the Insurer shall have the right to exercise
all rights of the Class A Noteholders as specified under this Agreement as if it
were a party hereto without any further consent of the Class A Noteholders. Any
right conferred to the Insurer hereunder shall be suspended and shall run to the
benefit of the Class A Noteholders during any period in which there exists an
Insurer Default.
Section 10.14 Enforceability Rights of the Indenture Trustee. All rights
conferred and remedies made available to the Indenture Trustee under this
Agreement may be exercised and enforced by the Controlling Party.
99
Section 10.15 Matters Regarding the Trust. The Trust's power and authority
to effect transactions shall be limited to such transactions specifically
provided for in this Agreement or the Transaction Documents.
Section 10.16 Reports to Insurer. The Seller, the Servicer and the
Indenture Trustee, as applicable, shall provide copies to the Insurer of all
statements, reports and notices delivered under this agreement to any other
party hereto, any Rating Agency or any Noteholder.
Section 10.17 Matters Regarding the Indenture Trustee. It is expressly
understood and agreed by the parties that (a) this Agreement is executed and
delivered by Deutsche Bank National Trust Company, not individually or
personally, but solely as Indenture Trustee, in the exercise of the powers and
authority conferred and vested in it, pursuant to the Trust Agreement, (b) each
of the representations, undertakings and agreements herein made on the part of
the Trust is made and intended not as personal representations, undertakings and
agreements by Deutsche Bank National Trust Company but is made and intended for
the purpose for binding only the Trust, (c) nothing herein contained shall be
construed as creating any liability on Deutsche Bank National Trust Company,
individually or personally, to perform any covenant either expressed or implied
contained herein, all such liability, if any, being expressly waived by the
parties hereto and by any person claiming by, through or under the parties
hereto, and (d) under no circumstances shall Deutsche Bank National Trust
Company be personally liable for the payment of any indebtedness or expenses of
the Trust or be liable for the breach or failure of any obligation,
representation, warranty or covenant made or undertaken by the Trust under this
Agreement or any other related documents. The Indenture Trustee shall be
entitled to the same rights, protections, immunities and indemnities afforded to
it under the Indenture and the Administration Agreement.
Section 10.18 Limitation of Owner Trustee Liability. It is expressly
understood and agreed by the parties that (a) this document is executed and
delivered by Wilmington Trust Company, not individually or personally, but
solely as Owner Trustee, in the exercise of the powers and authority conferred
and vested in it, pursuant to the Trust Agreement, (b) each of the
representations, undertakings and agreements herein made on the part of the
Trust is made and intended not as personal representations, undertakings and
agreements by Wilmington Trust Company but is made and intended for the purpose
for binding only the Trust, (c) nothing herein contained shall be construed as
creating any liability on Wilmington Trust Company, individually or personally,
to perform any covenant either expressed or implied contained herein, all such
liability, if any, being expressly waived by the parties hereto and by any
person claiming by, through or under the parties hereto, and (d) under no
circumstances shall Wilmington Trust Company be personally liable for the
payment of any indebtedness or expenses of the Trust or be liable for the breach
or failure of any obligation, representation, warranty or covenant made or
undertaken by the Trust under this Agreement or any other related documents.
[SIGNATURE PAGES FOLLOW]
100
IN WITNESS WHEREOF, the following have caused their names to be signed by
their respective officers thereunto duly authorized, as of the day and year
first above written, to this Sale and Servicing Agreement.
INDYMAC MBS, INC., as Depositor
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice President
DEUTSCHE BANK NATIONAL TRUST COMPANY,
not in its individual capacity, but solely as Indenture Trustee
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------------------------
Name: ▇▇▇ ▇▇▇▇▇▇▇▇
Title: Authorized Signer
INDYMAC BANK, F.S.B.,
as Servicer and Seller
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice President
INDYMAC HOME EQUITY MORTGAGE LOAN
ASSET-BACKED TRUST, SERIES 2006-H3,
as the Trust
By: Wilmington Trust Company,
not in its individual capacity
but solely as Owner Trustee
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
IndyMac Home Equity Mortgage Loan
Asset-Backed Trust, Series 2006-H3
Sale and Servicing Agreement
S-1
STATE OF CALIFORNIA )
) ss.:
COUNTY OF LOS ANGELES )
BEFORE ME, on September 29, 2006, the undersigned authority, a Notary
Public, on this day personally appeared ▇▇▇▇ ▇▇▇▇▇▇▇▇, known to me to be the
person and officer whose name is subscribed to the foregoing instrument, and
acknowledged to me that the same was the act of the said IndyMac MBS, Inc., as
Depositor, and that he/she executed the same as the act of such corporation for
the purposes and consideration therein expressed, and in the capacity therein
stated.
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------------
Notary Public, State of California
IndyMac Home Equity Mortgage Loan
Asset-Backed Trust, Series 2006-H3
Sale and Servicing Agreement
N-1
STATE OF CALIFORNIA )
) ss.:
COUNTY OF ORANGE )
BEFORE ME, on September 21, 2006, the undersigned authority, a Notary
Public, on this day personally appeared ▇▇▇ ▇▇▇▇▇▇▇▇, known to me to be the
person and officer whose name is subscribed to the foregoing instrument, and
acknowledged to me that the same was the act of the said Deutsche Bank National
Trust Company, as Indenture Trustee of IndyMac Home Equity Mortgage Loan
Asset-Backed Trust, Series 2006-H3, and that he/she executed the same as the act
of such national banking association for the purposes and consideration therein
expressed, and in the capacity therein stated.
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------
Notary Public, State of California
IndyMac Home Equity Mortgage Loan
Asset-Backed Trust, Series 2006-H3
Sale and Servicing Agreement
N-2
STATE OF CALIFORNIA )
) ss.:
COUNTY OF LOS ANGELES )
BEFORE ME, on September 29, 2006, the undersigned authority, a Notary
Public, on this day personally appeared ▇▇▇▇ ▇▇▇▇▇▇▇▇, known to me to be the
person and officer whose name is subscribed to the foregoing instrument, and
acknowledged to me that the same was the act of the said IndyMac Bank, F.S.B.,
as Seller and Servicer, and that he/she executed the same as the act of such
federal savings bank for the purposes and consideration therein expressed, and
in the capacity therein stated.
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------------
Notary Public, State of California
IndyMac Home Equity Mortgage Loan
Asset-Backed Trust, Series 2006-H3
Sale and Servicing Agreement
N-3
STATE OF DELAWARE )
) ss.:
COUNTY OF NEW CASTLE )
BEFORE ME, on September 21, 2006, the undersigned authority, a Notary
Public, on this day personally appeared ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, known to me to be the
person and officer whose name is subscribed to the foregoing instrument, and
acknowledged to me that the same was the act of the said Wilmington Trust
Company, not in its individual capacity but solely as owner trustee, and that
he/she executed the same as the act of such Delaware banking corporation for the
purposes and consideration therein expressed, and in the capacity therein
stated.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Notary Public, State of Delaware
IndyMac Home Equity Mortgage Loan
Asset-Backed Trust, Series 2006-H3
Sale and Servicing Agreement
N-4
EXHIBIT A
MORTGAGE LOAN SCHEDULE
[On file with Indenture Trustee]
A-1
EXHIBIT B
LIST OF SERVICING OFFICERS
To: Deutsche Bank National Trust Company
AUTHORIZED SERVICING OFFICER CERTIFICATE
Listed below are those individuals authorized to provide Deutsche Bank
National Trust Company with written instructions relating to the IndyMac Home
Equity Mortgage Loan Asset Backed Trust, Series 2006-H3 transaction. Deutsche
Bank National Trust Company is Indenture Trustee for this transaction.
Name Title Specimen Signature
--------------- ------------------------- -------------------------
▇▇▇▇ ▇▇▇▇▇ _________________________ _________________________
▇▇▇▇ ▇▇▇▇▇▇▇▇ _________________________ _________________________
▇▇▇▇▇▇ ▇▇▇▇ _________________________ _________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇ _________________________ _________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ _________________________ _________________________
▇▇▇▇▇▇ ▇▇▇▇▇ _________________________ _________________________
▇▇▇ ▇▇▇▇▇▇ _________________________ _________________________
▇▇▇▇▇ ▇▇▇▇▇▇ _________________________ _________________________
B-1
▇▇▇▇▇ ▇▇▇▇ _________________________ _________________________
▇▇▇▇▇ ▇▇▇▇▇▇▇ _________________________ _________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ _________________________ _________________________
By:__________________________
Name:
Title:
Date:
B-2
EXHIBIT C
FORM OF ANNUAL OFFICER'S CERTIFICATE
INDYMAC BANK, F.S.B.
INDYMAC HOME EQUITY MORTGAGE LOAN ASSET-BACKED TRUST,
SERIES 2006-H3
The undersigned, a duly authorized representative of IndyMac Bank, F.S.B.
("IndyMac Bank"), pursuant to the Sale and Servicing Agreement dated as of
September 14, 2006 (the "Agreement"), among IndyMac MBS, Inc., a Delaware
corporation, as depositor, IndyMac Home Equity Mortgage Loan Asset-Backed Trust,
Series 2006-H3 (the "Trust"), IndyMac Bank, F.S.B., a federally chartered bank,
as seller and servicer (in such capacity, the "Seller" and "Servicer"), and
Deutsche Bank National Trust Company, a national banking association, as
Indenture Trustee on behalf of the Class A Noteholders (in such capacity, the
"Indenture Trustee"), does hereby certify that:
IndyMac Bank is, as of the date hereof, the Servicer under the Agreement.
Capitalized terms used in this Certificate have their respective meanings as set
forth in the Agreement.
1. The undersigned is a Servicing Officer who is duly authorized
pursuant to the Agreement to execute and deliver this Certificate to
the Indenture Trustee.
2. A review of the activities of the Servicer during the twelve months
[or such shorter period in the year after the Closing Date] ended
[DATE], and of its performance under the Agreement, was conducted
under my supervision.
3. Based on such review, the Servicer has, to the best of my knowledge,
performed in all material respects its obligations under the
Agreement throughout the twelve months [or such shorter period in
the year after the Closing Date] ended [DATE], and no default in the
performance of such obligations has occurred or is continuing except
as set forth in paragraph 5 below.
4. The following is a description of each default in the performance of
the Servicer's obligations under the provisions of the Agreement
known to me to have been made by the Servicer during the twelve
months [or such shorter period in the year after the Closing Date]
ended [DATE], which sets forth in detail (i) the nature of each such
default, (ii) the action taken by the Servicer, if any, to remedy
each such default and (iii) the current status of each such default.
C-1
IN WITNESS WHEREOF, the undersigned has duly executed this Certificate
this _____ day of __________ 200___.
INDYMAC BANK, F.S.B.
as Servicer
By:__________________________
[Name]:
[Title]:
C-2
EXHIBIT D
FORM OF ADVANCE NOTICE
___________________
Date
[Addressed to Holder of the Class L Certificates]
In connection with that certain Sale and Servicing Agreement dated as of
September 14, 2006 by and among IndyMac MBS, Inc., as Depositor, Deutsche Bank
National Trust Company, as Indenture Trustee, IndyMac Bank, F.S.B, as Seller and
Servicer, and IndyMac Home Equity Mortgage Loan Asset-Backed Trust, Series
2006-H3, as Issuer (the "Sale and Servicing Agreement"), the undersigned
Servicer hereby requests that you make an advance to the Trust in the amount of
$___________ (such amount to be deposited into the Reserve Account) no later
than the date two Business Days prior to the next Payment Date in accordance
with Section 2.01(d) of the Sale and Servicing Agreement, in respect of the
following Draw[s]:
Loan no.:
Date of Draw:
Amount of Draw:
Loan no.:
Date of Draw:
Amount of Draw:
Total amount of Draws:
Amount of total covered by Principal Collections:
D-1
Capitalized terms used herein shall have the meanings ascribed to them in
the Sale and Servicing Agreement.
INDYMAC BANK, F.S.B.
as Servicer
By:_____________________________
Name:
Title:
cc: Deutsche Bank National Trust Company
▇▇▇▇ ▇▇▇▇ ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
D-2
EXHIBIT E
FORM OF MORTGAGE NOTE
[On file with Servicer]
E-1
EXHIBIT F
FORM OF MORTGAGE
[On file with Servicer]
F-1
EXHIBIT G
SPECIMEN OF THE POLICY
(See attached)
G-1
EXHIBIT H
FORM OF LOST NOTE AFFIDAVIT
AFFIDAVIT OF LOST CERTIFICATE
STATE OF )
) ss.:
COUNTY OF )
(name) , (address) , being duly sworn,
deposes and says:
1. that he is a ____________________ of assignor
2. that (assignor) is the owner and holder of a (type of mortgage)
loan in the present principal amount of ____________________ securing the
premises known as (premises);
3. (a) that (assignor), after having conducted a diligent
investigation in its records and files, has been unable to locate the
following original certificate and believes that said original certificate
has been lost, misfiled, misplaced or destroyed due to a clerical error:
a certificate in the original sum of ____________________________
made by ____________________, to ____________________, under date of
____________________;
(b) this affidavit is being delivered simultaneously with a copy
of the original certificate listed above;
4. that said certificate and the related mortgage have not been paid
off, satisfied, assigned, transferred, encumbered, endorsed, pledged,
hypothecated, or otherwise disposed of;
5. that no other person, firm, corporation or other entity has any
right, title, interest or claim in said certificate except (assignor);
6. that it is the intention and understanding of (assignor) to the
right, title and interest in the said assign certificate and mortgage to
__________________________;
H-1
7. that (assignor) covenants and agrees (a) promptly to deliver to
(assignee) the original certificate if it is subsequently found, and (b)
to indemnify and hold harmless (assignee) and its successors and assigns
from and against any and all costs, expenses and monetary losses arising
as a result of (assignor's) failure to deliver said original certificate
to (assignee);
8. that this Affidavit is made to induce __________________________
to accept an assignment of the certificate and mortgage described herein.
___________________________
Name:
Title:
Sworn to before me this
____ day of ____________, ____________
H-2
EXHIBIT I
FORM OF REQUEST FOR RELEASE
[DATE]
Deutsche Bank National Trust Company
▇▇▇▇ ▇. ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇
Attention:
Re: IndyMac Residential Asset-Backed Notes, Series 2006-H3
Gentlemen:
In connection with the administration of the Mortgage Loans held by you as
Indenture Trustee under the Sale and Servicing Agreement dated as of September
14, 2006, among IndyMac Home Equity Mortgage Loan Asset-Backed Trust, Series
2006-H3, IndyMac MBS, Inc., as Depositor, IndyMac Bank, F.S.B., as Seller and
Servicer, and you, as Indenture Trustee (the "Sale and Servicing Agreement"), we
hereby request a release of the Mortgage File held by you as Indenture Trustee
with respect to the following described Mortgage Loan for the reason indicated
below.
Loan No.:
Reason for requesting file:
______ 1. Mortgage Loan paid in full. (The Servicer hereby certifies
that all amounts received in connection with the payment in
full of the Mortgage Loan which are required to be deposited
in the Collection Account pursuant to Section 3.02 of the Sale
and Servicing Agreement have been so deposited).
______ 2. The Mortgage Loan is being foreclosed.
______ 3. The Mortgage Loan is being re financed by another depository
institution. (The Servicer hereby certifies that all amounts
received in connection with the payment in full of the
Mortgage Loan which are required to be deposited in the
Collection Account pursuant to Section 3.02 of the Sale and
Servicing Agreement have been so deposited).
______ 4. Other (Describe).
I-1
The undersigned acknowledges that the above Mortgage File will be held by
the undersigned in accordance with the provisions of the Sale and Servicing
Agreement and will promptly be returned to the Indenture Trustee when the need
therefor by the Servicer no longer exists unless the Mortgage Loan has been
liquidated.
Capitalized terms used herein shall have the meanings ascribed to them in
the Sale and Servicing Agreement.
INDYMAC BANK, F.S.B.
as Servicer
By:_____________________________
Name:
Title: Servicing Officer
I-2
EXHIBIT J
FORM OF INITIAL CERTIFICATION
INITIAL CERTIFICATION
September [__], 2006
XL Capital Assurance Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
IndyMac MBS, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
IndyMac Bank, F.S.B.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: Sale and Servicing Agreement between IndyMac Home Equity Mortgage
Loan Asset-Backed Trust, Series 2006-H3, IndyMac MBS, Inc., as
depositor, IndyMac Bank, F.S.B., as seller and as servicer, and
Deutsche Bank National Trust Company, as Indenture Trustee (the
"Indenture Trustee")
Gentlemen:
In accordance with Section 2.01(g) of the above-captioned Sale and
Servicing Agreement (the "Sale and Servicing Agreement"), the undersigned, as
Indenture Trustee, hereby certifies that, as to each Mortgage Loan listed in
each Mortgage Loan Schedule (other than any Mortgage Loan listed in the attached
schedule), the original Mortgage Note, endorsed in blank, or a copy of such
original Mortgage Note with an accompanying Lost Certificate Affidavit, is in
its possession.
The undersigned has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
Sale and Servicing Agreement. The undersigned makes no representations as to:
(i) the validity, legality, sufficiency, enforceability or genuineness of any of
the documents contained in each Mortgage File of any of the Mortgage Loans
identified on either Mortgage Loan Schedule, or (ii) the collectability,
insurability, effectiveness or suitability of any such Mortgage Loan.
J-1
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Sale and Servicing Agreement.
Very truly yours,
DEUTSCHE BANK NATIONAL
TRUST COMPANY,
as Indenture Trustee
By:_____________________________
Name:
Title:
J-2
EXHIBIT K
FORM OF INTERIM CERTIFICATION
INTERIM CERTIFICATION
[Date]
XL Capital Assurance Inc.
1221 Avenue of the Americas
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
IndyMac MBS, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
IndyMac Bank, F.S.B.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: Sale and Servicing Agreement between IndyMac Home Equity Mortgage
Loan Asset-Backed Trust, Series 2006-H3, IndyMac MBS, Inc., as
depositor, IndyMac Bank, F.S.B., as seller and as servicer, and
Deutsche Bank National Trust Company, as Indenture Trustee (the
"Indenture Trustee")
Gentlemen:
In accordance with Section 2.01(g) of the above-captioned Sale and
Servicing Agreement (the "Sale and Servicing Agreement"), the undersigned, as
Indenture Trustee, hereby certifies that, as to each Mortgage Loan listed in
each Mortgage Loan Schedule (other than any Mortgage Loan listed in the attached
schedule), it has received:
the original Mortgage Note, endorsed in blank, or a copy of
such original Mortgage Note with an accompanying Lost Certificate
Affidavit; and
the original Assignment of Mortgage, from the Seller either in
blank or to "Deutsche Bank National Trust Company, as Indenture
Trustee for IndyMac Home Equity Mortgage Loan Asset-Backed Trust,
Series 2006-H3", which assignment shall be in form and substance
acceptable for recording.
Based on its review and examination and only as to the foregoing
documents, such documents appear regular on their face and relate to such
Mortgage Loan.
K-1
The undersigned has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
Sale and Servicing Agreement. The undersigned makes no representations as to:
(i) the validity, legality, sufficiency, enforceability or genuineness of any of
the documents contained in each Mortgage File of any of the Mortgage Loans
identified on either Mortgage Loan Schedule, or (ii) the collectability,
insurability, effectiveness or suitability of any such Mortgage Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Sale and Servicing Agreement.
Very truly yours,
DEUTSCHE BANK NATIONAL
TRUST COMPANY,
as Indenture Trustee
By:_____________________________
Name:
Title:
K-2
EXHIBIT L
FORM OF FINAL CERTIFICATION
[Date]
XL Capital Assurance Inc.
1221 Avenue of the Americas
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
IndyMac MBS, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
IndyMac Bank, F.S.B.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: Sale and Servicing Agreement among IndyMac Home Equity Mortgage Loan
Asset-Backed Trust, Series 2006-H3, IndyMac MBS, Inc., as depositor,
IndyMac Bank, F.S.B., as seller and servicer, and Deutsche Bank
National Trust Company, as Indenture Trustee (the "Indenture
Trustee")
Gentlemen:
In accordance with Section 2.01(i) of the above-captioned Sale and
Servicing Agreement (the "Sale and Servicing Agreement"), the undersigned, as
Indenture Trustee, hereby certifies that as to each Mortgage Loan listed in each
Mortgage Loan Schedule (other than any Mortgage Loan paid in full or listed on
the attached exception report) it has received:
(A) the original Mortgage Note, endorsed in blank, or a copy
of such original Mortgage Note with an accompanying Lost Note
Affidavit;
(B) the original Assignment of Mortgage, from the Seller
either in blank or to "Deutsche Bank National Trust Company, as
Indenture Trustee for IndyMac Home Equity Mortgage Loan Asset-Backed
Trust, Series 2006-H3", which assignment shall be in form and
substance acceptable for recording;
(C) the original Mortgage, with evidence of recording thereon,
provided that if the original Mortgage has been delivered for
recording to the appropriate public recording office of the
jurisdiction in which the Mortgaged Property is located but has not
yet been returned to the Seller by such recording office, the Seller
shall deliver to the Indenture Trustee a certified true copy of such
original Mortgage so certified by or on behalf of such Seller,
together with a
L-1
certificate by or on behalf of such Seller certifying that such
original Mortgage has been so delivered to such recording office; in
all such instances, such Seller shall deliver or cause to be
delivered the original recorded Mortgage to the Indenture Trustee
promptly upon receipt of the original recorded Mortgage;
(D) [reserved];
(E) intervening assignments, if any, with evidence of
recording thereon, provided that if such intervening assignment has
been delivered for recording to the appropriate public recording
office of the jurisdiction in which the Mortgaged Property is
located but has not yet been returned to the Seller by such
recording office, the Seller shall deliver to the Indenture Trustee
a certified true copy of such intervening assignment so certified by
or on behalf of such Seller, together with a certificate by or on
behalf of such Seller certifying that such intervening assignment
has been so delivered to such recording office; in all such
instances, such Seller shall deliver or cause to be delivered the
original intervening assignment to the Indenture Trustee promptly
upon receipt of the original intervening assignment; and
(F) with respect to any Subsequent Mortgage Loans, originals
of all assumption and modification agreements, if any.
Based on its review and examination and only as to the foregoing
documents, (a) such documents appear regular on their face and related to such
Mortgage Loan, and (b) with respect to Mortgage Loans, the information set forth
in the definition of "Mortgage Loan Schedule" in Article I of the Sale and
Servicing Agreement other than items (i), (iv), (v), (vi), (viii), (ix), (x),
(xi) and (xii) accurately reflects information set forth in the related Mortgage
Files.
The undersigned has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
Sale and Servicing Agreement. The undersigned makes no representations as to:
(i) the validity, legality, sufficiency, enforceability or genuineness of any of
the documents contained in each Mortgage File of any of the Mortgage Loans
identified on either Mortgage Loan Schedule, or (ii) the collectability,
insurability, effectiveness or suitability of any such Mortgage Loan.
Notwithstanding anything herein to the contrary, the undersigned has made no
determination and makes no representations as to whether (i) any endorsement is
sufficient to transfer all right, title and interest of the party so endorsing,
as noteholder or assignee thereof, in and to that Mortgage Note or (ii) any
assignment is in recordable form or sufficient to effect the assignment of and
transfer to the assignee thereof, under the Mortgage to which the assignment
relates.
L-2
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Sale and Servicing Agreement.
DEUTSCHE BANK NATIONAL TRUST
COMPANY,
as Indenture Trustee
By:_________________________
Name:
Title:
L-3
EXHIBIT M
FORM OF CERTIFICATION TO BE PROVIDED BY THE DEPOSITOR WITH FORM 10-K
Re: IndyMac MBS Inc.
IndyMac Home Equity Mortgage Loan Asset-Backed Trust, Series
2006-H3
I, [identify the certifying individual], certify that:
1. I have reviewed this annual 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 Home Equity Mortgage Loan Asset-Backed Trust, Series
2006-H3 (the "Exchange Act Periodic Reports");
2. Based on my knowledge, the Exchange Act Periodic Reports, taken
as a whole, does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect
to the period covered by this report;
3. Based on my knowledge, 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. Based on my knowledge and 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) in all material
respects; and;
5. All of the reports on assessment of compliance with servicing
criteria for asset-backed securities and their related attestation reports on
assessment of compliance with servicing criteria for asset-backed securities
required to be included in this report in accordance with Item 1122 of
Regulation AB and Exchange Act Rules 13a-18 and 15d-18 have been included as an
exhibit to this report, except as otherwise disclosed in this report. Any
material instances of noncompliance described in such reports have been
disclosed in this report on Form 10-K.
M-1
In giving the certifications above, I have reasonably relied on
information provided to me by the following unaffiliated parties: Deutsche Bank
National Trust Company.
Date: __________________
INDYMAC MBS, INC.,
as Depositor
By:_____________________________
Name:
Title:
M-2
EXHIBIT N
INDENTURE TRUSTEE'S OFFICER'S CERTIFICATE
I, ____________________, a duly elected and acting officer of
Deutsche Bank National Trust Company (the "Indenture Trustee") hereby certify as
follows:
Reference is hereby made to the Sale and Servicing Agreement dated
as of September 14, 2006 (the "Sale and Servicing Agreement") by and among
IndyMac Bank, F.S.B., as seller and servicer, IndyMac MBS, Inc., as depositor
and Deutsche Bank National Trust Company, as indenture trustee and supplemental
interest trustee, pursuant to which was created the IndyMac Home Equity Mortgage
Loan Asset-Backed Trust, Series 2006-H3 (the "Trust"). Capitalized terms used
herein but not defined shall have the meanings assigned to them in the Sale and
Servicing Agreement.
1. I am an authorized officer of the Indenture Trustee and I have
reviewed this annual 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
IndyMac Home Equity Mortgage Loan Asset-Backed Trust, Series 2006-H3 (the
"Exchange Act Periodic Reports");
2. For purposes of this certificate, "Relevant Information" means
the information in the report on assessment of the Indenture Trustee's
compliance with the servicing criteria set forth in Item 1122(d) of Reg AB (the
"Servicing Assessment"), the registered public accounting firm's attestation
provided in accordance with Rules 13a-18 and 15d-18 under the Exchange Act and
Section 1122(b) of Reg AB (the "Attestation Report") applicable to the Indenture
Trustee and the Statements to Noteholders (excluding information provided, or
based on information provided, by the Servicer or any servicer) and those items
in Exhibit R attached to the Sale and Servicing Agreement which indicate the
4.03 statement or the Indenture Trustee as the responsible party during the
Relevant Year. Based on my knowledge, the Relevant Information, taken as a
whole, does not contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect
to the period covered by this annual report; and
3. Based on my knowledge, the distribution information required to
be provided by the Indenture Trustee under the Sale and Servicing Agreement is
included in the Statements to Noteholders.
4. I am responsible for reviewing the activities performed by the
Indenture Trustee, as servicer under the Sale and Servicing Agreement during the
Relevant Year. Based upon the review required by the Sale and Servicing
Agreement and except as disclosed in the Servicing Assessment or Attestation
Report, to the best of my knowledge, the Indenture Trustee has fulfilled its
obligations under the Sale and Servicing Agreement throughout the Relevant Year.
Relevant Year shall mean 200__.
N-1
DATED as of _____________, 200____.
By: _________________________
Name: _________________________
Title: _________________________
N-2
EXHIBIT O
ORIGINATORS' APPRAISAL MATRIX
(See attached)
O-1
EXHIBIT P
SERVICING CRITERIA TO BE ADDRESSED
IN ASSESSMENT OF COMPLIANCE
Applicable Applicable
Servicing Criteria Servicing Criteria Servicing Criteria
---------------- ----------------------------------------------------------------- -------------------- --------------------
Reference Criteria Servicer Indenture Trustee
---------------- ----------------------------------------------------------------- -------------------- --------------------
General Servicing Considerations
Policies and procedures are instituted to monitor any performance
or other triggers and events of default in accordance with the X X
1122(d)(1)(i) transaction agreements.
If any material servicing activities are outsourced to
third parties, policies and procedures are instituted to X X
monitor the third party's performance and compliance with
1122(d)(1)(ii) such servicing activities.
Any requirements in the transaction agreements to maintain a
1122(d)(1)(iii) back-up servicer for the pool assets are maintained.
A fidelity bond and errors and omissions policy is in
effect on the party participating in the servicing function X
throughout the reporting period in the amount of coverage
required by and otherwise in accordance with the terms of
1122(d)(1)(iv) the transaction agreements.
Cash Collection and Administration
Payments on pool assets are deposited into the appropriate
custodial bank accounts and related bank clearing accounts X X
no more than two business days following receipt, or such
1122(d)(2)(i) other number of days specified in the transaction agreements.
Disbursements made via wire transfer on behalf of an obligor or X X
1122(d)(2)(ii) to an investor are made only by authorized personnel.
Advances of funds or guarantees regarding collections,
Cashflows or distributions, and any interest or other fees X
charged for such advances, are made, reviewed and approved
1122(d)(2)(iii) as specified in the transaction agreements.
The related accounts for the transaction, such as cash reserve
accounts or accounts established as a form of
overcollateralization, are separately maintained (e.g., with X
respect to commingling of cash) as set forth in the transaction
1122(d)(2)(iv) agreements.
Each custodial account is maintained at a federally insured
depository institution as set forth in the transaction
agreements. For purposes of this criterion, "federally
insured depository institution" with respect to a foreign X X
1122(d)(2)(v) financial institution means a foreign financial institution that
meets the
P-1
Applicable Servicing Applicable Servicing
Servicing Criteria Criteria Criteria
------------------------------------------------------------------------------------ -------------------- --------------------
Reference Criteria Servicer Indenture Trustee
---------------- ----------------------------------------------------------------- -------------------- --------------------
requirements of Rule 13k-1(b)(1) of the
Securities Exchange Act.
Unissued checks are safeguarded so as to prevent unauthorized
1122(d)(2)(vi) access.
Reconciliations are prepared on a monthly basis for all
asset-backed securities related bank accounts, including
custodial accounts and related bank clearing accounts.
These reconciliations are (A) mathematically accurate; (B)
prepared within 30 calendar days after the bank statement
cutoff date, or such other number of days specified in the
transaction agreements; (C) reviewed and approved by X X
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
1122(d)(2)(vii) agreements.
Investor Remittances and Reporting
Reports to investors, including those to be filed with the
Commission, are maintained in accordance with the
transaction agreements and applicable Commission
requirements. Specifically, such reports (A) are prepared
in accordance with timeframes and other terms set forth in
the transaction agreements; (B) provide information X
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
1122(d)(3)(i) by the servicer.
Amounts due to investors are allocated and remitted in
accordance with timeframes, distribution priority and other X
1122(d)(3)(ii) terms set forth in the transaction agreements.
Disbursements made to an investor are posted within two business
days to the servicer's investor records, or such other number of X
1122(d)(3)(iii) days specified in the transaction agreements.
Amounts remitted to investors per the investor reports agree with
cancelled checks, or other form of payment, or custodial bank X
1122(d)(3)(iv) statements.
Pool Asset Administration
Collateral or security pool asset is maintained as required by X
1122(d)(4)(i) the transaction agreements or related asset pool documents.
Pool assets and related documents are safeguarded as required by X
1122(d)(4)(ii) the transaction agreements
P-2
Applicable Servicing Applicable Servicing
Servicing Criteria Criteria Criteria
------------------------------------------------------------------------------------ -------------------- --------------------
Reference Criteria Servicer Indenture Trustee
---------------- ----------------------------------------------------------------- -------------------- --------------------
Any additions, removals or substitutions to the asset pool
are made, reviewed and approved in accordance with any conditions X X
1122(d)(4)(iii) or requirements in the transaction agreements.
Payments on pool assets, including 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 X
days specified in the transaction agreements, and allocated
to principal, interest or other items (e.g., escrow) in
1122(d)(4)(iv) accordance with the related pool asset documents.
The servicer's records regarding the pool assets agree with
the servicer's records with respect to an obligor's unpaid X
1122(d)(4)(v) principal balance.
Changes with respect to the terms or status of an obligor's
pool asset (e.g., loan modifications or re-agings) are
made, reviewed and approved by authorized personnel in X
accordance with the transaction agreements and related pool
1122(d)(4)(vi) asset documents.
Loss mitigation or recovery actions (e.g., forbearance
plans, modifications and deeds in lieu of foreclosure,
foreclosures and repossessions, as applicable) are X
initiated, conducted and concluded in accordance with the
timeframes or other requirements established by
1122(d)(4)(vii) the transaction agreements.
Records documenting collection 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
1122(d)(4)(viii) is deemed temporary (e.g., illness or unemployment).
Adjustments to interest rates or rates of return for pool
assets with variable rates are computed based on the X
1122(d)(4)(ix) related pool asset documents.
Regarding any funds held in trust 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 asset, or such
1122(d)(4)(x) other number of days specified in the transaction agreements.
Payments made on behalf of an obligor (such as tax or
insurance payments) are made on or before the related
penalty or expiration dates, as indicated on the
appropriate bills or notices for such payments, provided
that such support has been received by the servicer at
least 30 calendar days prior to these dates, or such
1122(d)(4)(xi) other number of days specified in the transaction agreements.
P-3
Applicable Applicable
Servicing Criteria Servicing Criteria Servicing Criteria
------------------------------------------------------------------------------------ -------------------- --------------------
Reference Criteria Servicer Indenture Trustee
---------------- ----------------------------------------------------------------- -------------------- --------------------
Any late payment penalties in connection with any payment
to be made on behalf of an obligor are paid from the
servicer's funds and not charged to the obligor, unless the
1122(d)(4)(xii) late payment was due to the obligor's error or omission.
Disbursements made on behalf of an obligor are posted
within two business days to the obligor's records
maintained by the servicer, or such other number of days
1122(d)(4)(xiii) specified in the transaction agreements.
Delinquencies, charge-offs and uncollectible accounts are
recognized and recorded in accordance with the transaction X
1122(d)(4)(xiv) agreements.
Any external enhancement or other support, identified in Item
1114(a)(1) through (3) or Item 1115 of Regulation AB, is X
1122(d)(4)(xv) maintained as set forth in the transaction agreements.
P-4
EXHIBIT Q
FORM OF STATEMENT TO NOTEHOLDERS
IndyMac Home Equity Mortgage Loan Asset-Backed Trust, Series 2006-H3
Statement to Noteholders
LIBOR: _________ LIBOR Determination Date: _________
Class A Note Rate: _________ Collection Period for _________
Mortgage Loans:
Class M1 Note Rate: _________
Class M2 Note Rate _________
Interest Period: ________ - _________ Payment Date: _________
Number of days in
Interest Period: _________
I. Pool Balance:
A. Cut-off Date Pool Balance $________
B. Cumulative Charge-Off Amounts (including the current
Collection Period) $________
C. Pool Balance at beginning of Collection Period $________
D. Charge-Off Amounts incurred during the related
Collection Period $________
E. Aggregate amount of Principal Collections received
during the Collection Period $________
F. Additional Balances (Draws) conveyed to the Trust during
the related Collection Period $________
G. Pool Balance at end of Collection Period $________
H. Number of Mortgage Loans outstanding at beginning of
related Collection Period _________
Q-1
I. Number of Mortgage Loans outstanding at end of related
Collection Period _________
II. Principal Balance of the Notes:
A. Initial Class A Note Principal Amount $________
B. Class A Note Principal Amount at beginning and end of
Collection Period $________
C. Class M1 Note Principal Amount at beginning and end of
Collection Period $________
D. Class M2 Certificate Principal Balance at beginning and
end of Collection Period $________
III. Invested Amount after all payments and distributions on the
Payment Date: $________
IV. Collections on Mortgage Loans:
A. Aggregate amount of Interest Collections received during
the related Collection Period $________
B. Principal Collections received during the related
Collection Period $________
C. Net Recoveries received during the related Collection
Period $________
V. Insured Amount: $________
VI. Distributions:
A. Premium Amount paid to the Insurer on the Payment Date $________
B. Class A Interest Payment Amount payable $________
C. Class M1 Interest Payment Amount $________
D. Class M2 Interest Payment Amount $________
E. Class A Interest Payment Amount for the Class A Notes
paid on the Payment Date $________
F. Class A Outstanding Interest Carryover Shortfall
remaining after all payments on the Payment Date $________
G. Specified Overcollateralization Amount $________
Q-2
H. Any other amounts paid to the Insurer pursuant to the
Insurance Agreement $________
I. Amount actually paid to Class A Noteholders in respect
of principal $________
J. Amount actually paid to the Class M1 Noteholders in
respect of principal
K. Amount actually paid to the Class M2 Noteholders in
respect of principal
VII. Modified Loans (cumulative Collection Periods including the
Current Collection Period):
A. Aggregate Principal Balance of Mortgage Loans modified
after giving effect to modifications $________
B. Aggregate Credit Limit of Mortgage Loans modified on a
cumulative basis after giving effect to modifications $________
C. Weighted average of Credit Limits of Mortgage Loans at
the end of Collection Period after giving effect to
modifications $________
VIII. Substitute Loans:
A. Purchase Prices $________
B. Substitution Adjustment $________
IX. Weighted Averages:
A. Weighted average of the Loan Rates at end of related
Collection Period $________
B. Weighted average of the Loan Rate Cap at end of related
Collection Period $________
C. Weighted average Margin at end of related Collection
Period $________
X. Delinquent Accounts:
# of Accounts Principal
Balance
A. 31-60 days delinquent ________ $________
B. 61-90 days delinquent ________ $________
C. over 90 days delinquent ________ $________
D. REO Properties ________ $________
Q-3
E. Foreclosures ________ $________
F. Bankruptcies ________ $________
G. Three Month Rolling Average _________%
H. Has a Trigger Event occurred? _________
XI. Rapid Amortization:
A. Has a Rapid Amortization Event occurred? _________
B. What was the Rapid Amortization Event? _________
XII. Allocations to Class A Noteholders (for each $1,000 of
original principal):
A. Aggregate amount of Principal Collections received
during the related Collection Period $________
B. Amount actually paid to Class A Noteholders in respect
of principal $________
C. Interest Distribution payable to the Class A Noteholders $________
D. Interest Distribution for the Class A Notes paid on the
Payment Date $________
E. Class A Note Principal Amount after all payments on the
Payment Date $________
F. Aggregate amount of any Relief Act Interest Shortfalls $________
XIII Allocations to Class M1 Noteholders (for each $1,000 of
original principal) $________
A. Aggregate amount of Principal Collections received
during the related Collection Period $________
B. Amount actually paid to Class M1 Noteholders in respect
of principal $________
C. Interest Distribution payable to the Class M1 Noteholder $________
D. Interest Distribution for the Class M1 Notes paid on the
Payment Date $________
E. Class M1 Note Principal Amount after all payments on the
Payment Date $________
F. Class M1 Note Principal Amount after all payments on the
Payment Date $________
Q-4
XIV Allocations to the Class M2 Noteholders (for each $1,000 of $________
original principal)
A. Aggregate amount of Principal Collections received
during the related Collection Period $________
B. Amount actually paid to Class M2 Noteholders in respect
of principal $________
C. Interest Distribution payable to the Class M2 Noteholder $________
D. Interest Distribution for the Class M2 Notes paid on the
Payment Date $________
E. Class M2 Note Principal Amount after all payments on the
Payment Date $________
F. Class M2 Note Principal Amount after all payments on the
Payment Date $________
XV Step-Down Date:
A. Step-Down Date Occurred? Yes___ No___
B. Step-Down Test Satisfied? Yes___ No___
C. Cumulative Net Charge-Off Amounts $________
XVI Pool Assets
A. Have any material modifications, extensions or waivers
to the Mortgage Loan term, fees penalties or payments
during the period? _________
B. Have any material breaches of Mortgage Loan pool
representations and warranties or convents occurred? _________
Q-5
EXHIBIT R
FORM 10-D, FORM 8-K AND FORM 10-K
REPORTING RESPONSIBILITY
As to each item described below, the entity indicated as the Responsible
Party shall be primarily responsible for reporting the information to the
Indenture Trustee pursuant to Section 3.14(f). If the Indenture Trustee is
indicated below as to any item, then the Indenture Trustee is primarily
responsible for obtaining that information.
Under Item 1 of Form 10-D: a) items marked "5.03 statement" are required
to be included in the periodic Distribution Date statement under Section 4.03,
provided by the Indenture Trustee based on information received from the
Servicer; and b) items marked "Form 10-D report" are required to be in the Form
10-D report but not the 4.03 statement, provided by the party indicated.
Information under all other Items of Form 10-D is to be included in the Form
10-D report.
Form Item Description Responsible Party
----- ----- ----------- -----------------
10-D Must be filed within 15 days of the distribution date for the asset-backed securities.
1 Distribution and Pool Performance Information
Item 1121(a) - Distribution and Pool Performance Information
(1) Any applicable record dates, accrual dates, determination 5.03 statement
dates for calculating distributions and actual distribution
dates for the distribution period.
(2) Cash flows received and the sources thereof for 5.03 statement
distributions, fees and expenses.
(3) Calculated amounts and distribution of the flow of funds 5.03 statement
for the period itemized by type and priority of payment,
including:
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(i) Fees or expenses accrued and paid, with an 5.03 statement
identification of the general purpose of such fees and the
party receiving such fees or expenses.
(ii) Payments accrued or paid with respect to enhancement 5.03 statement
or other support identified in Item 1114 of Regulation AB (such
as insurance premiums or other enhancement maintenance fees),
with an identification of the general purpose of such payments
and the party receiving such payments.
(iii) Principal, interest and other distributions accrued 5.03 statement
and paid on the asset-backed securities by type and by class or
series and any principal or interest shortfalls or carryovers.
(iv) The amount of excess cash flow or excess spread and 5.03 statement
the disposition of excess cash flow.
(4) Beginning and ending principal balances of the asset-backed 5.03 statement
securities.
(5) Interest rates applicable to the pool assets and the 5.03 statement
asset-backed securities, as applicable.
(6) Beginning and ending balances of transaction accounts, such 5.03 statement
as reserve accounts, and material account activity during the
period.
(7) Any amounts drawn on any credit enhancement or other 5.03 statement
support identified in Item 1114 of Regulation AB, as
applicable, and the amount of coverage remaining under any such
enhancement, if known and applicable.
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(8) Number and amount of pool assets at the beginning and 5.03 statement
ending of each period, and updated pool composition
information, such as weighted average coupon, weighted average
life, weighted average remaining term, pool factors and
prepayment amounts. Updated pool
composition
information fields to
be as specified by
Depositor from time to
time
(9) Delinquency and loss information for the period. 5.03 statement.
In addition, describe any material changes to the information
specified in Item 1100(b)(5) of Regulation AB regarding the Form 10-D report:
pool assets. Servicer
(10) Information on the amount, terms and general purpose of 5.03 statement
any advances made or reimbursed during the period, including
the general use of funds advanced and the general source of
funds for reimbursements.
(11) Any material modifications, extensions or waivers to pool 5.03 statement
asset terms, fees, penalties or payments during the
distribution period or that have cumulatively become material
over time.
(12) Material breaches of pool asset representations or 5.03 statement
warranties or transaction covenants.
(13) Information on ratio, coverage or other tests used for 5.03 statement
determining any early amortization, liquidation or other
performance trigger and whether the trigger was met.
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(14) Information regarding any new issuance of asset-backed Form 10-D report:
securities backed by the same asset pool, Depositor
[information regarding] any pool asset changes (other than in
connection with a pool asset converting into cash in accordance
with its terms), such as additions or removals in connection Form 10-D report:
with a pre-funding or revolving period and pool asset Servicer
substitutions and repurchases (and purchase rates, if
applicable), and cash flows available for future purchases,
such as the balances of any pre-funding or revolving accounts,
if applicable.
Disclose any material changes in the solicitation,
credit-granting, underwriting, origination, acquisition or pool
selection criteria or procedures, as applicable, used to Form 10-D report:
originate, acquire or select the new pool assets. Servicer
Item 1121(b) - Pre-Funding or Revolving Period Information N/A
Updated pool information as required under Item 1121(b).
2 Legal Proceedings
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Item 1117 - Legal proceedings pending against the following
entities, or their respective property, that is material to
Certificateholders, including proceedings known to be
contemplated by governmental authorities:
Sponsor (Seller)
Depositor Seller
Indenture Trustee Depositor
Issuing entity Indenture Trustee
Servicer, affiliated Servicer, other Servicer servicing 20% or
more of pool assets at time of report, other material servicers Depositor
Originator of 20% or more of pool assets as of the Cut-off Date Servicer
Custodian Seller
Indenture Trustee
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3 Sales of Securities and Use of Proceeds
Information from Item 2(a) of Part II of Form 10-Q:
With respect to any sale of securities by the sponsor,
depositor or issuing entity, that are backed by the same asset
pool or are otherwise issued by the issuing entity, whether or Depositor
not registered, provide the sales and use of proceeds
information in Item 701 of Regulation S-K. Pricing information
can be omitted if securities were not registered.
4 Defaults Upon Senior Securities
Information from Item 3 of Part II of Form 10-Q:
Report the occurrence of any Event of Default (after expiration
of any grace period and provision of any required notice) Indenture Trustee
5 Submission of Matters to a Vote of Security Holders
Information from Item 4 of Part II of Form 10-Q Party submitting the
matter to Holders for
vote
6 Significant Obligors of Pool Assets
Item 1112(b) - Significant Obligor Financial Information* N/A
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*This information need only be reported on the Form 10-D for
the distribution period in which updated information is
required pursuant to the Item.
7 Significant Enhancement Provider Information
Item 1114(b)(2) - Credit Enhancement Provider Financial Depositor
Information*
Determining applicable disclosure threshold
Obtaining required financial information or effecting
incorporation by reference
Item 1115(b) - Derivative Counterparty Financial Information* Depositor
Determining current maximum probable exposure
Determining current significance percentage
Obtaining required financial information or effecting
incorporation by reference
*This information need only be reported on the Form 10-D for
the distribution period in which updated information is
required pursuant to the Items.
8 Other Information
Disclose any information required to be reported on Form 8-K The Responsible Party
during the period covered by the Form 10-D but not reported for the applicable
Form 8-K item as
indicated below
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9 Exhibits
Distribution report Indenture Trustee
Exhibits required by Item 601 of Regulation S-K, such as Depositor
material agreements
8-K Must be filed within four business days of an event reportable on Form 8-K.
1.01 Entry into a Material Definitive Agreement
Disclosure is required regarding entry into or amendment of any Servicer; or any of
definitive agreement that is material to the securitization, the following that is
even if depositor is not a party. a party to the
agreement if Servicer
is not: Indenture
Trustee, Sponsor,
Depositor
Examples: servicing agreement, custodial agreement.
Note: disclosure not required as to definitive agreements that
are fully disclosed in the prospectus
1.02 Termination of a Material Definitive Agreement
Disclosure is required regarding termination of any definitive Servicer; or any of
agreement that is material to the securitization (other than the following that is
expiration in accordance with its terms), even if depositor is a party to the
not a party. agreement if Servicer
is not: Indenture
Trustee, Sponsor,
Depositor
Examples: servicing agreement, custodial agreement.
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1.03 Bankruptcy or Receivership
Disclosure is required regarding the bankruptcy or Depositor
receivership, if known to the Depositor, with respect to any of
the following:
Sponsor (Seller), Depositor, Servicer, affiliated Servicer,
other Servicer servicing 20% or more of pool assets at time of
report, other material servicers, Indenture Trustee,
significant obligor, credit enhancer (10% or more), derivatives
counterparty
2.04 Triggering Events that Accelerate or Increase a Direct
Financial Obligation or an Obligation under an Off-Balance
Sheet Arrangement
Includes an early amortization, performance trigger or other Servicer/Indenture
event, including event of default, that would materially alter Trustee (to the
the payment priority/distribution of cash flows/amortization extent of actual
schedule. knowledge)
Disclosure will be made of events other than waterfall triggers
which are disclosed in the 4.03 statement
3.03 Material Modification to Rights of Security Holders
Disclosure is required of any material modification to Indenture Trustee
documents defining the rights of Certificateholders, including
the Pooling and Servicing Agreement
5.03 Amendments to Articles of Incorporation or Bylaws; Change in
Fiscal Year
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Disclosure is required of any amendment "to the governing Depositor
documents of the issuing entity"
5.06 Change in Shell Company Status
[Not applicable to ABS issuers] Depositor
6.01 ABS Informational and Computational Material
[Not included in reports to be filed under Section 3.18] Depositor
6.02 Change of Servicer or Indenture Trustee
Requires disclosure of any removal, replacement, substitution Indenture Trustee or
or addition of any servicer, affiliated servicer, other Servicer
servicer servicing 10% or more of pool assets at time of
report, other material servicers, certificate administrator or
trustee. Reg AB disclosure about any new servicer or indenture
trustee is also required.
6.03 Change in Credit Enhancement or Other External Support
Covers termination of any enhancement in manner other than by Depositor or
its terms, the addition of an enhancement, or a material change Indenture Trustee
in the enhancement provided. Applies to external credit
enhancements as well as derivatives. Reg AB disclosure about
any new enhancement provider is also required.
6.04 Failure to Make a Required Distribution Indenture Trustee
6.05 Securities Act Updating Disclosure
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If any material pool characteristic differs by 5% or more at Depositor
the time of issuance of the securities from the description in
the final prospectus, provide updated Reg AB disclosure about
the actual asset pool.
If there are any new servicers or originators required to be Depositor
disclosed under Regulation AB as a result of the foregoing,
provide the information called for in Items 1108 and 1110
respectively.
7.01 Regulation FD Disclosure Depositor
8.01 Other Events
Any event, with respect to which information is not otherwise Depositor
called for in Form 8-K, that the registrant deems of importance
to security holders.
9.01 Financial Statements and Exhibits The Responsible Party
applicable to
reportable event
10-K Must be filed within 90 days of the fiscal year end for the registrant.
9B Other Information
Disclose any information required to be reported on Form 8-K The Responsible Party
during the fourth quarter covered by the Form 10-K but not for the applicable
reported Form 8-K item as
indicated above
15 Exhibits and Financial Statement Schedules
Item 1112(b) - Significant Obligor Financial Information Servicer
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Item 1114(b)(2) - Credit Enhancement Provider Financial
Information Depositor
Determining applicable disclosure threshold
Obtaining required financial information or effecting
incorporation by reference
Item 1115(b) - Derivative Counterparty Financial Information Depositor
Determining current maximum probable exposure
Determining current significance percentage
Obtaining required financial information or effecting
incorporation by reference
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Item 1117 - Legal proceedings pending against the following
entities, or their respective property, that is material to
Certificateholders, including proceedings known to be
contemplated by governmental authorities:
Sponsor (Seller)
Depositor Seller
Indenture Trustee Depositor
Issuing entity Indenture Trustee
Servicer, affiliated Servicer, other Servicer servicing 20% or Depositor
more of pool assets at time of report, other material servicers
Originator of 20% or more of pool assets as of the Cut-off Date Servicer
Servicer
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Item 1119 - Affiliations and relationships between the
following entities, or their respective affiliates, that are
material to Certificateholders:
Sponsor (Seller)
Depositor Seller
Indenture Trustee Depositor
Servicer, affiliated Servicer, other Servicer servicing 20% or Indenture Trustee
more of pool assets at time of report, other material servicers (only as to
affiliations between
the Indenture Trustee
and such other parties
listed)
Originator Servicer
Credit Enhancer/Support Provider
Significant Obligor
Depositor
Depositor
Servicer
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Item 1122 - Assessment of Compliance with Servicing Criteria Each Party
participating in the
servicing function
Item 1123 - Servicer Compliance Statement Servicer and
Indenture Trustee
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