AAMES MORTGAGE INVESTMENT TRUST 2006-1, as Issuer FINANCIAL ASSET SECURITIES CORP., as Depositor WELLS FARGO BANK, N.A., as Trust Administrator and Master Servicer AAMES FUNDING CORPORATION, as Servicer AAMES INVESTMENT CORPORATION, as Sponsor and...
EXHIBIT
99.1
AAMES
MORTGAGE INVESTMENT TRUST 2006-1, as Issuer
FINANCIAL
ASSET SECURITIES CORP., as Depositor
▇▇▇▇▇
FARGO BANK, N.A., as Trust Administrator and Master Servicer
AAMES
FUNDING CORPORATION, as Servicer
AAMES
INVESTMENT CORPORATION, as Sponsor
and
DEUTSCHE
BANK NATIONAL TRUST COMPANY, as Indenture Trustee
___________________________
Dated
as
of April 1, 2006
___________________________
MORTGAGE
BACKED NOTES
TABLE
OF
CONTENTS
ARTICLE
I
DEFINITIONS
|
Section
1.01.
|
Definitions
|
|
Section
1.02.
|
Calculations
With Respect to the Mortgage Loans
|
|
Section
1.03.
|
Calculations
With Respect to Accrued Interest
|
ARTICLE
II
CONVEYANCE
OF MORTGAGE LOANS
|
Section
2.01.
|
Creation
and Declaration of Trust Estate; Conveyance of Mortgage
Loans.
|
|
Section
2.02.
|
Acceptance
of Trust Estate; Review of Documentation.
|
|
Section
2.03.
|
Grant
Clause.
|
|
Section
2.04.
|
Option
to Contribute Derivative Instrument.
|
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES
|
Section
3.01.
|
Representations
and Warranties of the Depositor and the Sponsor.
|
|
Section
3.02.
|
Discovery
of Breach
|
|
Section
3.03.
|
Repurchase,
Purchase or Substitution of Mortgage Loans.
|
ARTICLE
IV
ADMINISTRATION
AND SERVICING OF THE MORTGAGE LOANS BY THE SERVICER
|
Section
4.01.
|
Sponsor’s
Engagement of Servicer to Perform Servicing
Responsibilities.
|
|
Section
4.02.
|
Servicing
of the Mortgage Loans.
|
|
Section
4.03.
|
Payments
To the Master Servicer.
|
|
Section
4.04.
|
General
Servicing Procedures.
|
|
Section
4.05.
|
Representations,
Warranties and Agreements.
|
|
Section
4.06.
|
The
Servicer.
|
|
Section
4.07.
|
Termination
for Cause.
|
|
Section
4.08.
|
Successor
to Servicer, Miscellaneous Provisions.
|
|
Section
4.09.
|
Sub-Servicers
and Sub-Servicing Agreements.
|
|
Section
4.10.
|
Miscellaneous
Servicing Provisions.
|
|
Section
4.11.
|
Advance
Facility.
|
ARTICLE
V
ADMINISTRATION
AND MASTER SERVICING OF MORTGAGE LOANS BY THE MASTER SERVICER AND THE TRUST
ADMINISTRATOR
|
Section
5.01.
|
Duties
of the Master Servicer; Representations and Warranties.
|
|
Section
5.02.
|
Master
Servicer Fidelity Bond and Master Servicer Errors and Omissions Insurance
Policy.
|
|
Section
5.03.
|
Master
Servicer’s Financial Statements and Related Information
|
|
Section
5.04.
|
Power
to Act; Procedures.
|
|
Section
5.05.
|
Enforcement
of Servicer’s and Master Servicer’s Obligations.
|
|
Section
5.06.
|
[Reserved]
|
|
Section
5.07.
|
Collection
Account.
|
|
Section
5.08.
|
Application
of Funds in the Collection Account
|
|
Section
5.09.
|
Reports
to Indenture Trustee and Noteholders.
|
|
Section
5.10.
|
Termination
of Servicer; Successor Servicers.
|
|
Section
5.11.
|
Master
Servicer Liable for Enforcement
|
|
Section
5.12.
|
Assumption
of Master Servicing by Indenture Trustee.
|
|
Section
5.13.
|
[Reserved]
|
|
Section
5.14.
|
Release
of Mortgage Files.
|
|
Section
5.15.
|
Documents,
Records and Funds in Possession of Master Servicer To Be Held for
Indenture Trustee.
|
|
Section
5.16.
|
Opinion
|
|
Section
5.17.
|
[Reserved]
|
|
Section
5.18.
|
[Reserved]
|
|
Section
5.19.
|
[Reserved]
|
|
Section
5.20.
|
Indenture
Trustee To Retain Possession of Certain Insurance Policies and
Documents
|
|
Section
5.21.
|
Compensation
to the Master Servicer
|
|
Section
5.22.
|
[Reserved]
|
|
Section
5.23.
|
Reports
to the Indenture Trustee.
|
|
Section
5.24.
|
[Reserved]
|
|
Section
5.25.
|
[Reserved]
|
|
Section
5.26.
|
Merger
or Consolidation
|
|
Section
5.27.
|
Resignation
of Master Servicer
|
|
Section
5.28.
|
Assignment
or Delegation of Duties by the Master Servicer
|
|
Section
5.29.
|
Limitation
on Liability of the Master Servicer and Others.
|
|
Section
5.30.
|
Indemnification;
Third Party Claims
|
|
Section
5.31.
|
Alternative
Index
|
|
Section
5.32.
|
Transfer
of Servicing
|
ARTICLE
VI
DEPOSITS
AND PAYMENTS TO HOLDERS
|
Section
6.01.
|
The
Collection Account.
|
|
Section
6.02.
|
Payments
from the Collection Account.
|
|
Section
6.03.
|
Allocation
of Realized Losses.
|
|
Section
6.04.
|
Control
of the Trust Account and Deferred Interest.
|
|
Section
6.05.
|
Advances
by Master Servicer and Servicer.
|
|
Section
6.06.
|
The
Interest Rate Swap Agreement.
|
|
Section
6.07.
|
Commission
Reporting.
|
ARTICLE
VII
ADMINISTRATION
OF THE AGREEMENTS
|
Section
7.01.
|
Duties
of the Trust Administrator.
|
|
Section
7.02.
|
Duties
of the Trust Administrator With Respect to the Indenture, the Trust
Agreement and this Agreement.
|
|
Section
7.03.
|
Records
|
|
Section
7.04.
|
Compensation
|
|
Section
7.05.
|
Additional
Information to be Furnished to the Issuer
|
|
Section
7.06.
|
Independence
of the Trust Administrator
|
|
Section
7.07.
|
No
Joint Venture
|
|
Section
7.08.
|
Other
Activities of Trust Administrator and the Depositor
|
|
Section
7.09.
|
Resignation
and Removal of Trust Administrator.
|
|
Section
7.10.
|
Action
upon Termination, Resignation or Removal of the Trust
Administrator
|
ARTICLE
VIII
MASTER
SERVICER EVENTS OF DEFAULT
|
Section
8.01.
|
Master
Servicer Events of Default; Indenture Trustee To Act; Appointment
of
Successor.
|
|
Section
8.02.
|
Additional
Remedies of Indenture Trustee Upon Master Servicer Event of
Default
|
|
Section
8.03.
|
Waiver
of Defaults
|
|
Section
8.04.
|
Notification
to Holders
|
|
Section
8.05.
|
Directions
by Noteholders and Duties of Indenture Trustee During Master Servicer
Event of Default
|
|
Section
8.06.
|
Action
Upon Certain Failures of the Master Servicer and Upon Master Servicer
Event of Default
|
|
Section
8.07.
|
[Reserved]
|
ARTICLE
IX
TERMINATION
|
Section
9.01.
|
Termination
|
|
Section
9.02.
|
Termination
Prior to Maturity Date; Optional Redemption.
|
|
Section
9.03.
|
Certain
Notices upon Final Payment
|
ARTICLE
X
MISCELLANEOUS
PROVISIONS
|
Section
10.01.
|
Binding
Nature of Agreement; Assignment
|
|
Section
10.02.
|
Entire
Agreement
|
|
Section
10.03.
|
Amendment.
|
|
Section
10.04.
|
Acts
of Noteholders
|
|
Section
10.05.
|
Recordation
of Agreement
|
|
Section
10.06.
|
Governing
Law
|
|
Section
10.07.
|
Notices
|
|
Section
10.08.
|
Severability
of Provisions
|
|
Section
10.09.
|
Indulgences;
No Waivers
|
|
Section
10.10.
|
Headings
Not To Affect Interpretation
|
|
Section
10.11.
|
Benefits
of Agreement
|
|
Section
10.12.
|
Special
Notices to the Rating Agencies.
|
|
Section
10.13.
|
Counterparts
|
|
Section
10.14.
|
Execution
by the Issuer
|
|
Section
10.15.
|
Intention
of the Parties and Interpretation
|
ATTACHMENTS
| Exhibit A-1 | Form of Initial Certification |
| Exhibit A-2 | Form of Interim Certification |
| Exhibit A-3 | Form of Final Certification |
| Exhibit A-4 | Form of Endorsement |
| Exhibit B | [Reserved] |
| Exhibit C | Form of Lost Note Affidavit |
| Exhibit D | Custodial Agreement |
| Exhibit E | Custodial Account Letter Agreement |
| Exhibit F | Escrow Account Letter Agreement |
| Exhibit G-1 | Form of Monthly Remittance Advice |
| Exhibit G-1A | Form of Monthly Remittance Advice |
| Exhibit G-2 | Standard Layout For Monthly Defaulted Loan Report |
| Exhibit G-3 | Form 332 Realized Loss Report |
| Exhibit H | Form of Back-Up Certification |
| Exhibit I | Interest Rate Swap Agreement |
| Exhibit J | Relevant Servicing Criteria |
| Exhibit K | Form 10-D, Form 8-K and Form 10-K Reporting Responsibility |
| Exhibit L | Additional Disclosure Notification |
| Schedule A | Mortgage Loan Schedule |
This
TRANSFER AND SERVICING AGREEMENT, dated as of April 1, 2006 (this “Agreement” or
this “Transfer and Servicing Agreement”), is by and among AAMES MORTGAGE
INVESTMENT TRUST 2006-1, a Delaware statutory trust, as issuer (the “Issuer”),
FINANCIAL ASSET SECURITIES CORP., a Delaware corporation, as depositor (the
“Depositor”), DEUTSCHE BANK NATIONAL TRUST COMPANY, as indenture trustee (the
“Indenture Trustee”), ▇▇▇▇▇ FARGO BANK, N.A., as trust administrator (the “Trust
Administrator”) and master servicer (the “Master Servicer”), AAMES FUNDING
CORPORATION, as servicer (the “Servicer”), and AAMES INVESTMENT CORPORATION, as
sponsor (the “Sponsor”).
PRELIMINARY
STATEMENT
WHEREAS,
the Depositor has acquired all of the rights, title and interest of the Sponsor
in certain conventional, adjustable and fixed rate, residential mortgage loans
identified in Schedule A hereto (the “Mortgage Loans”) on a servicing-retained
basis from the Sponsor pursuant to the Mortgage Loan Purchase Agreement, and
at
the Closing Date is the owner of the Mortgage Loans and the other property
being
conveyed by it to the Issuer hereunder for inclusion in the Trust
Estate;
WHEREAS,
the Depositor has duly authorized the execution and delivery of this Agreement
to provide for the conveyance to the Issuer of the Mortgage Loans and the other
property constituting the Trust Estate;
WHEREAS,
on the Closing Date, the Depositor will acquire the Notes and the Ownership
Certificate from the Issuer as consideration for its transfer to the Issuer
of
the Mortgage Loans and the other property constituting the Trust
Estate;
WHEREAS,
pursuant to the Indenture, the Issuer will pledge the Mortgage Loans and the
other property constituting the Trust Estate to the Indenture Trustee as
security for the Notes;
WHEREAS,
the Sponsor desires that the Servicer service the Mortgage Loans upon such
transfer to the Issuer pursuant to this Agreement, and the Servicer has agreed
to do so;
WHEREAS,
the Master Servicer shall be obligated under this Agreement, among other things,
to supervise the servicing of the Mortgage Loans on behalf of the Issuer, and
shall have the right, under certain circumstances, to terminate the rights
and
obligations of the Servicer under this Agreement upon the occurrence and
continuance of a Servicer Event of Default as provided herein;
WHEREAS,
the parties hereto acknowledge and agree that, at the direction of the
Depositor, the Sponsor will assign all of its rights with respect to the
Mortgage Loans (other than the servicing rights) to the Indenture
Trustee;
WHEREAS,
the Issuer has entered into certain agreements in connection with the issuance
of the Notes, including (i) the Depository Agreement and (ii) the Indenture
(the
Depository Agreement, the Indenture, the Trust Agreement and the Custodial
Agreement being hereinafter referred to collectively as the “Related
Agreements”);
WHEREAS,
pursuant to the Related Agreements, the Issuer is required to perform certain
duties in connection with (a) the Notes and the collateral therefor pledged
pursuant to the Indenture (the “Collateral”) and (b) the undivided subordinate
beneficial ownership interest in the Issuer represented by the Ownership
Certificate;
WHEREAS,
the Issuer desires to have the Trust Administrator perform certain of the duties
of the Issuer referred to in the preceding clause, and to provide such
additional services consistent with the terms of this Agreement and the Related
Agreements as the Issuer or the Owner Trustee may from time to time reasonably
request; and
WHEREAS,
the Trust Administrator has the capacity to provide the services required hereby
and is willing to perform such services for the Issuer and the Owner Trustee
on
the terms set forth herein.
NOW,
THEREFORE, in consideration of the mutual agreements herein contained, the
parties hereto agree as follows:
The
following table sets forth (or describes) the Class designation, Note Interest
Rate, initial Class Principal Amount and minimum denomination for each Class
of
Notes issued pursuant to the Indenture.
|
Class
Designation
|
Note
Interest Rate
|
Initial
Class
Principal Amount
|
Minimum
Denominations
|
|||||||
|
Class
A-1
|
Variable
(1)
|
|
$
|
244,348,000
|
$
|
25,000
|
||||
|
Class
A-2
|
Variable
(1)
|
|
$
|
62,902,000
|
$
|
25,000
|
||||
|
Class
A-3
|
Variable
(1)
|
|
$
|
127,232,000
|
$
|
25,000
|
||||
|
Class
A-4
|
Variable
(1)
|
|
$
|
22,641,000
|
$
|
25,000
|
||||
|
Class
M-1
|
Variable
(1)
|
|
$
|
44,948,000
|
$
|
25,000
|
||||
|
Class
M-2
|
Variable
(1)
|
|
$
|
13,148,000
|
$
|
25,000
|
||||
|
Class
M-3
|
Variable
(1)
|
|
$
|
11,619,000
|
$
|
25,000
|
||||
|
Class
M-4
|
Variable
(1)
|
|
$
|
11,313,000
|
$
|
25,000
|
||||
|
Class
M-5
|
Variable
(1)
|
|
$
|
9,785,000
|
$
|
25,000
|
||||
|
Class
M-6
|
Variable
(1)
|
|
$
|
12,231,000
|
$
|
25,000
|
||||
|
Class
M-7
|
Variable
(1)
|
|
$
|
15,594,000
|
$
|
25,000
|
||||
|
Class
M-8
|
Variable
(1)
|
|
$
|
6,115,000
|
$
|
25,000
|
||||
|
Class
M-9
|
Variable
(1)
|
|
$
|
5,504,000
|
$
|
25,000
|
||||
|
Class
M-10
|
Variable
(1)
|
|
$
|
3,058,000
|
$
|
25,000
|
||||
|
Class
M-11
|
Variable
(1)
|
|
$
|
6,115,000
|
$
|
25,000
|
||||
_______________
(1) See
the
definition of “Note Interest Rate” herein.
ARTICLE
I
DEFINITIONS
Section
1.01. Definitions.
The
following words and phrases, unless the context otherwise requires, shall have
the following meanings:
10-K
Filing Deadline:
The
meaning set forth in Section 6.07(a)(iv)(A).
Accounts:
Any or
all of the Custodial Accounts, the Escrow Accounts, the Collection Account
and
any other accounts created or maintained by the Trust Administrator or the
Servicer pursuant to this Agreement.
Accountant:
A
Person engaged in the practice of accounting who (except when this Agreement
provides that an Accountant must be Independent) may be employed by or
affiliated with the Depositor or an Affiliate of the Depositor.
Accrual
Period:
With
respect to any Payment Date and the Notes, the period beginning on the
immediately preceding Payment Date (or, in the case of the first Payment Date,
beginning on the Closing Date) and ending on the day immediately preceding
the
related Payment Date.
Additional
Disclosure Notification:
The
meaning set forth in Section 6.07(a)(ii).
Additional
Form 10-D Disclosure:
The
meaning set forth in Section 6.07(a)(i).
Additional
Form 10-K Disclosure:
The
meaning set forth in Section 6.07(a)(iv).
Advance:
With
respect to each Servicer Remittance Date and each Mortgage Loan, an amount
equal
to the Scheduled Payment (with the interest portion of such Scheduled Payment
adjusted to the Mortgage Loan Remittance Rate, in the case of the Servicer,
or
to the Net Mortgage Rate, in the case of the Master Servicer) that was due
on
the Mortgage Loan on the Due Date in the related Collection Period, and that
(i)
was delinquent at the close of business on the related Determination Date and
(ii) was not the subject of a previous Advance, but only to the extent that
such
amount is expected, in the reasonable judgment of the Servicer or Master
Servicer, as applicable, to be recoverable from collections or other recoveries
in respect of such Mortgage Loan.
Advance
Facility:
As
defined in Section 4.11(a) hereof.
Advance
Facility Notice:
As
defined in Section 4.11(a) hereof.
Advancing
Person:
As
defined in Section 4.11(a) hereof.
Affiliate:
With
respect to any specified Person, any other Person controlling or controlled
by
or under common control with such specified Person. For the purposes of this
definition, “control” when used with respect to any specified Person means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract
or
otherwise; and the terms “controlling” and “controlled” have meanings
correlative to the foregoing.
Aggregate
Loan Balance:
As of
any date of determination, an amount equal to the aggregate of the Stated
Principal Balances of the Mortgage Loans as of such date.
Agreement:
This
Transfer and Servicing Agreement and all amendments and supplements
hereto.
AIC:
Aames
Investment Corporation.
Allocated
Realized Loss Amount:
With
respect to any Class of Subordinate Notes and any Payment Date is an amount
equal to the sum of (i) any Realized Loss allocated to that Class of Notes
on
such Payment Date and (ii) the amount of any Allocated Realized Loss Amount
for
that Class remaining unpaid from the previous Payment Date as reduced by an
amount equal to the increase in the related Class Principal Amount due to the
receipt of Subsequent Recoveries.
Annual
Statement of Compliance:
As
defined in Section 4.04(d).
Ancillary
Income:
All
income derived from the Mortgage Loans, excluding Servicing Fees, Master
Servicing Fees and Prepayment Premiums attributable to the Mortgage Loans and
other amounts treated as payment proceeds of the Mortgage Loans, including
but
not limited to, late charges, fees received with respect to checks or bank
drafts returned by the related bank for non-sufficient funds, assumption fees,
optional insurance administrative fees and all other incidental fees and
charges.
Appraised
Value:
With
respect to any Mortgage Loan, the amount set forth in an appraisal made in
connection with the origination of such Mortgage Loan as the value of the
related Mortgaged Property.
Assessment
of Compliance:
As
defined in Section 4.04(e).
Assignment
of Mortgage:
An
assignment of the Mortgage, notice of transfer or equivalent instrument, in
recordable form, sufficient under the laws of the jurisdiction wherein the
related Mortgaged Property is located to reflect the assignment of the Mortgage
to the Indenture Trustee for the benefit of Noteholders, which assignment,
notice of transfer or equivalent instrument may be in the form of one or more
blanket assignments covering the Mortgage Loans secured by Mortgaged Properties
located in the same jurisdiction, if permitted by law; provided,
however,
that
neither the Issuer nor the Indenture Trustee shall be responsible for
determining whether any such assignment is in recordable form.
Attestation
Report:
As
defined in Section 4.04(e).
Authorized
Officer:
Any
Person who may execute an Officer’s Certificate on behalf of the
Issuer.
Back-Up
Certification:
The
meaning set forth in Section 6.07(a)(iv).
Bankruptcy:
As to
any Person, the making of an assignment for the benefit of creditors, the filing
of a voluntary petition in bankruptcy, adjudication as a bankrupt or insolvent,
the entry of an order for relief in a bankruptcy or insolvency proceeding,
the
seeking of reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief, or seeking, consenting to or acquiescing in
the
appointment of a trustee, receiver or liquidator, dissolution, or termination,
as the case may be, of such Person pursuant to the provisions of either the
Bankruptcy Code or any other similar state laws.
Bankruptcy
Code:
The
United States Bankruptcy Code of 1986, as amended.
Basis
Risk Shortfall:
With
respect to any Class of Notes and any Payment Date, the amount by which (a)
the
amount of Current Interest without regard to the Net Funds Cap for such date
exceeds (b) the amount of Current Interest calculated at the Net Funds
Cap.
Benefit
Plan Opinion:
An
Opinion of Counsel satisfactory to the Owner Trustee and the Certificate
Registrar to the effect that any proposed transfer of Certificates will not
(i)
cause the assets of the Trust Estate to be regarded as plan assets for purposes
of the Plan Asset Regulations or (ii) give rise to any fiduciary duty on the
part of the Depositor or the Indenture Trustee.
Bloomberg
Screen LIBO Page:
The
display designated as page “BBAM” on the Bloomberg L.P. (or such other page as
may replace the BBAM page on that service for the purpose of displaying London
interbank offered rates of major banks).
Book-Entry
Notes:
As
defined in the Indenture.
Business
Day:
Any day
other than (i) a Saturday or a Sunday or (ii) a day on which banking
institutions in New York, New York or, if other than New York, the city in
which
the Corporate Trust Office of the Indenture Trustee is located, or the States
of
California, Delaware, Maryland or Minnesota are authorized or obligated by
law
or executive order to be closed.
Certificate:
The
Ownership Certificate.
Certificate
Registrar:
As
defined in the Trust Agreement, the initial Certificate Registrar shall be
the
Trust Administrator.
Certificateholder:
Any
registered holder of the Ownership Certificate.
Certification
Parties:
The
meaning set forth in Section 6.07(a)(iv).
Certifying
Person:
The
meaning set forth in Section 6.07(a)(iv).
Civil
Relief Act:
The
Servicemembers Civil Relief Act, as such may be amended from time to time,
and
any similar state laws.
Class:
All
Notes bearing the same class designation.
Class
M-1 and Class M-2 Principal Payment Amount:
With
respect to any Payment Date on or after the Stepdown Date and as long as a
Trigger Event is not in effect with respect to such Payment Date, the amount,
if
any, by which (x) the sum of (i) the aggregate Class Principal Amount of the
Senior Notes after giving effect to payments to such Classes on such Payment
Date and (ii) the aggregate Class Principal Amount of the Class M-1 and Class
M-2 Notes immediately prior to such Payment Date exceeds (y) the Class M-1
and
Class M-2 Target Amount for such Payment Date.
Class
M-1 and Class M-2 Target Amount:
With
respect to any Payment Date, an amount equal to the lesser of (a) the product
of
(1) 68.50% and (2) the Aggregate Loan Balance for such Payment Date determined
as of the last day of the related Collection Period and (b) the amount, if
any,
by which (i) the Aggregate Loan Balance for such Payment Date determined as
of
the last day of the related Collection Period exceeds (ii) 0.50% of the Cut-off
Date Balance.
Class
Principal Amount:
With
respect to any date of determination and each Class of Notes, the aggregate
of
the Note Principal Amounts of all Notes of such Class as of such
date.
Clearing
Agency:
An
organization registered as a “clearing agency” pursuant to Section 17A of the
Exchange Act, as amended. As of the Closing Date, the Clearing Agency shall
be
The Depository Trust Company.
Closing
Date:
May 2,
2006.
Code:
The
Internal Revenue Code of 1986, as amended, and as it may be further amended
from
time to time, any successor statutes thereto, and applicable U.S. Department
of
Treasury regulations issued pursuant thereto in temporary or final
form.
Collateral:
As
defined in the Indenture.
Collection
Account:
A
separate account established and maintained by the Trust Administrator for
the
benefit of the Indenture Trustee pursuant to Section 5.07.
Collection
Period:
With
respect to any Payment Date and Mortgage Loan, the period commencing on the
second day of the month immediately preceding the month in which such Payment
Date occurs and ending on the first day of the month in which such Payment
Date
occurs.
Commission:
The
U.S. Securities and Exchange Commission.
Compensating
Interest Payment:
With
respect to any Payment Date, an amount equal to the lesser of (x) the aggregate
Prepayment Interest Shortfall Amount with respect to such Payment Date and
(y)
the aggregate Servicing Fee payable to the Servicer in respect of such Payment
Date.
Condemnation
Proceeds:
All
awards of settlements in respect of a Mortgaged Property, whether permanent
or
temporary, partial or entire, by exercise of the power of eminent domain or
condemnation, to the extent not required to be released to a Mortgagor in
accordance with the terms of the related Mortgage Loan documents.
Control:
The
meaning specified in Section 8-106 of the New York UCC.
Conventional
Loan:
A
Mortgage Loan that is not insured by the United States Federal Housing
Administration or guaranteed by the United States Department of Veterans
Affairs.
Corporate
Trust Office:
With
respect to (i) the Trust Administrator, the principal corporate trust office
of
the Trust Administrator at which, at any particular time, its corporate trust
business shall be administered, which office at the date of execution of this
Agreement for purposes of transfers and exchanges and for presentment and
surrender of the Notes and for payment thereof is located at ▇▇▇▇▇ Fargo Bank,
N.A., Sixth Street and Marquette Avenue, Minneapolis, Minnesota 55479,
Attention: Corporate Trust Group (Aames 2006-1), and for all other purposes
is
located at ▇▇▇▇▇ Fargo Bank, N.A., P.O. Box 98, Columbia, Maryland 21046 (or
for
overnight deliveries, at ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇),
Attention: Corporate Trust Group (Aames 2006-1); (ii) the Certificate Registrar,
the principal office of the Certificate Registrar at which at any particular
time its corporate trust business shall be administered, which office at the
date of execution of this Agreement is located at the Corporate Trust Office
of
the Trust Administrator, or at such other address as the Certificate Registrar
may designate from time to time by notice to the Noteholders and the Trust,
or
the principal corporate trust office of any successor Certificate Registrar
at
the address designated by such successor Certificate Registrar by notice to
the
Noteholders and the Trust; and (iii) the Indenture Trustee, the principal office
of the Indenture Trustee at which at any particular time its corporate trust
business shall be administered, which office at the date of execution of this
Agreement is located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: Trust Administration, AA0601, or at such other address as
the
Indenture Trustee may designate from time to time by notice to the Noteholders
and the Trust, or the principal corporate trust office of any successor
Indenture Trustee at the address designated by such successor Indenture Trustee
by notice to the Noteholders and the Trust.
Cumulative
Loss Trigger Event:
A
Cumulative Loss Trigger Event shall have occurred with respect to any Payment
Date if the fraction, expressed as a percentage, obtained by dividing (x) the
aggregate amount of Realized Losses incurred on the Mortgage Loans from the
Cut-off Date through the last day of the related Collection Period by (y) the
Cut-off Date Balance exceeds the applicable percentage described below with
respect to such Payment Date:
|
Payment
Date
|
Required
Loss Percentage
|
|
May
2008 through April 2009
|
2.40%
for the first month, plus an additional 1/12th
of
1.35% for each month thereafter
|
|
May
2009 through April 2010
|
3.75%
for the first month, plus an additional 1/12th
of
1.25% for each month thereafter
|
|
May
2010 through April 2011
|
5.00%
for the first month, plus an additional 1/12th
of
1.00% for each month thereafter
|
|
May
2011 through April 2012
|
6.00%
for the first month, plus an additional 1/12th
of
0.50% for each month thereafter
|
|
May
2012 and thereafter
|
6.50%
|
Current
Interest:
With
respect to any Class of Notes and any Payment Date, will equal the aggregate
amount of interest accrued at the applicable Note Interest Rate during the
related Accrual Period on the Class Principal Amount of such Class immediately
prior to such Payment Date.
Custodial
Account:
The
separate custodial account (other than an Escrow Account) established and
maintained by the Servicer pursuant to Section 4.02(d) of this
Agreement.
Custodial
Agreement:
The
custodial agreement relating to the custody of certain of the Mortgage Loans,
substantially in the form attached as Exhibit D hereto, among the Custodian,
the
Issuer and the Indenture Trustee, as acknowledged by the Sponsor, the Depositor,
the Master Servicer, the Trust Administrator and the Servicer, dated as of
April
1, 2006.
Custodian:
The
custodian appointed pursuant to the Custodial Agreement, and any successor
thereto. The initial Custodian is Deutsche Bank National Trust
Company.
Cut-off
Date:
April
1, 2006.
Cut-off
Date Balance:
The
Aggregate Loan Balance as of the Cut-off Date.
Debt
Service Reduction:
With
respect to any Mortgage Loan, a reduction of the Scheduled Payment that the
related Mortgagor is obligated to pay on any Due Date as a result of any
proceeding in Bankruptcy or any similar proceeding.
Deferred
Interest:
For any
Class of Subordinate Notes and any Payment Date, the sum of (a) the aggregate
amount of interest accrued at the applicable Note Interest Rate during the
related Accrual Period on the Allocated Realized Loss Amount for that Class
for
the immediately preceding Payment Date, (b) any amounts due pursuant to clause
(a) for such Class for prior Payment Dates that remain unpaid and (c) interest
accrued during the Accrual Period related to such Payment Date on the amount
in
clause (b) at the Note Interest Rate applicable to such Class.
Definitive
Notes:
As
defined in the Indenture.
Deleted
Mortgage Loan:
A
Mortgage Loan that is repurchased from the Trust Estate pursuant to the terms
hereof or as to which one or more Qualifying Substitute Mortgage Loans are
substituted therefor.
Delinquency
Rate:
With
respect to any calendar month, the fraction, expressed as a percentage, the
numerator of which is the aggregate outstanding principal balance of all
Mortgage Loans 60 or more days Delinquent (including all foreclosures,
bankruptcies and REO Properties) as of the close of business on the last day
of
such month, and the denominator of which is the Aggregate Loan
Balance
as of the close of business on the last day of such month.
Delinquent:
For
reporting purposes, a Mortgage Loan is “delinquent” when any payment
contractually due thereon has not been made by the close of business on the
Due
Date therefor. Such Mortgage Loan is “30 days Delinquent” if such payment has
not been received by the close of business on the corresponding day of the
month
immediately succeeding the month in which such payment was first due, or, if
there is no such corresponding day (e.g.,
as when
a 30-day month follows a 31-day month in which a payment was due on the 31st
day
of such month), then on the last day of such immediately succeeding month.
Similarly for “60 days Delinquent” and the second immediately succeeding month
and “90 days Delinquent” and the third immediately succeeding
month.
Depositor:
Financial Asset Securities Corp., a Delaware corporation having its principal
place of business in New York, or its successors in interest.
Depository
Agreement:
The
agreement dated May 2, 2006, among the Issuer and The Depository Trust Company,
as the initial Clearing Agency, relating to the Book-Entry Notes.
Determination
Date:
With
respect to each Payment Date, the 15th day of the month in which such Payment
Date occurs, or, if such 15th day is not a Business Day, the next succeeding
Business Day.
Due
Date:
The day
of the calendar month on which the Scheduled Payment is due on a Mortgage Loan,
exclusive of any days of grace. Pursuant to Section 4.03(d), with respect to
any
Mortgage Loans for which payment from the Mortgagor is due on a day other than
the first day of the month, such Mortgage Loans will be treated as if the
Scheduled Payment is due on the first day of the immediately succeeding month
(other than with respect to the calculation of the Repurchase
Price).
Eligible
Account:
Either
(i) an account or accounts maintained with a federal or state chartered
depository institution or trust company that complies with the definition of
Eligible Institution or (ii) an account or accounts the deposits in which are
insured by the FDIC to the limits established by such corporation, provided
that
any such deposits not so insured shall be maintained in an account at a
depository institution or trust company whose commercial paper or other short
term debt obligations (or, in the case of a depository institution or trust
company which is the principal subsidiary of a holding company, the commercial
paper or other short term debt or deposit obligations of such holding company
or
depository institution, as the case may be) have been rated by each Rating
Agency in its highest short-term rating category, or (iii) a segregated trust
account or accounts (which shall be a “special deposit account”) maintained with
the Trust Administrator or any other federal or state chartered depository
institution or trust company, acting in its fiduciary capacity, in a manner
acceptable to the Rating Agencies. Eligible Accounts may bear
interest.
Eligible
Institution:
Any of
the following:
| (i) |
An
institution whose:
|
|
(A)
|
commercial
paper, short-term debt obligations, or other short-term deposits
are rated
at least “A-1+” or long-term unsecured debt obligations are rated at least
“AA-” by S&P (or assigned comparable ratings by the other Rating
Agencies), if the amounts on deposit are to be held in the account
for no
more than 365 days; or
|
|
(B)
|
commercial
paper, short-term debt obligations, demand deposits, or other short-term
deposits are rated at least “A-2” by S&P (or assigned comparable
ratings by the other Rating Agencies), if the amounts on deposit
are to be
held in the account for no more than 30 days and are not intended
to be
used as credit enhancement. Upon the loss of the required rating
set forth
in this clause (ii), the accounts shall be transferred immediately
to
accounts which have the required rating. Furthermore, commingling
by the
Servicer is acceptable at the A-2 rating level if the Servicer is
a bank,
thrift or depository and provided the Servicer has the capability
to
immediately segregate funds and commence remittance to an Eligible
Account
upon a downgrade; or
|
| (ii) |
the
corporate trust department of a federal depositor institution or
state-chartered depositor institution subject to regulations regarding
fiduciary funds on deposit similar to Title 12 of the U.S. Code of
Federal
Regulation Section 9.10(b), which, in either case, has corporate
trust
powers and is acting in its fiduciary
capacity.
|
Eligible
Investments:
Any one
or more of the following obligations or securities:
| (i) |
direct
obligations of, and obligations fully guaranteed as to timely payment
of
principal and interest by, the United States of America or any agency
or
instrumentality of the United States of America the obligations of
which
are backed by the full faith and credit of the United States of America
(“Direct Obligations”);
|
| (ii) |
federal
funds, or demand and time deposits in, certificates of deposits of,
or
bankers’ acceptances issued by, any depository institution or trust
company (including U.S. subsidiaries of foreign depositories and
the
Indenture Trustee or the Trust Administrator or any agent of the
Indenture
Trustee or the Trust Administrator, acting in its respective commercial
capacity) incorporated or organized under the laws of the United
States of
America or any state thereof and subject to supervision and examination
by
federal or state banking authorities, so long as at the time of investment
or the contractual commitment providing for such investment the commercial
paper or other short term debt obligations of such depository institution
or trust company (or, in the case of a depository institution or
trust
company which is the principal subsidiary of a holding company, the
commercial paper or other short term debt or deposit obligations
of such
holding company or deposit institution, as the case may be) have
been
rated by each Rating Agency in its highest short-term rating category
or
one of its two highest long-term rating
categories;
|
| (iii) |
repurchase
agreements collateralized by Direct Obligations or securities guaranteed
by GNMA, ▇▇▇▇▇▇ ▇▇▇ or FHLMC with any registered broker/dealer subject
to
Securities Investors’ Protection Corporation jurisdiction or any
commercial bank insured by the FDIC, if such broker/dealer or bank
has an
uninsured, unsecured and unguaranteed obligation rated by each Rating
Agency in its highest short-term rating
category;
|
| (iv) |
securities
bearing interest or sold at a discount issued by any corporation
incorporated under the laws of the United States of America or any
state
thereof which have a credit rating from each Rating Agency, at the
time of
investment or the contractual commitment providing for such investment,
at
least equal to one of the two highest long term credit rating categories
of each Rating Agency; provided,
however,
that securities issued by any particular corporation will not be
Eligible
Investments to the extent that investment therein will cause the
then
outstanding principal amount of securities issued by such corporation
and
held as part of the Trust Estate to exceed 20% of the sum of the
Aggregate
Loan Balance and the aggregate principal amount of all Eligible
Investments in the Collection Account; provided,
further,
that such securities will not be Eligible Investments if they are
published as being under review with negative implications from any
Rating
Agency;
|
| (v) |
commercial
paper (including both non-interest-bearing discount obligations and
interest bearing obligations payable on demand or on a specified
date not
more than 180 days after the date of issuance thereof) rated by each
Rating Agency in its highest short-term rating
category;
|
| (vi) |
a
Qualified GIC;
|
| (vii) |
certificates
or receipts representing direct ownership interests in future interest
or
principal payments on obligations of the United States of America
or its
agencies or instrumentalities (which obligations are backed by the
full
faith and credit of the United States of America) held by a custodian
in
safekeeping on behalf of the holders of such receipts;
and
|
| (viii) |
any
other demand, money market, common trust fund or time deposit or
obligation, or interest bearing or other security or investment (including
those managed or advised by the Indenture Trustee, the Master Servicer,
the Trust Administrator, or any Affiliate thereof), (A) rated in
the
highest rating category by each Rating Agency or (B) that would not
adversely affect the then current rating assigned by each Rating
Agency to
any of the Notes. Such investments in this subsection (viii) may
include
money market mutual funds or common trust estates, including any
fund for
which ▇▇▇▇▇ Fargo Bank, N.A. (the “Bank”) in its capacity other than as
the Master Servicer, the Trust Administrator or an affiliate thereof
serves as an investment advisor, administrator, shareholder servicing
agent, and/or custodian or subcustodian, notwithstanding that (x)
the
Bank, the Indenture Trustee, the Master Servicer or any affiliate
thereof
charges and collects fees and expenses from such funds for services
rendered, (y) the Bank, the Indenture Trustee, the Trust Administrator,
the Master Servicer or any affiliate thereof charges and collects
fees and
expenses for services rendered pursuant to this Agreement, and (z)
services performed for such funds and pursuant to this Agreement
may
converge at any time. The Bank or an affiliate thereof is specifically
authorized to charge and collect from the Issuer such fees as are
collected from all investors in such funds for services rendered
to such
funds (but not to exceed investment earnings
thereon);
|
provided,
however,
that no
such instrument shall be an Eligible Investment if such instrument evidences
either (i) a right to receive only interest payments with respect to the
obligations underlying such instrument, or (ii) 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 of greater than 120% of the yield to maturity at par of such underlying
obligations, provided that any such investment will be a “permitted investment”
within the meaning of Section 860G(a)(5) of the Code.
Entitlement
Holder:
The
meaning specified in Section 8-102(a)(7) of the New York UCC.
Entitlement
Order:
The
meaning specified in Section 8-102(a)(8) of the New York UCC (i.e.,
generally, orders directing the transfer or redemption of any Financial
Asset).
Environmental
Problem Property:
A
Mortgaged Property or REO Property that is in violation of any environmental
law, rule or regulation.
ERISA:
The
Employee Retirement Income Security Act of 1974, as amended.
Errors
and Omissions Insurance:
Errors
and Omissions Insurance to be maintained by the Servicer in accordance with
Section 4.02(m).
Errors
and Omission Insurance Policy:
Any
Errors and Omission Insurance policy required to be obtained by the Servicer
satisfying the requirements of this Agreement.
Escrow
Account:
The
separate escrow account (other than a Custodial Account) established and
maintained by the Servicer pursuant to Section 4.02(f) of this
Agreement.
Escrow
Payments:
With
respect to any Mortgage Loan, the amounts constituting ground rents, taxes,
assessments, water rates, sewer rents, municipal charges, mortgage insurance
premiums, fire and hazard insurance premiums, condominium charges, and any
other
payments required to be escrowed by the Mortgagor with the mortgagee pursuant
to
the Mortgage or any other document.
Exchange
Act:
The
Securities Exchange Act of 1934, as amended.
▇▇▇▇▇▇
▇▇▇ or FNMA:
▇▇▇▇▇▇
▇▇▇, a federally chartered and privately owned corporation organized and
existing under the Federal National Mortgage Association Charter Act, or any
successor thereto.
FDIC:
The
Federal Deposit Insurance Corporation or any successor thereto.
FHA:
The
Federal Housing Administration, an agency within HUD.
FHA
Approved Mortgagee:
Those
institutions which are approved by FHA to act as servicer and mortgagee of
record pursuant to FHA Regulations.
FHA
Regulations:
Regulations promulgated by HUD under the National Housing Act, codified in
Title
24 of the Code of Federal Regulations, and other HUD issuances relating to
FHA
Loans, including the related handbooks, circulars, notices and mortgagee
letters.
Fidelity
Bond:
Any
fidelity bond to be maintained by the Servicer in accordance with Section
4.02(m).
Financial
Asset:
The
meaning specified in Section 8-102(a) of the New York UCC.
Fixed
Rate Cap:
With
respect to any Payment Date, a per annum rate equal to 14.00%.
Fixed
Swap Payment:
With
respect to any Payment Date, a fixed amount equal to the product of (i) 5.36%,
(ii) the related Notional Amount (as defined in the Interest Rate Swap
Agreement) and (iii) a fraction, the numerator of which is 30, and the
denominator of which is 360.
Floating
Swap Payment:
With
respect to any Payment Date, a floating amount equal to the product of (i)
Swap
LIBOR, (ii) the related Notional Amount (as defined in the Interest Rate Swap
Agreement) and (iii) a fraction, the numerator of which is the actual number
of
days elapsed from and including the previous Floating Rate Payer Payment Date
(as defined in the Interest Rate Swap Agreement) to but excluding the current
Floating Rate Payer Payment Date, and the denominator of which is
360.
Form
8-K Disclosure Information:
The
meaning set forth in Section 6.07(a)(iii).
Freddie
Mac or FHLMC:
The
Federal Home Loan Mortgage Corporation, a corporate instrumentality of the
United States created and existing under Title III of the Emergency Home Finance
Act of 1970, as amended, or any successor thereto.
▇▇▇▇▇▇
▇▇▇ or GNMA:
The
Government National Mortgage Association, a wholly owned corporate
instrumentality of the United States within HUD.
Guidelines:
As
defined in Section 4.02(u).
Highest
Priority:
As of
any date of determination, the Class of Subordinate Notes then outstanding
with
a Note Principal Amount greater than zero, with the highest priority for
payments pursuant to Section 6.02 hereof, in the following order: Class M-1,
Class M-2, Class M-3, Class M-4, Class M-5, Class M-6, Class M-7, Class M-8,
Class M-9, Class M-10 and Class M-11 Notes.
Holder
or
Noteholder:
The
registered holder of any Note or Ownership Certificate as recorded on the books
of the Note Registrar or the Certificate Registrar except that, solely for
the
purposes of taking any action or giving any consent pursuant to this Agreement,
any Note registered in the name of the Depositor, the Master Servicer, the
Servicer, the Sponsor, the Trust Administrator or the Indenture Trustee or
any
Affiliate thereof (unless any such Person owns 100% of a Class) shall be deemed
not to be outstanding in determining whether the requisite percentage necessary
to effect any such consent has been obtained, except that, in determining
whether the Indenture Trustee and Trust Administrator shall be protected in
relying upon any such consent, only Notes and an Ownership Certificate which
a
Responsible Officer thereof has actual knowledge to be so held shall be
disregarded. The Indenture Trustee and Trust Administrator may request and
conclusively rely on certifications by the Depositor in determining whether
any
Note or Ownership Certificate is registered to an Affiliate of the
Depositor.
HUD:
The
United States Department of Housing and Urban Development, or any successor
thereto and including the Federal Housing Commissioner and the Secretary of
Housing and Urban Development where appropriate under the FHA
Regulations.
Indenture:
The
Indenture dated as of April 1, 2006, among the Issuer, the Trust Administrator
and the Indenture Trustee, as such may be amended or supplemented from time
to
time.
Indenture
Event of Default:
As
defined in Section 5.01 of the Indenture.
Indenture
Trustee:
Deutsche Bank National Trust Company, not in its individual capacity but solely
as Indenture Trustee, or any successor in interest.
Independent:
When
used with respect to any Accountants, a Person who is “independent” within the
meaning of Rule 2-01(b) of the Securities and Exchange Commission’s Regulation
S-X. When used with respect to any other Person, a Person who (a) is in fact
independent of another specified Person and any Affiliate of such other Person,
(b) does not have any material direct financial interest in such other Person
or
any Affiliate of such other Person, and (c) is not connected with such other
Person or any Affiliate of such other Person as an officer, employee, promoter,
underwriter, trustee, partner, director or Person performing similar
functions.
Index:
The
index specified in the related Mortgage Note for calculation of the Mortgage
Rate thereof.
Initial
Optional Termination Date:
As
defined in Section 9.02(a).
Insurance
Policy:
Any
primary mortgage insurance policy, any standard hazard insurance policy, flood
insurance policy, earthquake insurance policy or title insurance policy relating
to the Mortgage Loans or the Mortgaged Properties, to be in effect as of the
Closing Date or thereafter during the term of this Agreement.
Insurance
Proceeds:
With
respect to each Mortgage Loan, proceeds of insurance policies insuring the
Mortgage Loan or the related Mortgaged Property, if applicable, including the
proceeds of any hazard or flood insurance policy reduced by expenses incurred
by
the Servicer in connection with procuring such proceeds, applied to the
restoration and repair of the related mortgaged property or to be paid to the
borrower pursuant to the mortgage note or state law.
Interest
Margin:
For
each Class of Notes and any Payment Date, the applicable percentage set forth
for such Class in the following table:
|
Class
|
|
Interest
Margin
(1)
|
|
Interest
Margin
(2)
|
||||
|
A-1
|
|
|
0.060%
|
|
0.120%
|
|||
|
A-2
|
|
|
0.120%
|
|
0.240%
|
|||
|
A-3
|
|
|
0.160%
|
|
0.320%
|
|||
|
A-4
|
|
|
0.280%
|
|
0.560%
|
|||
|
M-1
|
|
|
0.320%
|
|
0.480%
|
|||
|
M-2
|
|
|
0.340%
|
|
0.510%
|
|||
|
M-3
|
|
|
0.400%
|
|
0.600%
|
|||
|
M-4
|
|
|
0.430%
|
|
0.645%
|
|||
|
M-5
|
|
|
0.540%
|
|
0.810%
|
|||
|
M-6
|
|
|
1.100%
|
|
1.650%
|
|||
|
M-7
|
|
|
1.400%
|
|
2.100%
|
|||
|
M-8
|
|
|
2.150%
|
|
3.225%
|
|||
|
M-9
|
|
|
2.500%
|
|
3.750%
|
|||
|
M-10
|
|
|
2.500%
|
|
3.750%
|
|||
|
M-11
|
|
|
2.500%
|
|
3.750%
|
|||
____________________
(1) For
any
Payment Date occurring on or prior to the Initial
Optional Termination Date.
(2) For
any
Payment Date occurring after the Initial Optional Termination Date.
Interest
Rate Swap Agreement:
The
interest rate swap agreement between the Swap Provider and the Trust, which
agreement provides for Net Swap Payments and Swap Termination Payments to be
paid, as provided therein, together with any schedules, confirmations or other
agreements relating thereto, attached hereto as Exhibit I.
Interest
Remittance Amount:
With
respect to any Payment Date, (a) the sum of, without duplication, (1) all
interest collected (other than the interest portion of Payaheads) or advanced
in
respect of Scheduled Payments on the Mortgage Loans during the related
Collection Period by the Servicer, the Master Servicer or the Indenture Trustee
(solely in its capacity as successor Master Servicer), minus, (w) the related
Servicing Fee and the Master Servicing Fee with respect to such Mortgage Loans,
(x) to the extent provided under Sections 4.02(e)(3) and (4) and Sections
5.08(i) and (ii) herein, previously unreimbursed Advances and previously
unreimbursed Servicing Advances and other amounts due to the Servicer, the
Master Servicer or the Indenture Trustee (solely in its capacity as successor
Master Servicer) with respect to the Mortgage Loans, to the extent allocable
to
interest, (y) any Net Swap Payment and/or Swap Termination Payment (other than
any Swap Termination Payment owed to the Swap Provider resulting from a Swap
Provider Trigger Event) payable to the Swap Provider with respect to such
Payment Date and (z) any Prepayment Premiums received with respect to such
Mortgage Loans during the related Prepayment Period, (2) any Compensating
Interest Payments or payments in respect of Prepayment Interest Shortfalls
paid
by the Servicer or the Master Servicer pursuant to Section 5.21 with respect
to
the related Prepayment Period with respect to the Mortgage Loans, (3) the
portion of any Purchase Price or Substitution Amount paid with respect to the
Mortgage Loans during the related Prepayment Period allocable to interest,
(4)
all Net Liquidation Proceeds, Insurance Proceeds, Subsequent Recoveries and
any
other recoveries collected with respect to such Mortgage Loans during the
related Prepayment Period, to the extent allocable to interest and (5) any
Net
Swap Payment or Swap Termination Payment (to the extent not applied to a
replacement swap or required to be retained and applied as provided herein)
received by the Trust Administrator under the Swap Agreement, as
reduced by
(b) the
other costs, expenses, fees or liabilities due to the Master Servicer, the
Servicer, the Indenture Trustee, the Custodian, the Owner Trustee or the Trust
Administrator to the extent provided in this Agreement, the Trust Agreement,
the
Indenture and the Custodial Agreement.
Intervening
Assignments:
The
original intervening assignments of the Mortgage, notices of transfer or
equivalent instrument.
Issuer:
The
Delaware statutory trust known as the “Aames Mortgage Investment Trust
2006-1.”
Issuer
Order
or
Issuer
Request:
A
written order or request signed in the name of the Issuer by any one of its
Authorized Officers and delivered to the Indenture Trustee and the Trust
Administrator.
LIBOR:
With
respect to the first Accrual Period, the per annum rate of 5.0225%. With respect
to each subsequent Accrual Period, a per annum rate determined on the LIBOR
Determination Date in the following manner by the Trust Administrator on the
basis of the “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.
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 Trust Administrator will
determine such rate on the basis of quotations obtained from the Reference
Banks
as follows:
(1) If
on
such LIBOR Determination Date two or more Reference Banks provide such offered
quotations, LIBOR for the related Accrual Period for the Notes shall be the
arithmetic mean of such offered quotations (rounded upwards if necessary to
the
nearest whole multiple of 0.03125%).
(2) If
on
such LIBOR Determination Date fewer than two Reference Banks provide such
offered quotations, LIBOR for the related Accrual Period shall be the higher
of
(x) LIBOR as determined on the previous LIBOR Determination Date and (y) the
Reserve Interest Rate.
The
establishment of LIBOR by the Trust Administrator and the Trust Administrator’s
subsequent calculation of the Note Interest Rate applicable to each Class of
Notes for the relevant Accrual Period, in the absence of manifest error, will
be
final and binding.
LIBOR
Business Day:
Any day
on which banks in London, England and The City of New York are open for
conducting transactions in foreign currency and exchange.
LIBOR
Determination Date:
The
second LIBOR Business Day immediately preceding the commencement of each Accrual
Period for any Notes.
Liquidated
Mortgage Loan:
Any
defaulted Mortgage Loan as to which the Master Servicer or the Servicer, as
applicable, has determined that all amounts that it expects to recover from
or
on account of such Mortgage Loan have been recovered (exclusive of any
possibility of a deficiency judgment).
Liquidation
Expenses:
Expenses that are incurred by the Master Servicer or the Servicer, as
applicable, 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 Section
4.02(c), 4.02(k) or 4.02(p).
Liquidation
Proceeds:
Cash
received in connection with the liquidation of a defaulted Mortgage Loan,
whether through the sale or assignment of such Mortgage Loan, trustee’s sale,
foreclosure sale, payment in full, discounted payoff or otherwise, or the sale
of the related REO Property, if the Mortgaged Property is acquired in
satisfaction of the Mortgage Loan.
Majority
Noteholders:
Until
such time as the sum of the Class Principal Amounts of all Classes of Notes
has
been reduced to zero, the holder or holders of in excess of 50% of the aggregate
Class Principal Amount of all Classes of Notes (accordingly, the holder of
the
Ownership Certificate shall be excluded from any rights or actions of the
Majority Noteholders during such period); and thereafter, the holder of the
Ownership Certificate.
Master
Servicer:
▇▇▇▇▇
Fargo Bank, N.A., or any successor in interest, or if any successor master
servicer shall be appointed as herein provided,
then
such successor master servicer.
Master
Servicer Event of Default:
Any one
of the conditions or circumstances enumerated in Section 8.01(a).
Master
Servicing Fee:
As to
any Payment Date and each Mortgage Loan, an amount equal to the product of
(i)
one-twelfth of the Master Servicing Fee Rate and (ii) the Stated Principal
Balance of such Mortgage Loan as of the first day of the related Collection
Period.
Master
Servicing Fee Rate:
0.0175%.
Material
Defect:
With
respect to any Mortgage Loan, as defined in Section 2.02(c) hereof.
Maturity
Date:
With
respect to any Class of Notes, the Payment Date in April 2036.
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 Mortgage Note.
Monthly
Excess Cashflow:
For any
Payment Date, the sum of (i) the Monthly Excess Interest, (ii) the
Overcollateralization Release Amount and (iii) any Principal Payment Amount
remaining after application pursuant to subclauses (i)(1) and (2) and subclauses
(ii)(1) through (3) of Section 6.02(c), in each case for such Payment
Date.
Monthly
Excess Interest:
With
respect to a Payment Date, means any Interest Remittance Amount remaining after
application pursuant to subclauses (i) through (iii) of Section
6.02(b).
Moody’s:
▇▇▇▇▇’▇
Investors Service, Inc., or any successor in interest.
Mortgage:
A
mortgage, deed of trust or other instrument encumbering a fee simple interest
in
real property securing a Mortgage Note.
Mortgage
File:
The
mortgage documents listed in Section 2.01(b) pertaining to a particular Mortgage
Loan required to be delivered to the Indenture Trustee (or the Custodian)
pursuant to this Agreement.
Mortgage
Impairment Insurance Policy:
A
mortgage impairment or blanket hazard insurance policy to be maintained by
the
Servicer in accordance with Section 4.02(l).
Mortgage
Loan:
A
mortgage loan that is conveyed to the Issuer pursuant to this Agreement on
the
Closing Date, which mortgage loan includes, without limitation, the mortgage
loan documents, the Scheduled Payments, Principal Prepayments, Liquidation
Proceeds, Condemnation Proceeds, Insurance Proceeds, any related REO Property,
REO Disposition Proceeds, and all other rights, benefits, proceeds and
obligations arising from or in connection with such mortgage loan. The Mortgage
Loans subject to this Agreement are identified on the Mortgage Loan Schedule
annexed hereto as Schedule A and have an aggregate Stated Principal Balance
as
of the Cut-off Date of $611,535,685.18.
Mortgage
Loan Purchase Agreement:
The
mortgage loan purchase and assignment agreement dated as of April 1, 2006,
for
the sale of the Mortgage Loans by Sponsor to the Depositor.
Mortgage
Loan Remittance Rate:
With
respect to each Mortgage Loan, the Mortgage Rate minus the Servicing Fee
Rate.
Mortgage
Loan Schedule:
The
schedule attached hereto as Schedule A, which shall identify each Mortgage
Loan,
as such schedule may be amended from time to time to reflect the addition of
Mortgage Loans to, or the deletion of Mortgage Loans from, the Trust Estate.
Such schedule shall set forth, among other things, the following information
with respect to each Mortgage Loan: (i) the Mortgage Loan identifying number;
(ii) [reserved]; (iii) the city, state and zip code of the Mortgaged Property;
(iv) the original principal amount of the Mortgage Loan; (v) the Mortgage Rate
at origination; (vi) the Index; (vii) the first Mortgage Rate adjustment date;
(viii) the monthly payment of principal and interest at origination; (ix) the
Servicing Fee Rate; (x) the Master Servicer Fee Rate; and (xi) whether such
Mortgage Loan is subject to a Prepayment Premium for voluntary prepayments
by
the Mortgagor, the term during which such Prepayment Premiums are imposed and
the method of calculation of the Prepayment Premium. The Servicer shall be
responsible for providing the Indenture Trustee, the Custodian and the Master
Servicer with all amendments to the Mortgage Loan Schedule.
Mortgage
Note:
The
note or other evidence of the indebtedness of a Mortgagor secured by a Mortgage
under a Mortgage Loan.
Mortgaged
Property:
The
underlying real property securing a Mortgage Loan.
Mortgage
Rate:
As to
any Mortgage Loan, the per annum rate at which interest accrues on such Mortgage
Loan, as determined under the related Mortgage Note as reduced by the
applications of the Civil Relief Act.
Mortgagor:
The
obligor on a Mortgage Note.
Net
Funds Cap:
With
respect to any Payment Date, an annual rate equal to the product of (a) the
weighted average Net Mortgage Rate of the Mortgage Loans as of the first day
of
the related Collection Period less a percentage, the numerator of which is
the
product of (x) the sum of any Net Swap Payment and/or Swap Termination Payment
(other than any Swap Termination Payment resulting from a Swap Provider Trigger
Event) owed to the Swap Provider for such Payment Date and (y) twelve, and
the
denominator of which is the Aggregate Loan Balance as of the first day of the
related Collection Period, (b) a fraction whose numerator is 30 and whose
denominator is the actual number of days in the related Accrual Period and
(c) a
fraction, the numerator of which is the Aggregate Loan Balance as of the last
day of the prior Collection Period and the denominator of which is the aggregate
Class Principal Amount of the Notes immediately prior to such Payment
Date.
Net
Liquidation Proceeds:
With
respect to any Liquidated Mortgage Loan, the related Liquidation Proceeds,
Insurance Proceeds and Condemnation Proceeds received and retained in connection
with the liquidation of such Mortgage Loan net of (i) Liquidation Expenses
and
(ii) any related unreimbursed Advances and Servicing Advances, if
any.
Net
Mortgage Rate:
With
respect to any Mortgage Loan, the Mortgage Rate thereof reduced by sum of the
Servicing Fee Rate and the Master Servicing Fee Rate.
Net
Swap Payment:
In the
case of payments made by the Trust, the excess, if any, of (x) the Fixed Swap
Payment over (y) the Floating Swap Payment and in the case of payments made
by
the Swap Provider, the excess, if any, of (x) the Floating Swap Payment over
(y)
the Fixed Swap Payment. In each case, the Net Swap Payment shall not be less
than zero.
New
York UCC:
The
Uniform Commercial Code as in effect from time to time in the State of New
York.
Non-MERS
Mortgage Loan:
Any
Mortgage Loan other than a MERS Mortgage Loan.
Nonrecoverable
Advance:
Any
Servicing Advance or Advance previously made or proposed to be made in respect
of a Mortgage Loan by the Servicer which, in the reasonable discretion of the
Servicer will not or, in the case of a proposed Servicing Advance or Advance,
would not, ultimately be recoverable by the Servicer from the related Mortgagor,
related Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds, REO
Disposition Proceeds or otherwise. The determination by the Servicer that all
or
a portion of a Servicing Advance or Advance would be a Nonrecoverable Advance
shall be evidenced by an Officer’s Certificate delivered to the Master Servicer
setting forth such determination and a reasonable explanation
thereof.
Note:
Any
Class A-1, Class A-2, Class A-3, Class A-4, Class M-1, Class M-2, Class M-3,
Class M-4, Class M-5, Class M-6, Class M-7, Class M-8, Class M-9, Class M-10
or
Class M-11 Note.
Note
Interest Rate:
With
respect to each Class of Notes on any Payment Date, the least of (1) LIBOR
plus
the Interest Margin for such Class and such Payment Date, (2) the applicable
Net
Funds Cap for such Payment Date and (3) the Fixed Rate Cap.
Note
Principal Amount:
With
respect to any Note, an amount equal to the initial principal amount thereof
on
the Closing Date plus any Subsequent Recoveries added to the Note Principal
Amount of such Note pursuant to Section 6.02 hereof, reduced by (a) the amount
of all principal payments previously paid with respect to such Note and (b)
any
Realized Losses previously allocated to that class of Note.
Note
Register and Note Registrar:
As
defined in the Indenture.
Officer’s
Certificate:
A
certificate signed by the Chairman of the Board, any Vice Chairman, the
President, any Senior Vice President, any Vice President or any Assistant Vice
President of a Person.
Operative
Agreements:
The
Trust Agreement, the Certificate of Trust of the Issuer, this Agreement, the
Mortgage Loan Purchase Agreement, the Indenture, the Custodial Agreement, the
Depository Agreement, the Interest Rate Swap Agreement and each other document
contemplated by any of the foregoing to which the Depositor, the Sponsor, the
Master Servicer, the Servicer, the Owner Trustee, the Trust Administrator,
the
Indenture Trustee, the Custodian or the Issuer is a party.
Opinion
of Counsel:
A
written opinion of counsel, reasonably acceptable in form and substance to
the
Sponsor, the Trust Administrator, the Indenture Trustee and/or the Master
Servicer, as applicable, and who may be in house or outside counsel to the
Sponsor, the Servicer, the Depositor, the Master Servicer, the Trust
Administrator or the Indenture Trustee but which must be Independent outside
counsel with respect to any such opinion of counsel concerning federal income
tax or ERISA matters.
Original
Loan-to-Value Ratio:
With
respect to any Mortgage Loan, the ratio of the principal balance of such
Mortgage Loan at origination, or such other date as is specified, to the
Original Value of the related Mortgaged Property.
Original
Value:
The
lesser of (a) the Appraised Value of a Mortgaged Property at the time the
related Mortgage Loan was originated and (b) if the Mortgage Loan was made
to
finance the acquisition of the related Mortgaged Property, the purchase price
paid for the Mortgaged Property by the Mortgagor at the time the related
Mortgage Loan was originated.
Overcollateralization
Amount:
With
respect to any Payment Date will be equal to the amount, if any, by which (x)
the Aggregate Loan Balance for such Payment Date exceeds (y) the aggregate
Class
Principal Amount of the Notes, in each case after giving effect to payments
on
such Payment Date.
Overcollateralization
Deficiency Amount:
With
respect to any Payment Date, the excess, if any, of the Targeted
Overcollateralization Amount for that Payment Date over the
Overcollateralization Amount for that Payment Date.
Overcollateralization
Release Amount:
With
respect to any Payment Date, the lesser of (x) the Principal Remittance Amount
for such Payment Date and (y) the amount, if any, by which (1) the
Overcollateralization Amount for such Payment Date (calculated for this purpose
on the basis of the assumption that 100% of the Principal Remittance Amount
for
such Payment Date is applied on such date in reduction of the aggregate Class
Principal Amount of the Notes) exceeds (2) the Targeted Overcollateralization
Amount for such Payment Date.
Ownership
Certificate:
An
equity certificate representing a 100% undivided beneficial ownership interest
in the Trust, substantially in the form attached as part of Exhibit A to the
Trust Agreement.
Owner
Trustee:
Wilmington Trust Company, a Delaware banking corporation, and any successor
in
interest, not in its individual capacity, but solely as owner trustee under
the
Trust Agreement.
Owner
Trustee Fee:
The
annual fee payable to the Owner Trustee by the Trust Administrator pursuant
to
the Fee Letter Agreement specified in Section 7.03 of the Trust
Agreement.
Payahead:
With
respect to any Mortgage Loan and any Due Date therefor, any Scheduled Payment
received by the Servicer during any Collection Period in addition to the
Scheduled Payment due on such Due Date, intended by the related Mortgagor to
be
applied on a subsequent Due Date or Due Dates.
Paying
Agent:
As
defined in the Indenture. The initial Paying Agent shall be the Trust
Administrator.
Payment
Date:
The
25th day of each month or, if such 25th day is not a Business Day, the next
succeeding Business Day, commencing in May 2006.
Percentage
Interest:
The
Percentage Interest evidenced thereby shall equal (i) with respect to the
Ownership Certificate, the Percentage Interest on the face of such certificate;
or (ii) with respect to any Note, the initial Note Principal Amount thereof,
divided by the initial Class Principal Amount of all Notes of the same
Class.
Person:
Any
individual, corporation, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
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.
Plan
Asset Regulations:
The
Department of Labor regulations set forth in 29 C.F.R. 2510.3 101.
Prepayment
Interest Excess Amount:
For any
Servicer Remittance Date and any Principal Prepayment received during the
portion of the related Prepayment Period occurring from and including the first
day through the fifteenth day of the calendar month in which such Servicer
Remittance Date occurs, an amount equal to interest (to the extent received)
due
in connection with such Principal Prepayment.
Prepayment
Interest Shortfall Amount:
With
respect to any voluntary Principal Prepayment in full or in part by the
Mortgagor on any Mortgage Loan that is received during the period from the
first
day of the Prepayment Period through the last day of the calendar month
preceding the related Payment Date, the amount, if any, by which one month’s
interest at the Mortgage Rate minus the Servicing Fee, in the case of the
Servicer, or at the Net Mortgage Rate, in the case of the Master Servicer,
for
such Mortgage Loan on the amount of such Principal Prepayment exceeds the amount
of interest received from such Mortgagor in respect of such Principal
Prepayment.
Prepayment
Period:
With
respect to any Payment Date, the period beginning from and including the
sixteenth day of the month preceding the month in which such Payment Date occurs
(or, in the case of the initial prepayment period, beginning on the Cut-off
Date) to and including the fifteenth day of the month in which such Payment
Date
occurs.
Prepayment
Premiums:
Any
prepayment fees and penalties to be paid by the Mortgagor on a Mortgage Loan
in
the case of a full or partial voluntary prepayment of such Mortgage Loan during
the related Prepayment Period.
Prime
Rate:
The
prime rate of the United States money center commercial banks as published
in
The Wall Street Journal, Northeast Edition.
Principal
Payment Amount:
With
respect to any Payment Date, an amount equal to the Principal Remittance Amount
for such date minus
the
Overcollateralization Release Amount for such Payment Date.
Principal
Prepayment:
Any
payment or other recovery of principal on a Mortgage Loan, including any payment
or other recovery of principal in connection with the repurchase of a Mortgage
Loan by the Sponsor, the Servicer or any other Person received in advance of
such Mortgage Loan’s scheduled Due Date.
Principal
Remittance Amount:
With
respect to any Payment Date, (a) the sum of (1) all principal collected (other
than the principal portion of Payaheads) or advanced in respect of Scheduled
Payments on the Mortgage Loans during the related Collection Period by the
Servicer or the Master Servicer (less unreimbursed Advances due to the Master
Servicer or the Servicer with respect to such Mortgage Loans and any
unreimbursed Servicing Advances, in each case to the extent allocable to
principal and to the extent provided under Section 4.02(e)(3) and (4) and
Sections 5.08(i) and (ii)), (2) the principal portion of all prepayments in
full
or in part received on the Mortgage Loans during the related Prepayment Period,
(3) the Stated Principal Balance of each Mortgage Loan that was repurchased
by
the Sponsor or purchased by the Servicer during the related Prepayment Period,
(4) the principal portion of any Substitution Amount paid with respect to any
Deleted Mortgage Loan during the related Prepayment Period allocable to
principal, (5) all Net Liquidation Proceeds, Insurance Proceeds, REO Disposition
Proceeds and Subsequent Recoveries and any other recoveries collected with
respect to the Mortgage Loans during the related Prepayment Period, to the
extent allocable to principal and (6) all other unscheduled collections and
recoveries in respect of principal during the related Prepayment Period, as
reduced by (b) (1) other costs, expenses, fees or liabilities reimbursable
to
the Master Servicer, the Servicer, the Trust Administrator, the Custodian,
the
Indenture Trustee or the Owner Trustee from interest collections as described
in
clause (b) of the definition of Interest Remittance Amount and not reimbursed
therefrom or otherwise and (2) any Net Swap Payment and/or Swap Termination
Payment (other than any Swap Termination Payment owed to the Swap Provider
resulting from a Swap Provider Trigger Event) payable to the Swap Provider
with
respect to such Payment Date and not covered by the Interest Remittance Amount
for such Payment Date (without giving effect to clause (a)(1)(y) of the
definition thereof).
Proceeding:
Any
suit in equity, action at law or other judicial or administrative
proceeding.
Property
Charges:
As
defined in Section 4.02(i).
Prospectus:
The
Prospectus Supplement, together with the accompanying prospectus dated April
26,
2006.
Prospectus
Supplement:
The
prospectus supplement dated April 27, 2006 relating to the Notes.
Purchase
Price:
With
respect to the purchase of a Mortgage Loan or related REO Property pursuant
to
this Agreement, an amount equal to the sum of (a) 100% of the unpaid principal
balance of such Mortgage Loan, (b) accrued interest thereon at the applicable
Mortgage Rate, from the date as to which interest was last paid to (but not
including) the Due Date in the Collection Period during which such Mortgage
Loan
or REO Property is being so purchased; (c) if applicable, the fair market value
of the REO Property and all other property being purchased; (d) any unreimbursed
Servicing Advances with respect to such Mortgage Loan; and (e) any costs and
damages incurred by the Trust Estate associated with any violation of applicable
federal, state or local anti-predatory or anti-abusive lending laws with respect
to the related Mortgage Loan. The Master Servicer and the Servicer shall be
reimbursed from the Purchase Price for any Mortgage Loan or related REO Property
for any Advances made or other amounts advanced with respect to such Mortgage
Loan that are reimbursable to the Master Servicer or the Servicer under this
Agreement, together with any accrued and unpaid Servicing Fee and Master
Servicing Fee with respect to such Mortgage Loan.
Qualified
GIC:
A
guaranteed investment contract or surety bond providing for the investment
of
funds in the Collection Account and insuring a minimum, fixed or floating rate
of return on investments of such funds, which contract or surety bond
shall:
(i) be
an
obligation of an insurance company or other corporation whose long term debt
is
rated by each Rating Agency in one of its two highest rating categories or,
if
such insurance company has no long term debt, whose claims paying ability is
rated by each Rating Agency in one of its two highest rating categories, and
whose short-term debt is rated by each Rating Agency in its highest rating
category;
(ii) provide
that the Trust Administrator on behalf of the Indenture Trustee may exercise
all
of the rights under such contract or surety bond without the necessity of taking
any action by any other Person;
(iii) provide
that if at any time the then current credit standing of the obligor under such
guaranteed investment contract is such that continued investment pursuant to
such contract of funds would result in a downgrading of any rating of the Notes,
the Trust Administrator shall terminate such contract without penalty and be
entitled to the return of all funds previously invested thereunder, together
with accrued interest thereon at the interest rate provided under such contract
to the date of delivery of such funds to the Trust Administrator;
(iv) provide
that the Indenture Trustee’s interest therein shall be transferable to any
successor trustee hereunder; and
(v) provide
that the funds reinvested thereunder and accrued interest thereon be returnable
to the Collection Account not later than the Business Day prior to any Payment
Date.
Qualified
Insurer:
An
insurance company duly qualified as such under the laws of the states in which
the related Mortgaged Properties are located, duly authorized and licensed
in
such states to transact the applicable insurance business and to write the
insurance provided and whose claims paying ability is rated by each Rating
Agency in its highest rating category or whose selection as an insurer will
not
adversely affect the rating of the Notes.
Qualified
REIT Subsidiary:
A
direct or indirect 100% owned subsidiary of a REIT that satisfies the
requirements of Section 856(i) of the Code.
Qualifying
Substitute Mortgage Loan:
In the
case of a Mortgage Loan substituted for a Deleted Mortgage Loan pursuant to
the
terms of this Agreement, a Mortgage Loan that, on the date of such substitution,
(i) has an outstanding Stated Principal Balance (or in the case of a
substitution of more than one mortgage loan for a Deleted Mortgage Loan, an
aggregate Stated Principal Balance), after application of all Scheduled Payments
due during or prior to the month of substitution, not in excess of, and not
more
than 5% less than, the outstanding Stated Principal Balance of the Deleted
Mortgage Loan as of the Due Date in the calendar month during which the
substitution occurs, (ii) has a Mortgage Rate not less than, and not more than
0.50% higher than, the Mortgage Rate on the Deleted Mortgage Loan, (iii) if
applicable, has a maximum Mortgage Rate not less than the maximum Mortgage
Rate
on the Deleted Mortgage Loan, (iv) has a minimum Mortgage Rate not less than
the
minimum Mortgage Rate of the Deleted Mortgage Loan, (v) has a gross margin
equal
to or greater than the gross margin of the Deleted Mortgage Loan, (vi) (a)
has a
next adjustment date not later than the next adjustment date on the Deleted
Mortgage Loan, (b) has an initial periodic rate cap not less than the Deleted
Mortgage Loan and (c) has a subsequent periodic rate cap not less than the
Deleted Mortgage Loan, (vii) has the same Due Date as the Deleted Mortgage
Loan,
(viii) has a remaining stated term to maturity not longer than 18 months and
not
more than 18 months shorter than the remaining stated term to maturity of the
related Deleted Mortgage Loan, (ix) is current as of the date of substitution,
(x) has a Loan-to-Value Ratio as of the date of substitution equal to or lower
than the Loan-to-Value Ratio of the Deleted Mortgage Loan as of such date,
(xi)
has been underwritten by the Sponsor in accordance with the same underwriting
criteria and guidelines as the Deleted Mortgage Loan, (xii) has a risk grading
determined by the Sponsor at least equal to the risk grading assigned on the
Deleted Mortgage Loan, (xiii) is secured by the same property type as the
Deleted Mortgage Loan, (xiv) conforms to each representation and warranty
applicable to the Deleted Mortgage Loan made in the Mortgage Loan Purchase
Agreement, (xv) has the same lien position as the Deleted Mortgage Loan, (xvi)
is covered by a primary mortgage insurance policy if the Deleted Mortgage Loan
was so covered, (xvii) contains provisions covering the payment of Prepayment
Premium by the Mortgager for early prepayment of the Mortgage Loan at least
as
favorable to the Trust as the Deleted Mortgage Loan, (xviii) has a maturity
date
not later than the maturity date of the latest maturing Mortgage Loan as of
the
Closing Date, (xix) has the same Index as the Deleted Mortgage Loan, (xx) if
originated on or after November 27, 2003, is not a “high cost” loan subject to
the New Jersey Home Ownership Security Act of 2003 and (xxi) if originated
on or
after January 1, 2004 is not a “high-cost” loan subject to the New Mexico Home
Loan Protection Act. In the event that one or more mortgage loans are
substituted for one or more Deleted Mortgage Loans, the amounts described in
clause (i) hereof shall be determined on the basis of aggregate Stated Principal
Balances, the Mortgage Rates described in clause (ii) hereof shall be determined
on the basis of weighted average Mortgage Rates, the risk gradings described
in
clause (xii) hereof shall be satisfied as to each such mortgage loan, the terms
described in clause (viii) hereof shall be determined on the basis of weighted
average remaining term to maturity, the Loan-to-Value Ratios described in clause
(x) hereof shall be satisfied as to each such mortgage loan and, except to
the
extent otherwise provided in this sentence, the representations and warranties
described in clause (xiv) hereof must be satisfied as to each Qualified
Substitute Mortgage Loan or in the aggregate, as the case may be.
Rating
Agency:
Each of
▇▇▇▇▇’▇ and S&P.
Realized
Loss:
With
respect to each Liquidated Mortgage Loan, an amount equal to (i) the unpaid
principal balance of such Mortgage Loan as of the date of liquidation, minus
(ii) Liquidation Proceeds received, to the extent allocable to principal, net
of
amounts that are reimbursable therefrom to the Master Servicer or the Servicer
with respect to such Mortgage Loan (other than Advances of principal) including
Liquidation Expenses. In determining whether a Realized Loss is a Realized
Loss
of principal, Liquidation Proceeds shall be allocated, first, to payment of
Liquidation Expenses, then to accrued unpaid interest and finally to reduce
the
principal balance of the Mortgage Loan.
Record
Date:
With
respect to each Payment Date and each Class of Notes, the Business Day prior
to
the related Payment Date, and with respect to any Class of Definitive Notes,
the
last Business Day of the month immediately preceding the month in which the
Payment Date occurs (or, in the case of the first Payment Date, the Closing
Date).
Recovery:
With
respect to any Liquidated Mortgage Loan, an amount received in respect of
principal on such Mortgage Loan which has previously been allocated as a
Realized Loss to a Class or Classes of Notes net of reimbursable
expenses.
Redemption
Date:
The
first Payment Date on which Aames Investment Acceptance Corporation is permitted
to exercise its right to purchase the assets of the Trust pursuant to Section
9.02 hereof.
Regulation
AB:
Subpart
229.1100 - Asset Backed Securities (Regulation AB), 17 C.F.R. §§229.1100 -
229.1123, as such may be amended from time to time, and subject to such
clarification and interpretation as have been provided by the Commission in
the
adopting release (Asset-Backed Securities, Securities Act Release No. 33-8518,
70 Fed. Reg. 1,506, 1,531 (Jan. 7, 2005)) or by the staff of the Commission,
or
as may be provided by the Commission or its staff from time to time.
Reference
Banks:
Leading
banks selected by the Trust Administrator and engaged in transactions in
Eurodollar deposits in the international Eurocurrency market (1) with an
established place of business in London, (2) whose quotations appear on the
Reuters Screen LIBO Page or the Bloomberg Screen LIBO Page on the Determination
Date in question, (3) which have been designated as such by the Trust
Administrator and (4) not controlling, controlled by, or under common control
with, the Depositor, the Indenture Trustee, the Trust Administrator, the Master
Servicer, the Servicer, the Sponsor or any successor servicer.
Relevant
Servicing Criteria:
The
Servicing Criteria applicable to the various parties, as set forth on Exhibit
J
attached hereto. For clarification purposes, multiple parties can have
responsibility for the same Relevant Servicing Criteria.
Relevant
UCC:
The
Uniform Commercial Code as in effect in the applicable
jurisdiction.
Reporting
Servicer:
The
meaning set forth in Section 6.07(a)(iv)(A).
Reportable
Event:
The
meaning set forth in Section 6.07(a)(iii).
REO
Disposition:
The
final sale by the Servicer of any REO Property.
REO
Disposition Proceeds:
All
amounts received with respect to an REO Disposition pursuant to Section
4.02(p).
REO
Property:
A
Mortgaged Property acquired by the Servicer through foreclosure or deed in
lieu
of foreclosure in connection with a defaulted Mortgage Loan.
Reserve
Interest Rate:
The
rate per annum that the Trust Administrator determines to be either (1) the
arithmetic mean (rounded upwards if necessary to the nearest whole multiple
of
0.03125%) of the one-month United States dollar lending rates which New York
City banks selected by the Trust Administrator are quoting on the relevant
LIBOR
Determination Date to the principal London offices of leading banks in the
London interbank market or, (2) in the event that the Trust Administrator can
determine no such arithmetic mean, the lowest one-month United States dollar
lending rate which New York City banks selected by the Trust Administrator
are
quoting on such LIBOR Determination Date to leading European banks.
Responsible
Officer:
Any
vice president, any assistant vice president, any assistant secretary, any
associate, any assistant treasurer, or any other officer of the Indenture
Trustee or the Trust Administrator, as applicable, customarily performing
functions similar to those performed by any of the above-designated officers
and, in each case, having direct responsibility for the administration of the
Operative Agreements and also, with respect to a particular matter, any other
officer to whom such matter is referred because of such officer’s knowledge of
and familiarity with the particular subject.
Reuters
Screen LIBO Page:
The
display designated as page “LIBOR01” on the Reuters Monitor Money Rates Service
(or such other page as may replace the LIBOR01 page on that service for the
purpose of displaying London interbank offered rates of major
banks).
Rolling
Three Month Delinquency Rate:
With
respect to any Payment Date, the average of the Delinquency Rates for each
of
the three (or one and two, in the case of the first and second Payment Dates,
respectively) immediately preceding calendar months.
S&P:
Standard & Poor’s Ratings Services, a division of The McGraw Hill Companies,
Inc., or any successor in interest.
▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act:
The
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the rules and regulations of the Commission
promulgated thereunder (including any interpretations thereof by the
Commission’s staff).
▇▇▇▇▇▇▇▇-▇▇▇▇▇
Certification:
A
written certification signed by an officer of the Master Servicer that complies
with (i) the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act, and (ii) Exchange Act Rules 13a-14(d) and
15d-14(d), as in effect from time to time; provided that if, after the Closing
Date (a) the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act is amended, (b) the Rules referred to in clause
(ii) are modified or superseded by any subsequent statement, rule or regulation
of the Commission or any statement of a division thereof, or (c) any future
releases, rules and regulations are published by the Commission from time to
time pursuant to the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act, which in any such case affects the
form
or substance of the required certification and results in the required
certification being, in the reasonable judgment of the Master Servicer,
materially more onerous than the form of the required certification as of the
Closing Date, the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Certification shall be as agreed to by the
Master Servicer and the Depositor following a negotiation in good faith to
determine how to comply with any such new requirements.
Scheduled
Payment:
Each
scheduled payment of principal and interest (or of interest only, if applicable)
to be paid by the Mortgagor on a Mortgage Loan, as reduced (except where
otherwise specified herein) by the amount of any related Debt Service Reduction
or pursuant to the Civil Relief Act (excluding all amounts of principal and
interest that were due on or before the Cut-off Date whenever received) and,
in
the case of an REO Property, an amount equivalent to the Scheduled Payment
that
would have been due on the related Mortgage Loan if such Mortgage Loan had
remained in existence.
Securities
Intermediary:
The
Person acting as Securities Intermediary under this Agreement (which is ▇▇▇▇▇
Fargo Bank, N.A.), its successor in interest, and any successor Securities
Intermediary appointed pursuant to Section 6.04.
Security
Entitlement:
The
meaning specified in Section 8-102(a)(17) of the New York UCC.
Senior
Enhancement Percentage:
For any
Payment Date, the fraction, expressed as a percentage, the numerator of which
is
the sum of the aggregate Class Principal Amount of the Subordinate Notes and
the
Overcollateralization Amount (which, for purposes of this definition only,
shall
not be less than zero) in each case after giving effect to payments on such
Payment Date and the denominator of which is the Aggregate Loan Balance for
such
Payment Date.
Senior
Note:
Any
Class A-1, Class A-2, Class A-3 or Class A-4.
Senior
Principal Payment Amount:
With
respect to any Payment Date on or after the Stepdown Date and as long as a
Trigger Event is not in effect with respect to such Payment Date, the amount,
if
any, by which (A) the aggregate Class Principal Amount of the Senior Notes
immediately prior to that Payment Date exceeds (B) the Senior Target
Amount.
Senior
Target Amount:
With
respect to any Payment Date, an amount equal to the lesser of (a) the product
of
(i) 49.50% and (ii) the Aggregate Loan Balance for such Payment Date determined
as of the last day of the related Collection Period and (b) the amount, if
any,
by which (i) the Aggregate Loan Balance for such Payment Date determined as
of
the last day of the related Collection Period exceeds (ii) 0.50% of the Cut-off
Date Balance.
Servicer:
Aames
Funding Corporation, or its successor in interest or assigns or any successor
to
the Servicer under this Agreement as herein provided.
Servicer
Event of Default:
Any one
of the conditions or circumstances enumerated in Section 4.07 with respect
to
the Servicer.
Servicer
Pipeline Losses:
Servicer Pipeline Losses with respect to any Payment Date shall be equal to
(x)
the product of (i) 50.00% and (ii) the sum of (a) the product of (1) 20.00%
and
(2) the aggregate outstanding principal balance of all Mortgage Loans 60 to
89
days Delinquent on the last day of the related Collection Period, (b) the
product of (1) 35.00% and (2) the aggregate outstanding principal balance of
all
Mortgage Loans 90 or more days Delinquent (but for which foreclosure proceedings
have not been instituted) on the last day of the related Collection Period,
(c)
the product of (1) 50.00% and (2) the aggregate outstanding principal balance
of
all Mortgage Loans on the last day of the related Collection Period for which
foreclosure proceedings have been instituted and (d) the product of (1) 90.00%
and (2) the aggregate outstanding principal balance of all REO Properties on
the
last day of the related Collection Period, divided by (y) the Cut-off Date
Balance.
Servicer
Pipeline Loss Trigger Event:
A
Servicer Pipeline Loss Trigger Event shall have occurred with respect to any
Payment Date if the sum of (i) Servicer Pipeline Losses for such Payment Date
and (ii) a fraction, expressed as a percentage, obtained by dividing (x) the
aggregate amount of Realized Losses incurred on the Mortgage Loans from the
Cut-off Date through the last day of the related Collection Period by (y) the
Cut-off Date Balance, exceeds the applicable percentages described below with
respect to such Payment Date:
|
Payment
Date
|
Required
Loss Percentage
|
|
May
2009 through April 2010
|
1.75%
with respect to May 2009, plus an additional 1/12th of 1.00% for
each
month thereafter
|
|
May
2010 through April 2011
|
2.75%
with respect to May 2010, plus an additional 1/12th of 0.80% for
each
month thereafter
|
|
May
2011 through April 2012
|
3.55%
with respect to May 2011, plus an additional 1/12th of 0.85% for
each
month thereafter
|
|
May
2012 and thereafter
|
4.40%
|
Servicer
Remittance Date:
The
Business Day prior to each Payment Date, commencing in May 2006.
Servicer
Termination Trigger Event:
A
Servicer Termination Trigger Event shall have occurred with respect to any
Payment Date if: (i) a Servicer Pipeline Loss Trigger Event shall have occurred
or (ii) the Rolling Three Month Delinquency Rate as of the last day of the
immediately preceding Collection Period equals or exceeds 31.65% for such
Payment Date.
Servicing
Advances:
All
customary, reasonable and necessary “out of pocket” costs and expenses other
than Advances (including reasonable attorneys’ fees and disbursements) incurred
in the performance by the Servicer of its servicing obligations, including,
but
not limited to, the cost of (a) the preservation, inspection, restoration and
protection of the Mortgaged Property, (b) any enforcement or administrative
or
judicial proceedings, including foreclosures, (c) the management and liquidation
of the Mortgaged Property if the Mortgaged Property is acquired in satisfaction
of the Mortgage, (d) taxes, assessments, water rates, sewer rents and other
charges which are or may become a lien upon the Mortgaged Property and fire
and
hazard insurance coverage and (e) any losses sustained by the Servicer with
respect to the liquidation of the Mortgaged Property. Notwithstanding anything
to the contrary herein, in the event the Servicer determines in its reasonable
judgment that a Servicing Advance is a Nonrecoverable Advance, the Servicer
shall be under no obligation to make such Servicing Advance.
Servicing
Criteria:
The
criteria set forth in paragraph (d) of Item 1122 of Regulation AB, as such
may
be amended from time to time.
Servicing
Fee:
As to
any Payment Date and each Mortgage Loan, an amount equal to the product of
(a)
one-twelfth of the Servicing Fee Rate and (b) the Stated Principal Balance
of
such Mortgage Loan as of the first day of the related Collection
Period.
Servicing
Fee Rate:
With
respect to each Mortgage Loan, 0.50% per annum.
Servicing
File:
The
items pertaining to a particular Mortgage Loan including, but not limited to,
the computer files, data disks, books, records, data tapes, notes, and all
additional documents generated as a result of or utilized in originating and/or
servicing each Mortgage Loan, which are held in trust for the Indenture Trustee
by the Servicer.
Servicing
Function Participant:
Any
Sub-Servicer or Subcontractor of a Servicer, the Master Servicer, the Custodian
or the Trust Administrator, respectively, determined by such party to be
“participating in the servicing function” within the meaning of Item 1122 of
Regulation AB.
Servicing
Officer:
Any
officer of the Servicer involved in or responsible for, the administration
and
servicing of the Mortgage Loans whose name appears on a list of servicing
officers furnished by the Servicer to the Master Servicer upon request, as
such
list may from time to time be amended.
Servicing
Standard:
The
servicing and administration of the Mortgage Loans for which the Servicer is
responsible hereunder (a) in the same manner in which, and with the same care,
skill, prudence and diligence with which, the Servicer generally services and
administers similar mortgage loans with similar mortgagors (i) for other third
parties, giving due consideration to customary and usual standards of practice
of prudent institutional residential mortgage lenders servicing their own loans
or (ii) held in the Servicer’s own portfolio, (b) with a view to the
maximization of the recovery on such Mortgage Loans on a net present value
basis
and the best interests of the Trust or any Person to which the Mortgage Loans
may be transferred by the Trust, (c) without regard to (i) any relationship
that
the Servicer or any affiliate thereof may have with the related Mortgagor or
any
other party to the transactions, (ii) the right of the Servicer to receive
compensation or other fees for its services rendered pursuant to this Agreement,
(iii) the obligation of the Servicer to make Servicing Advances, (iv) the
ownership, servicing or management by the Servicer or any affiliate thereof
for
others of any other mortgage loans or mortgaged properties, and (v) any debt
the
Servicer or any affiliate of the Servicer has extended to any mortgagor or
any
affiliate of such mortgagor and (d) in accordance with the applicable state,
local and federal laws, rules and regulations.
Sponsor:
Aames
Investment Corporation.
Sponsor
Financial Covenant Termination Event:
A
Sponsor Financial Covenant Termination Event shall have occurred with respect
to
any Payment Date if: (i) the Sponsor’s tangible net worth shall be less than
$75,000,000 as of the last day of the immediately preceding Collection Period,
(ii) the Sponsor’s total liquidity shall be less than $17,500,000 as of the last
day of the immediately preceding Collection Period or (iii) the Sponsor’s
warehouse capacity shall be less than $500,000,000 as of the last day of the
immediately preceding Collection Period.
Stated
Principal Balance:
With
respect to any Payment Date, either (a) in the case of any Mortgage Loan, the
principal balance of such Mortgage Loan at the close of business on the Cut-off
Date after giving effect to principal payments due on or before the Cut-off
Date, whether or not received, less an amount equal to principal payments due
after the Cut-off Date and on or before the Due Date in the related Collection
Period, whether or not received from the Mortgagor or advanced by any Servicer
or the Master Servicer, and all amounts allocable to unscheduled principal
payments (including Principal Prepayments, Liquidation Proceeds, Insurance
Proceeds and condemnation proceeds, in each case to the extent identified and
applied prior to or during the related Prepayment Period), provided that the
Stated Principal Balance of any Liquidated Mortgage Loan shall be zero and
(b)
in the case of any REO Property, the Stated Principal Balance of the related
Mortgage Loan on the Due Date immediately preceding the date of acquisition
of
such REO Property by or on behalf of the Indenture Trustee (reduced by any
amount applied as a reduction of principal on the related Mortgage
Loan).
Stepdown
Date:
The
earlier to occur of (i) the first Payment Date following the Payment Date on
which the aggregate Class Principal Amount of the Senior Notes has been reduced
to zero and (ii) the later to occur of (x) the Payment Date in May 2009 and
(y)
the first Payment Date on which the Senior Enhancement Percentage (calculated
for this purpose after giving effect to payments or other recoveries in respect
of the Mortgage Loans during the related Collection Period, but before giving
effect to payments on any Notes on such Payment Date) is greater than or equal
to 50.50%.
Subcontractor:
Any
vendor, subcontractor or other Person that is not responsible for the overall
servicing of Mortgage Loans but performs one or more discrete functions
identified in Item 1122(d) of Regulation AB with respect to Mortgage Loans
under
the direction or authority of any Servicer (or a Sub-Servicer of any Servicer),
the Master Servicer, the Trustee, the Custodian or the Trust
Administrator.
Sub-Servicer:
Any
Person with which the Servicer has entered into a Sub-Servicing Agreement and
which meets the qualifications of a Sub-Servicer pursuant to Section
4.09.
Subordinate
Class Principal Payment Amount:
With
respect to any Class of Subordinate Notes (other than the Class M-1 and Class
M-2 Notes) and any Payment Date on or after the Stepdown Date and as long as
a
Trigger Event is not in effect with respect to such Payment Date, the amount,
if
any, by which (x) the sum of (i) the aggregate Class Principal Amount of the
Senior Notes after giving effect to payments to such Classes on such Payment
Date, (ii) the aggregate Class Principal Amount of the Classes of Subordinate
Notes, if any, that have a higher priority of payment than the subject Class
of
Subordinate Notes, after giving effect to payments to such Classes on such
Payment Date and (iii) the Class Principal Amount of the subject Class of
Subordinate Notes immediately prior to such Payment Date exceeds (y) the
Subordinate Class Target Amount for the subject Class of Subordinate Notes
for
such Payment Date.
Subordinate
Class Target Amount:
With
respect to any Class of Subordinate Notes (other than the Class M-1 and Class
M-2 Notes) and any Payment Date, an amount equal to the lesser of (a) the
product of (1) the target percentage set forth for such Class in the following
table and (2) the Aggregate Loan Balance for such Payment Date determined as
of
the last day of the related Collection Period and (b) the excess of (i) the
Aggregate Loan Balance for such Payment Date determined as of the last day
of
the related Collection Period exceeds (ii) 0.50% of the Cut-off Date
Balance:
|
Class
|
Target
Percentage
|
|
|
M-3
|
72.30%
|
|
|
M-4
|
76.00%
|
|
|
M-5
|
79.20%
|
|
|
M-6
|
83.20%
|
|
|
M-7
|
88.30%
|
|
|
M-8
|
90.30%
|
|
|
M-9
|
92.10%
|
|
|
M-10
|
93.10%
|
|
|
M-11
|
95.10%
|
Subordinate
Note:
Any
Class M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class M-6, Class M-7,
Class M-8, Class M-9, Class M-10 or Class M-11 Note.
Subordinate
Priority:
As
defined in clause 6.02(d)(i).
Subsequent
Recoveries:
The
unanticipated amounts received on a Liquidated Mortgage Loan that resulted
in a
Realized Loss in a prior month. If Subsequent Recoveries are received, they
will
be included (net of any amounts due the Servicer) as part of the Principal
Remittance Amount for the following Payment Date and paid in accordance with
the
priorities described herein. In addition, after giving effect to all payments
on
a Payment Date, if any Allocated Realized Loss Amounts are outstanding, such
Subsequent Recovery amounts shall be applied to reduce the Allocated Realized
Loss Amount for the Class of Subordinate Notes then outstanding with the highest
payment priority until reduced to zero (with any remaining Subsequent Recoveries
applied to reduce the Allocated Realized Loss Amount of the Class with the
next
highest payment priority), and to increase the Class Principal Amount of such
Class or Classes of Subordinate Notes by the same amount. Thereafter, such
Class
or Classes of Notes will accrue interest on the increased Class Principal
Amount.
Substitution
Amount:
The
amount, if any, by which the Stated Principal Balance of a Deleted Mortgage
Loan
exceeds the Stated Principal Balance of the related Qualifying Substitute
Mortgage Loan, or aggregate Stated Principal Balance, if applicable,
plus
unpaid
interest thereon, any related unpaid Advances or Servicing Advances, unpaid
Servicing Fees and unpaid Master Servicing Fees and the amount of any costs
and
damages incurred by the Trust Fund associated with a violation of any applicable
federal, state or local predatory or abusive lending law in connection with
the
origination of such Deleted Mortgage Loan.
Swap
Default:
An
Event of Default as defined in the Interest Rate Swap Agreement.
Swap
Early Termination:
The
occurrence of an Early Termination Date under the Swap Agreement.
Swap
LIBOR:
A per
annum rate equal to the floating rate payable by the Swap Provider under the
Interest Rate Swap Agreement.
Swap
Provider:
Bear
▇▇▇▇▇▇▇ Financial Products Inc.
Swap
Provider Trigger Event:
The
Swap Termination Payment that is triggered upon: (i) a Swap Default under the
Swap Agreement with respect to which the Swap Provider is a Defaulting Party
(as
defined in the Swap Agreement), (ii) a Termination Event under the Swap
Agreement with respect to which the Swap Provider is the sole Affected Party
(as
defined in the Swap Agreement) or (iii) an Additional Termination Event under
the Swap Agreement with respect to which the Swap Provider is the sole Affected
Party.
Swap
Termination Payment:
The
amount, if any, owed by the Issuer or the Swap Provider upon a Swap Early
Termination.
Target
Amount:
With
respect to any Payment Date, an amount equal to the Aggregate Loan Balance
as of
such Payment Date minus
the
Targeted Overcollateralization Amount for such Payment Date.
Targeted
Overcollateralization Amount:
With
respect to any Payment Date (a) prior to the Stepdown Date, will be equal to
2.45% of the Cut-off Date Balance, (b) with respect to any Payment Date on
or
after the Stepdown Date and with respect to which a Trigger Event is not in
effect, will be equal to 4.90% of the Aggregate Loan Balance as of the end
of
the related Collection Period, subject to a floor equal to 0.50% of the Cut-Off
Date Balance and (c) with respect to any Payment Date on or after the Stepdown
Date with respect to which a Trigger Event has occurred and is continuing,
will
be equal to the Targeted Overcollateralization Amount for the immediately
preceding Payment Date.
Telerate
Page 3750:
The
display currently so designated as “Page 3750” on the Moneyline Telerate Service
(or such other page selected by the Master Servicer as may replace Page 3750
on
that service for the purpose of displaying daily comparable rates on
prices).
Termination
Price:
The
sum, as calculated by the Servicer, of (a) 100% of the aggregate outstanding
principal balance of the Mortgage Loans, plus accrued interest thereon at the
applicable Mortgage Rate, (b) any costs and damages incurred by the Trust
associated with a violation of any applicable federal, state or local predatory
or abusive lending law, (c) the fair market value of the REO Property and all
other property being purchased, (d) any unreimbursed Servicing Advances, (e)
any
Basis Risk Shortfall and Unpaid Basis Risk Shortfall amounts and (f) all other
amounts to be paid or reimbursed to the Master Servicer, the Trust
Administrator, the Indenture Trustee, the Owner Trustee and the Custodian and
(g) any remaining amounts owed to the Swap Provider.
Title
Insurance Policy:
A title
insurance policy maintained with respect to a Mortgage Loan.
Total
Remittance Amount:
With
respect to any Payment Date, the sum of (i) the Interest Remittance Amount
for
such Payment Date and (ii) Principal Remittance Amount for such Payment
Date.
Trigger
Event:
A
Trigger Event is in effect with respect to any Payment Date on or after the
Stepdown Date if (i) the Rolling Three Month Delinquency Rate as of the last
day
of the immediately preceding month equals or exceeds 31.65% of the Senior
Enhancement Percentage for the Payment Date immediately preceding such Payment
Date or (ii) a Cumulative Loss Trigger Event shall have occurred.
Trust
or Trust Fund:
The
Issuer.
Trust
Account Property:
The
Trust Account, all amounts and investments held from time to time in the Trust
Account (whether in the form of deposit accounts, physical property, book-entry
securities, uncertificated securities, securities entitlements, investment
property or otherwise) and all proceeds of the foregoing.
Trust
Account:
The
Collection Account.
Trust
Agreement:
The
trust agreement dated May 2, 2006, between the Depositor and the Owner Trustee,
as amended and restated on May 2, 2006, among the Depositor, the Trust
Administrator and the Owner Trustee, as such may be amended or supplemented
from
time to time.
Trust
Estate:
The
assets of the Issuer and pledged by the Issuer to the Indenture Trustee under
the Indenture, which assets consist of all accounts, accounts receivable,
contract rights, general intangibles, chattel paper, instruments, documents,
money, deposit accounts, certificates of deposit, goods, notes, drafts, letters
of credit, advices of credit, investment property, uncertificated securities
and
rights to payment of any and every kind consisting of, arising from or relating
to any of the following: (a) the Mortgage Loans listed in the Mortgage Loan
Schedule, and principal due and payable after the Cut-off Date, but not
including interest and principal due and payable on any Mortgage Loans on or
before the Cut-off Date, together with the Mortgage Files relating to such
Mortgage Loans; (b) any Insurance Proceeds, REO Property, Liquidation Proceeds,
REO Disposition Proceeds and other recoveries (in each case, subject to clause
(a) above), (c) the Collection Account, any Custodial Account, any Escrow
Account and all amounts deposited therein pursuant to the applicable provisions
of this Agreement, (d) any Insurance Policies, (e) the rights of the Depositor
under the Mortgage Loan Purchase Agreement, (f) the rights of the Trust under
the Interest Rate Swap Agreement and (g) all income, revenues, issues, products,
revisions, substitutions, replacements, profits, rents and all cash and non-cash
proceeds of the foregoing.
UCC:
The
Uniform Commercial Code as enacted in the relevant jurisdiction.
Underwriters:
Greenwich Capital Markets, Inc., Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc.,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated, ▇▇▇▇▇▇ Brothers Inc., Bear, ▇▇▇▇▇▇▇ &
Co. Inc., Citigroup Global Markets Inc. and Countrywide Securities
Corporation.
Unpaid
Basis Risk Shortfall:
With
respect to any Payment Date and any Class of Notes, the aggregate of all Basis
Risk Shortfalls with respect to such Class remaining unpaid from all previous
Payment Dates, plus
interest
accrued thereon at the applicable Note Interest Rate (calculated without giving
effect to the Net Funds Cap).
Unpaid
Interest Shortfall Amount:
means
(i) for each Class of Notes and the first Payment Date, zero, and (ii) with
respect to each Class of Notes and any Payment Date after the first Payment
Date, the amount, if any, by which (a) the sum of (1) the Current Interest
for
such Class for the immediately preceding Payment Date and (2) the outstanding
Unpaid Interest Shortfall Amount, if any, for such Class for such preceding
Payment Date exceeds (b) the aggregate amount paid on such Class in respect
of
interest pursuant to clause (a) of this definition on such preceding Payment
Date, plus interest on the amount of interest due but not paid on the Notes
of
such Class on such preceding Payment Date, to the extent permitted by law,
at
the Note Interest Rate for such Class for the related Accrual
Period.
Voting
Interests:
The
portion of the voting rights of all the Notes that is allocated to any Note
for
purposes of the voting provisions of this Agreement. At all times during the
term of this Agreement, 99% of all voting rights will be allocated among the
holders of the Notes as provided below. The portion of such voting rights
allocated to any Class of Notes will be based on the fraction, expressed as
a
percentage, the numerator of which is the Class Principal Amount of such Class
as of the date of determination and the denominator of which is the aggregate
Class Principal Amount of the Notes as of such date. At all times during the
term of the Indenture and this Agreement, the holders of the Ownership
Certificate will be allocated 1% of the voting rights for so long as the Class
remains outstanding. The voting rights allocation to any Class of Notes or
the
Ownership Certificate will be allocated among all holders of each such Class
or
Ownership Certificate in proportion to their respective Note Principal Amounts
of such Notes or Percentage Interests of the Ownership Certificate.
Section
1.02. Calculations
With Respect to the Mortgage Loans.
Calculations required to be made pursuant to this Agreement with respect to
any
Mortgage Loan in the Trust Estate shall be made based upon current information
as to the terms of the Mortgage Loans and reports of payments received from
the
Mortgagor on such Mortgage Loans provided by the Servicer to the Master
Servicer. Payments to be made by the Trust Administrator shall be based on
information provided by the Master Servicer. The Trust Administrator shall
not
be required to recompute, verify or recalculate the information supplied to
it
by the Master Servicer or the Servicer.
Section
1.03. Calculations
With Respect to Accrued Interest.
Accrued
interest, if any, on any Note shall be calculated based upon a 360-day year
and
the actual number of days in each Accrual Period.
ARTICLE
II
CONVEYANCE
OF MORTGAGE LOANS
Section
2.01. Creation
and Declaration of Trust Estate; Conveyance of Mortgage Loans.
(a) Mortgage
Loans.
As of
the Closing Date, in consideration of the Issuer’s delivery of the Notes and the
Ownership Certificate to the Depositor or its designee, and concurrently with
the execution and delivery of this Agreement, the Depositor does hereby
transfer, assign, set over, deposit with and otherwise convey to the Issuer,
without recourse, subject to Section 3.01, in trust, all the right, title and
interest of the Depositor in and to the Mortgage Loans and the right to receive
any amounts under the Interest Rate Swap Agreement. Such conveyance includes,
without limitation, the right to all payments of principal and interest received
on or with respect to the Mortgage Loans on and after the Cut-off Date (other
than payments of principal and interest due on or before such date), and all
such payments due after such date but received prior to such date and intended
by the related Mortgagors to be applied after such date together with all of
the
Depositor’s right, title and interest in any REO Property and the proceeds
thereof, the Depositor’s rights under any Insurance Policies related to the
Mortgage Loans, the Depositor’s security interest in any collateral pledged to
secure the Mortgage Loans, including the Mortgaged Properties and any proceeds
of the foregoing, to have and to hold, in trust; and the Indenture Trustee
declares that, subject to the review provided for in Section 2.02, it has
received and shall hold the Trust Estate, as Indenture Trustee, in trust, for
the benefit and use of the Noteholders and the Swap Provider and for the
purposes and subject to the terms and conditions set forth in this Agreement,
and, concurrently with such receipt, the Issuer has issued and delivered the
Notes and the Ownership Certificate to or upon the order of the Depositor,
in
exchange for the Mortgage Loans and the other property of the Trust Estate.
Concurrently
with the execution and delivery of this Agreement, the Depositor does hereby
assign to the Issuer all of its rights and interest under the Mortgage Loan
Purchase Agreement but without delegation of any of its obligations thereunder.
The Issuer hereby accepts such assignment, and shall be entitled to exercise
all
the rights of the Depositor under the Mortgage Loan Purchase Agreement as if,
for such purpose, it were the Depositor. Upon the issuance of the Notes,
ownership in the Trust Estate shall be vested in the Issuer, subject to the
lien
created by the Indenture in favor of the Indenture Trustee, for the benefit
of
the Noteholders and Swap Provider. The foregoing sale, transfer, assignment,
set-over, deposit and conveyance does not and is not intended to result in
creation or assumption by the Indenture Trustee of any obligation of the
Depositor, the Sponsor, or any other Person in connection with the Mortgage
Loans or any other agreement or instrument relating thereto except as
specifically set forth herein.
(b) In
connection with such transfer and assignment, the Depositor does hereby deliver
to, and deposit with, or cause to be delivered to and deposited with, the
Indenture Trustee, and/or the Custodian acting on the Indenture Trustee’s
behalf, the following documents or instruments with respect to each Mortgage
Loan (each a “Mortgage File”) so transferred and assigned:
(i) the
original Mortgage Note, endorsed either (A) in blank or (B) in the form of
the
Form of Endorsement set forth in Exhibit A-4 hereto (or Exhibit B-6 to the
Custodial Agreement), or with respect to any lost Mortgage Note, an original
Lost Note Affidavit, in the form set forth in Exhibit C hereto (or Exhibit
B-5
to the Custodial Agreement), stating that the original Mortgage Note was lost,
misplaced or destroyed, together with a copy of the related Mortgage
Note;
(ii) the
original of any guarantee executed in connection with the Mortgage Note,
assigned to the Indenture Trustee;
(iii) the
original Mortgage with evidence of recording thereon, and the original recorded
power of attorney, if the Mortgage was executed pursuant to a power of attorney,
with evidence of recording thereon or, if such Mortgage or power of attorney
has
been submitted for recording but has not been returned from the applicable
public recording office, has been lost or is not otherwise available, a copy
of
such Mortgage or power of attorney, as the case may be, certified by an
Officer’s Certificate of the Depositor to be a true and complete copy of the
original submitted for recording;
(iv) with
respect to each Non-MERS Mortgage Loan, an original Assignment of Mortgage,
in
form and substance acceptable for recording. The Mortgage shall be assigned
either (A) in blank, without recourse, or (B) so long as Deutsche Bank National
Trust Company is the Indenture Trustee, to “Deutsche Bank National Trust
Company, as Indenture Trustee of the Aames Mortgage Investment Trust 2006-1”,
without recourse or (C) to the order of the Indenture Trustee;
(v) an
original copy of any intervening assignment of Mortgage showing a complete
chain
of assignments or, in the case of an intervening assignment that has been lost,
a written Opinion of Counsel for the Sponsor that such original intervening
assignment is not required to enforce the Indenture Trustee’s interest in the
Mortgage Loans;
(vi) the
original or a certified copy of lender’s title insurance policy (or, in lieu
thereof, a commitment to issue such title insurance policy, with an original
or
a certified copy of such title insurance policy to follow as soon after the
Closing Date as reasonably practicable) or attorney’s opinion of title and
abstract of title;
(vii) the
original or copies of each assumption, modification, written assurance or
substitution agreement, if any, or as to any such agreement which cannot be
delivered prior to the Closing Date because of a delay caused by the public
recording office where such assumption, modification or substitution agreement
has been delivered for recordation, a photocopy of such assumption, modification
or substitution agreement, pending delivery of the original thereof, together
with an Officer’s Certificate of the Depositor certifying that the copy of such
assumption, modification or substitution agreement delivered to the Custodian
is
a true copy and that the original of such agreement has been forwarded to the
public recording office; and
(viii) the
original of any security agreement or equivalent instrument executed in
connection with the Mortgage or as to any security agreement or equivalent
instrument that cannot be delivered on or prior to the Closing Date because
of a
delay caused by the public recording office where such document has been
delivered for recordation, a photocopy of such document, pending delivery of
the
original thereof, together with an Officer’s Certificate of the Depositor
certifying that the copy of such security agreement, chattel mortgage or their
equivalent delivered to the Custodian is a true copy and that the original
of
such document has been forwarded to the public recording office.
The
Depositor and the Sponsor acknowledge and agree that the form of endorsement
attached hereto as Exhibit A-4 is intended to effect the transfer to the
Indenture Trustee, for the benefit of the Noteholders, of the Mortgage Notes
and
the Mortgages.
(c) Assignments
of Mortgage with respect to each Non-MERS Mortgage Loan shall be recorded;
provided,
however,
that
such Assignments need not be recorded if, on or prior to the Closing Date,
the
Sponsor delivers an Opinion of Counsel (which must be Independent counsel)
acceptable to the Rating Agencies, to the effect that recording in such states
is not required to protect the Indenture Trustee’s interest in the related
Non-MERS Mortgage Loans.
(d) In
instances where a Title Insurance Policy is required to be delivered to the
Indenture Trustee or the Custodian on behalf of the Indenture Trustee under
clause (b)(vi) above and is not so delivered, the Sponsor will provide a copy
of
such Title Insurance Policy to the Indenture Trustee, or to the Custodian on
behalf of the Indenture Trustee, as promptly as practicable after the execution
and delivery hereof, but in any case within 180 days of the Closing
Date.
(e) For
Mortgage Loans (if any) that have been prepaid in full after the Cut-off Date
and prior to the Closing Date, the Depositor, in lieu of delivering the above
documents, herewith delivers to the Indenture Trustee, or to the Custodian
on
behalf of the Indenture Trustee, an Officer’s Certificate which shall include a
statement to the effect that all amounts received in connection with such
prepayment that are required to be deposited in the Collection Account pursuant
to Section 5.07 have been so deposited. All original documents that are not
delivered to the Indenture Trustee or the Custodian on behalf of the Indenture
Trustee shall be held by the Servicer in trust for the benefit of the Indenture
Trustee and the Noteholders.
Section
2.02. Acceptance
of Trust Estate; Review of Documentation.
(a) Subject
to the provisions of Section 2.01, the Issuer acknowledges receipt of the assets
transferred by the Depositor included in the Trust Estate and has directed
that
the documents referred to in Section 2.01 and all other assets included in
the
definition of “Trust Estate” be delivered to the Indenture Trustee (or the
Custodian) on its behalf.
The
Indenture Trustee, by execution and delivery hereof, acknowledges receipt by
it
or by the applicable Custodian on its behalf of the Mortgage Files pertaining
to
the Mortgage Loans listed on the Mortgage Loan Schedule, subject to review
thereof by the Indenture Trustee, or by the Custodian on behalf of the Indenture
Trustee, under this Section 2.02. The Indenture Trustee, or the Custodian on
behalf of the Indenture Trustee, will execute and deliver to the Depositor,
the
Master Servicer, the Servicer (and the Indenture Trustee if delivered by the
Custodian) on the Closing Date an Initial Certification in the form annexed
hereto as Exhibit A-1 (or in the form annexed to the Custodial Agreement as
Exhibit B-1, as applicable).
(b) Within
45
days after the Closing Date, the Indenture Trustee or the Custodian on behalf
of
the Indenture Trustee, will, for the benefit of Noteholders, review each
Mortgage File to ascertain that all required documents set forth in Section
2.01
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 Master Servicer and the Servicer (and the Indenture Trustee
if
delivered by the Custodian) an Interim Certification in the form annexed hereto
as Exhibit A-2 (or in the form annexed to the Custodial Agreement as Exhibit
B-2, as applicable) 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(b)
are in its possession and (ii) such documents have been reviewed by it and
appear to relate to such Mortgage Loan. The Indenture Trustee, or the Custodian
on behalf of 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. Neither the Indenture Trustee
nor the Custodian shall 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 or for the perfection or priority of any
document.
(c) If
in the
course of the review described in paragraph (b) above the Indenture Trustee
or
the Custodian 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, or the Custodian
on behalf of the Indenture Trustee, discovering such Material Defect shall
identify the Mortgage Loan to which such Material Defect relates in the Interim
Certification delivered to the Depositor and the Master Servicer. Within 90
days
of its receipt of such notice, the Sponsor shall be required to cure such
Material Defect (and, in such event, the Sponsor shall provide the Indenture
Trustee with an Officer’s Certificate confirming that such cure has been
effected). If the Sponsor does not so cure such Material Defect, if a loss
has
been incurred with respect to such Mortgage Loan that would, if such Mortgage
Loan were not purchased from the Trust Estate, constitute a Realized Loss,
and
such loss is attributable to the failure of the Sponsor to cure such Material
Defect, the Sponsor shall repurchase the related Mortgage Loan from the Trust
Estate at the Purchase Price. A loss shall be deemed to be attributable to
the
failure of the Sponsor to cure a Material Defect if, as determined by the
Sponsor acting in good faith, absent such Material Defect, such loss would
not
have been incurred. The Sponsor may, in lieu of repurchasing a Mortgage Loan
pursuant to this Section 2.02, substitute for such Mortgage Loan a Qualifying
Substitute Mortgage Loan subject to the provisions of Section 3.03. The failure
of the Indenture Trustee or the Custodian to deliver the Interim Certification
within 45 days after the Closing Date shall not affect or relieve the Sponsor
of
its obligation to repurchase any Mortgage Loan pursuant to this Section 2.02
or
any other Section of this Agreement requiring the repurchase of Mortgage Loans
from the Trust Estate.
(d) Within
180 days following the Closing Date, the Indenture Trustee, or the Custodian,
shall deliver to the Depositor, the Master Servicer and the Servicer (and the
Indenture Trustee if delivered by the Custodian) a Final Certification
substantially in the form attached as Exhibit A-3 (or in the form annexed to
the
Custodial Agreement as Exhibit B-3, as applicable) evidencing the completeness
of the Mortgage Files in its possession or control, with any exceptions noted
thereto.
(e) Nothing
in this Agreement shall be construed to constitute an assumption by the Trust
Estate, the Indenture Trustee, the Custodian or the Noteholders of any
unsatisfied duty, claim or other liability on any Mortgage Loan or to any
Mortgagor.
(f) Notwithstanding
anything to the contrary contained herein, each of the parties hereto
acknowledges that the Custodian shall perform the applicable review of the
Mortgage Loans and respective certifications thereof as provided in the
Custodial Agreement.
(g) Upon
execution of this Agreement, the Depositor hereby delivers to the Indenture
Trustee and the Indenture Trustee acknowledges a receipt of the Mortgage Loan
Purchase Agreement.
(h) For
purposes of the determinations required to be made by the Indenture Trustee
or
the Custodian pursuant to paragraphs (a) through (d) of this Section 2.02,
the
Indenture Trustee or the Custodian, as applicable, shall be entitled to
conclusively rely upon the diskette, tape or other electronic media provided
by
or on behalf of the Sponsor with respect to the Mortgage Loans as to whether
(i)
any guarantee was executed in connection with any Mortgage Loan, (ii) any
assumption, modification or substitution agreement was executed in connection
with any Mortgage Loan, (iii) primary mortgage guaranty insurance is required
with respect to any Mortgage Loan or (iv) any security agreement or equivalent
instrument was executed in connection with any Mortgage Loan.
Section
2.03. Grant
Clause.
(a) It
is
intended that the conveyance by the Depositor to the Issuer of the Mortgage
Loans, as provided for in Section 2.01, be construed as a sale by the Depositor
to the Issuer of the Mortgage Loans and other assets in the Trust Estate for
the
benefit of the Noteholders and the Swap Provider. Further, it is not intended
that any such conveyance be deemed to be a pledge of the Mortgage Loans by
the
Depositor to the Issuer to secure a debt or other obligation of the Depositor.
However,
in the
event that the Mortgage Loans 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 other assets in the Trust Estate, then it is intended that
(a) this Agreement shall also be deemed to be a security agreement within the
meaning of Articles 8 and 9 of the New York UCC (or the Relevant UCC if not
the
New York UCC); (b) the conveyances provided for in Section 2.01 shall be deemed
to be (1) a grant by the Depositor to the Issuer of a security interest in
all
of the Depositor’s right (including the power to convey title thereto), title
and interest, whether now owned or hereafter acquired, in and to (A) the
Mortgage Loans, including the Mortgage Notes, the Mortgages, any related
insurance policies and all other documents in the related Mortgage Files, (B)
all amounts payable pursuant to the Mortgage Loans in accordance with the terms
thereof and (C) any and all general intangibles consisting of, arising from
or
relating to any of the foregoing, and all proceeds of the conversion, voluntary
or involuntary, of the foregoing into cash, instruments, securities or other
property, including without limitation all Liquidation Proceeds, all Insurance
Proceeds, all amounts from time to time held or invested in the Collection
Account, whether in the form of cash, instruments, securities or other property
and (2) an assignment by the Depositor to the Issuer of any security interest
in
any and all of the Depositor’s right (including the power to convey title
thereto), title and interest, whether now owned or hereafter acquired, in and
to
the property described in the foregoing clauses (1)(A) through (C); (c) the
possession by the Indenture Trustee or any other agent of the Issuer of Mortgage
Notes, and such other items of property as constitute instruments, money,
negotiable documents or chattel paper shall be deemed to be “possession by the
secured party,” or possession by a purchaser or a person designated by such
secured party, for purposes of perfecting the security interest pursuant to
the
New York UCC and any other Relevant UCC (including, without limitation, Section
9-313, 8-313 or 8-321 thereof); and (d) notifications to persons holding such
property, and acknowledgments, receipts or confirmations from persons holding
such property, shall be deemed notifications to, or acknowledgments, receipts
or
confirmations from, financial intermediaries, bailees or agents (as applicable)
of the Issuer for the purpose of perfecting such security interest under
applicable law.
(b) The
Depositor and, at the Depositor’s direction, the Issuer shall, to the extent
consistent with this Agreement, take such reasonable actions as may be necessary
to ensure that, if this Agreement were deemed to create a security interest
in
the Mortgage Loans and the other property of the Trust Estate, such security
interest would be deemed to be a perfected security interest of first priority
under applicable law and will be maintained as such throughout the term of
this
Agreement. Without limiting the generality of the foregoing, the Depositor
shall
prepare and file any UCC financing statements that are necessary to perfect
the
Indenture Trustee’s security interest in or lien on the Mortgage Loans, as
evidenced by an Officer’s Certificate of the Depositor, and furnish a copy of
each such filed financing statement to the Trust Administrator. The Trust
Administrator shall prepare and file, at the expense of the Issuer, all filings
necessary to maintain the effectiveness of any original filings necessary under
the Relevant UCC to perfect the Indenture Trustee’s security interest in or lien
on the Mortgage Loans, including without limitation (x) continuation statements,
and (y) to the extent that a Responsible Officer of the Trust Administrator
has
received written notice of such change or transfer, such other statements as
may
be occasioned by (1) any change of name of the Sponsor, the Depositor or the
Issuer, (2) any change of location of the place of business or the chief
executive office of the Sponsor or the Depositor or (3) any transfer of any
interest of the Sponsor or the Depositor in any Mortgage Loan.
Neither
the Depositor nor the Issuer shall organize under the law of any jurisdiction
other than the State under which each is organized as of the Closing Date
(whether changing its jurisdiction of organization or organizing under an
additional jurisdiction) without giving 30 days’ prior written notice of such
action to its immediate and mediate transferee, including the Indenture Trustee.
Before effecting such change, each of the Depositor or the Issuer proposing
to
change its jurisdiction of organization shall prepare and file in the
appropriate filing office any financing statements or other statements necessary
to continue the perfection of the interests of its immediate and mediate
transferees, including the Indenture Trustee, in the Mortgage Loans. In
connection with the transactions contemplated by this Agreement and the
Indenture, each of the Depositor and the Issuer authorizes its immediate or
mediate transferee to file in any filing office any initial financing
statements, any amendments to financing statements, any continuation statements,
or any other statements or filings described in this Section
2.03(b).
(c) The
Depositor shall not take any action inconsistent with the sale by the Depositor
of all of its right, title and interest in and to the Trust Estate and shall
indicate or shall cause to be indicated in its records and records held on
its
behalf that ownership of each Mortgage Loan and the other property of the Issuer
is held by the Issuer. In addition, the Depositor shall respond to any inquiries
from third parties with respect to ownership of a Mortgage Loan or any other
property of the Trust Estate by stating that it is not the owner of such
Mortgage Loan and that ownership of such Mortgage Loan or other property of
the
Trust Estate is held by the Issuer on behalf of the Noteholders.
Section
2.04. Option
to Contribute Derivative Instrument.
At
any
time on or after the Closing Date, the Sponsor shall have the right to
contribute to, and deposit into, the Trust a derivative contract or comparable
instrument (a “Derivative Instrument”). The Derivative Instrument may have a
notional amount in excess of the sum of the beneficial interests in the Trust.
Any such instrument shall constitute a fully prepaid agreement. The Trust
Administrator shall have no tax reporting duties with respect to any such
Derivative Instrument.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES
Section
3.01. Representations
and Warranties of the Depositor and the Sponsor.
(a) The
Depositor hereby represents and warrants to the Issuer, the Indenture Trustee
for the benefit of Noteholders and
the
Swap Provider,
the
Trust Administrator, the Master Servicer, the Sponsor and the Servicer as of
the
Closing Date or such other date as is specified, that:
(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, 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 Estate 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 Sponsor) 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 Estate;
(iv) The
Depositor has not transferred the Mortgage Loans to the Trust Estate 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 the State of Delaware, with full power and
authority to own its assets and conduct its business as presently being
conducted; and
(b) The
Sponsor hereby represents and warrants to the Issuer, the Indenture Trustee
for
the benefit of Noteholders and the Swap Provider, the Trust Administrator,
the
Master Servicer and the Depositor as of the Closing Date or such other date
as
is specified, that:
(i) the
Sponsor is a Maryland corporation, duly organized validly existing and in good
standing under the laws of the State of Maryland, and has the corporate power
to
own its assets and to transact the business in which it is currently engaged.
The Sponsor is duly qualified to do business as a foreign corporation and is
in
good standing in each jurisdiction in which the character of the business
transacted by it or any properties owned or leased by it requires such
qualification and in which the failure so to qualify would have a material
adverse effect on the business, properties, assets, or condition (financial
or
other) of the Sponsor;
(ii) the
Sponsor has the corporate power and authority to make, execute, deliver and
perform this Agreement and all of the transactions contemplated under the
Agreement, and has taken all necessary corporate action to authorize the
execution, delivery and performance of this Agreement. When executed and
delivered, this Agreement will constitute the legal, valid and binding
obligation of the Sponsor enforceable in accordance with its terms, except
as
enforcement of such terms may be limited by bankruptcy, insolvency or similar
laws affecting the enforcement of creditors’ rights generally and by the
availability of equitable remedies;
(iii) the
Sponsor is not 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 consent, license, approval or authorization, or registration or
declaration, 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 the Sponsor will not
violate any provision of any existing law or regulation or any order or decree
of any court applicable to the Sponsor or any provision of the articles of
incorporation or bylaws of the Sponsor, or constitute a material breach of
any
mortgage, indenture, contract or other agreement to which the Sponsor is a
party
or by which the Sponsor may be bound;
(v) no
litigation or administrative proceeding of or before any court, tribunal or
governmental body is currently pending, or to the knowledge of the Sponsor
threatened, against the Sponsor or any of its properties or with respect to
this
Agreement which in the opinion of the Sponsor has a reasonable likelihood of
resulting in a material adverse effect on the transactions contemplated by
this
Agreement; and
(vi) the
Sponsor has been organized in conformity with the requirements for qualification
as a REIT; the Sponsor has filed an election to be treated as a REIT for federal
income tax purposes; and the Sponsor currently qualifies as, and it proposes
to
operate in a manner that will enable it to continue to qualify as, a
REIT.
(c) The
Sponsor hereby represents and warrants to the Issuer, the Indenture Trustee
for
the benefit of Noteholders, the Trust Administrator, the Master Servicer and
the
Depositor as of the Closing Date or such other date as is specified, with
respect to the Mortgage Loans, the representations and warranties set forth
in
Schedule II of the Mortgage Loan Purchase Agreement.
(d) To
the
extent that any fact, condition or event with respect to a Mortgage Loan
constitutes a breach of a representation or warranty of the Sponsor under
subsection (c) above or the Mortgage Loan Purchase Agreement, the only right
or
remedy of the Indenture Trustee or any Certificateholder hereunder shall be
their rights to enforce the obligations of the Sponsor under any applicable
representation or warranty made by it. The Indenture Trustee on behalf of the
Issuer acknowledges that the Depositor shall have no obligation or liability
with respect to any breach of any representation or warranty with respect to
the
Mortgage Loans (except as set forth in Section 3.01(a)(ii)) under any
circumstances.
Section
3.02. Discovery
of Breach.
It is
understood and agreed that the representations and warranties (i) of the
Depositor set forth in Section 3.01(a), (ii) of the Sponsor set forth in Section
3.01(b) and (c) and (iii) of the Servicer pursuant to Section 4.05 of this
Agreement, shall each survive delivery of the Mortgage Files and the Assignment
of Mortgage of each Mortgage Loan to the Indenture Trustee and shall continue
throughout the term of this Agreement. With respect to the representations
and
warranties which are made to the best of the Sponsor’s knowledge, if it is
discovered by the Depositor, the Sponsor, the Trust Administrator, the Indenture
Trustee, the Master Servicer, the Underwriters or the Servicer that the
substance of such representation and warranty is inaccurate and such inaccuracy
materially and adversely affects the value of the Mortgage Loans or the
interests of the Noteholders or the Indenture Trustee therein, notwithstanding
such Sponsor’s lack of knowledge with respect to the substance of such
representation or warranty, remedies for breach will apply to such inaccuracy.
Any breach of the representation and warranty set forth in clauses (g), (ss),
(tt) and (vv) of Schedule II of the Mortgage Loan Purchase Agreement shall
be
deemed to materially and adversely affect the interest of the Trust in that
Mortgage Loan, notwithstanding the Sponsor’s lack of knowledge with respect to
the substance of such representation and warranty. Upon discovery by any of
the
Depositor, the Master Servicer, the Trust Administrator or the Indenture Trustee
of a breach of any of such representations and warranties made by the Sponsor
that adversely and materially affects the value of the related Mortgage Loan,
the party discovering such breach shall give prompt written notice to the other
parties. Within 60 days of the discovery by the Sponsor of a breach of any
representation or warranty given to the Indenture Trustee by the Sponsor or
the
Sponsor’s receipt of written notice of such a breach, the Sponsor shall either
(a) cure such breach in all material respects, (b) repurchase such Mortgage
Loan
or any property acquired in respect thereof from the Indenture Trustee at the
Purchase Price or (c) substitute a Qualifying Substitute Mortgage Loan for
the
affected Mortgage Loan.
Section
3.03. Repurchase,
Purchase or Substitution of Mortgage Loans.
(a) With
respect to any Mortgage Loan repurchased by the Sponsor pursuant to Section
3.02(b) of this Agreement, the principal portion of the funds in respect of
such
repurchase of a Mortgage Loan will be considered a Principal Prepayment and
the
Purchase Price shall be deposited in the Collection Account. Upon receipt by
the
Trust Administrator of the full amount of the Purchase Price for a Deleted
Mortgage Loan and notification thereof has been made to the Indenture Trustee,
or upon receipt of notification from the Custodian that it had received the
Mortgage File for a Qualifying Substitute Mortgage Loan substituted for a
Deleted Mortgage Loan (and any applicable Substitution Amount), the Indenture
Trustee shall release or cause to be released and reassign to the Depositor
or
the Sponsor, as applicable, the related Mortgage File for the Deleted Mortgage
Loan and shall execute and deliver such instruments of transfer or assignment,
in each case without recourse, representation or warranty, as shall be necessary
to vest in such party or its designee or assignee title to any Deleted Mortgage
Loan released pursuant hereto, free and clear of all security interests, liens
and other encumbrances created by this Agreement and the Indenture, which
instruments shall be prepared by the Servicer and the Indenture Trustee shall
have no further responsibility with respect to the Mortgage File relating to
such Deleted Mortgage Loan.
(b) With
respect to each Qualifying Substitute Mortgage Loan to be delivered to the
Indenture Trustee (or its custodian) in exchange for a Deleted Mortgage Loan:
(i) the Depositor or the Sponsor, as applicable, must deliver to the Indenture
Trustee (or a Custodian) the Mortgage File for the Qualifying Substitute
Mortgage Loan containing the documents set forth in Section 2.01(b) along with
a
written certification certifying as to the delivery of such Mortgage File and
containing the granting language set forth in Section 2.01(a); and (ii) the
Sponsor and the Depositor will be deemed to have made, with respect to such
Qualifying Substitute Mortgage Loan, each of the representations and warranties
made by it with respect to the related Deleted Mortgage Loan. As soon as
practicable after the delivery of any Qualifying Substitute Mortgage Loan
hereunder, the Indenture Trustee, at the expense of the Depositor and at the
direction and with the cooperation of the Servicer shall (i) with respect to
a
Qualifying Substitute Mortgage Loan that is a Non-MERS Mortgage Loan, cause
the
Assignment of Mortgage to be recorded by the Servicer if required pursuant
to
Section 2.01(c), or (ii) with respect to a Qualifying Substitute Mortgage Loan
that is a MERS Mortgage Loan, cause to be taken such actions as are necessary
to
cause the Indenture Trustee (on behalf of the Issuer) to be clearly identified
as the owner of each such Mortgage Loan on the records of MERS if required
pursuant to Section 2.01(c).
ARTICLE
IV
ADMINISTRATION
AND SERVICING OF THE
MORTGAGE
LOANS BY THE SERVICER
Section
4.01. Sponsor’s
Engagement of Servicer to Perform Servicing Responsibilities.
(a) Contract
for Servicing; Possession of Servicing Files.
The
Sponsor, as the owner of the servicing rights, by execution and delivery of
this
Agreement, does hereby contract with the Servicer for the servicing of the
Mortgage Loans for the benefit of the Issuer and the Indenture Trustee. The
Servicer shall maintain a Servicing File with respect to each Mortgage Loan
in
order to service such Mortgage Loans pursuant to this Agreement and each
Servicing File delivered to the Servicer shall be held in trust by the Servicer
for the benefit of the Issuer and the Indenture Trustee; provided,
however,
that
the Servicer shall not have any liability for any Servicing Files (or portions
thereof) not delivered by the Sponsor. The Servicer’s possession of any portion
of the Mortgage Loan documents shall be at the will of the Indenture Trustee
for
the sole purpose of facilitating servicing of the related Mortgage Loan pursuant
to this Agreement, and such retention and possession by the Servicer shall
be in
a custodial capacity only. The ownership of each Mortgage Note, Mortgage, and
the contents of the Servicing File shall be vested in the Indenture Trustee
and
the ownership of all records and documents with respect to the related Mortgage
Loan prepared by or which come into the possession of the Servicer shall
immediately vest in the Indenture Trustee and shall be retained and maintained,
in trust, by the Servicer at the will of the Indenture Trustee in such custodial
capacity only. The Servicing File retained by the Servicer pursuant to this
Agreement shall be identified in accordance with the Servicer’s file tracking
system to reflect the ownership of the related Mortgage Loan by the Indenture
Trustee. The Servicer shall release from its custody the contents of any
Servicing File retained by it only in accordance with this
Agreement.
(b) Books
and Records.
All
rights arising out of the Mortgage Loans shall be vested in the Indenture
Trustee, subject to the Servicer’s rights to service and administer the Mortgage
Loans hereunder in accordance with the terms of this Agreement. All funds
received on or in connection with a Mortgage Loan, other than the Master
Servicing Fee, the Servicing Fee and other compensation and reimbursement to
which the Servicer and the Master Servicer are entitled as set forth herein,
including but not limited to Section 4.04(c), Section 5.07(e) and Section 5.21
shall be received and held by them in trust for the benefit of the Indenture
Trustee pursuant to the terms of this Agreement.
The
Servicer shall forward to the Custodian original documents evidencing an
assumption, modification, consolidation or extension of any Mortgage Loan
entered into in accordance with Section 4.02(a) within one week of their
execution; provided,
however,
that
the Servicer shall provide the Custodian with a Servicer certified true copy
of
any such document submitted for recordation within one week of its execution,
and shall provide the original of any document submitted for recordation or
a
copy of such document certified by the appropriate public recording office
to be
a true and complete copy of the original within 120 days of its submission
for
recordation.
Section
4.02. Servicing
of the Mortgage Loans.
(a) Servicer
to Service.
The
Servicer, acting directly or through one or more sub-servicers as provided
in
Section 4.09 shall service and administer the Mortgage Loans from and after
the
Closing Date and, except where prior consent or approval of the Master Servicer
is required under this Agreement, 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, consistent
with the terms of this Agreement and with the Servicing Standard.
Consistent
with the terms of this Agreement, the Servicer may waive, modify or vary any
term of any Mortgage Loan or consent to the postponement of strict compliance
with any such term or in any manner grant indulgence to any Mortgagor, including
(i) waiving any late payment charge and (ii) extending the due dates for
payments due on a Mortgage Note for a period not greater than 120 days;
provided,
however,
that
the maturity of any Mortgage Loan shall not be extended past the date on which
the final payment is due on the latest maturing Mortgage Loan as of the Cut-off
Date. Such waiver, modification, postponement or indulgence may be made if
in
the Servicer’s reasonable and prudent determination such waiver, modification,
postponement or indulgence is not materially adverse to the interests of the
Issuer, the Indenture Trustee and the Noteholders; provided,
however,
that
unless the Servicer has obtained the prior written consent of the Master
Servicer, the Servicer shall not permit any modification with respect to any
Mortgage Loan that would change the Mortgage Rate, defer or forgive the payment
of principal or interest, reduce or increase the outstanding principal balance
(except for actual payments of principal) or change the final maturity date
on
such Mortgage Loan, other than as provided in clauses (i) and (ii) of the
immediately preceding sentence. In the event of any such modification which
permits the deferral of interest or principal payments on any Mortgage Loan,
the
Servicer shall, on the Business Day immediately preceding the Servicer
Remittance Date in any month in which any such principal or interest payment
has
been deferred, make an Advance in accordance with Section 4.03(c) in an amount
equal to the difference between (a) such month’s principal and one month’s
interest at the Mortgage Loan Remittance Rate on the unpaid principal balance
of
such Mortgage Loan and (b) the amount paid by the Mortgagor. The Servicer shall
be entitled to reimbursement for such advances to the same extent as for all
other Advances made pursuant to Section 4.03. Without limiting the generality
of
the foregoing, the Servicer shall continue, and is hereby authorized and
empowered, to execute and deliver on behalf of itself, the Issuer and the
Indenture Trustee, 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.
The
Indenture Trustee shall execute and deliver to the Servicer powers of attorney
(on the standard form used by the Indenture Trustee) and other documents,
furnished to it by the Servicer and reasonably satisfactory to the Indenture
Trustee, necessary or appropriate to enable the Servicer to carry out its
servicing and administrative duties under this Agreement; provided
that the
Indenture Trustee shall not be liable for the actions of the Servicer under
any
such powers of attorney. Promptly after the execution of any assumption,
modification, consolidation or extension of any Mortgage Loan, the Servicer
shall forward to the Master Servicer copies of any documents evidencing such
assumption, modification, consolidation or extension.
In
servicing and administering the Mortgage Loans, the Servicer shall adhere to
the
Servicing Standard. Notwithstanding the appointment of any sub-servicer pursuant
to Section 4.09, the Servicer shall remain liable for the performance of all
of
the servicing obligations and responsibilities under this
Agreement.
(b) Servicer
Discretion.
In
managing the liquidation of defaulted Mortgage Loans, the Servicer will have
sole discretion, subject to the terms of this Agreement, to sell defaulted
Mortgage Loans; provided,
however,
that
the Servicer shall not take any action that is inconsistent with or prejudices
the interests of the Noteholders in any Mortgage Loan or the rights and
interests of the Depositor, the Indenture Trustee and the Noteholders under
this
Agreement.
(c) Collection
and Liquidation of Mortgage Loans.
Continuously from the Closing Date, until the date each Mortgage Loan ceases
to
be subject to this Agreement, the Servicer shall proceed diligently to collect
all payments due under each of the Mortgage Loans when the same shall become
due
and payable and shall take special care in ascertaining and estimating Escrow
Payments and all other charges that will become due and payable with respect
to
the Mortgage Loans and each related Mortgaged Property, to the end that the
installments payable by the Mortgagors will be sufficient to pay such charges
as
and when they become due and payable.
The
Servicer shall use its best efforts, consistent with the Servicing Standard
to
foreclose upon or otherwise comparably convert the ownership of such Mortgaged
Properties as come into and continue in default and as to which no satisfactory
arrangements can be made for collection of delinquent payments pursuant to
Section 4.02(a). The Servicer shall use its best efforts to realize upon
defaulted Mortgage Loans in such a manner as will maximize the receipt of
principal and interest by the Trust, taking into account, among other things,
the timing of foreclosure proceedings. The foregoing is subject to the
provisions that, in any case in which Mortgaged Property shall have suffered
damage, the Servicer shall not be required to expend its own funds toward the
restoration of such property unless it shall determine in its discretion (i)
that such restoration will increase the proceeds of liquidation of the related
Mortgage Loan to the Issuer after reimbursement to itself for such expenses,
and
(ii) that such expenses will be recoverable by the Servicer through Insurance
Proceeds or Liquidation Proceeds from the related Mortgaged Property. In the
event that any payment due under any Mortgage Loan and not otherwise postponed,
deferred or waived pursuant to Section 4.02 is not paid when the same becomes
due and payable, or in the event the Mortgagor fails to perform any other
covenant or obligation under the Mortgage Loan and such failure continues beyond
any applicable grace period, the Servicer shall take such action as (1) shall
be
consistent with the Servicing Standard and (2) the Servicer shall determine
prudently to be in the best interest of the Issuer, the Indenture Trustee and
the Noteholders. In the event that any payment due under any Mortgage Loan
is
not otherwise postponed, deferred or waived pursuant to Section 4.02(a) and
remains delinquent for a period of 105 days or any other default continues
for a
period of 105 days beyond the expiration of any grace or cure period, the
Servicer shall commence foreclosure proceedings. The Servicer shall notify
the
Master Servicer in writing of the commencement of foreclosure proceedings on
a
monthly basis no later than the fifth Business Day of each month (which
notification may be included within the monthly reports submitted to the Master
Servicer under Section 4.03(b) this Agreement). In such connection, the Servicer
shall be responsible for all costs and expenses incurred by it in any such
proceedings; provided,
however,
that it
shall be entitled to reimbursement thereof from the related Mortgaged Property,
as contemplated in Sections 4.02(e) and 4.02(p) or as otherwise provided in
Section 4.02(e)(4).
Notwithstanding
the generality of the preceding paragraph, the Servicer shall take such actions
generally in accordance with the Servicer’s established default timeline and in
accordance with the Servicing Standard with respect to each Mortgage Loan and
Mortgagor for which there is a delinquency until such time as the related
Mortgagor is current with all payments due under the Mortgage Loan.
(d) Establishment
of and Deposits to Custodial Account.
(i) The
Servicer shall segregate and hold all funds collected and received pursuant
to
the Mortgage Loans separate and apart from any of its own funds and general
assets and shall initially establish and maintain one or more Custodial
Accounts, in the form of time deposit or demand accounts, each of which accounts
shall be titled “Aames Funding Corporation in trust for Deutsche Bank National
Trust Company, as Indenture Trustee, for Aames Mortgage Investment Trust 2006-1
Mortgage Backed Notes, Series 2006-1” and referred to herein as a “Custodial
Account.” Each Custodial Account shall be an Eligible Account. Any funds
deposited in the Custodial Account may be invested in Eligible Investments
subject to the provisions of Section 4.02(j) hereof. Funds deposited in the
Custodial Account may be drawn on by the Servicer in accordance with Section
4.02(e) hereof. The creation of any Custodial Account shall be evidenced by
a
letter agreement in the form of Exhibit E hereto. A copy of such certification
or letter agreement shall be furnished to the Indenture Trustee, the Master
Servicer and, upon request, to any subsequent owner of the Mortgage Loans.
The
Servicer shall deposit or cause to be deposited into the Custodial Account,
no
later than the Business Day following the Closing Date, any amounts received
with respect to the Mortgage Loans representing Scheduled Payments on the
Mortgage Loans due after the Cut-off Date and unscheduled payments received
on
or after the Cut-off Date and on or before the Closing Date.
(ii) The
Servicer shall deposit in the Custodial Account on a daily basis, but not more
than two (2) Business Days after receipt by the Servicer and retain therein,
the
following collections received by the Servicer and payments made by the Servicer
after the related Cut-off Date (other than scheduled payments of principal
and
interest due on or before the related Cut-off Date), as applicable:
(1) all
payments on account of principal on the Mortgage Loans, including all Principal
Prepayments and all Prepayment Premiums;
(2) all
payments on account of interest on the Mortgage Loans adjusted to the Mortgage
Loan Remittance Rate;
(3) all
Liquidation Proceeds (net of Liquidation Expenses);
(4) all
Insurance Proceeds including amounts required to be deposited pursuant to
Section 4.02(k) (other than proceeds to be held in the Escrow Account and
applied to the restoration and repair of the Mortgaged Property or released
to
the Mortgagor in accordance with Section 4.02(k));
(5) all
Condemnation Proceeds that are not applied to the restoration or repair of
the
Mortgaged Property or released to the Mortgagor in accordance with Section
4.02(o);
(6) with
respect to each Principal Prepayment in full or in part, the Prepayment Interest
Shortfall Amount, if any, for the month of payment. Such deposit shall be made
from the Servicer’s own funds, without reimbursement therefor, up to a maximum
amount per month in the aggregate of the Servicing Fee, actually received for
such month for the Mortgage Loans;
(7) all
Advances made by the Servicer pursuant to Section 4.03(c);
(8) any
amounts received from the Sponsor, the Depositor or any other person giving
representations and warranties with respect to the Mortgage Loans, in connection
with the repurchase of any Mortgage Loan;
(9) any
amounts required to be deposited by the Servicer pursuant to Section 4.02(k)
in
connection with the deductible clause in any blanket hazard insurance
policy;
(10) any
amounts received with respect to or related to any REO Property or REO
Disposition Proceeds pursuant to Section 4.02(p);
(11) all
Subsequent Recoveries;
(12) any
other
amounts required to be deposited in the Custodial Account pursuant to this
Agreement.
The
foregoing requirements for deposit into the Custodial Account shall be
exclusive, it being understood and agreed that, without limiting the generality
of the foregoing, payments in the nature of the Servicing Fee, Prepayment
Interest Excess Amounts and Ancillary Income need not be deposited by the
Servicer into the Custodial Account. Any interest paid on funds deposited in
the
Custodial Account by the depository institution maintaining such account shall
accrue to the benefit of the Servicer and the Servicer shall be entitled to
retain and withdraw such interest from the Custodial Account pursuant to Section
4.02(e). Additionally, any other benefit derived from the Custodial Account
associated with the receipt, disbursement and accumulation of principal,
interest, taxes, hazard insurance, mortgage insurance, etc. shall accrue to
the
Servicer.
(iii) The
Servicer agrees that it shall not create, incur or subject any Mortgage Loans,
or any funds that are deposited in any Custodial Account or Escrow Account,
or
any funds that otherwise are or may become due or payable to or for the benefit
of the Indenture Trustee, to any claim, lien, security interest, judgment,
levy,
writ of attachment or other encumbrance, nor assert by legal action or otherwise
any claim or right of setoff against any Mortgage Loan or any funds collected
on, or in connection with, a Mortgage Loan.
(iv) The
Servicer shall be responsible for reviewing and reconciling each Custodial
Account and Escrow Account in accordance with industry standards of prudent
residential mortgage loan servicers, and shall act promptly to resolve any
discrepancies in any such account. The Servicer shall be responsible and liable
for all expenses incurred by the other parties hereto resulting from, and all
consequences for, the Servicer’s failure to properly and promptly reconcile each
such account.
(e) Permitted
Withdrawals from Custodial Account.
The
Servicer shall, from time to time, withdraw funds from the Custodial Account
for
the following purposes:
(1) to
make
payments to the Master Servicer in the amounts and in the manner provided for
in
Section 4.03(a);
(2) in
the
event the Servicer has elected not to retain the Servicing Fee out of any
Mortgagor payments on account of interest or other recovery of interest with
respect to a particular Mortgage Loan (including late collections of interest
on
such Mortgage Loan, or interest portions of Insurance Proceeds, Liquidation
Proceeds or Condemnation Proceeds) prior to the deposit of such Mortgagor
payment or recovery into the Custodial Account, to pay to itself the related
Servicing Fee from all such Mortgagor payments on account of interest or other
such recovery for interest with respect to that Mortgage Loan;
(3) to
reimburse itself for unreimbursed Advances and ▇▇▇▇▇▇▇▇▇ Advances, the
Servicer’s right to reimburse itself pursuant to this subclause (3) with respect
to any Mortgage Loan being limited to related Liquidation Proceeds (net of
Liquidation Expenses), Condemnation Proceeds, Insurance Proceeds, REO
Disposition Proceeds and other amounts received in respect of the related REO
Property, and such other amounts as may be collected by the Servicer from the
Mortgagor or otherwise relating to such Mortgage Loan, it being understood
that,
in the case of any such reimbursement, the Servicer’s right thereto shall be
prior to the rights of the Noteholders;
(4) to
reimburse itself for any previously unreimbursed Advances or Servicing Advances
that it determines are Nonrecoverable Advances, it being understood, in the
case
of each such reimbursement, that the Servicer’s right thereto shall be prior to
the rights of the Noteholders;
(5) to
pay
itself investment earnings on funds deposited in the Custodial
Account;
(6) to
transfer funds to another Eligible Account in accordance with Section 4.02(j)
hereof;
(7) to
invest
funds in certain Eligible Investments in accordance with Section 4.02(d)(i)
and
Section 4.02(j) hereof;
(8) to
withdraw funds deposited in error;
(9) to
clear
and terminate the Custodial Account upon the termination of this Agreement;
and
(10) to
pay
itself any Prepayment Interest Excess Amount.
(f) Establishment
of and Deposits to Escrow Account.
The
Servicer shall segregate and hold all funds collected and received pursuant
to a
Mortgage Loan constituting Escrow Payments separate and apart from any of its
own funds and general assets and shall establish and maintain one or more Escrow
Accounts, in the form of time deposit or demand accounts, titled “Aames Funding
Corporation in trust for Deutsche Bank National Trust Company, as Indenture
Trustee, for Aames Mortgage Investment Trust 2006-1.” The Escrow Accounts shall
be established with an Eligible Institution. Nothing herein shall require the
Servicer to compel a Mortgagor to establish an Escrow Account in violation
of
applicable law. Funds deposited in the Escrow Account may be drawn on by the
Servicer in accordance with Section 4.02(g). The creation of any Escrow Account
shall be evidenced by a letter agreement in the form of Exhibit F hereto. A
copy
of such certification or letter agreement shall be furnished to the Master
Servicer.
The
Servicer shall deposit in the Escrow Account or Accounts on a daily basis,
and
retain therein:
(i) all
Escrow Payments collected on account of the Mortgage Loans, for the purpose
of
effecting timely payment of any such items as required under the terms of this
Agreement; and
(ii) all
amounts representing Insurance Proceeds or Condemnation Proceeds which are
to be
applied to the restoration or repair of any Mortgaged Property.
The
Servicer shall make withdrawals from the Escrow Account only to effect such
payments as are required under this Agreement, as set forth in Section 4.02(g).
The Servicer shall be entitled to retain any interest earnings paid on funds
deposited in the Escrow Account by the depository institution, other than
interest on escrowed funds required by law to be paid to the Mortgagor. To
the
extent required by law, the Servicer shall pay interest on escrowed funds to
the
Mortgagor notwithstanding that the Escrow Account may be non-interest bearing
or
the interest earnings paid thereon are insufficient for such
purposes.
(g) Permitted
Withdrawals from Escrow Account.
Withdrawals from the Escrow Account or Accounts may be made by the Servicer
only:
(i) to
effect
timely payments of ground rents, taxes, assessments, water rates, mortgage
insurance premiums, condominium charges, fire and hazard insurance premiums
or
other items constituting Escrow Payments for the related Mortgage;
(ii) to
reimburse the Servicer for any Servicing Advance of an Escrow Payment made
by
the Servicer with respect to a related Mortgage Loan, but only from amounts
received on the related Mortgage Loan which represent late collections of Escrow
Payments thereunder;
(iii) to
refund
to any Mortgagor any funds found to be in excess of the amounts required to
be
escrowed under the terms of the related Mortgage Loan;
(iv) to
the
extent permitted by applicable law, for transfer to the Custodial Account and
application to reduce the principal balance of the Mortgage Loan in accordance
with the terms of the related Mortgage and Mortgage Note;
(v) for
application to restoration or repair of the Mortgaged Property in accordance
with Section 4.02(o);
(vi) to
pay to
the Servicer, or any Mortgagor to the extent required by law, any interest
paid
on the funds deposited in the Escrow Account; and
(vii) to
clear
and terminate the Escrow Account on the termination of this
Agreement.
The
Servicer will be responsible for the administration of the Escrow Accounts
and
will be obligated to make Servicing Advances to the Escrow Account in respect
of
its obligations under this 4.02(g), reimbursable from the Escrow Accounts or
Custodial Account to the extent not collected from the related Mortgagor,
anything to the contrary notwithstanding, when and as necessary to avoid the
lapse of insurance coverage on the Mortgaged Property, or which the Servicer
knows, or in servicing the Mortgage Loans in accordance with the Servicing
Standard should know, is necessary to avoid the loss of the Mortgaged Property
due to a tax sale or the foreclosure as a result of a tax lien. If any such
payment has not been made and the Servicer receives notice of a tax lien with
respect to the Mortgage being imposed, the Servicer will advance or cause to
be
advanced funds (which will constitute a Servicing Advance) necessary to
discharge such lien on the Mortgaged Property in order to prevent loss of title
to the Mortgaged Property.
(h) Notification
of Adjustments.
With
respect to each Mortgage Loan, the Servicer shall adjust the Mortgage Rate
on
the related interest rate adjustment date and shall adjust the Scheduled Payment
on the related mortgage payment adjustment date, if applicable, in compliance
with the requirements of applicable law and the related Mortgage and Mortgage
Note. The Servicer shall execute and deliver any and all necessary notices
required under applicable law and the terms of the related Mortgage Note and
Mortgage regarding the Mortgage Rate and Scheduled Payment adjustments. The
Servicer shall promptly, upon written request therefor, deliver to the Master
Servicer such notifications and any additional applicable data regarding such
adjustments and the methods used to calculate and implement such adjustments.
Upon the discovery by the Servicer or the receipt of notice from the Master
Servicer that the Servicer has failed to adjust a Mortgage Rate or Scheduled
Payment in accordance with the terms of the related Mortgage Note, the Servicer
shall immediately deposit in the Custodial Account from its own funds the amount
of any interest loss or deferral caused the Sponsor thereby.
(i) Payment
of Taxes, Insurance and Other Charges.
(i) With
respect to each Mortgage Loan which provides for Escrow Payments, the Servicer
shall maintain accurate records reflecting the status of ground rents, taxes,
assessments, water rates, sewer rents, and other charges which are or may become
a lien upon the Mortgaged Property and the status of fire and hazard insurance
coverage and shall obtain, from time to time, all bills for the payment of
such
charges (including renewal premiums) (“Property Charges”) and shall effect
payment thereof prior to the applicable penalty or termination date, employing
for such purpose deposits of the Mortgagor in the Escrow Account which shall
have been estimated and accumulated by the Servicer in amounts sufficient for
such purposes, as allowed under the terms of the Mortgage. The Servicer shall
effect timely payment of all such charges (which will constitute Servicing
Advances) irrespective of each Mortgagor’s faithful performance in the payment
of the same or the making of the Escrow Payments if necessary to avoid a lien
or
loss on the Mortgaged Property.
(ii) To
the
extent that a Mortgage does not provide for Escrow Payments, the Servicer shall
make Servicing Advances from its own funds to effect payment of all Property
Charges upon receipt of notice of any failure to pay on the part of the
Mortgagor, or at such other time as the Servicer determines to be in the best
interest of the Trust; provided,
that in
any event the Servicer shall pay such charges on or before any date by which
payment is necessary to preserve the lien status of the Mortgage. The Servicer
shall pay any late fee or penalty (which will constitute Servicing Advances)
which is payable due to any delay in payment of any Property Charge and
necessary to avoid a lien on or loss on Mortgage Property.
(j) Protection
of Accounts.
The
Servicer may transfer the Custodial Account or the Escrow Account to a different
Eligible Institution from time to time. Such transfer shall be made only upon
obtaining the consent of the Master Servicer, which consent shall not be
withheld unreasonably, and the Servicer shall give notice to the Master Servicer
and the Indenture Trustee of any change in the location of the Custodial
Account.
The
Servicer shall bear any expenses, losses or damages sustained by the Master
Servicer or the Indenture Trustee if the Custodial Account and/or the Escrow
Account are not Eligible Accounts.
Amounts
on deposit in the Custodial Account may be invested at the option of the
Servicer, but only in Eligible Investments. Any such Eligible Investment with
respect to the Custodial Account shall mature no later than two (2) Business
Days prior to the Servicer Remittance Date in each month; provided,
however,
that if
such Eligible Investment is an obligation of an Eligible Institution (other
than
the Servicer) that maintains the Custodial Account, then such Eligible
Investment may mature on the related Servicer Remittance Date. Any such Eligible
Investment shall be made in the name of the Servicer in trust for the benefit
of
the Indenture Trustee. All income on or gain realized from any such Eligible
Investment shall be for the benefit of the Servicer and may be withdrawn at
any
time by the Servicer. Any losses incurred in respect of any such investment
shall be deposited in the Custodial Account by the Servicer out of its own
funds
immediately as realized. If, at any time, the amount on deposit in the Custodial
Account exceeds the amount of the applicable FDIC insurance, such excess above
the amount of the applicable FDIC insurance shall be invested in Eligible
Investments.
(k) Maintenance
of Hazard Insurance.
The
Servicer shall cause to be maintained for each Mortgage Loan hazard insurance
such that all buildings upon the related Mortgaged Property are insured by
a
generally acceptable insurer acceptable under the Servicing Standard against
loss by fire, hazards of extended coverage and such other hazards as are
customary in the area where the Mortgaged Property is located, in an amount
which is at least equal to the lesser of (i) the replacement value of the
improvements securing such Mortgage Loan and (ii) the greater of (a) the
outstanding principal balance of the Mortgage Loan plus accrued interest thereon
and the good faith estimate of the Servicer of the related Liquidation Expenses
to be incurred in connection therewith and (b) an amount such that the proceeds
thereof shall be sufficient to prevent the Mortgagor or the loss payee from
becoming a co-insurer. The Servicer shall be under no obligation to require
any
Mortgagor to obtain 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.
If
upon
origination of the Mortgage Loan the related Mortgaged Property was located
in
an area identified in the Federal Register by the Flood Emergency Management
Agency as having special flood hazards (and such flood insurance has been made
available), a flood insurance policy meeting the requirements of the current
guidelines of the Federal Insurance Administration shall be in effect with
a
generally acceptable insurance carrier acceptable under the Servicing Standard
in an amount representing coverage equal to the lesser of (i) the minimum amount
required, under the terms of coverage, to compensate for any damage or loss
on a
replacement cost basis (or the unpaid balance of the mortgage if replacement
cost coverage is not available for the type of building insured) and (ii) the
maximum amount of insurance which is available under the Flood Disaster
Protection Act of 1973, as amended. If at any time during the term of the
Mortgage Loan, the Servicer determines in accordance with applicable law and
pursuant to the Servicing Standard that a Mortgaged Property is located in
a
special flood hazard area and is not covered by flood insurance or is covered
in
an amount less than the amount required by the Flood Disaster Protection Act
of
1973, as amended, the Servicer shall notify the related Mortgagor that the
Mortgagor must obtain such flood insurance coverage, and if said ▇▇▇▇▇▇▇▇▇
fails
to obtain the required flood insurance coverage within thirty (30) days after
such notification, the Servicer shall immediately force place the required
flood
insurance on the Mortgagor’s behalf.
The
Servicer shall cause to be maintained on each Mortgaged Property such other
or
additional insurance as may be required pursuant to such applicable laws and
regulations as shall at any time be in force and as shall require such
additional insurance, or pursuant to the requirements of any private mortgage
guaranty insurer, or as may be required to conform with the Servicing
Standard.
In
the
event that the Master Servicer or the Servicer shall determine that the
Mortgaged Property should be insured against loss or damage by hazards and
risks
not covered by the insurance required to be maintained by the Mortgagor pursuant
to the terms of the Mortgage, the Servicer shall communicate and consult with
the Mortgagor with respect to the need for such insurance and bring to the
Mortgagor’s attention the desirability of protection of the Mortgaged
Property.
All
policies required hereunder shall name the Servicer as loss payee and shall
be
endorsed with standard or union mortgagee clauses, without contribution, which
shall provide for at least 30 days’ prior written notice of any cancellation,
reduction in amount or material change in coverage.
The
Servicer shall not interfere with the Mortgagor’s freedom of choice in selecting
either his insurance carrier or agent; provided, however,
that the
Servicer shall not accept any such insurance policies from insurance companies
unless such companies are generally acceptable under the Servicing Standard.
The
Servicer shall determine that such policies provide sufficient risk coverage
and
amounts, that they insure the property owner, and that they properly describe
the property address. The Servicer shall notify the Mortgagor of the expiration
of any such insurance and, prior to force placing any insurance, will permit
the
Mortgagor a grace period (not to exceed 60 days) to obtain renewal
coverage.
Pursuant
to Section 4.02(d), any amounts collected by the Servicer under any such
policies (other than amounts to be deposited in the Escrow Account and applied
to the restoration or repair of the related Mortgaged Property, or property
acquired in liquidation of the Mortgage Loan, or to be released to the
Mortgagor, in accordance with the Servicer’s normal servicing procedures) shall
be deposited in the Custodial Account subject to withdrawal pursuant to Section
4.02(e).
(l) Maintenance
of Mortgage Impairment Insurance.
In the
event that the Servicer shall obtain and maintain a blanket policy insuring
against losses arising from fire and hazards covered under extended coverage
on
all of the Mortgage Loans, then, to the extent such policy provides coverage
in
an amount equal to the amount required pursuant to Section 4.02(k) and otherwise
complies with all other requirements of Section 4.02(k), it shall conclusively
be deemed to have satisfied its obligations as set forth in Section 4.02(k).
Any
amounts collected by the Servicer under any such policy relating to a Mortgage
Loan shall be deposited in the Custodial Account subject to withdrawal pursuant
to Section 4.02(e). Such policy may contain a deductible clause, in which case,
in the event that there shall not have been maintained on the related Mortgaged
Property a policy complying with Section 4.02(k), and there shall have been
a
loss which would have been covered by such policy, the Servicer shall deposit
in
the Custodial Account at the time of such loss the amount not otherwise payable
under the blanket policy because of such deductible clause, such amount to
deposited from the Servicer’s funds, without reimbursement therefor. Upon
request of the Master Servicer or the Indenture Trustee, the Servicer shall
cause to be delivered to such person a certified true copy of such policy and
a
statement from the insurer thereunder that such policy shall in no event be
terminated or materially modified without 30 days’ prior written notice to the
Master Servicer and the Indenture Trustee.
(m) Maintenance
of Fidelity Bond and Errors and Omissions Insurance.
The
Servicer shall maintain with responsible companies, at its own expense, a
blanket Fidelity Bond and an 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 Mortgage Loans (“Servicer Employees”). 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
such 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 Mortgage Loan without having obtained
payment in full of the indebtedness secured thereby. No provision of this
Section 4.02(m) 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 coverage amounts which are
acceptable for the Servicer as determined by ▇▇▇▇▇▇ ▇▇▇ and Freddie Mac. Upon
the request of the Master Servicer or the Indenture Trustee, the Servicer shall
cause to be delivered to such party a certified true copy of such fidelity
bond
and insurance policy and a statement from the surety and the insurer that such
fidelity bond and insurance policy shall in no event be terminated or materially
modified without 30 days’ prior written notice to the Master Servicer and the
Indenture Trustee.
(n) Inspections.
The
Servicer shall inspect the Mortgaged Property as often as deemed necessary
by
the Servicer to assure itself that the value of the Mortgaged Property is being
preserved. In addition, the Servicer shall inspect the Mortgaged Property and/or
take such other actions as may be necessary or appropriate in accordance with
the Servicing Standard or as may be required by the primary mortgage guaranty
insurer. The Servicer shall keep a written report of each such
inspection.
(o) Restoration
of Mortgaged Property.
The
Servicer need not obtain the approval of the Master Servicer or the Indenture
Trustee prior to releasing any Insurance Proceeds or Condemnation Proceeds
to
the Mortgagor to be applied to the restoration or repair of the Mortgaged
Property if such release is in accordance with the Servicing Standard. At a
minimum, the Servicer shall comply with the following conditions in connection
with any such release of Insurance Proceeds or Condemnation
Proceeds:
(i) the
Servicer shall receive satisfactory independent verification of completion
of
repairs and issuance of any required approvals with respect
thereto;
(ii) the
Servicer shall take all steps necessary to preserve the priority of the lien
of
the Mortgage, including, but not limited to requiring waivers with respect
to
mechanics’ and materialmen’s liens; and
(iii) pending
repairs or restoration, the Servicer shall place the Insurance Proceeds or
Condemnation Proceeds in the Escrow Account.
(p) Title,
Management and Disposition of REO Property.
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 taken in the
name of the Indenture Trustee or its nominee (which shall include the Servicer)
in trust for the benefit of the Noteholders and the Swap Provider, or in the
event the Indenture Trustee is not authorized or permitted to hold title to
real
property in the state where the REO Property is located, or would be adversely
affected under the “doing business” or tax laws of such state by so holding
title, the deed or certificate of sale shall be taken in the name of such Person
or Persons as shall be consistent with an Opinion of Counsel obtained by the
Servicer (with a copy delivered to the Indenture Trustee) from any attorney
duly
licensed to practice law in the state where the REO Property is located. The
Person or Persons holding such title other than the Indenture Trustee shall
acknowledge in writing that such title is being held as nominee for the
Indenture Trustee.
The
Servicer shall manage, conserve, protect and operate each REO Property for
the
Indenture Trustee solely for the purpose of its prompt disposition and sale.
The
Servicer, either itself or through an agent selected by the Servicer, shall
manage, conserve, protect and operate the REO Property in the same manner that
it manages, conserves, protects and operates other foreclosed property for
its
own account, and in the same manner that similar property in the same locality
as the REO Property is managed. The Servicer shall attempt to sell the same
(and
may temporarily rent the same for a period not greater than one year, except
as
otherwise provided below) on such terms and conditions as the Servicer deems
to
be in the best interest of the Issuer, the Indenture Trustee and the
Noteholders.
If
the
Servicer hereafter becomes aware that a Mortgaged Property is an Environmental
Problem Property, the Servicer will notify the Master Servicer of the existence
of the Environmental Problem Property. Additionally, the Servicer shall set
forth in such notice a description of such problem, a recommendation to the
Master Servicer relating to the proposed action regarding the Environmental
Problem Property, and the Servicer shall carry out the recommendation set forth
in such notice. Notwithstanding the foregoing, the Servicer shall obtain the
Master Servicer’s prior written consent to any expenditures proposed to
remediate Environmental Problem Properties or to defend any claims associated
with Environmental Problem Properties if such expenses, in the aggregate, are
expected to exceed $100,000. Failure to provide written notice of disapproval
of
the expenditure within five (5) Business Days of receipt of such request for
prepaid expenditures shall be deemed an approval of such expenditure. If the
Servicer has received reliable instructions to the effect that a Mortgaged
Property is an Environmental Problem Property (e.g.,
Servicer obtains a broker’s price opinion which reveals the potential for such
problem), the Servicer will not accept a deed-in-lieu of foreclosure upon any
such Mortgaged Property without first obtaining a preliminary environmental
investigation for that Mortgaged Property.
The
Servicer shall also maintain on each REO Property fire and hazard insurance
with
extended coverage in amount which is at least equal to the maximum insurable
value of the improvements which are a part of such property and, to the extent
required and available under the Flood Disaster Protection Act of 1973, as
amended, flood insurance in the amount required above, which may be in the
form
of a blanket policy. Any amounts collected by the Servicer under any such policy
relating to a Mortgage Loan shall be deposited in the Custodial Account subject
to withdrawal pursuant to Section 4.02(e). Such policy may contain a deductible
clause, in which case, in the event that there shall not have been maintained
on
the related Mortgaged Property a policy complying with Section 4.02(k), and
there shall have been a loss which would have been covered by such policy,
the
Servicer shall deposit in the Custodial Account at the time of such loss the
amount not otherwise payable under the blanket policy because of such deductible
clause, such amount to deposited from the Servicer’s funds, without
reimbursement therefor.
The
proceeds of sale of the REO Property shall be promptly deposited in the
Custodial Account. As soon as practical thereafter the expenses of such sale
shall be paid and the Servicer shall reimburse itself pursuant to Section
4.02(e) for any related unreimbursed Servicing Advances, unpaid Servicing Fees
and unreimbursed advances made pursuant to this Section 4.02 or Section
4.03.
The
Servicer shall make Servicing Advances of all funds necessary for the proper
operation, management and maintenance of the REO Property, including the cost
of
maintaining any hazard insurance pursuant to Section 4.02(k), such advances
to
be reimbursed from the disposition or liquidation proceeds of the REO Property
or pursuant to Section 4.02(e)(4). The Servicer shall make monthly remittances
on each Servicer Remittance Date to the Master Servicer of the net cash flow
from the REO Property (which shall equal the revenues from such REO Property
net
of the expenses described in this Section 4.02(p) and of any reserves reasonably
required from time to time to be maintained to satisfy anticipated liabilities
for such expenses).
(q) Real
Estate Owned Reports.
Together with the statement furnished pursuant to Section 4.03(b), the Servicer
shall furnish to the Master Servicer on or before the 18th calendar day in
each
month a statement with respect to any REO Property covering the operation of
such REO Property for the previous month and the Servicer’s efforts in
connection with the sale of such REO Property and any rental of such REO
Property incidental to the sale thereof for the previous month. That statement
shall be accompanied by such other information as the Master Servicer shall
reasonably request.
(r) Liquidation
Reports.
Upon
the foreclosure sale of any Mortgaged Property or the acquisition thereof by
the
Indenture Trustee pursuant to a deed in lieu of foreclosure, the Servicer shall
submit to the Indenture Trustee and the Master Servicer a monthly liquidation
report with respect to such Mortgaged Property.
(s) Reports
of Foreclosures and Abandonments of Mortgaged Property.
Following the foreclosure sale or abandonment of any Mortgaged Property, the
Servicer shall report such foreclosure or abandonment as required pursuant
to
Section 6050J of the Code.
(t) Prepayment
Premiums.
The
Servicer or any designee of the Servicer shall not waive any Prepayment Premium
with respect to any Mortgage Loan that contains a Prepayment Premium and that
prepays during the term of the premium. If the Servicer or its designee fails
to
collect the Prepayment Premium upon any prepayment of any Mortgage Loan that
contains a Prepayment Premium, the Servicer shall pay to the Master Servicer
or
the Trust Administrator at such time (by deposit to the Custodial Account)
an
amount equal to amount of the Prepayment Premium that was not collected.
Notwithstanding the above, the Servicer or its designee may waive a Prepayment
Premium without paying the Issuer the amount of the Prepayment Premium if (i)
the Mortgage Loan is in default (defined as 61 days or more delinquent) and
such
waiver would maximize recovery of total proceeds taking into account the value
of such Prepayment Premium and the related Mortgage Loan or (ii) if the
prepayment is not a result of a refinancing by the Servicer or any of its
affiliates and the Mortgage Loan is foreseen to be in default and such waiver
would maximize recovery of total proceeds taking into account the value of
such
Prepayment Premium and the related Mortgage Loan or (iii) the collection of
the
Prepayment Premium would be in violation of applicable federal, state or local
laws or would be deemed “predatory” thereunder.
(u) Compliance
with Safeguarding Customer Information Requirements.
The
Servicer has implemented and will maintain security measures designed to meet
the objectives of the Interagency Guidelines Establishing Standards for
Safeguarding Customer Information published in final form on February 1, 2001,
66 Fed. Reg. 8616, and the rules promulgated thereunder, as amended from time
to
time (the “Guidelines”).
(v) Presentment
of Claims and Collection of Proceeds.
The
Servicer shall prepare and present on behalf of the Indenture Trustee and the
Noteholders all claims under the Insurance Policies with respect to the Mortgage
Loans, and take such actions (including the negotiation, settlement, compromise
or enforcement of the insured’s claim) as shall be necessary to realize recovery
under such policies. Any proceeds disbursed to the Servicer in respect of such
policies or bonds shall be promptly deposited in the Custodial Account upon
receipt, except that any amounts realized that are to be applied to the repair
or restoration of the related Mortgaged Property as a condition requisite to
the
presentation of claims on the related Mortgage Loan to the insurer under any
applicable Insurance Policy need not be so deposited (or remitted).
(w) Purchase
of Defaulted Mortgage Loans.
The
Servicer, in its sole discretion, shall have the right to elect (by written
notice sent to the Indenture Trustee and the Trust Administrator) to purchase
for its own account from the Trust Estate any Mortgage Loan that is 90 days
or
more Delinquent at a price equal to the Purchase Price; provided, however,
that the
Servicer may only exercise this right on or after the last day of the calendar
month in which such Mortgage Loan became 90 days Delinquent (such month, the
“Eligible Purchase Month”); provided further, that any such Mortgage Loan which
becomes current but thereafter becomes Delinquent may only be purchased by
the
Servicer pursuant to this Section 4.02(w) in any ensuing Eligible Purchase
Month. The principal portion of the funds in respect of such purchase of a
Mortgage Loan will be considered a Principal Prepayment and the Purchase Price
shall be deposited in the Collection Account. Upon receipt by the Trust
Administrator of the full amount of the Purchase Price for such Mortgage Loan
and notification thereof has been made to the Indenture Trustee, the Indenture
Trustee shall release or cause to be released and reassign to the Servicer
the
related Mortgage File for such Mortgage Loan and shall execute and deliver
such
instruments of transfer or assignment, in each case without recourse,
representation or warranty, as shall be necessary to vest in such party or
its
designee or assignee title to any such Mortgage Loan released pursuant hereto,
free and clear of all security interests, liens and other encumbrances created
by this Agreement and the Indenture, which instruments shall be prepared by
the
Servicer and the Indenture Trustee shall have no further responsibility with
respect to the Mortgage File relating to such 90 days Delinquent Mortgage Loan
purchased by the Sponsor.
(x) Sponsor
Financial Covenant Termination Events.
The
Servicer shall notify the Master Servicer and the Trust Administrator in writing
promptly following the occurrence of a Sponsor Financial Covenant Termination
Event. The Master Servicer and the Trust Administrator will have no obligation
to independently determine or verify whether such a Sponsor Financial Covenant
Termination Event has occurred and will rely solely on the written notification
provided by the Servicer. In calculating the Sponsor Financial Covenant
Termination Event numbers, the Servicer will use a consolidated balance sheet
and a consolidated income statement prepared in accordance with U.S. GAAP and
consistent with the audited financial statements of the Sponsor to calculate
the
Sponsor Financial Covenant Termination Event numbers.
Section
4.03. Payments
To the Master Servicer.
(a) Remittances.
On each
Servicer Remittance Date, the Servicer shall remit on a scheduled/scheduled
basis by wire transfer of immediately available funds to the Master Servicer
(a)
all amounts deposited in the Custodial Account as of the close of business
on
the last day of the related Collection Period (net of charges against or
withdrawals from the Custodial Account pursuant to Section 4.02(e)), plus (b)
all Advances, if any, that the Servicer is obligated to make pursuant to Section
4.03(c), minus (c) any amounts attributable to Principal Prepayments,
Liquidation Proceeds, Insurance Proceeds, Condemnation Proceeds or REO
Disposition Proceeds received after the applicable Prepayment Period, which
amounts shall be remitted on the following Servicer Remittance Date, together
with any Compensating Interest required to be deposited in the Custodial Account
in accordance with Section 4.02(d)(ii)(6) and Section 4.04(c), and minus
(d) any
amounts attributable to Scheduled Payments collected but due on a Due Date
or
Due Dates subsequent to the first day of the month in which such Servicer
Remittance Date occurs, which amounts shall be remitted on the Servicer
Remittance Date next succeeding the Due Date related to such Scheduled
Payment.
With
respect to any remittance received by the Master Servicer after the Servicer
Remittance Date on which such remittance was due as provided above, the Servicer
shall pay to the Master Servicer interest on any such late remittance at an
annual rate equal to the Prime Rate, adjusted as of the date of each change,
plus three percentage points, but in no event greater than the maximum amount
permitted by applicable law. Such interest shall be deposited in the Custodial
Account by the Servicer on the date such late remittance is made and shall
cover
the period commencing with the day following such Servicer Remittance Date
and
ending with the Business Day on which such remittance is made, both inclusive.
The payment by the Servicer of any such interest shall not be deemed an
extension of time for payment or a waiver of any Servicer Event of Default
by
the Servicer.
All
remittances required to be made to the Master Servicer shall be made to the
following wire account or to such other account as may be specified by the
Master Servicer from time to time:
▇▇▇▇▇
Fargo Bank, N.A.
San
Francisco, CA
ABA#:
▇▇▇-▇▇▇-▇▇▇
Account
Name: Corporate Trust Clearing
Account
Number: 3970771416
Reference:
17196100, Aames 2006-1
(b) Statements
to Master Servicer and Trust Administrator.
On the
18th
day of
each calendar month (or, if such 18th
day is
not a Business Day, then no later than noon (Eastern Time) on the immediately
preceding Business Day), the Servicer shall furnish to the Master Servicer
(i) a
monthly remittance advice in the format set forth in Exhibit G-1 hereto
(including the information in Exhibit G-1A), a monthly defaulted loan report
in
the format set forth in Exhibit G-2 hereto (or in such other format mutually
agreed to between the Servicer and the Master Servicer) and, with respect to
each Mortgage Loan with respect to which a Realized Loss occurred during the
immediately preceding calendar month, a realized loss report in the format
set
forth in Exhibit G-3 hereto (or in such other format mutually agreed to between
the Servicer and the Master Servicer), in each case relating to the period
ending on the last day of the preceding calendar month and (ii) all such
information required pursuant to clause (i) above on a magnetic tape or other
similar media reasonably acceptable to the Master Servicer. No later than two
Business Days after the end of each Prepayment Period, the Servicer shall
furnish to the Master Servicer a monthly report containing such information
regarding prepayments of Mortgage Loans during such Prepayment Period and in
a
format as mutually agreed to between the Servicer and the Master
Servicer.
Such
monthly remittance advice shall also be accompanied by a supplemental report
provided to the Master Servicer and the Sponsor which includes on an aggregate
basis for the previous calendar month (i) the amount of any insurance claims
filed, (ii) the amount of any claim payments made and (iii) the amount of claims
denied or curtailed. The Master Servicer will convert such data into a format
acceptable to the Trust Administrator and provide monthly reports to the Trust
Administrator pursuant to the Trust Agreement.
In
addition, not more than 75 days after the end of each calendar year, commencing
December 31, 2006, the Servicer shall provide (as such information becomes
reasonably available to the Servicer) to the Master Servicer and the Trust
Administrator such information concerning the Mortgage Loans and annual
remittances to the Master Servicer therefrom as is necessary for the Trust
Administrator to prepare the reports required by Section 5.09(c). Such
obligation of the Servicer shall be deemed to have been satisfied to the extent
that substantially comparable information shall be provided by the Servicer
to
the Master Servicer and the Trust Administrator pursuant to any requirements
of
the Code as from time to time are in force. The Servicer shall also provide
to
the Trust Administrator such information as may be requested by it and required
for the completion of any tax reporting responsibility of the Trust
Administrator within such reasonable time frame as shall enable the Trust
Administrator to timely file each Schedule Q (or other applicable tax report
or
return) required to be filed by it.
(c) Advances
by Servicer.
On the
Business Day immediately preceding each Servicer Remittance Date, the Servicer
shall deposit in the Custodial Account from its own funds or from amounts held
for future payment, or a combination of both, an amount equal to all Advances
for the related Servicer Remittance Date. Any amounts held for future payment
and so used shall be replaced by the Servicer by deposit in the Custodial
Account on or before any future Servicer Remittance Date if funds in the
Custodial Account on such Servicer Remittance Date shall be less than
remittances to the Master Servicer required to be made on such Servicer
Remittance Date. The Servicer shall keep appropriate records of such amounts
and
will provide such records to the Master Servicer upon request.
The
Servicer’s obligation to make such Advances as to any Mortgage Loan will
continue through the last Scheduled Payment due prior to the payment in full
of
the Mortgage Loan, or through the last Remittance Date prior to the Remittance
Date for the payment of all Liquidation Proceeds and other payments or
recoveries (including Insurance Proceeds and Condemnation Proceeds) with respect
to the related Mortgage Loan.
(d) Due
Dates Other Than the First of the Month.
Mortgage Loans having Due Dates other than the first day of a month shall be
accounted for as described in this Section 4.03(d). Any Scheduled Payment due
on
a day other than the first day of each month shall be considered due on the
first day of the month following the month in which that payment is due as
if
such payment were due on the first day of that month. For example, a Scheduled
Payment due on August 15 shall be considered to be due on September 1. Any
Scheduled Payment due and collected on a Mortgage Loan after the Cut-off Date
shall be deposited in the Custodial Account. For Mortgage Loans with Due Dates
on the first day of a month, deposits to the Custodial Account begin with the
Scheduled Payment due on the first of the month following the Cut-off
Date.
(e) Credit
Reporting.
For
each Mortgage Loan, in accordance with its current servicing practices, the
Servicer will accurately and fully report its underlying borrower credit files
to each of the following credit repositories or their successors: Equifax Credit
Information Services, Inc., Trans Union, LLC and Experian Information Solution,
Inc., on a monthly basis in a timely manner.
Section
4.04. General
Servicing Procedures.
(a) Transfers
of Mortgaged Property.
The
Servicer shall use its best efforts to enforce any “due-on-sale” provision
contained in any Mortgage or Mortgage Note and to deny assumption by the person
to whom the Mortgaged Property has been or is about to be sold whether by
absolute conveyance or by contract of sale, and whether or not the Mortgagor
remains liable on the Mortgage and the Mortgage Note. When the Mortgaged
Property has been conveyed by the Mortgagor, the Servicer shall, to the extent
it has knowledge of such conveyance, exercise its rights to accelerate the
maturity of such Mortgage Loan under the “due-on-sale” clause applicable
thereto; provided,
however,
that
the Servicer shall not exercise such rights if prohibited by law from doing
so.
If
the
Servicer reasonably believes it is unable under applicable law to enforce such
“due-on-sale” clause, the Servicer shall enter into (i) an assumption and
modification agreement with the person to whom such property has been conveyed
pursuant to which such person becomes liable under the Mortgage Note and the
original Mortgagor remains liable thereon or (ii) in the event the Servicer
is
unable under applicable law to require that the original Mortgagor remain liable
under the Mortgage Note and the Servicer has the prior consent of the primary
mortgage guaranty insurer, a substitution of liability agreement with the seller
of the Mortgaged Property pursuant to which the original Mortgagor is released
from liability and the buyer of the Mortgaged Property is substituted as
▇▇▇▇▇▇▇▇▇ and becomes liable under the Mortgage Note. In connection with any
such assumption, neither the Mortgage Rate borne by the related Mortgage Note,
the timing of principal or interest payments on the Mortgage Loan, the term
of
the Mortgage Loan nor the outstanding principal amount of the Mortgage Loan
shall be changed.
To
the
extent that any Mortgage Loan is assumable, the Servicer shall inquire
diligently into the creditworthiness of the proposed transferee, and shall
use
the underwriting criteria for approving the credit of the proposed transferee
which are used by the Servicer, its affiliates or ▇▇▇▇▇▇ ▇▇▇ with respect to
underwriting mortgage loans of the same type as the Mortgage Loans. If the
credit of the proposed transferee does not meet such underwriting criteria,
the
Servicer diligently shall, to the extent permitted by the Mortgage or the
Mortgage Note and by applicable law, accelerate the maturity of the 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.
(b) Satisfaction
of Mortgages and Release of Mortgage Files.
Upon
the payment in full of any Mortgage Loan, or the receipt by the Servicer of
a
notification that payment in full will be escrowed in a manner customary for
such purposes, the Servicer shall notify the Master Servicer in the monthly
remittance advice as provided in Section 4.03(b), and may request the release
of
any Mortgage Loan Documents from the Custodian in accordance with the Custodial
Agreement.
If
the
Servicer satisfies or releases a Mortgage without first having obtained payment
in full of the indebtedness secured by the Mortgage, the Servicer shall deposit
into the Custodial Account the entire outstanding principal balance, plus all
accrued interest on such Mortgage Loan, on the day preceding the Servicer
Remittance Date in the month following the date of such release. The Servicer
shall maintain the Fidelity Bond and Errors and Omissions Insurance Policy
as
provided for in Section 4.02(m) insuring the Servicer against any loss it may
sustain with respect to any Mortgage Loan not satisfied in accordance with
the
procedures set forth herein.
(c) Servicing
Compensation.
As
consideration for servicing the Mortgage Loans subject to this Agreement, the
Servicer shall be paid in the aggregate the relevant Servicing Fee for each
Mortgage Loan remaining subject to this Agreement during any month or part
thereof. Such Servicing Fee shall be payable monthly and retained by the
Servicer, or as otherwise provided in Section 4.02(e)(2). The obligation of
the
Issuer to pay the Servicing Fee is limited to, and the Servicing Fee is payable
from, the interest portion (including recoveries with respect to interest from
Liquidation Proceeds) of such Scheduled Payment collected by the Servicer,
or as
otherwise provided in Section 4.02(e)(2). Additional servicing compensation
in
the form of Ancillary Income shall be retained by the Servicer and is not
required to be deposited in the Custodial Account.
The
Servicer shall be required to pay all expenses incurred by it in connection
with
its servicing activities hereunder and shall not be entitled to reimbursement
thereof except as specifically provided for herein.
The
Servicing Fee payable to or retained by the Servicer with respect to any
Collection Period shall be reduced by the aggregate Prepayment Interest
Shortfall Amount for the related Prepayment Period required to be deposited
in
the Custodial Account and remitted to the Master Servicer on the related
Servicer Remittance Date. The Servicer shall be obligated to remit to the Master
Servicer on each Servicer Remittance Date the aggregate Prepayment Interest
Shortfall Amount, only up to an amount equal to the aggregate Servicing Fee
that
the Servicer is entitled to receive for such Collection Period.
(d) Statement
as to Compliance.
(i) The
Servicer, the Master Servicer and the Trust Administrator will deliver (or
otherwise make available) and the Servicer, Master Servicer and Trust
Administrator shall cause any Servicing Function Participant engaged by it
to
deliver to the Depositor and the Trust Administrator, not later than March
15th
of each
calendar year beginning in 2007, an Officers’ Certificate (an “Annual Statement
of Compliance”) stating, as to each signatory thereof, that (i) a review of the
activities of such party during the preceding calendar year and of performance
under this Agreement or such other applicable agreement in the case of a
Servicing Function Participant has been made under such officer’s supervision
and (ii) to the best of such officer’s knowledge, based on such review, such
party has fulfilled all of its obligations under this Agreement or such other
applicable agreement in the case of a Servicing Function Participant in all
material respects throughout such year or portion thereof, or, if there has
been
a failure to fulfill any such obligation in any material respect, specifying
each such failure known to such officer and the nature and status of cure
provisions thereof. Such Annual Statement of Compliance shall contain no
restrictions or limitations on its use. Notwithstanding the foregoing, as to
any
Subcontractor determined by the Servicer to be “participating in the servicing
function,” an Annual Statement of Compliance is not required to be delivered
unless it is required as part of a Form 10-K with respect to the Trust.
(ii) In
the
event the Master Servicer, the Trust Administrator, any Sub-Servicer or any
Subcontractor engaged by any such party is terminated or resigns pursuant to
the
terms of this Agreement, or any applicable agreement in the case of a
Sub-Servicer or Subcontractor, as the case may be, such party shall provide
an
Officer’s Certificate pursuant to this Section 4.04(d) or to such applicable
agreement, as the case may be, notwithstanding any such termination, assignment
or resignation.
(iii) The
Master Servicer shall include all annual statements of compliance received
by it
from the Servicer with its own annual statement of compliance to be submitted
to
the Trust Administrator pursuant to this Section 4.04(d).
(iv) Any
failure by the Servicer to comply with its obligations under this Section
4.04(d) shall (subject to the provisions of Section 4.07(10)) constitute a
Servicer Event of Termination with respect to the Servicer under this Agreement,
and shall entitle the Master Servicer, pursuant to Section 4.07, to terminate
the rights and obligations of the Servicer as servicer under this Agreement
without payment (notwithstanding anything in this Agreement to the contrary)
of
any compensation to the Servicer (other than as provided herein with respect
to
unreimbursed Advances or Servicing Advances or accrued and unpaid Servicing
Fees); provided that to the extent that any provision of this Agreement
expressly provides for the survival of certain rights or obligations following
termination of the Servicer as servicer, such provision shall be given
effect.
(e) Assessments
of Compliance and Attestation Reports.
(i) Pursuant
to Rules 13a-18 and 15d-18 of the Exchange Act and Item 1122 of Regulation
AB,
the Servicer, Master Servicer and Trust Administrator, each at its own expense
shall furnish or otherwise make available, and each such party shall cause
any
Servicing Function Participant engaged by it to furnish, each at its own
expense, to the Trust Administrator and the Depositor 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 its Relevant Servicing Criteria
during the preceding calendar year. The Assessment of Compliance must be as
set
forth in Regulation AB and contain the following:
(1) A
statement by such officer of its responsibility for assessing compliance with
the Relevant Servicing Criteria applicable to such
party;
(2) A
statement by such officer that such officer used the Relevant Servicing Criteria
to assess compliance with the Relevant Servicing Criteria applicable to such
party;
(3) Such
parties’ assessment of compliance with the Relevant 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 such party,
that
are backed by the same asset type as the Mortgage Loans; and
(4) A
statement that a registered public accounting firm has issued an attestation
report on such party’s Assessment of Compliance for the period consisting of the
preceding calendar year; and
(5) A
statement as to which of the Relevant 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 Relevant Servicing Criteria
specified on Exhibit J hereto which are indicated as applicable to such
party.
No
later
than the end of each fiscal year for the Trust for which a 10-K is required
to
be filed, the Master Servicer and the Custodian shall each forward to the Trust
Administrator and the Depositor the name of each Servicing Function Participant
engaged by it and what Relevant Servicing Criteria will be addressed in the
report on assessment of compliance prepared by such Servicing Function
Participant; provided, however, that the Master Servicer need not provide such
information to the Trust Administrator so long as the Master Servicer and the
Trust Administrator are the same Person. When the Master Servicer and the
Custodian (or any Servicing Function Participant engaged by them) submit their
assessments to the Trust Administrator, such parties will also at such time
include the assessment and attestation pursuant to this Section 4.04(e) of
each
Servicing Function Participant engaged by it.
Promptly
after receipt of each such report on assessment of compliance, (i) the Depositor
shall review each such report and, if applicable, consult with the Servicer,
the
Master Servicer, the Trust Administrator and any Servicing Function Participant
engaged by such parties as to the nature of any material instance of
noncompliance with the Relevant Servicing Criteria by each such party, and
(ii)
the Trust Administrator shall confirm that the assessments, taken as a whole,
address all of the Servicing Criteria and taken individually address the
Relevant Servicing Criteria for each party as set forth on Exhibit J and notify
the Depositor of any exceptions.
In
the
event the Master Servicer, the Trust Administrator, the Custodian, any
Sub-Servicer or any Subcontractor engaged by any such party is terminated,
assigns its rights and obligations under, or resigns pursuant to, the terms
of
this Agreement, or any other applicable agreement, as the case may be, such
party shall provide a report on assessment of compliance pursuant to this
Section 4.04(e), or to such other applicable agreement, notwithstanding any
such
termination, assignment or resignation.
(ii) On
or
before March 15th
of each
calendar year beginning in 2007, the Servicer, Master Servicer, Trust
Administrator, each at its own expense, shall furnish or otherwise make
available, and each such party shall cause any Servicing Function Participant
engaged by it to furnish, each at its own expense, to the Depositor and Trust
Administrator a report (an “Attestation Report”) by a registered public
accounting firm that is a member of the American Institute of Certified Public
Accountants to the effect that (i) it has obtained a representation regarding
certain matters from the management of such party, which includes an assertion
that such party has complied with the Relevant Servicing Criteria, and (ii)
on
the basis of an examination conducted by such firm in accordance with standards
for attestation engagements issued or adopted by the Public Company Accounting
Oversight Board, it is expressing an opinion as to whether such party’s
compliance with the Relevant Servicing Criteria was fairly stated in all
material respects, or it cannot express an overall opinion regarding such
party’s assessment of compliance with the Relevant Servicing Criteria. In the
event that an overall opinion cannot be expressed, such registered public
accounting firm shall state in such report why it was unable to express such
an
opinion. Such report must be available for general use and not contain
restricted use language.
Promptly
after receipt of each such assessment of compliance and attestation report,
the
Trust Administrator shall confirm that each assessment submitted pursuant to
this Section 4.04(e) is coupled with an attestation meeting the requirements
of
this Section and notify the Depositor of any exceptions.
(iii) In
the
event the Master Servicer, the Trust Administrator, the Custodian, the Servicer,
any Servicing Function Participant engaged by any such party, is terminated,
assigns its rights and duties under, or resigns pursuant to the terms of, this
Agreement or any Sub-Servicing Agreement, as the case may be, such party shall
cause a registered public accounting firm to provide an attestation pursuant
to
this Section 4.04(e), or such other applicable agreement, notwithstanding any
such termination, assignment or resignation.
Notwithstanding
the foregoing, as to any Subcontractor determined by the Servicer or the
Custodian to be “participating in the servicing function,” neither an Assessment
of Compliance nor the related Attestation Report is required to be delivered
unless it is required as part of a Form 10-K with respect to the Trust. Any
failure by the Servicer to deliver the Assessment of Compliance and Attestation
Reports when and as required under this Section 4.04(e), including any failure
by the Servicer to identify any Subcontractor “participating in the servicing
function” within the meaning of Item 1122 of Regulation AB, shall (subject to
the provisions of Section 4.07(10)) constitute a Servicer Event of Termination
with respect to the Servicer under this Agreement, and shall entitle the Master
Servicer, pursuant to Section 4.07, to terminate the rights and obligations
of
the Servicer as servicer under this Agreement without payment (notwithstanding
anything in this Agreement to the contrary) of any compensation to the Servicer
(other than as provided herein with respect to unreimbursed Advances or
Servicing Advances or accrued and unpaid Servicing Fees); provided that to
the
extent that any provision of this Agreement expressly provides for the survival
of certain rights or obligations following termination of the Servicer as
servicer, such provision shall be given effect.
(iv) The
Master Servicer shall include all annual reports on assessment of compliance
received by it with its own assessment of compliance to be submitted to the
Trust Administrator pursuant to this Section and shall include all attestation
reports received by it with its own attestation report to be submitted to the
Trust Administrator pursuant to this Section.
(f) Inspection.
The
Servicer shall provide the Indenture Trustee and the Master Servicer, upon
five
(5) Business Days’ advance notice, during normal business hours, access to all
records maintained by the Servicer in respect of its rights and obligations
hereunder and reasonable access to officers of the Servicer responsible for
such
obligations. Upon request, the Servicer shall furnish to the Indenture Trustee
and the Master Servicer its most recent publicly available financial statements
and such other information relating to its capacity to perform its obligations
under this Agreement. Notwithstanding anything to the contrary in this Section
4.04, nothing in this Agreement shall limit 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 4.04(f) as a result of such obligation shall not constitute a breach
of
this Section 4.04(f).
Section
4.05. Representations,
Warranties and Agreements.
(a) Representations,
Warranties and Agreements of the Servicer.
The
Servicer, as a condition to the consummation of the transactions contemplated
hereby, hereby makes the following representations and warranties to the Master
Servicer, the Depositor, the Sponsor and the Indenture Trustee and the Trust
Administrator, as of the Closing Date:
(i) Due
Organization and Authority.
The
Servicer is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its formation and has all licenses
necessary to carry on its business as now being conducted; the Servicer has
the
full corporate power and authority to execute and deliver this Agreement and
to
perform in accordance herewith; the execution, delivery and performance of
this
Agreement (including all instruments of transfer to be delivered pursuant to
this Agreement) by the Servicer and the consummation of the transactions
contemplated hereby have been duly and validly authorized; this Agreement
evidences the valid, binding and enforceable obligation of the Servicer (except
to the extent bankruptcy, insolvency, reorganization, fraudulent conveyance
or
similar laws affect the enforcement of creditor’s rights generally) and all
requisite corporate action has been taken by the Servicer to make this Agreement
valid and binding upon the Servicer in accordance with its terms;
(ii) Ordinary
Course of Business.
The
consummation of the transactions contemplated by this Agreement are in the
ordinary course of business of the Servicer;
(iii) No
Conflicts.
Neither
the execution and delivery of this Agreement, the acquisition of the servicing
responsibilities by the Servicer or the transactions contemplated hereby, nor
the fulfillment of or compliance with the terms and conditions of this
Agreement, will (a) conflict with or result in a breach of any of the terms,
conditions or provisions of the Servicer’s charter or by-laws or any legal
restriction or constitute a default under any of the foregoing, (b) materially
conflict with, result in a material breach, violation or acceleration of, or
result in a material default under, the terms of any other agreement or
instrument to which the Servicer is a party or by which it may be bound, (c)
result in a material violation of any law, rule, regulation, order, judgment
or
decree to which the Servicer or its property is subject or (d) materially impair
the ability of the Servicer to act as Servicer hereunder with respect to the
Mortgage Loans;
(iv) Ability
to Perform.
The
Servicer does not believe, nor does it have any reason or cause to believe,
that
it cannot perform each and every covenant contained in this
Agreement;
(v) No
Litigation Pending.
There
is no action, suit, proceeding or investigation pending or, to the Servicer’s
knowledge, threatened against the Servicer which, either in any one instance
or
in the aggregate, may result in any material adverse change in the business,
operations, financial condition, properties or assets of the Servicer, or in
any
material impairment of the right or ability of the Servicer to carry on its
business substantially as now conducted, or in any material liability on the
part of the Servicer, or which would draw into question the validity of this
Agreement or of any action taken or to be taken in connection with the
obligations of the Servicer contemplated herein, or which would be likely to
impair materially the ability of the Servicer to perform under the terms of
this
Agreement;
(vi) No
Consent Required.
No
consent, approval, authorization or order of any court or governmental agency
or
body is required for the execution, delivery and performance by the Servicer
of
or compliance by the Servicer with this Agreement, or if required, such approval
has been obtained prior to the Closing Date;
(vii) No
Default.
The
Servicer is not in default, and no event or condition exists that after the
giving of notice or lapse of time or both, would constitute an event of default
under any material mortgage, indenture, contract, agreement, judgment, or other
undertaking, to which the Servicer is a party or which purports to be binding
upon it or upon any of its assets, which default could impair materially the
ability of the Servicer to perform under the terms of this
Agreement;
(viii) Ability
to Service.
The
Servicer or its sub-servicer is an FHA Approved Mortgagee in good standing
to
service mortgages, and has not been suspended as a mortgagee or servicer by
the
FHA and has the facilities, procedures and experienced personnel necessary
for
the sound servicing of mortgage loans of the same type as the Mortgage Loans.
No
event has occurred, including but not limited to a change in insurance coverage,
which would make the Servicer or its sub-servicer, as applicable, unable to
comply with HUD, FHA eligibility requirements or which would require
notification to any of HUD or FHA;
(ix) No
Untrue Information.
Neither
this Agreement nor any statement, report or other document furnished or to
be
furnished pursuant to this Agreement or in connection with the transactions
contemplated hereby contains any untrue statement of a material fact or omits
to
state a material fact necessary to make the statements contained therein not
misleading; and
(x) No
Commissions to Third Parties.
The
Servicer has not dealt with any broker or agent or anyone else who might be
entitled to a fee or commission in connection with this transaction other than
the Sponsor.
(b) Remedies
for Breach of Representations and Warranties of the Servicer.
It is
understood and agreed that the representations and warranties set forth in
Sections 4.05(a) shall survive the engagement of the Servicer to perform the
servicing responsibilities as of the Closing Date hereunder and the delivery
of
the Servicing Files to the Servicer and shall inure to the benefit of the Master
Servicer and the Indenture Trustee. Upon discovery by the Servicer, the Master
Servicer or the Indenture Trustee of a breach of any of the foregoing
representations and warranties which materially and adversely affects the
ability of the Servicer to perform its duties and obligations under this
Agreement or otherwise materially and adversely affects the value of the
Mortgage Loans, the Mortgaged Property or the priority of the security interest
on such Mortgaged Property or the interests of the Master Servicer or the
Indenture Trustee, the party discovering such breach shall give prompt written
notice to the other parties.
Within
60
days of the earlier of either discovery by or notice to the Servicer of any
breach of a representation or warranty set forth in Section 4.05(a) which
materially and adversely affects the ability of the Servicer to perform its
duties and obligations under this Agreement or otherwise materially and
adversely affects the value of the Mortgage Loans, the Mortgaged Property or
the
priority of the security interest on such Mortgaged Property, the Servicer
shall
use its best efforts promptly to cure such breach in all material respects
and,
if such breach cannot be cured, the Servicer shall, at the Indenture Trustee’s
or the Master Servicer’s option, assign its rights and obligations under this
Agreement (or with respect to the affected Mortgage Loans) to a successor
servicer. Such assignment shall be made in accordance with Sections 4.06(b)
and
4.06(c).
In
addition, the Servicer shall indemnify all other parties to this Agreement
and
hold each of them harmless against any losses, damages, penalties, fines,
forfeitures, reasonable and necessary legal fees and related costs, judgments,
and other costs and expenses resulting from any claim, demand, defense or
assertion based on or grounded upon, or resulting from, a breach of the
Servicer’s representations and warranties contained in Section
4.05.
Any
cause
of action against the Servicer relating to or arising out of the breach of
any
representations and warranties made in Section 4.05(a) shall accrue upon (i)
discovery of such breach by the Servicer or notice thereof by the Master
Servicer, the Depositor or the Indenture Trustee to the Servicer, (ii) failure
by the Servicer to cure such breach within the applicable cure period, and
(iii)
demand upon the Servicer by the Master Servicer or the Indenture Trustee for
compliance with this Agreement.
(c) Additional
Indemnification by the Servicer.
The
Servicer shall indemnify the Master Servicer, the Depositor, the Issuer, the
Indenture Trustee, the Owner Trustee, and the Trust Administrator and hold
each
of them harmless against any and all claims, losses, damages, penalties, fines,
forfeitures, reasonable and necessary legal fees and related costs, judgments,
and any other costs, fees and expenses (collectively, the “Liabilities”) that
the indemnified party may sustain in any way related to the failure of the
Servicer to perform its duties and service the Mortgage Loans in accordance
with
the terms of this Agreement. The Servicer shall immediately notify the Master
Servicer, the Depositor, the Indenture Trustee, the Owner Trustee and the Trust
Administrator if a claim is made by a third party with respect to this Agreement
or the Mortgage Loans that may result in such Liabilities, and the Servicer
shall assume (with the prior written consent of the indemnified party) the
defense of any such claim and pay all expenses in connection therewith,
including counsel fees, promptly pay, discharge and satisfy any judgment or
decree which may be entered against it or any indemnified party in respect
of
such claim and follow any written instructions received from such indemnified
party in connection with such claim. The Servicer shall be reimbursed promptly
from the Trust Fund for all amounts advanced by it pursuant to the preceding
sentence except when the claim is in any way related to the Servicer’s
indemnification pursuant to this Section 4.05(c), or the failure of the Servicer
to service and administer the Mortgage Loans in accordance with the terms of
this Agreement.
Section
4.06. The
Servicer.
(a) Merger
or Consolidation of the Servicer.
The
Servicer shall keep in full effect its existence, rights and franchises as
a
corporation, and shall obtain and preserve its qualification to do business
as a
foreign corporation in each jurisdiction in which such qualification is or
shall
be necessary to protect the validity and enforceability of this Agreement or
any
of the Mortgage Loans and to perform its duties under this
Agreement.
Any
Person into which the Servicer may be merged or consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Servicer
shall be a party, or any Person succeeding to the business of the Servicer,
shall be the successor of the Servicer hereunder, without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding, provided,
however,
that
the successor or surviving Person shall be an institution (i) having a net
worth
of not less than $15,000,000, and (ii) which is a FHA Approved Mortgagee in
good
standing.
(b) Limitation
on Liability of the Servicer and Others.
Neither
the Servicer nor any of the directors, officers, employees or agents of the
Servicer shall be under any liability to the Master Servicer, the Depositor,
the
Issuer, the Indenture Trustee or the Trust Administrator for any action taken
or
for refraining from the taking of any action in good faith pursuant to this
Agreement, or for errors in judgment; provided,
however,
that
this provision shall not protect the Servicer or any such person against any
breach of warranties or representations made herein, or failure to perform
its
obligations in strict compliance with any standard of care set forth in this
Agreement, or any liability which would otherwise be imposed by reason of any
breach of the terms and conditions of this Agreement (except to the extent
otherwise covered by Section 4.05(c)). The Servicer and any director, officer,
employee or agent of 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 Servicer shall not be under any obligation to
appear in, prosecute or defend any legal action which is not incidental to
its
duties to service the Mortgage Loans in accordance with this Agreement and
which
in its opinion may involve it in any expense or liability; provided,
however,
that
the Servicer may 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. In such event, the Servicer shall be entitled to reimbursement from
the
Trust Fund for the reasonable legal expenses and costs of such
action.
The
Servicer and any director, officer, employee or agent of the Servicer shall
be
indemnified and held harmless by the Trust against any and all Liabilities
incurred in connection with any legal action relating to this Agreement or
the
Notes, except to the extent such Liabilities resulted from or arose out of
the
negligence, bad faith or willful misfeasance in the performance of the
Servicer’s (or any director, officer, employee or agent of the Servicer) duties
hereunder or by reason of its reckless disregard of its obligations and duties
hereunder.
(c) Limitation
on Resignation and Assignment by the Servicer.
This
Agreement has been entered into with the Servicer in reliance upon the
independent status of the Servicer, and the representations as to the adequacy
of its servicing facilities, plant, personnel, records and procedures,
integrity, reputation and financial standing, and the continuance thereof.
Therefore, except as expressly provided in this Section 4.06(c) and in Sections
4.02(a) and 4.09, the Servicer shall neither assign its rights under this
Agreement or the servicing hereunder nor delegate its duties hereunder or any
portion thereof, or sell or otherwise dispose of all or substantially all of
its
property or assets without, in each case, the prior written consent of the
Sponsor, the Master Servicer and the Trust Administrator, which consent, in
the
case of an assignment of rights or delegation of duties, shall be granted or
withheld in the discretion of the Sponsor, the Master Servicer and the Trust
Administrator; provided,
that in
each case, there must be delivered to the Sponsor, the Master Servicer, the
Indenture Trustee and the Trust Administrator a letter from each Rating Agency
to the effect that such transfer of servicing or sale or disposition of assets
will not result in a qualification, withdrawal or downgrade of the then-current
rating of any of the Notes.
The
Servicer shall not resign from the obligations and duties hereby imposed on
it
except by mutual consent of the Servicer and the Master Servicer, or upon the
determination that its duties hereunder are no longer permissible under
applicable law and such incapacity cannot be cured by the Servicer. Any such
determination permitting the resignation of the Servicer shall be evidenced
by
an Opinion of Counsel to such effect delivered to the Sponsor, the Master
Servicer and the Indenture Trustee which Opinion of Counsel shall be in form
and
substance reasonably acceptable to each of them. No such resignation shall
become effective until a successor shall have assumed the Servicer’s
responsibilities and obligations hereunder in the manner provided in Section
4.08.
Without
in any way limiting the generality of this Section 4.06, in the event that
the
Servicer either shall assign this Agreement or the servicing responsibilities
hereunder or delegate its duties hereunder or any portion thereof or sell or
otherwise dispose of all or substantially all of its property or assets, except
to the extent permitted by and in accordance with this Section 4.06 and in
Sections 4.02(a) and 4.09, without the prior written consent of the Sponsor,
the
Master Servicer, the Indenture Trustee and the Trust Administrator, then such
parties shall have the right to terminate this Agreement upon notice given
as
set forth in Section 4.07, without any payment of any penalty or damages and
without any liability whatsoever to the Servicer or any third
party.
(d) Successor
Servicers.
The
provisions of Sections 4.06(a), (b), and (c) shall apply to any successor to
the
Servicer hereunder.
Section
4.07. Termination
for Cause.
Any
of
the following occurrences shall constitute an event of default (each, a
“Servicer Event of Default”) on the part of the Servicer:
(1) any
failure by the Servicer to remit to the Master Servicer any payment required
to
be made under the terms of this Agreement which continues unremedied for a
period of two Business Days after the date upon which written notice of such
failure, requiring the same to be remedied, shall have been given to the
Servicer by the Master Servicer; or
(2) failure
by the Servicer duly to observe or perform in any material respect any other
of
the covenants or agreements on the part of the Servicer set forth 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 Master Servicer; or
(3) failure
by the Servicer to maintain its license to do business or service residential
mortgage loans in any jurisdiction where the Mortgaged Properties are located
except where the failure to so maintain such license does not have a material
adverse effect on the Servicer’s ability to service the Mortgage Loans;
or
(4) a
decree
or order of a court or agency or supervisory authority having jurisdiction
for
the appointment of a conservator or receiver or liquidator in any insolvency,
readjustment of debt, including bankruptcy, marshalling of assets and
liabilities or similar proceedings, or for the winding-up or liquidation of
its
affairs, shall have been entered against the Servicer and such decree or order
shall have remained in force undischarged or unstayed for a period of 60 days;
or
(5) 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 or similar proceedings of or relating to the Servicer or of or
relating to all or substantially all of its property; or
(6) 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,
bankruptcy or reorganization statute, make an assignment for the benefit of
its
creditors, voluntarily suspend payment of its obligations or cease its normal
business operations for three Business Days; or
(7) the
Servicer or its sub-servicer, as applicable, ceases to be a FHA Approved
Mortgagee; or
(8) the
Servicer attempts to assign the servicing of the Mortgage Loans or its right
to
servicing compensation hereunder or the Servicer or attempts to assign this
Agreement or the servicing responsibilities hereunder or to delegate its duties
hereunder or any portion thereof in a manner not permitted under this Agreement;
or
(9) the
net
worth of the Servicer shall be less than $15,000,000; or
(10) failure
by the Servicer to duly perform, within the required time period, its
obligations under Section 4.04(d) or 4.04(e); or
(11) a
Servicer Termination Trigger Event or a Sponsor Financial Covenant Termination
Event shall have occurred.
In
each
and every such case, so long as a Servicer Event of Default shall not have
been
remedied, in addition to whatsoever rights the Master Servicer or the Indenture
Trustee may have at law or equity to damages, including injunctive relief and
specific performance, the Master Servicer, by notice in writing to the Servicer,
may terminate all the rights and obligations of the Servicer under this
Agreement and in and to the servicing contract established hereby and the
proceeds thereof.
Upon
receipt by the Servicer of such written termination notice, all authority and
power of the Servicer, under this Agreement, whether with respect to the
Mortgage Loans or otherwise, shall pass to and be vested in a successor servicer
appointed by the Master Servicer, in accordance with Section 4.08(a). Upon
written request from the Master Servicer, the Servicer shall prepare, execute
and deliver to the successor servicer any and all documents and other
instruments, place in such successor’s possession all Servicing Files, and do or
cause to be done all other acts or things necessary or appropriate to effect
the
purposes of such notice of termination, including but not limited to the
transfer and endorsement or assignment of the Mortgage Loans and related
documents, at the Servicer’s sole expense. The Servicer shall cooperate with the
Sponsor, the Master Servicer, the Indenture Trustee and such successor in
effecting the termination of the Servicer’s responsibilities and rights
hereunder, including without limitation, the transfer to such successor for
administration by it of all cash amounts which shall at the time be credited
by
the Servicer to the Custodial Account or Escrow Account or thereafter received
with respect to the Mortgage Loans.
By
a
written notice, the Master Servicer may waive any default by the Servicer in
the
performance of its obligations hereunder and its consequences. Upon any waiver
of a past default, such default shall cease to exist, and any Servicer Event
of
Default arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereon except to the extent
expressly so waived.
Section
4.08. Successor
to Servicer, Miscellaneous Provisions.
(a)
Successor
to the Servicer.
Simultaneously with the termination of the Servicer’s responsibilities and
duties under this Agreement pursuant to Section 4.05, 4.06, or 4.07, the Master
Servicer shall (i) within 90 days of the Servicer’s notice of such termination,
succeed to and assume all of the Servicer’s responsibilities, rights, duties and
obligations under this Agreement, or (ii) appoint a successor having the
characteristics set forth in clauses (i) and (ii) of the second paragraph of
Section 4.06(a) and which shall succeed to all rights and assume all of the
responsibilities, duties and liabilities of the Servicer under this Agreement
simultaneously with the termination of the Servicer’s responsibilities, duties
and liabilities under this Agreement. Any successor to the Servicer (other
than
the Master Servicer) shall be subject to the approval of the Master Servicer
and
the Trust Administrator. Any approval of a successor servicer by the Master
Servicer and the Trust Administrator, shall, if the successor servicer is not
at
that time a servicer of other Mortgage Loans for the Trust, be conditioned
upon
the receipt by the Master Servicer, the Sponsor, the Indenture Trustee and
the
Trust Administrator of a letter from each Rating Agency to the effect that
such
transfer of servicing will not result in a qualification, withdrawal or
downgrade of the then-current rating of any of the Notes. In connection with
such appointment and assumption, the Master Servicer may make such arrangements
for the compensation of such successor out of payments on Mortgage Loans as
it
and such successor shall agree; provided, however,
that no
such compensation shall be in excess of that permitted the Servicer under this
Agreement. In the event that the Servicer’s duties, responsibilities and
liabilities under this Agreement should be terminated pursuant to the
aforementioned sections, the Servicer shall discharge such duties and
responsibilities during the period from the date it acquires knowledge of such
termination until the effective date thereof with the same degree of diligence
and prudence which it is obligated to exercise under this Agreement (including
continuing to make Advances during such transition period pursuant to Section
4.03(c)) and shall take no action whatsoever that might impair or prejudice
the
rights or financial condition of its successor. The resignation or removal
of
the Servicer pursuant to the aforementioned sections shall not become effective
until a successor shall be appointed pursuant to this Section 4.08(a) and shall
in no event relieve the Servicer of the representations and warranties made
pursuant to Sections 4.05 and the remedies available to the Master Servicer,
the
Indenture Trustee and the Sponsor under Sections 4.08(b) and 4.05(b) and (c),
it
being understood and agreed that the provisions of such Sections 4.08(b) and
4.05(b) and (c) shall be applicable to the Servicer notwithstanding any such
resignation or termination of the Servicer, or the termination of this
Agreement. Neither the Master Servicer, in its capacity as successor servicer,
nor any other successor servicer shall be responsible for the lack of
information and/or documents that it cannot otherwise obtain through reasonable
efforts.
Within
a
reasonable period of time, but in no event later than 30 days following the
appointment of a successor entity, the Servicer shall prepare, execute and
deliver to the successor entity any and all documents and other instruments,
place in such successor’s possession all Servicing Files, and do or cause to be
done all other acts or things necessary or appropriate to effect the purposes
of
such notice of termination, including but not limited to the transfer of any
Mortgage Notes and the related documents. The Servicer shall cooperate with
the
Indenture Trustee, the Master Servicer or the Sponsor, as applicable, and such
successor in effecting the termination of the Servicer’s responsibilities and
rights hereunder and the transfer of servicing responsibilities to the successor
Servicer, including without limitation, the transfer to such successor for
administration by it of all cash amounts which shall at the time be credited
by
the Servicer to the Custodial Account or Escrow Account or thereafter received
with respect to the Mortgage Loans.
Any
successor appointed as provided herein shall execute, acknowledge and deliver
to
the Indenture Trustee, the Servicer, the Master Servicer, the Trust
Administrator and the Sponsor an instrument (i) accepting such appointment,
wherein the successor shall make the representations and warranties set forth
in
Section 4.05(a) and provide for the same remedies set forth in such Section
herein and (ii) an assumption of the due and punctual performance and observance
of each covenant and condition to be performed and observed by the Servicer
under this Agreement, whereupon such successor shall become fully vested with
all the rights, powers, duties, responsibilities, obligations and liabilities
of
the Servicer, with like effect as if originally named as a party to this
Agreement. Any termination or resignation of the Servicer or termination of
this
Agreement pursuant to Sections 4.05, 4.06 and 4.07 shall not affect any claims
that the Sponsor, the Master Servicer, the Indenture Trustee or the Trust
Administrator may have against the Servicer arising out of the Servicer’s
actions or failure to act prior to any such termination or
resignation.
The
Servicer shall deliver promptly to the successor servicer the funds in the
Custodial Account and Escrow Account(s) and all Mortgage Loan documents and
related documents and statements held by it hereunder and the Servicer shall
account for all funds and shall execute and deliver such instruments and do
such
other things as may reasonably be required to more fully and definitively vest
in the successor all such rights, powers, duties, responsibilities, obligations
and liabilities of the Servicer.
Upon
a
successor’s acceptance of appointment as such, it shall notify the Indenture
Trustee, the Trust Administrator, the Sponsor and Master Servicer and the
Depositor of such appointment.
(b) Costs.
The
Sponsor shall pay the legal fees and expenses of its attorneys. Costs and
expenses incurred in connection with the transfer of the servicing
responsibilities, including fees for delivering Servicing Files, shall be paid
by (i) the terminated or resigning Servicer if such termination or resignation
is a result of an occurrence of a termination event under Section 4.05(b) or
4.07, and (ii) to the extent not paid by such Servicer, and in all other cases,
by the Trust.
Section
4.09. Sub-Servicers
and Sub-Servicing Agreements.
(a) The
Servicer may enter into sub-servicing agreements for any servicing and
administration of Mortgage Loans with any institution that is acceptable to
the
Sponsor and that is in compliance with the laws of each state necessary to
enable it to perform its obligations under such sub-servicing agreement. The
Servicer shall give notice to the Rating Agencies and the Master Servicer of
the
appointment of any sub-servicer. The Servicer shall not enter into any
sub-servicing agreement that does not provide for the servicing of the Mortgage
Loans specified therein on a basis consistent with the terms of this Agreement
or that otherwise violates the provisions of this Agreement. The Servicer may
enter into, and make amendments to, any sub-servicing agreement or enter into
different forms of sub-servicing agreements; provided,
however,
that
any such amendments or forms shall be consistent with and not violate the
provisions of this Agreement.
(b) For
purposes of this Agreement the Servicer shall be deemed to have received
payments on Mortgage Loans when any sub-servicer has received such payments.
With respect to the Servicer's obligations under Section 4.03(a) to make
deposits in the Custodial Account maintained by the Servicer, the Servicer
shall
be deemed to have made such deposits when any sub-servicer has made such
deposits into a sub-servicing account if permitted by the related sub-servicing
agreement.
(c) Any
sub-servicing agreement and any other transactions or services relating to
the
Mortgage Loans involving a sub-servicer shall be deemed to be between the
sub-servicer and the Servicer alone and the Master Servicer and the Indenture
Trustee shall not be deemed parties thereto and shall have no claims, rights,
obligations, duties or liabilities with respect to any sub-servicer, except
that
the Indenture Trustee shall have such claims or rights that arise as a result
of
any funds held by a sub-servicer in trust for or on behalf of the Issuer.
Notwithstanding the execution of any sub-servicing agreement, the Servicer
shall
not be relieved of any liability hereunder and shall remain obligated and liable
for the servicing and administration of the Mortgage Loans.
(d) The
Servicer shall be entitled to terminate any sub-servicing agreement and the
rights and obligations of any sub-servicer pursuant to any sub-servicing
agreement in accordance with the terms and conditions of such sub-servicing
agreement but only with the prior consent of the Sponsor. In the event of
termination of any sub-servicer, all servicing obligations of such sub-servicer
shall be assumed simultaneously by the Servicer without any act or deed on
the
part of such sub-servicer or the Servicer, and the Servicer either shall service
directly the related Mortgage Loans or shall enter into a sub-servicing
agreement with a successor sub-servicer. The Servicer shall give written notice
to the Sponsor, Master Servicer and Indenture Trustee of the termination of
any
sub-servicer.
(e) Any
sub-servicing agreement shall include the provision that such agreement may
be
immediately terminated by the Master Servicer or the Indenture Trustee, in
accordance with the terms of this Agreement, in the event that the Servicer
shall, for any reason, no longer be the Servicer (including termination due
to a
Servicer Event of Default) (i) without fee or (ii) clearly and unambiguously
states that any termination fee is the sole responsibility of the Servicer
and
none of the Sponsor, Depositor, Master Servicer, Indenture Trustee or the Issuer
has any liability therefor, regardless of the circumstances surrounding such
termination.
Section
4.10. Miscellaneous
Servicing Provisions.
(a) Protection
of Confidential Information.
The
Servicer shall keep confidential and shall not divulge to any party, without
the
Sponsor’s prior written consent, any nonpublic information pertaining to the
Mortgage Loans or any borrower thereunder, except to the extent that it is
appropriate for the Servicer to do so in working with legal counsel, special
servicers, auditors, taxing authorities or other governmental
agencies.
(b) No
Personal Solicitation.
For as
long as the Servicer services the Mortgage Loans, it covenants that it will
not,
and that it will ensure that its affiliates and agents will not, directly
solicit or provide information for any other party to solicit for prepayment
or
refinancing of any of the Mortgage Loans by the related mortgagors. It is
understood that promotions undertaken by the Servicer which are directed to
the
general public at large, or certain segments thereof, shall not constitute
solicitation as that term is used in this Section 4.10(b).
(c) Intention
of the Parties.
It is
the intention of the Sponsor and the Servicer that the Sponsor is conveying,
and
the Servicer is receiving, only a contract for servicing the Mortgage Loans.
Accordingly, the parties hereby acknowledge that the Trust remains the sole
and
absolute owner of the Mortgage Loans (other than the servicing rights) and
all
rights related thereto, subject to the lien of the Indenture.
Section
4.11. Advance
Facility.
(a) The
Servicer is hereby authorized to enter into a facility (an “Advance Facility”)
with any Person which provides that such Person (an “Advancing Person”) agrees
to fund some or all of the Advances and/or Servicing Advances required to be
made by the Servicer pursuant to this Agreement or that the Servicer may pledge
or assign its rights to be reimbursed for Advances and/or Servicing Advances,
directly or indirectly, to an Advancing Person, although no such Advance
Facility shall reduce or otherwise affect the Servicer’s obligation to fund such
Advances and/or Servicing Advances. If the Servicer enters into an Advance
Facility, the Servicer and the related Advancing Person shall deliver to the
Indenture Trustee, the Master Servicer and the Trust Administrator at the
respective addresses set forth in Section 10.07 hereof a written notice (an
“Advance Facility Notice”), stating the identity of the Advancing Person. If the
Servicer enters into such an Advance Facility pursuant to this Section 4.11,
upon reasonable request of the Advancing Person, the Trust Administrator shall
execute a letter of acknowledgment prepared by the Servicer, confirming its
receipt of notice of the existence of such Advance Facility. To the extent
that
an Advancing Person previously identified in the Advance Facility Notice funds
any Advance or any Servicing Advance and the Servicer provides the Trust
Administrator with an Officer’s Certificate that such Advancing Person is
entitled to reimbursement, such Advancing Person shall be entitled to receive
reimbursement pursuant to this Agreement for such amount to the extent provided
in Section 4.11(c). Such Officer’s Certificate must specify the amount of the
reimbursement, the remittance date, the written payment instructions for the
Advancing Person, the Section of this Agreement that permits the applicable
Advance or Servicing Advance to be reimbursed and either the section(s) of
the
Advance Facility that entitle the Advancing Person to receive reimbursement
from
the Trust Administrator, rather than the Servicer, or proof of an event of
default by the Servicer under the Advance Facility entitling the Advancing
Person to reimbursement from the Trust Administrator. The Trust Administrator
shall not have any duty or liability with respect to any calculation of any
reimbursement to be paid to an Advancing Person and shall be entitled to
conclusively rely without independent investigation on the Officer’s Certificate
provided pursuant to this Section 4.11. An Advancing Person whose obligations
hereunder are limited to the funding of Advances and/or Servicing Advances,
or
who merely receives an assignment or pledge of the Servicer’s rights to be
reimbursed for Advances and/or Servicing Advances, shall not be required to
meet
the qualifications of the Servicer or any sub-servicer and will not be deemed
to
be a sub-servicer under this Agreement.
(b) None
of
the Depositor, the Master Servicer, the Trust Administrator or the Indenture
Trustee shall, as a result of the existence of any Advance Facility, have any
additional duty or liability with respect to the calculation or payment of
any
reimbursement for Advances or Servicing Advances, nor, as a result of the
existence of any Advance Facility, shall the Depositor, the Master Servicer,
the
Trust Administrator or the Indenture Trustee have any additional responsibility
to track or monitor the administration of the Advance Facility or the
reimbursement for Advances or ▇▇▇▇▇▇▇▇▇ Advances, except, in the case of the
Trust Administrator, to remit reimbursements in accordance with payment
instructions received pursuant to Section 4.11(a). The Servicer shall indemnify
the Depositor, the Master Servicer, the Trust Administrator, the Indenture
Trustee, any successor Servicer and the Issuer for any claim, loss, liability
or
damage resulting from any claim by the Advancing Person, except to the extent
that such claim, loss, liability or damage resulted from or arose out of the
negligence, recklessness or willful misconduct on the part of the Depositor,
the
Master Servicer, the Trust Administrator, the Indenture Trustee, any successor
Servicer or the Issuer, as the case may be, or failure by the successor
Servicer, the Master Servicer or the Trust Administrator, as the case may be,
to
remit funds as required by this Agreement or the commission of an act or
omission to act by the successor Servicer, the Master Servicer or the Trust
Administrator, as the case may be, and the passage of any applicable cure or
grace period, such that, in the case of the Master Servicer, a Master Servicer
Event of Default occurs under this Agreement, or in the case of the successor
Servicer, the Master Servicer or the Trust Administrator, such entity is subject
to termination for cause under this Agreement.
(c) If
an
Advance Facility is entered into, and if the Servicer so notifies the Trust
Administrator, then the Servicer shall not seek reimbursement for any Advance
or
Servicing Advance made by an Advancing Person under Section 6.05, but instead
the Servicer shall remit the amounts relating to Advances to the Master Servicer
for inclusion in the monthly remittance made to the Trust Administrator on
a
Servicer Remittance Date in accordance with this Agreement. The Trust
Administrator, upon its receipt of an Officer’s Certificate in accordance with
Section 4.11 hereof, shall pay to the Advancing Person or to a trustee, agent
or
custodian designated in the Officer’s Certificate specified in Section 4.11(a),
reimbursements for Advances and Servicing Advances from the Collection Account
to the same extent the Servicer would have been permitted to reimburse itself
from its Custodial Account for such Advances and/or Servicing Advances in
accordance with Sections 4.02(e) and 6.05, had the Servicer itself funded such
Advance or Servicing Advance.
(d) All
Advances and Servicing Advances made pursuant to the terms of this Agreement
shall be deemed made and shall be reimbursed on a “first in-first out” (FIFO)
basis, such that an advance made earlier in time with respect to any Mortgage
Loan shall be reimbursed to the Servicer who made that advance, before
reimbursement of an advance made later in time with respect to that Mortgage
Loan, and a predecessor Servicer’s advances with respect to any particular
Mortgage Loan shall be reimbursed before reimbursement of a successor ▇▇▇▇▇▇▇▇’s
advances with respect to such Mortgage Loan.
(e) In
making
its determination that any Advance or Servicing Advance theretofore made has
become a Nonrecoverable Advance, the Servicer shall apply the same criteria
in
making such determination regardless of whether such Advance or Servicing
Advance shall have been made by the Servicer or any predecessor
Servicer.
(f) The
Servicer shall maintain and provide to any successor Servicer and, upon request,
the Master Servicer, the Trust Administrator and the Indenture Trustee a
detailed accounting on a loan-by-loan basis as to amounts advanced by, pledged
or assigned to, and reimbursed to any Advancing Person. The successor Servicer
shall be entitled to rely on any such information provided by the predecessor
Servicer, and the successor Servicer shall not be liable for any errors in
such
information.
(g) Any
amendment to this Section 4.11 or to any other provision of this Agreement
that
may be necessary or appropriate to effect the terms of an Advance Facility
as
described generally in this Section 4.11, including amendments to add provisions
relating to a successor Servicer, may be entered into by the parties hereto
without the consent of any Noteholder, provided that such amendment complies
with Section 10.03. All reasonable costs and expenses (including attorneys’
fees) of each party hereto of any such amendment shall be borne solely by the
Servicer. The parties hereto hereby acknowledge and agree that: (a) the Advances
and/or Servicing Advances financed by and/or pledged to an Advancing Person
under any Advance Facility are obligations owed to the Servicer payable only
from the cash flows and proceeds received under this Agreement for reimbursement
of Advances and/or Servicing Advances only to the extent provided herein, and
the Indenture Trustee, the Owner Trustee, the Trust Administrator, the Master
Servicer and the Issuer are not, as a result of the existence of any Advance
Facility, separately obligated or liable to repay any Advances and/or Servicing
Advances financed by the Advancing Person; (b) the Servicer will be responsible
for remitting to the Advancing Person the applicable amounts collected by it
as
reimbursement for Advances and/or Servicing Advances funded by the Advancing
Person, subject to the provisions of this Agreement and except to the extent
an
election is made to remit all such reimbursements to the Trust Administrator
as
described in Section 4.11(c); and (c) none of the Master Servicer, the Trust
Administrator and the Indenture Trustee shall have any responsibility to track
or monitor the administration of the financing arrangement between the Servicer
and any Advancing Person.
ARTICLE
V
ADMINISTRATION
AND MASTER SERVICING OF MORTGAGE LOANS
BY
THE
MASTER SERVICER AND THE TRUST ADMINISTRATOR
Section
5.01. Duties
of the Master Servicer; Representations and Warranties.
(a) For
and
on behalf of the Issuer, the Indenture Trustee and the Noteholders, the Master
Servicer shall master service the Mortgage Loans from and after the Closing
Date
in accordance with the provisions of this Article V. The Master Servicer hereby
represents and warrants to the Depositor, the Issuer, the Indenture Trustee,
the
Trust Administrator and the Servicer, as of the Closing Date, that:
(i) it
is
validly existing and in good standing as a federally chartered national banking
association and as Master Servicer has full power and authority to transact
any
and all business contemplated by this Agreement and to execute, deliver and
comply with its obligations under the terms of this Agreement, the execution,
delivery and performance of which have been duly authorized by all necessary
corporate action on the part of the Master Servicer;
(ii) the
execution and delivery of this Agreement by the Master Servicer and its
performance and compliance with the terms of this Agreement will not (A) violate
the Master Servicer’s charter or bylaws, (B) violate any law or regulation or
any administrative decree or order to which it is subject or (C) constitute
a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, or result in the breach of, any material contract,
agreement or other instrument to which the Master Servicer is a party or by
which it is bound or to which any of its assets are subject, which violation,
default or breach would materially and adversely affect the Master Servicer’s
ability to perform its obligations under this Agreement;
(iii) this
Agreement constitutes, assuming due authorization, execution and delivery hereof
by the other respective parties hereto, a legal, valid and binding obligation
of
the Master Servicer, enforceable against it in accordance with the terms hereof,
except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium and other laws affecting the enforcement of
creditors’ rights in general, and by general equity principles (regardless of
whether such enforcement is considered in a proceeding in equity or at
law);
(iv) the
Master Servicer is not in default with respect to any order or decree of any
court or any order or regulation of any federal, state, municipal or
governmental agency to the extent that any such default would materially and
adversely affect its performance hereunder;
(v) the
Master Servicer is not a party to or bound by any agreement or instrument or
subject to any charter provision, bylaw or any other corporate restriction
or
any judgment, order, writ, injunction, decree, law or regulation that may
materially and adversely affect its ability as Master Servicer to perform its
obligations under this Agreement or that requires the consent of any third
person to the execution of this Agreement or the performance by the Master
Servicer of its obligations under this Agreement;
(vi) no
litigation is pending or, to the best of the Master Servicer’s knowledge,
threatened against the Master Servicer which would prohibit its entering into
this Agreement or performing its obligations under this Agreement;
(vii) the
Master Servicer, or an affiliate thereof the primary business of which is the
servicing of conventional residential mortgage loans, is a ▇▇▇▇▇▇ ▇▇▇- or
FHLMC-approved seller/servicer;
(viii) no
consent, approval, authorization or order of any court or governmental agency
or
body is required for the execution, delivery and performance by the Master
Servicer of or compliance by the Master Servicer with this Agreement or the
consummation of the transactions contemplated by this Agreement, except for
such
consents, approvals, authorizations and orders (if any) as have been
obtained;
(ix) the
consummation of the transactions contemplated by this Agreement are in the
ordinary course of business of the Master Servicer;
(x) the
Master Servicer has obtained an Errors and Omissions Insurance Policy and a
Fidelity Bond in accordance with Section 5.02 each of which is in full force
and
effect, and each of which provides at least such coverage as is required
hereunder; and
(xi) the
information about the Master Servicer under the heading “The Master Servicer” in
the Prospectus Supplement does not include an untrue statement of a material
fact and does not omit to state a material fact, with respect to the statements
made, necessary in order to make the statements in light of the circumstances
under which they were made not misleading.
(b) It
is
understood and agreed that the representations and warranties set forth in
this
Section 5.01 shall survive the execution and delivery of this Agreement. The
Master Servicer shall indemnify the Depositor, the Issuer, the Indenture
Trustee, the Owner Trustee, the Trust Administrator and the Servicer and hold
them harmless against any loss, damages, penalties, fines, forfeitures, legal
fees and related costs, judgments, and other costs and expenses resulting from
any claim, demand, defense or assertion based on or grounded upon, or resulting
from, a breach of the Master Servicer’s representations and warranties contained
in this Section 5.01. It is understood and agreed that the enforcement of the
obligation of the Master Servicer set forth in this Section to indemnify the
foregoing parties as provided in this Section constitutes the sole remedy (other
than as set forth in Section 8.01) of such parties respecting a breach of the
foregoing representations and warranties. Such indemnification shall survive
any
termination of the Master Servicer as Master Servicer hereunder, and any
termination of this Agreement.
Any
cause
of action against the Master Servicer relating to or arising out of the breach
of any representations and warranties made in this Section shall accrue upon
discovery of such breach by the Depositor, the Issuer, the Indenture Trustee,
the Trust Administrator or the Servicer or notice thereof by any one of such
parties to the other parties. Notwithstanding anything in this Agreement to
the
contrary, the Master Servicer shall not be liable for special, indirect or
consequential losses or damages of any kind whatsoever (including, but not
limited to, lost profits).
Section
5.02. Master
Servicer Fidelity Bond and Master Servicer Errors and Omissions Insurance
Policy.
(a) The
Master Servicer, at its expense, shall maintain in effect a Fidelity Bond and
an
Errors and Omissions Insurance Policy, affording coverage with respect to all
directors, officers, employees and other Persons acting on the Master Servicer’s
behalf, and covering errors and omissions in the performance of the Master
Servicer’s obligations hereunder. The Master Servicer’s Errors and Omissions
Insurance Policy and the Master Servicer Fidelity Bond shall be in such form
and
amount that would be consistent with coverage customarily maintained by master
servicers of mortgage loans similar to the Mortgage Loans and shall by its
terms
not be cancelable without thirty days’ prior written notice to the Indenture
Trustee. The Master Servicer shall provide the Depositor and the Indenture
Trustee, upon request, with a copy of such policy and fidelity bond. The Master
Servicer shall (i) require the Servicer to maintain an Errors and Omissions
Insurance Policy and a Fidelity Bond in accordance with the provisions of
Section 4.02(m) of this Agreement, (ii) cause the Servicer to provide to the
Master Servicer certificates evidencing that such policy and bond is in effect
and to furnish to the Master Servicer any notice of cancellation, non-renewal
or
modification of the policy or bond received by it, as and to the extent provided
in Section 4.02(m) of the Agreement, and (iii) furnish copies of such policies
and of the certificates and notices referred to in clause (ii) to the Indenture
Trustee upon request.
(b) The
Master Servicer shall promptly report to the Indenture Trustee and the Trust
Administrator any material changes that may occur in the Master Servicer’s
Fidelity Bond or the Master Servicer’s Errors and Omissions Insurance Policy and
shall furnish either such party, on request, with certificates evidencing that
such bond and insurance policy are in full force and effect. The Master Servicer
shall promptly report to the Indenture Trustee and the Trust Administrator
all
cases of embezzlement or fraud, if such events involve funds relating to the
Mortgage Loans. The total losses, regardless of whether claims are filed with
the applicable insurer or surety, shall be disclosed in such reports together
with the amount of such losses covered by insurance. If a bond or insurance
claim report is filed with any of such bonding companies or insurers, the Master
Servicer shall promptly furnish a copy of such report to the Indenture Trustee
and the Trust Administrator. Any amounts relating to the Mortgage Loans
collected by the Master Servicer under any such bond or policy shall be promptly
remitted by the Master Servicer to the Trust Administrator for deposit into
the
Collection Account. Any amounts relating to the Mortgage Loans collected by
the
Servicer under any such bond or policy shall be remitted to the Master
Servicer.
Section
5.03. Master
Servicer’s Financial Statements and Related Information.
For
each year this Agreement is in effect, the Master Servicer shall deliver to
the
Trust Administrator, the Indenture Trustee, each Rating Agency and the Depositor
a copy of its annual unaudited financial statements on or prior to May 31 of
each year, beginning May 31, 2007. Such financial statements shall include
a
balance sheet, income statement, statement of retained earnings, statement
of
additional paid in capital, statement of changes in financial position and
all
related notes and schedules and shall be in comparative form, certified by
a
nationally recognized firm of Independent Accountants to the effect that such
statements were examined and prepared in accordance with generally accepted
accounting principles applied on a basis consistent with that of the preceding
year.
Section
5.04. Power
to Act; Procedures.
(a) The
Master Servicer shall master service the Mortgage Loans, provided that the
Master Servicer shall not take, or knowingly permit the Servicer to take, any
action that is inconsistent with or prejudices the interests of the Issuer,
the
Indenture Trustee or the Noteholders in any Mortgage Loan or the rights and
interests of the Depositor, the Issuer, the Indenture Trustee and the
Noteholders under this Agreement and the Indenture. The Master Servicer shall
represent and protect the interests of the Issuer, the Indenture Trustee and
the
Noteholders in the same manner as it protects its own interests in mortgage
loans in its own portfolio in any claim, proceeding or litigation regarding
a
Mortgage Loan. Without limiting the generality of the foregoing, the Master
Servicer in its own name, and the Servicer, to the extent such authority is
delegated to such Servicer under this Agreement, is hereby authorized and
empowered by the Indenture Trustee when the Master Servicer or such Servicer,
as
the case may be, believes it appropriate in its best judgment and in accordance
with the Servicing Standard, to execute and deliver, on behalf of itself and
the
Noteholders, the Trust Administrator, the Indenture Trustee or any of them,
any
and all instruments of satisfaction or cancellation, or of partial or full
release or discharge and all other comparable instruments, with respect to
the
Mortgage Loans and with respect to the Mortgaged Properties. The Indenture
Trustee shall furnish the Master Servicer, upon request, with any powers of
attorney (on the standard form used by the Indenture Trustee) empowering the
Master Servicer or the Servicer to execute and deliver instruments of
satisfaction or cancellation, or of partial or full release or discharge, and
to
foreclose upon or otherwise liquidate Mortgaged Property, and to appeal,
prosecute or defend in any court action relating to the Mortgage Loans or the
Mortgaged Property, in accordance with this Agreement, and the Indenture Trustee
shall execute and deliver such other documents as the Master Servicer may
request, necessary or appropriate to enable the Master Servicer to master
service the Mortgage Loans and carry out its duties hereunder, and to allow
the
Servicer to service the Mortgage Loans in each case in accordance with the
Servicing Standard (and the Indenture Trustee or the Trust Administrator shall
have no liability for misuse of any such powers of attorney by the Master
Servicer or the Servicer). If the Master Servicer or the Indenture Trustee
has
been advised that it is likely that the laws of the state in which action is
to
be taken prohibit such action if taken in the name of the Indenture Trustee
or
that the Indenture Trustee would be adversely affected under the “doing
business” or tax laws of such state if such action is taken in its name, then
upon request of the Indenture Trustee, the Master Servicer shall join with
the
Indenture Trustee in the appointment of a co-trustee pursuant to Section 6.10
of
the Indenture. In no event shall the Master Servicer, without the Indenture
Trustee’s written consent: (i) initiate any action, suit or proceeding solely
under the Indenture Trustee’s name without indicating the Master Servicer’s
representative capacity or (ii) take any action with the intent to cause, and
which actually does cause, the Indenture Trustee to be registered to do business
in any state. The Master Servicer shall indemnify the Indenture Trustee for
any
and all costs, liabilities and expenses incurred by the Indenture Trustee in
connection with the negligent or willful misuse of such powers of attorney
by
the Master Servicer. In the performance of its duties hereunder, the Master
Servicer shall be an independent contractor and shall not, except in those
instances where it is taking action in the name of the Indenture Trustee, be
deemed to be the agent of the Indenture Trustee.
(b) In
master
servicing and administering the Mortgage Loans, the Master Servicer shall employ
procedures and exercise the same care that it customarily employs and exercises
in master servicing and administering loans for its own account, giving due
consideration to the Servicing Standard where such practices do not conflict
with this Agreement. Consistent with the foregoing, the Master Servicer may,
and
may permit the Servicer to, in its discretion (i) waive any late payment charge
and (ii) extend the due dates for payments due on a Mortgage Note for a period
not greater than 120 days; provided, however,
that the
maturity of any Mortgage Loan shall not be extended past the date on which
the
final payment is due on the latest maturing Mortgage Loan as of the Cut-off
Date. In the event of any extension described in clause (ii) above, the Master
Servicer shall make or cause the Servicer to make Advances on the related
Mortgage Loan in accordance with the provisions of Section 4.03 on the basis
of
the amortization schedule of such Mortgage Loan without modification thereof
by
reason of such extension.
Section
5.05. Enforcement
of Servicer’s and Master Servicer’s Obligations.
(a) The
Master Servicer shall not be required to (i) take any action with respect to
the
servicing of any Mortgage Loan that the Servicer is not required to take under
this Agreement and (ii) cause the Servicer to take any action or refrain from
taking any action if this Agreement does not require the Servicer to take such
action or refrain from taking such action.
(b) The
Master Servicer, for the benefit of the Issuer, the Indenture Trustee and the
Noteholders, shall enforce the obligations of the Servicer hereunder, and shall,
in the event that the Servicer fails to perform its obligations in accordance
herewith, terminate the rights and obligations of the Servicer hereunder and
either act as servicer of the related Mortgage Loans or cause other parties
hereto to either assume the obligations of the Servicer under this Agreement
(or
agree to execute and deliver a successor servicing or sub-servicing agreement
with a successor servicer). Such enforcement, including, without limitation,
the
legal prosecution of claims, termination of servicing or sub-servicing rights
and the pursuit of other appropriate remedies, shall be in such form and carried
out to such an extent and at such time as the Master Servicer, in its good
faith
business judgment, would require were it the owner of the related Mortgage
Loans. The Master Servicer shall pay the costs of such enforcement at its own
expense, and shall be reimbursed therefor initially (i) from a general recovery
resulting from such enforcement only to the extent, if any, that such recovery
exceeds all amounts due in respect of the related Mortgage Loans, (ii) from
a
specific recovery of costs, expenses or attorneys’ fees against the party
against whom such enforcement is directed, and then, (iii) to the extent that
such amounts are insufficient to reimburse the Master Servicer for the costs
of
such enforcement, from the Collection Account.
Section
5.06. [Reserved]
Section
5.07. Collection
Account.
(a) On
the
Closing Date, the Trust Administrator shall open and shall thereafter maintain
a
segregated account held in trust in the name of the Securities Intermediary
(the
“Collection Account”), entitled “Collection Account, Deutsche Bank National
Trust Company, as Indenture Trustee, in trust for Holders of the Aames Mortgage
Investment Trust 2006-1, Mortgage Backed Notes, Series 2006-1.” The Collection
Account shall relate solely to the Notes issued by the Issuer, and funds
deposited in the Collection Account shall not be commingled with any other
monies.
(b) The
Collection Account shall be an Eligible Account. If an existing Collection
Account ceases to be an Eligible Account, the Trust Administrator shall
establish a new Collection Account that is an Eligible Account within 10 days
and transfer all funds and investment property on deposit in such existing
Collection Account into such new Collection Account.
(c) The
Trust
Administrator shall give to the Master Servicer and the Indenture Trustee prior
written notice of the name and address of the depository institution at which
the Collection Account is maintained and the account number of such Collection
Account. The Trust Administrator shall take such actions as are necessary to
cause the depository institution holding the Collection Account to hold such
account in the name of the Indenture Trustee. On each Payment Date, the entire
amount on deposit in the Collection Account relating to the Mortgage Loans
(subject to permitted withdrawals set forth in Section 5.08), other than amounts
not included in Interest Remittance Amount or Principal Remittance Amount to
be
paid to Noteholders for such Payment Date, shall be applied to make the
requested payment of principal and/or interest on each Class of
Notes.
(d) The
Master Servicer shall deposit or cause to be deposited in the Collection Account
on the earlier of the applicable Payment Date and one Business Day following
receipt thereof, the following amounts received or payments made by the Master
Servicer (other than in respect of principal of and interest on the Mortgage
Loans due on or before the Cut-off Date):
(i) all
remittances from the Custodial Account to the Master Servicer pursuant to
Section 4.03;
(ii) all
Advances made by the Servicer or the Master Servicer pursuant to Section 6.05
hereof and any payment in respect of Prepayment Interest Shortfalls paid by
the
Master Servicer pursuant to Section 5.21 hereof;
(iii) the
Purchase Price of any Mortgage Loan repurchased by the Depositor or the Sponsor
during the related Prepayment Period or any other Person and any Substitution
Amount related to any Qualifying Substitute Mortgage Loan; and
(iv) any
other
amounts received by or on behalf of the Master Servicer (including amounts
received by the Trust Administrator in respect of the Swap Agreement) and
required to be deposited in the Collection Account pursuant to this
Agreement.
(e) Funds
in
the Collection Account may be invested by the Trust Administrator in Eligible
Investments selected by and at the written direction of the Master Servicer,
which shall mature not later than one Business Day prior to the next Payment
Date (or on the Payment Date with respect to any Eligible Investment of the
Master Servicer or any other fund managed or advised by it or any Affiliate)
and
any such Eligible Investment shall not be sold or disposed of prior to its
maturity. All such Eligible Investments shall be made in the name of the Master
Servicer in trust for the benefit of the Indenture Trustee and the Noteholders.
All income and gain realized from any Eligible Investment shall be for the
benefit of the Master Servicer and shall be subject to its withdrawal or order
from time to time, subject to Section 5.08 and shall not be part of the Trust
Estate. The amount of any losses incurred in respect of any such investments
shall be deposited in such Collection Account by the Master Servicer out of
its
own funds, without any right of reimbursement therefor, immediately as realized.
The foregoing requirements for deposit in the Collection Account are exclusive,
it being understood and agreed that, without limiting the generality of the
foregoing, payments of interest on funds in the Collection Account and payments
in the nature of late payment charges, assumption fees and other incidental
fees
and charges relating to the Mortgage Loans need not be deposited by the Master
Servicer in the Collection Account and may be retained by the Master Servicer
or
the Servicer, as applicable, as additional servicing compensation. If the Master
Servicer deposits in the Collection Account any amount not required to be
deposited therein, it may at any time withdraw such amount from such Collection
Account.
Section
5.08. Application
of Funds in the Collection Account.
The
Trust Administrator may, from time to time, make, or cause to be made,
withdrawals from the Collection Account for the following purposes:
(i) to
reimburse the Master Servicer or the Servicer, as applicable, for any previously
unreimbursed Advances or Servicing Advances made by any such party, such right
to reimbursement pursuant to this subclause (i) being limited to amounts
received on or in respect of a particular Mortgage Loan (including, for this
purpose, Liquidation Proceeds, Condemnation Proceeds, REO Disposition Proceeds
and amounts representing Insurance Proceeds with respect to the property subject
to the related Mortgage) which represent late recoveries (net of the applicable
Servicing Fee) of payments of principal or interest respecting which any such
Advance was made, it being understood, in the case of any such reimbursement,
that the Master Servicer’s or Servicer’s right thereto shall be prior to the
rights of the Noteholders;
(ii) to
reimburse the Master Servicer or the Servicer following a final liquidation
of a
Mortgage Loan for any previously unreimbursed Advances made by any such party
(A) that such party determines in good faith will not be recoverable from
amounts representing late recoveries of payments of principal or interest
respecting the particular Mortgage Loan as to which such Advance was made or
from Liquidation Proceeds, Condemnation Proceeds, REO Disposition Proceeds
or
Insurance Proceeds with respect to such Mortgage Loan and/or (B) to the extent
that such unreimbursed Advances exceed the related Liquidation Proceeds or
Insurance Proceeds, it being understood, in the case of each such reimbursement,
that the Master Servicer’s or Servicer’s right thereto shall be prior to the
rights of the Noteholders;
(iii) to
reimburse the Master Servicer or the Servicer from Liquidation Proceeds for
Liquidation Expenses and for amounts expended by it pursuant to Section 4.02(o)
in good faith in connection with the restoration of damaged property and, to
the
extent that Liquidation Proceeds after such reimbursement exceed the unpaid
principal balance of the related Mortgage Loan, together with accrued and unpaid
interest thereon at the applicable Mortgage Rate less the applicable Servicing
Fee Rate and Master Servicing Fee Rate for such Mortgage Loan to the Due Date
next succeeding the date of its receipt of such Liquidation Proceeds, to pay
to
the Master Servicer or the Servicer out of such excess the amount of any unpaid
assumption fees, late payment charges or other Mortgagor charges on the related
Mortgage Loan and to retain any excess remaining thereafter as additional
servicing compensation, it being understood, in the case of any such
reimbursement or payment, that such Master Servicer’s or Servicer’s right
thereto shall be prior to the rights of the Noteholders;
(iv) to
pay to
the Depositor or the Sponsor or any other Person, as applicable, with respect
to
each Mortgage Loan or REO Property acquired in respect thereof that has been
purchased pursuant to this Agreement, all amounts received thereon and not
paid
on the date on which the related repurchase was effected, and to pay to the
applicable party any Advances and Servicing Advances to the extent specified
in
the definition of Purchase Price;
(v) to
the
extent not paid by the Servicer, to pay any Insurance Premium with respect
to a
Mortgage Loan;
(vi) to
pay to
the Master Servicer income earned on the investment of funds on deposit in
the
Collection Account;
(vii) to
make
payment to the Swap Provider in the amounts and in the manner provided for
in
Section 6.02;
(viii) on
each
Payment Date, to make payment to the Noteholders in the amounts and in the
manner provided for in Section 6.02 for the related Payment Date (to the extent
collected by the Master Servicer or the Servicer);
(ix) on
each
Payment Date, to make payment to the Ownership Certificate, all Prepayment
Premiums received during the immediately preceding Prepayment
Period;
(x) to
make
payment to itself, the Master Servicer, the Servicer, the Indenture Trustee,
the
Custodian, the Owner Trustee and others pursuant to any provision of this
Agreement, the Trust Agreement, the Indenture or the Custodial
Agreement;
(xi) to
withdraw funds deposited in error in the Collection Account;
(xii) to
clear
and terminate the Collection Account pursuant to Article IX; and
(xiii) to
reimburse a successor master servicer (solely in its capacity as successor
master servicer), for any fee or advance occasioned by a termination of the
Master Servicer, and the assumption of such duties by the Indenture Trustee
as
successor master servicer or a successor master servicer appointed by the
Indenture Trustee pursuant to Section 8.01, in each case to the extent not
reimbursed by the terminated Master Servicer, it being understood, in the case
of any such reimbursement or payment, that the right of the Master Servicer
or
the Indenture Trustee thereto shall be prior to the rights of the
Noteholders.
In
connection with withdrawals pursuant to subclauses (i) and (iv) above, the
Master Servicer’s or the Servicer’s or such other Person’s entitlement thereto
is limited to collections or other recoveries on the related Mortgage Loan.
The
Trust Administrator shall therefore keep and maintain a separate accounting
for
each Mortgage Loan for the purpose of justifying any withdrawal from the
Collection Account it maintains pursuant to such subclauses.
Section
5.09. Reports
to Indenture Trustee and Noteholders.
(a) On
each
Payment Date, the Trust Administrator shall make available to the Indenture
Trustee and each Noteholder, a report setting forth the following information
(on the basis of Mortgage Loan level information obtained from the
Servicer):
(i) the
aggregate amount of the payment to be made on such Payment Date to the Holders
of each Class of Notes, to the extent applicable, allocable to principal on
the
Mortgage Loans, including Liquidation Proceeds and Insurance Proceeds, stating
separately the amount attributable to scheduled principal payments and
unscheduled payments in the nature of principal;
(ii) the
aggregate amount of the payment to be made on such Payment Date to the Holders
of each Class of Notes allocable to interest and the calculation
thereof;
(iii) the
amount, if any, of any payment to the Holder of the Ownership
Certificate;
(iv)
(A) the
aggregate amount of any Advances required to be made by or on behalf of the
Servicer (or the Master Servicer) with respect to such Payment Date, (B) the
aggregate amount of such Advances actually made, and (C) the amount, if any,
by
which (A) above exceeds (B) above;
(v) the
total
number of Mortgage Loans, the aggregate Stated Principal Balance of all the
Mortgage Loans as of the close of business on the last day of the related
Collection Period, after giving effect to payments allocated to principal
reported under clause (i) above;
(vi) the
Class
Principal Amount of each Class of Notes, to the extent applicable, as of such
Payment Date after giving effect to payments allocated to principal reported
under clause (i) above;
(vii) the
amount of all Prepayment Premiums distributed to the Ownership
Certificate;
(viii) the
amount of any Realized Losses incurred with respect to the Mortgage Loans (x)
in
the applicable Prepayment Period and (y) in the aggregate since the Cut-off
Date, and the aggregate amount of Subsequent Recoveries received during the
related Prepayment Period;
(ix) the
amount of the Servicing Fee paid during the Collection Period to which such
payment relates;
(x) the
number and aggregate Stated Principal Balance of Mortgage Loans, as reported
to
the Trust Administrator by the Servicer, (a) remaining outstanding, (b)
delinquent 30 to 59 days on a contractual basis (based on the OTS methodology
as
described below), (c) delinquent 60 to 89 days on a contractual basis (based
on
the OTS methodology as described below), (d) delinquent 90 or more days on
a
contractual basis (based on the OTS methodology as described below), (e) as
to
which foreclosure proceedings have been commenced as of the close of business
on
the last Business Day of the calendar month immediately preceding the month
in
which such Payment Date occurs, (f) in bankruptcy and (g) that are REO
Properties;
(xi) the
aggregate Stated Principal Balance of any Mortgage Loans with respect to which
the related Mortgaged Property became an REO Property as of the close of
business on the last Business Day of the calendar month immediately preceding
the month in which such Payment Date occurs;
(xii) with
respect to substitution of Mortgage Loans in the preceding calendar month,
the
Stated Principal Balance of each Deleted Mortgage Loan and of each Qualifying
Substitute Mortgage Loan;
(xiii) the
aggregate outstanding Basis Risk Shortfalls and Unpaid Basis Risk Shortfalls,
if
any, for each Class of Notes, after giving effect to the payments made on such
Payment Date;
(xiv) the
Note
Interest Rate applicable to such Payment Date with respect to each Class of
Notes;
(xv) the
Interest Remittance Amount and the Principal Remittance Amount applicable to
such Payment Date;
(xvi) if
applicable, the amount of any shortfall (i.e.,
the
difference between the aggregate amounts of principal and interest which
Noteholders would have received if there were sufficient available amounts
in
the Collection Account and the amounts actually paid);
(xvii) any
Overcollateralization Deficiency Amount after giving effect to the payments
made
on such Payment Date;
(xviii) the
aggregate Deferred Interest and Allocated Realized Loss Amounts, if any, for
each Class of Notes, after giving effect to the payments made on such Payment
Date;
(xix) the
amount of any Net Swap Payment or Swap Termination Payments;
(xx) LIBOR
with respect to such Payment Date; and
(xxi) indication
of whether a Servicer Termination Trigger Event or a Sponsor Financial Covenant
Termination Event has occurred.
In
the
case of information furnished pursuant to subclauses (i), (ii) and (vi) above,
the amounts shall (except in the case of the report delivered to the holder
of
the Ownership Certificate) be expressed as a dollar amount per $1,000 of
original principal amount of Notes.
The
Trust
Administrator will include on Form 10-D (to the extent it receives information
from the Servicer) information regarding any material breaches of
representations and warranties regarding the Mortgage Loans and material
modification, extension or waivers to Mortgage Loan terms, fees, penalties
or
payments during the preceding calendar month or that have become material over
time.
For
all
purposes of this Agreement, with respect to any Mortgage Loan, delinquencies
shall be determined and reported based on the OTS methodology for determining
delinquencies on mortgage loans similar to the Mortgage Loans. By way of
example, a Mortgage Loan would be delinquent with respect to a Monthly Payment
due on a Due Date if such Monthly Payment is not made by the close of business
on the Mortgage Loan’s next succeeding Due Date, and a Mortgage Loan would be
more than 30 days Delinquent with respect to such Monthly Payment if such
Monthly Payment were not made by the close of business on the Mortgage Loan’s
second succeeding Due Date. The Servicer hereby represents and warrants to
the
Depositor that this delinquency recognition policy is not less restrictive
than
any delinquency recognition policy established by the primary safety and
soundness regulator, if any, of the Servicer.
The
Trust
Administrator will make such report and additional loan level information (and,
at its option, any additional files containing the same information in an
alternative format) available each month to the Rating Agencies and Noteholders
via the Trust Administrator’s website. The Trust Administrator’s website can be
accessed at ▇▇▇.▇▇▇▇▇▇▇.▇▇▇.
Assistance in using the website can be obtained by calling the Trust
Administrator’s customer service desk at (▇▇▇) ▇▇▇-▇▇▇▇. Such parties that are
unable to use the website are entitled to have a paper copy mailed to them
via
first class mail by notifying the Trust Administrator at ▇▇▇▇▇ Fargo Bank,
N.A.,
P.O. Box 98, Columbia, Maryland 21046 (or for overnight deliveries at ▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇), and indicating such. The Trust
Administrator shall have the right to change the way such statements are
distributed in order to make such distribution more convenient and/or more
accessible to the above parties and the Trust Administrator shall provide timely
and adequate notification to all above parties regarding any such
changes.
The
foregoing information and reports shall be prepared and determined by the Trust
Administrator based solely on Mortgage Loan data provided to the Trust
Administrator by the Master Servicer (in a format agreed to by the Trust
Administrator and the Master Servicer) no later than the Payment Date. In
preparing or furnishing the foregoing information, the Trust Administrator
and
the Master Servicer shall be entitled to rely conclusively on the accuracy
of
the information or data regarding the Mortgage Loans, the related REO Property,
Sponsor Financial Covenant Termination Events and Servicer Termination Trigger
Events that has been provided to the Master Servicer by the Servicer, and
neither the Trust Administrator nor the Master Servicer shall be obligated
to
verify, recompute, reconcile or recalculate any such information or data. The
Trust Administrator, the Indenture Trustee, the Custodian and the Master
Servicer shall be entitled to conclusively rely on all of such data and
information provided to the Master Servicer and shall have no liability for
any
errors in such data or information.
(b) Upon
the
reasonable advance written request of any Noteholder that is a savings and
loan,
bank or insurance company, which request, if received by the Indenture Trustee
shall be forwarded promptly to the Trust Administrator, the Trust Administrator
shall provide, or cause to be provided (or, to the extent that such information
or documentation is not required to be provided by the Servicer, shall use
reasonable efforts to obtain such information and documentation from the
Servicer, and provide), to such Noteholder such reports and access to
information and documentation regarding the Mortgage Loans as such Noteholder
may reasonably deem necessary to comply with applicable regulations of the
Office of Thrift Supervision or its successor or other regulatory authorities
with respect to an investment in the Notes; provided, however,
that the
Trust Administrator shall be entitled to be reimbursed by such Noteholder for
actual expenses incurred in providing such reports and access.
(c) Within
90
days, or such shorter period as may be required by statute or regulation, after
the end of each calendar year, the Trust Administrator shall have prepared
and
shall make available to each Person who at any time during the calendar year
was
a Noteholder 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 Noteholders pursuant to Section 5.09(a)
on
an annual basis as may be required to enable such Holders to prepare their
federal income tax returns; provided, however,
that
this Section 5.09(c) shall not be applicable where relevant reports or summaries
are required elsewhere in this Agreement. Such information shall include the
amount of original issue discount accrued on each Class of Notes and information
regarding the expenses of the Issuer. The Trust Administrator shall be deemed
to
have satisfied such requirement if it forwards such information in any other
format permitted by the Code. The Master Servicer shall provide the Trust
Administrator with such information as is necessary for the Trust Administrator
to prepare such reports.
(d) The
Trust
Administrator shall furnish any other information that is required by the Code
and regulations thereunder to be made available to Noteholders. The Master
Servicer shall provide the Trust Administrator with such information as is
necessary for the Trust Administrator to prepare such reports (and the Trust
Administrator may rely solely upon such information).
(e) Once
during each calendar month, the Trust Administrator shall supply an electronic
tape to Bloomberg Financial Markets, Inc. in a format acceptable to Bloomberg
Financial Markets, Inc. on a monthly basis, and shall supply an electronic
tape
to Loan Performance and Intex Solutions in a format acceptable to Loan
Performance and Intex Solutions on a monthly basis.
Section
5.10. Termination
of Servicer; Successor Servicers.
(a) The
Master Servicer shall be entitled to terminate the rights and obligations of
the
Servicer upon the occurrence of a Servicer Event of Default as set forth in
Section 4.07; provided, however,
that in
the event of termination of the Servicer, the Master Servicer shall provide
for
the servicing of the Mortgage Loans by a successor servicer as provided in
Section 4.08.
The
parties acknowledge that notwithstanding the preceding sentence, there may
be a
transition period, not to exceed 90 days, in order to effect the transfer of
servicing to a successor servicer. The Master Servicer shall be entitled to
be
reimbursed by the Servicer (or by the Trust Estate, if the Servicer is unable
to
fulfill its obligations hereunder) for all costs associated with the transfer
of
servicing, 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 required by the Master Servicer
to correct any errors or insufficiencies in the servicing data or otherwise
to
enable the Master Servicer to service the Mortgage Loans properly and
effectively.
(b) If
the
Master Servicer acts as a successor Servicer, it shall not assume liability
for
the representations and warranties of the Servicer that it replaces. The Master
Servicer shall use reasonable efforts to have the successor Servicer assume
liability for the representations and warranties made by the terminated Servicer
and in the event of any such assumption by the successor servicer, the Master
Servicer may, in the exercise of its business judgment, release the terminated
Servicer from liability for such representations and warranties.
(c) If
the
Master Servicer acts as a successor Servicer, it will have no obligation to
make
an Advance if it determines in its reasonable judgment that such Advance would
constitute a Nonrecoverable Advance.
Section
5.11. Master
Servicer Liable for Enforcement.
The
Master Servicer shall use commercially reasonable efforts to ensure that the
Mortgage Loans are serviced in accordance with the provisions of this Agreement
and shall use commercially reasonable efforts to enforce the provisions of
Article IV for the benefit of the Noteholders. The Master Servicer shall be
entitled to enter into any agreement with any Servicer for indemnification
of
the Master Servicer and nothing contained in this Agreement shall be deemed
to
limit or modify such indemnification. Except as expressly set forth herein,
the
Master Servicer shall have no liability for the acts or omissions of the
Servicer in the performance by such Servicer of its obligations under Article
IV.
Section
5.12. Assumption
of Master Servicing by Indenture Trustee.
(a) In
the
event the Master Servicer shall for any reason no longer be the Master Servicer
(including by reason of any Master Servicer Event of Default under Section
8.01
of this Agreement), the Indenture Trustee shall thereupon assume all of the
rights and obligations of such Master Servicer hereunder. The Indenture Trustee,
its designee or any successor master servicer appointed by the Indenture Trustee
shall be deemed to have assumed all of the Master Servicer’s interest herein,
except that the Master Servicer shall not thereby be relieved of any liability
or obligations of the Master Servicer accruing prior to its replacement as
Master Servicer, and shall be liable to the Indenture Trustee, and hereby agrees
to indemnify and hold harmless the Indenture Trustee from and against all costs,
damages, expenses and liabilities (including reasonable attorneys’ fees)
incurred by the Indenture Trustee as a result of such liability or obligations
of the Master Servicer and in connection with the Indenture Trustee’s assumption
(but not its performance, except to the extent that costs or liability of the
Indenture Trustee are created or increased as a result of negligent or wrongful
acts or omissions of the Master Servicer prior to its replacement as Master
Servicer) of the Master Servicer’s obligations, duties or responsibilities
thereunder.
(b) The
Master Servicer that has been terminated shall, upon request of the Indenture
Trustee but at the expense of such Master Servicer, deliver to the assuming
party all documents and records relating to the Mortgage Loans and an accounting
of amounts collected and held by it and otherwise use its best efforts to effect
the orderly and efficient transfer of master servicing to the assuming
party.
Section
5.13. [Reserved]
Section
5.14. Release
of Mortgage Files.
(a) Upon
(i)
becoming aware of the payment in full of any Mortgage Loan or (ii) the receipt
by the Master Servicer of a notification that payment in full has been or will
be escrowed in a manner customary for such purposes, the Master Servicer will,
or will cause the Servicer to, promptly notify the Indenture Trustee (or the
Custodian) by a certification (which certification shall include a statement
to
the effect that all amounts received in connection with such payment that are
required to be deposited in the Collection Account maintained by the Trust
Administrator pursuant to Section 5.07 have been or will be so deposited) of
a
Servicing Officer and shall request (on the form attached to the Custodial
Agreement) the Indenture Trustee or the Custodian, to deliver to the Servicer
the related Mortgage File. Upon receipt of such certification and request,
the
Indenture Trustee or the Custodian (with the consent, and at the direction
of
the Indenture Trustee), shall promptly release the related Mortgage File to
the
Servicer and the Indenture Trustee shall have no further responsibility with
regard to such Mortgage File. Upon any such payment in full, the Master Servicer
is authorized, and the Servicer is authorized, to give, as agent for the
Indenture Trustee, as the mortgagee under the Mortgage that secured the Mortgage
Loan, an instrument of satisfaction (or assignment of mortgage without recourse)
regarding the Mortgaged Property subject to the Mortgage, which instrument
of
satisfaction or assignment, as the case may be, shall be delivered to the Person
or Persons entitled thereto against receipt therefor of such payment, it being
understood and agreed that no expenses incurred in connection with such
instrument of satisfaction or assignment, as the case may be, shall be
chargeable to the Collection Account.
(b) From
time
to time and as appropriate for the servicing or foreclosure of any Mortgage
Loan, the Indenture Trustee shall execute such documents as shall be prepared
and furnished to the Indenture Trustee by the Master Servicer, or by the
Servicer, as applicable, (in a form reasonably acceptable to the Indenture
Trustee) and as are necessary for the prosecution of any such proceedings.
The
Indenture Trustee or the Custodian, shall, upon request of the Master Servicer
or of the Servicer, as applicable, and delivery to the Indenture Trustee or
the
Custodian, of a trust receipt signed by a Servicing Officer substantially in
the
form attached to the Custodial Agreement, release the related Mortgage File
held
in its possession or control to the Master Servicer (or the Servicer, as
applicable). Such trust receipt shall obligate the Master Servicer or the
Servicer, as applicable, to return the Mortgage File to the Indenture Trustee
or
the Custodian, as applicable, when the need therefor by the Master Servicer
or
the Servicer, as applicable, 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, the trust receipt shall be released
by
the Indenture Trustee or the Custodian, as applicable, to the Master Servicer
or
the Servicer as applicable.
Section
5.15. Documents,
Records and Funds in Possession of Master Servicer To Be Held for Indenture
Trustee.
(a) The
Master Servicer shall transmit, or cause the Servicer to transmit, to the
Indenture Trustee such documents and instruments coming into the possession
of
the Master Servicer or the Servicer from time to time as are required by the
terms hereof to be delivered to the Indenture Trustee or the Custodian. Any
funds received by the Master Servicer or by the Servicer in respect of any
Mortgage Loan or which otherwise are collected by the Master Servicer or the
Servicer as Liquidation Proceeds or Insurance Proceeds in respect of any
Mortgage Loan shall be held for the benefit of the Indenture Trustee, the
Noteholders and the Swap Provider subject to the Master Servicer’s right to
retain or withdraw amounts provided in this Agreement and to the right of the
Servicer to retain its Servicing Fee and other amounts as provided herein.
The
Master Servicer shall, and shall cause the Servicer to, provide access to
information and documentation regarding the Mortgage Loans to the Indenture
Trustee, their respective agents and accountants at any time upon reasonable
request and during normal business hours, and to Noteholders that are savings
and loan associations, banks or insurance companies, the Office of Thrift
Supervision, the FDIC and the supervisory agents and examiners of such Office
and Corporation or examiners of any other federal or state banking or insurance
regulatory authority if so required by applicable regulations of the Office
of
Thrift Supervision or other regulatory authority, such access to be afforded
without charge but only upon reasonable request in writing and during normal
business hours at the offices of the Master Servicer designated by it. In
fulfilling such a request the Master Servicer shall not be responsible for
determining the sufficiency of such information.
(b) All
Mortgage Files and funds collected or held by, or under the control of, the
Master Servicer or the Servicer, in respect of any Mortgage Loans, whether
from
the collection of principal and interest payments or from Liquidation Proceeds
or Insurance Proceeds, shall be held by the Master Servicer or by the Servicer
for and on behalf of the Indenture Trustee as the Indenture Trustee’s agent and
bailee for purposes of perfecting the Indenture Trustee’s security interest
therein as provided by relevant Uniform Commercial Code or laws; provided, however,
that the
Master Servicer and the Servicer shall be entitled to setoff against, and deduct
from, any such funds any amounts that are properly due and payable to the Master
Servicer or the Servicer under this Agreement and shall be authorized to remit
such funds to the Trust Administrator in accordance with this
Agreement.
(c) The
Master Servicer hereby acknowledges that concurrently with the execution of
this
Agreement, the Indenture Trustee shall own or, to the extent that a court of
competent jurisdiction shall deem the conveyance of the Mortgage Loans from
the
Sponsor to the Depositor not to constitute a sale, the Indenture Trustee shall
have a security interest in the Mortgage Loans and in all Mortgage Files
representing such Mortgage Loans and in all funds and investment property now
or
hereafter held by, or under the control of, the Servicer or the Master Servicer
that are collected by the Servicer or the Master Servicer in connection with
the
Mortgage Loans, whether as scheduled installments of principal and interest
or
as full or partial prepayments of principal or interest or as Liquidation
Proceeds or Insurance Proceeds or otherwise, and in all proceeds of the
foregoing and proceeds of proceeds (but excluding any fee or other amounts
to
which the Servicer or the Master Servicer is entitled to hereunder); and the
Master Servicer agrees that so long as the Mortgage Loans are assigned to and
held by the Indenture Trustee or the Custodian, all documents or instruments
constituting part of the Mortgage Files, and such funds relating to the Mortgage
Loans which come into the possession or custody of, or which are subject to
the
control of, the Master Servicer or the Servicer shall be held by the Master
Servicer or the Servicer for and on behalf of the Indenture Trustee as the
Indenture Trustee’s agent and bailee for purposes of perfecting the Indenture
Trustee’s security interest therein as provided by the applicable Uniform
Commercial Code or other applicable laws.
(d) The
Master Servicer agrees that it shall not, and shall not authorize the Servicer
to, create, incur or subject any Mortgage Loans, or any funds that are deposited
in any Custodial Account, Escrow Account or the Collection Account, or any
funds
that otherwise are or may become due or payable to or for the benefit of the
Indenture Trustee, to any claim, lien, security interest, judgment, levy, writ
of attachment or other encumbrance, nor assert by legal action or otherwise
any
claim or right of setoff against any Mortgage Loan or any funds collected on,
or
in connection with, a Mortgage Loan.
Section
5.16. Opinion.
On or
before the Closing Date, the Master Servicer shall cause to be delivered to
the
Depositor, the Sponsor, the Indenture Trustee, the Issuer, the Trust
Administrator and the Servicer one or more Opinions of Counsel, dated the
Closing Date, in form and substance reasonably satisfactory to the Depositor,
as
to the due authorization, execution and delivery of this Agreement by the Master
Servicer and the enforceability thereof.
Section
5.17. [Reserved]
Section
5.18. [Reserved]
Section
5.19. [Reserved]
Section
5.20. Indenture
Trustee To Retain Possession of Certain Insurance Policies and
Documents.
The
Indenture Trustee (or the Custodian on behalf of the Indenture Trustee) shall
retain possession and custody of the originals of the primary mortgage insurance
policies or certificate of insurance if applicable and any certificates of
renewal as to the foregoing as may be issued from time to time as contemplated
by this Agreement. Until all amounts payable in respect of the Notes have been
paid in full and the Master Servicer otherwise has fulfilled its obligations
under this Agreement, the Indenture Trustee (or the Custodian) shall also retain
possession and custody of each Mortgage File in accordance with and subject
to
the terms and conditions of this Agreement. The Master Servicer shall promptly
deliver or cause the Servicer to deliver to the Indenture Trustee (or the
Custodian), upon the execution or receipt thereof the originals of the primary
mortgage insurance policies and any certificates of renewal thereof, and such
other documents or instruments that constitute portions of the Mortgage File
that come into the possession of the Master Servicer or the Servicer from time
to time.
Section
5.21. Compensation
to the Master Servicer.
In
addition to the Master Servicing Fee, all income and gain realized from any
investment of funds in the Collection Account shall be for the benefit of the
Master Servicer as compensation pursuant to Section 5.07(e). Notwithstanding
the
foregoing, the Master Servicer shall deposit in the Collection Account, on
or
before the related Payment Date, an amount equal to the lesser of (i) its master
servicing compensation with respect to such Payment Date and (ii) the amount
of
any Compensating Interest Payment required to be paid by the Servicer with
respect to such Payment Date pursuant to this Agreement, but which is not paid
by the Servicer on its behalf. The Master Servicer shall be required to pay
all
expenses incurred by it in connection with its activities hereunder and shall
not be entitled to reimbursement therefor except as provided in this
Agreement.
Section
5.22. [Reserved]
Section
5.23. Reports
to the Indenture Trustee.
(a) Not
later
than 30 days after each Payment Date, the Trust Administrator shall, upon
request, forward to the Indenture Trustee a statement, deemed to have been
certified by a officer of the Trust Administrator, setting forth the status
of
the Collection Account maintained by the Trust Administrator as of the close
of
business on the related Payment Date, indicating that all payments required
by
this Agreement to be made by the Trust Administrator have been made (or if
any
required payment has not been made by the Trust Administrator, specifying the
nature and status thereof) and showing, for the period covered by such
statement, the aggregate of deposits into and withdrawals from the Collection
Account maintained by the Trust Administrator. Copies of such statement shall
be
provided by the Trust Administrator, upon request, to the Depositor, Attention:
Aames 2006-1 and any Noteholders (or by the Indenture Trustee at the Trust
Administrator’s expense if the Trust Administrator shall fail to provide such
copies to the Noteholders (unless (i) the Trust Administrator shall have failed
to provide the Indenture Trustee with such statement or (ii) the Indenture
Trustee has no actual knowledge of the Trust Administrator’s failure to provide
such statement)).
(b) Not
later
than two Business Days following each Payment Date, the Trust Administrator
shall deliver to one Person designated by the Depositor, in a format consistent
with other electronic loan level reporting supplied by the Master Servicer
in
connection with similar transactions, “loan level” information with respect to
the Mortgage Loans as of the related Determination Date, to the extent that
such
information has been provided to the Master Servicer by the Servicer or by
the
Depositor.
(c) All
information, reports and statements prepared by the Master Servicer under this
Agreement shall be based on information supplied to the Master Servicer by
the
Servicer without independent verification thereof and the Master Servicer shall
be entitled to rely on such information.
Section
5.24. [Reserved]
Section
5.25. [Reserved]
Section
5.26. Merger
or Consolidation.
Any
Person into which the Master Servicer may be merged or consolidated, or any
Person resulting from any merger, conversion, other change in form or
consolidation to which the Master Servicer shall be a party, or any Person
succeeding to the business of the Master Servicer, shall be the successor to
the
Master Servicer hereunder, without the execution or filing of any paper or
any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding; provided, however,
that the
successor or resulting Person to the Master Servicer shall be a Person that
shall be qualified and approved (or that have an Affiliate that is qualified
and
approved) to service mortgage loans for ▇▇▇▇▇▇ ▇▇▇ or FHLMC and shall have
a net
worth of not less than $15,000,000.
Section
5.27. Resignation
of Master Servicer.
Except
as otherwise provided in Sections 5.26 and this Section 5.27 hereof, the Master
Servicer shall not resign from the obligations and duties hereby imposed on
it
unless it determines that the Master Servicer’s 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 and cannot be cured.
Any such determination permitting the resignation of the Master Servicer shall
be evidenced by an Opinion of Counsel that shall be Independent to such effect
delivered to the Indenture Trustee. No such resignation shall become effective
until the Indenture Trustee shall have assumed, or a successor master servicer
shall have been appointed by the Indenture Trustee and until such successor
shall have assumed, the Master Servicer’s responsibilities and obligations under
this Agreement. Notice of such resignation shall be given promptly by the Master
Servicer and the Depositor to the Indenture Trustee.
Section
5.28. Assignment
or Delegation of Duties by the Master Servicer.
Except
as expressly provided herein, the Master Servicer shall not assign or transfer
any of its rights, benefits or privileges hereunder to any other Person, or
delegate to or subcontract with, or authorize or appoint any other Person to
perform any of the duties, covenants or obligations to be performed by the
Master Servicer hereunder, unless the Indenture Trustee and the Depositor shall
have consented to such action; provided, however,
that the
Master Servicer shall have the right without the prior written consent of the
Indenture Trustee or the Depositor to delegate or assign to or subcontract
with
or authorize or appoint an Affiliate of the Master Servicer to perform and
carry
out any duties, covenants or obligations to be performed and carried out by
the
Master Servicer hereunder. In no case, however, shall any such delegation,
subcontracting or assignment to an Affiliate of the Master Servicer relieve
the
Master Servicer of any liability hereunder. Notice of such permitted assignment
shall be given promptly by the Master Servicer to the Depositor and the
Indenture Trustee. If, pursuant to any provision hereof, the duties of the
Master Servicer are transferred to a successor master servicer, the entire
amount of compensation payable to the Master Servicer pursuant hereto, including
amounts payable to or permitted to be retained or withdrawn by the Master
Servicer pursuant to Section 5.21 hereof, shall thereafter be payable to such
successor master servicer.
Section
5.29. Limitation
on Liability of the Master Servicer and Others.
(a) The
Master Servicer undertakes to perform such duties and only such duties as are
specifically set forth in this Agreement.
(b) No
provision of this Agreement shall be construed to relieve the Master Servicer
from liability for its own negligent action, its own negligent failure to act
or
its own willful misconduct; provided, however,
that the
duties and obligations of the Master Servicer shall be determined solely by
the
express provisions of this Agreement, the Master Servicer shall not be liable
except for the performance of such duties and obligations as are specifically
set forth in this Agreement; no implied covenants or obligations shall be read
into this Agreement against the Master Servicer and, in absence of bad faith
on
the part of the Master Servicer, the Master Servicer may conclusively rely,
as
to the truth of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Master Servicer
and
conforming to the requirements of this Agreement.
(c) Neither
the Master Servicer nor any of the directors, officers, employees or agents
of
the Master Servicer shall be under any liability to the Indenture Trustee or
the
Noteholders for any action taken or for refraining from the taking of any action
in good faith pursuant to this Agreement, or for errors in judgment;
provided, however,
that
this provision shall not protect the Master Servicer or any such person against
any liability that would otherwise be imposed by reason of willful misfeasance,
bad faith or negligence in its performance of its duties or by reason of
reckless disregard for its obligations and duties under this Agreement. The
Master Servicer and any director, officer, employee or agent of the Master
Servicer shall be entitled to indemnification by the Trust Estate and will
be
held harmless against any loss, liability or expense incurred in connection
with
any legal action relating to this Agreement, the Notes or any other Operative
Agreement other than any loss, liability or expense incurred by reason of
willful misfeasance, bad faith or negligence in the performance of his or its
duties hereunder or by reason of reckless disregard of his or its obligations
and duties hereunder. The Master ▇▇▇▇▇▇▇▇ and any director, officer, employee
or
agent of the Master Servicer may rely in good faith on any document of any
kind
prima facie properly executed and submitted by any Person respecting any matters
arising hereunder. The Master Servicer shall be under no obligation to appear
in, prosecute or defend any legal action that is not incidental to its duties
to
master service the Mortgage Loans in accordance with this Agreement and that
in
its opinion may involve it in any expenses or liability; provided, however,
that the
Master Servicer may in its sole discretion undertake any such action that it
may
deem necessary or desirable with respect to this Agreement and the rights and
duties of the parties hereto and the interests of the Noteholders hereunder.
In
such event, the legal expenses and costs of such action and any liability
resulting therefrom shall be expenses, costs and liabilities of the Issuer
and
the Master Servicer shall be entitled to be reimbursed therefor out of the
Collection Account it maintains as provided by Section 4.08.
Section
5.30. Indemnification;
Third Party Claims.
The
Master Servicer agrees to indemnify the Depositor, the Issuer, the Indenture
Trustee, the Owner Trustee and the Servicer and hold them harmless against
any
and all claims, losses, penalties, fines, forfeitures, legal fees and related
costs, judgments, and any other costs, liability, fees and expenses that the
Depositor, the Issuer, the Indenture Trustee, the Owner Trustee or the Servicer
may sustain as a result of the failure of the Master Servicer to perform its
duties and master service the Mortgage Loans in compliance with the terms of
this Agreement. The Depositor, the Issuer, the Indenture Trustee, the Owner
Trustee and the Servicer shall immediately notify the Master Servicer if a
claim
is made by a third party with respect to this Agreement, the Mortgage Loans
entitling the Depositor, the Issuer, the Indenture Trustee, the Owner Trustee
or
the Servicer to indemnification under this Section 5.30, whereupon the Master
Servicer shall assume the defense of any such claim and pay all expenses in
connection therewith, including counsel fees, and promptly pay, discharge and
satisfy any judgment or decree which may be entered against it or them in
respect of such claim. The failure to provide such immediate notice shall not
affect the Master Servicer’s obligation pursuant to this Section 5.30 to
indemnify the Depositor, the Issuer, the Indenture Trustee, the Owner Trustee
and the Servicer, except to the extent that the Master Servicer is materially
prejudiced by such failure to notify.
Section
5.31. Alternative
Index.
In the
event that the Servicer notifies the Master Servicer in writing that the Index
for any Mortgage Loan, as specified in the related Mortgage Note, becomes
unavailable for any reason, the Master Servicer shall select an alternative
index in accordance with the terms of such Mortgage Note or, if such Mortgage
Note does not make provision for the selection of an alternative index in such
event, the Master Servicer shall, subject to applicable law, select an
alternative index based on information comparable to that used in connection
with the original Index and, in either case, such alternative index shall
thereafter be the Index for such Mortgage Loan.
Section
5.32. Transfer
of Servicing.
The
Servicer agrees that it shall provide written notice to the Master Servicer
and
the Indenture Trustee thirty days prior to any proposed transfer or assignment
by the Sponsor of the servicing of the Mortgage Loans. In addition, the ability
of the Servicer to transfer or assign the servicing hereunder to a successor
servicer shall be subject to the following conditions:
(i) Receipt
of written consent of the Master Servicer to such transfer;
(ii) Such
successor servicer must be a FHA Approved Mortgagee;
(iii) Such
successor servicer must satisfy the servicer eligibility standards set forth
in
Section 4.06(a);
(iv) Such
successor servicer must execute and deliver to the Master Servicer and the
Indenture Trustee an agreement, in form and substance reasonably satisfactory
to
the Master Servicer and the Indenture Trustee, that contains an assumption
by
such successor servicer of the due and punctual performance and observance
of
each covenant and condition to be performed and observed by the
Servicer;
(v) If
the
successor servicer is not a Servicer of Mortgage Loans at the time of the
transfer, there must be delivered to the Indenture Trustee a letter from each
Rating Agency to the effect that such transfer of servicing will not result
in a
qualification, withdrawal or downgrade of the then-current rating of any of
the
Notes; and
(vi) The
Sponsor shall, at its cost and expense, take such steps, or cause the terminated
Servicer to take such steps, as may be necessary or appropriate to effectuate
and evidence the transfer of the servicing of the Mortgage Loans to such
successor servicer, including, but not limited to, the following: (A) to the
extent required by the terms of the Mortgage Loans and by applicable federal
and
state laws and regulations, the Sponsor shall cause the prior Servicer to timely
mail to each obligor under a Mortgage Loan any required notices or disclosures
describing the transfer of servicing of the Mortgage Loans to the successor
servicer; (B) prior to the effective date of such transfer of servicing, the
Sponsor shall cause the prior Servicer to transmit to any related insurer
notification of such transfer of servicing; (C) on or prior to the effective
date of such transfer of servicing, the Sponsor shall cause the prior Servicer
to deliver to the successor servicer all Mortgage Loan Documents and any related
records or materials; (D) on or prior to the effective date of such transfer
of
servicing, the Sponsor shall cause the prior Servicer to transfer to the
successor servicer, or, if such transfer occurs after a Servicer Remittance
Date
but before the next succeeding Payment Date, to the Trust Administrator, all
funds held by the prior Servicer in respect of the Mortgage Loans; (E) on or
prior to the effective date of such transfer of servicing, the Sponsor shall
cause the prior Servicer to, after the effective date of the transfer of
servicing to the successor servicer, continue to forward to such successor
servicer, within one Business Day of receipt, the amount of any payments or
other recoveries received by the prior Servicer, and to notify the successor
servicer of the source and proper application of each such payment or recovery;
and (F) the Sponsor shall cause the prior Servicer to, after the effective
date
of transfer of servicing to the successor servicer, continue to cooperate with
the successor servicer to facilitate such transfer in such manner and to such
extent as the successor servicer may reasonably request.
ARTICLE
VI
DEPOSITS
AND PAYMENTS TO HOLDERS
Section
6.01. The
Collection Account.
(a) The
Trust
Administrator shall establish and maintain in the name of the Notes Intermediary
the Collection Account as provided in Section 5.07, which account shall be
pledged to the Indenture Trustee for the benefit of the Noteholders and the
Swap
Provider.
(b) The
Trust
Administrator shall make withdrawals from the Collection Account only for the
purposes set forth in Section 5.08.
Section
6.02. Payments
from the Collection Account.
(a) The
Trust
Administrator (or the Paying Agent on behalf of the Trust Administrator) shall
(i) on the Business Day prior to each Payment Date, withdraw from the Collection
Account to pay to the Swap Provider, any Net Swap Payments and any Swap
Termination Payment (other than any Swap Termination Payment resulting from
a
Swap Provider Trigger Event) owed to the Swap Provider pursuant to the Interest
Rate Swap Agreement for such Payment Date and (ii) on each Payment Date,
withdraw from the Collection Account the Total Remittance Amount (to the extent
such amount is on deposit in the Collection Account) and shall pay such amount
as specified in this Section.
(b) On
each
Payment Date, the Trust Administrator (or the Paying Agent on behalf of the
Trust Administrator) shall pay the Interest Remittance Amount for such date
in
the following order of priority in accordance with the report of the Trust
Administrator:
(i) to
the
Class A-1, Class A-2, Class A-3, and Class A-4 Notes, pro
rata,
in
proportion to their respective entitlements pursuant to this clause (i), Current
Interest and any Unpaid Interest Shortfall Amount for each such Class for such
Payment Date;
(ii) to
the
Class M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class M-6, Class M-7,
Class M-8, Class M-9, Class M-10 and Class M-11 Notes, sequentially, in that
order (the “Subordinate Priority”), Current Interest for each such Class for
such Payment Date;
(iii) to
the
Indenture Trustee, the Owner Trustee, the Master Servicer, the Trust
Administrator and the Servicer, previously unreimbursed extraordinary costs,
liabilities and expenses to the extent provided in this Agreement (including
amounts set forth in Section 4.08(b)(ii)); and
(iv) for
application as part of Monthly Excess Cashflow for such Payment Date, as
provided in subsection (d) of this Section, any Interest Remittance Amount
remaining after application pursuant to clauses (i) through (iii)
above.
(c) On
each
Payment Date, the Trust Administrator (or the Paying Agent on behalf of the
Trust Administrator) shall pay the Principal Remittance Amount for such date
in
accordance with the report of the Trust Administrator as follows:
(i) On
each
Payment Date (a) prior to the Stepdown Date or (b) on and after the Stepdown
Date and with respect to which a Trigger Event is in effect, the Trust
Administrator (or the Paying Agent on behalf of the Trust Administrator) shall
make the following payments to the extent of funds then in the Collection
Account available therefor:
(1)
sequentially, to the Class A-1, Class A-2, Class A-3 and Class A-4 Notes, in
that order, until the Class Principal Amount of each such Class has been reduced
to zero, provided, however, on any Payment Date on which the aggregate Class
Principal Amount of the Subordinate Notes and the Overcollateralization Amount
have been reduced to zero, payments of principal to the Senior Notes will be
made on a pro rata basis based on the Class Principal Amount of each such Class
(the “Senior Priority”);
(2) to
the
Class M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class M-6, Class M-7,
Class M-8, Class M-9, Class M-10 and Class M-11 Notes, in accordance with the
Subordinate Priority, until the Class Principal Amount of each such Class has
been reduced to zero; and
(3) for
application as part of Monthly Excess Cashflow for such Payment Date, as
provided for in subsection (d) of this Section, any such Principal Payment
Amount remaining after application pursuant to clauses (1) and (2)
above.
(ii) On
each
Payment Date on or after the Stepdown Date with respect to which a Trigger
Event
is not in effect, the Trust Administrator (or the Paying Agent on behalf of
the
Trust Administrator) shall pay the Principal Payment Amount for such date in
the
following order of priority:
(1) to
the
Class A-1, Class A-2, Class A-3 and Class A-4 Notes in accordance with the
Senior Priority, an amount equal to the lesser of (x) the Principal Payment
Amount for such Payment Date and (y) the Senior Principal Payment Amount for
such Payment Date, in each case until the Class Principal Amount of each such
Class has been reduced to zero;
(2) sequentially,
to the Class M-1 and Class M-2 Notes, in that order, an amount equal to the
lesser of (x) the excess of (a) the Principal Payment Amount for such Payment
Date over (b) the amount paid to the Senior Notes on such Payment Date pursuant
to clause (i) above and (y) the Class M-1 and Class M-2 Principal Payment Amount
for such Payment Date, in each case until the Class Principal Amount of such
Class has been reduced to zero;
(3) sequentially,
to the Class M-3, Class M-4, Class M-5, Class M-6, Class M-7, Class M-8, Class
M-9, Class M-10 and Class M-11 Notes, in that order, in each case in an amount
equal to the lesser of (x) the excess of (a) the Principal Payment Amount for
such Payment Date over (b) the aggregate of the amount paid to the Senior Notes
on such Payment Date pursuant to clause (1) above and any amounts paid to any
Class or Classes of Subordinate Notes that have a higher priority of payment
than the subject class on such Payment Date pursuant to this clause (3), and
(y)
the Subordinate Class Principal Payment Amount for the subject Class for such
Payment Date, until the Class Principal Amount of such Class has been reduced
to
zero; and
(4) for
application as part of Monthly Excess Cashflow for such Payment Date, as
provided in subsection (d) of this Section, any Principal Payment Amount
remaining after application pursuant to clauses (1), (2) and (3)
above.
(d) On
each
Payment Date (except with respect to clause (vi) which occurs on the Business
Day prior to each Payment Date), the Trust Administrator (or the Paying Agent
on
behalf of the Trust Administrator) shall pay the Monthly Excess Cashflow for
such date in accordance with the report of the Trust Administrator as
follows:
(i) for
each
Payment Date occurring (a) before the Stepdown Date or (b) on or after the
Stepdown Date but for which a Trigger Event is in effect, until the aggregate
Class Principal Amount of the Notes equals the Target Amount for such Payment
Date, in the following order of priority:
(1) to
the
Class A-1, Class A-2, Class A-3 and Class A-4 Notes, in accordance with the
Senior Priority, until the Class Principal Amount of each such Class has been
reduced to zero; and
(2) to
the
Class M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class M-6, Class M-7,
Class M-8, Class M-9, Class M-10 and Class M-11 Notes, in accordance with the
Subordinate Priority, until the Class Principal Amount of each such Class has
been reduced to zero;
(ii) for
each
Payment Date occurring on or after the Stepdown Date and for which a Trigger
Event is not in effect, in the following order of priority:
(1) to
the
Class A-1, Class A-2, Class A-3 and Class A-4 Notes, in accordance with the
Senior Priority, until the aggregate Class Principal Amount of the Senior Notes,
after giving effect to payments on such Payment Date, equals the Senior Target
Amount;
(2) sequentially,
to the Class M-1 and Class M-2 Notes, in that order, in reduction of their
respective Class Principal Amounts, until the aggregate Class Principal Amount
of the Senior Notes and the Class M-1 and Class M-2 Notes, after giving effect
to payments on such Payment Date, equals the Class M-1 and Class M-2 Target
Amount for such Payment Date; and
(3) sequentially,
to the Class M-3, Class M-4, Class M-5, Class M-6, Class M-7, Class M-8, Class
M-9, Class M-10 and Class M-11 Notes, in that order, in reduction of their
respective Class Principal Amounts, in each case until the aggregate Class
Principal Amount of the Senior Notes, the Classes of Subordinate Notes, if
any,
that have a higher priority of payment than the subject Class and the subject
Class, after giving effect to payments on such Payment Date, equals the
Subordinate Class Target Amount for the subject Class for such Payment
Date;
(iii) to
the
Class M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class M-6, Class M-7,
Class M-8, Class M-9, Class M-10 and Class M-11 Notes, in accordance with the
Subordinate Priority, in each case first to pay (a) any Unpaid Interest
Shortfall Amount for the subject Class and second (b) to pay any Allocated
Realized Loss Amount for the subject Class;
(iv) for
each
Payment Date, from Monthly Excess Cashflow remaining after payments have been
made pursuant to priority 6.02(d)(i), (ii) or (iii) above, in the following
order of priority:
(1) concurrently,
in proportion to their respective Basis Risk Shortfall and Unpaid Basis Risk
Shortfall amounts for such Payment Date, to the Senior Notes, any such Basis
Risk Shortfall and Unpaid Basis Risk Shortfall amounts for each such Class;
and
(2) to
the
Class M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class M-6, Class M-7,
Class M-8, Class M-9, Class M-10 and Class M-11 Notes, in accordance with the
Subordinate Priority, any applicable Basis Risk Shortfall and Unpaid Basis
Risk
Shortfall amounts for each such Class for such Payment Date;
(v) to
the
Class M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class M-6, Class M-7,
Class M-8, Class M-9, Class M-10 and Class M-11 Notes, in accordance with the
Subordinate Priority, any Deferred Interest for each such Class and such Payment
Date;
(vi) to
the
Swap Provider, any Swap Termination Payments resulting from a Swap Provider
Trigger Event; and
(vii) to
the
Ownership Certificate, any amount remaining on such date after application
pursuant to clauses (i) through (vi) above.
On
the
Redemption Date, the Trust Administrator (or the Paying Agent on behalf of
the
Trust Administrator) shall pay to each Class of Notes the related Termination
Price therefor, as set forth in the Indenture.
Following
the foregoing payments, an amount equal to the amount of Subsequent Recoveries
deposited into the Custodial Account pursuant to Section 4.02(d)(ii)(11) of
this
Agreement shall be applied to increase the aggregate Note Principal Amount
of
the Class of Notes with the Highest Priority up to the extent of such Realized
Losses previously unreimbursed to that Class of Notes pursuant to Section 6.03.
An amount equal to the amount of any remaining Subsequent Recoveries shall
be
applied to increase the aggregate Note Principal Amount of the Class of Notes
with the next Highest Priority, up to the amount of such Realized Losses
previously allocated to that Class of Notes pursuant to Section 6.03. Any such
increases shall be applied to the Note Principal Amount of each Note of such
Class in accordance with its respective Percentage Interest.
Section
6.03. Allocation
of Realized Losses.
(a) On
each
Payment Date, after all payments are made on such date, if the aggregate Note
Principal Amount of the Notes exceeds the Aggregate Loan Balance, such excess
shall be applied to reduce the Note Principal Amount of the Subordinate Notes,
as follows: first, to the Class M-11 Notes until the Note Principal Amount
thereof has been reduced to zero; second, to the Class M-10 Notes until the
Note
Principal Amount thereof has been reduced to zero; third, to the Class M-9
Notes
until the Note Principal Amount thereof has been reduced to zero; fourth, to
the
Class M-8 Notes until the Note Principal Amount thereof has been reduced to
zero; fifth, to the Class M-7 Notes until the Note Principal Amount thereof
has
been reduced to zero; sixth, to the Class M-6 Notes until the Note Principal
Amount thereof has been reduced to zero; seventh, to the Class M-5 Notes until
the Note Principal Amount thereof has been reduced to zero; eighth, to the
Class
M-4 Notes, until the Note Principal Amount thereof has been reduced to zero;
ninth, to the Class M-3 Notes, until the Note Principal Amount thereof has
been
reduced to zero; tenth, to the Class M-2 Notes, until the Note Principal Amount
thereof has been reduced to zero; and eleventh, to the Class M-1 Notes, until
the Note Principal Amount thereof has been reduced to zero.
(b) All
Realized Losses to be allocated to the Note Principal Amounts of all Classes
on
any Payment Date shall be so allocated after the actual payments to be made
on
such date as provided above. All references above to the Note Principal Amount
of any Class of Notes shall be to the Note Principal Amount of such Class
immediately prior to the relevant Payment Date, before reduction thereof by
any
Realized Losses, in each case to be allocated to such Class of Notes, on such
Payment Date.
Any
allocation of Realized Losses to a Subordinate Note on any Payment Date shall
be
made by reducing the Note Principal Amount thereof by the amount so allocated.
No allocations of any Realized Losses shall be made to the Note Principal
Amounts of the Senior Notes.
All
Realized Losses and all other losses allocated to a Class of Notes hereunder
will be allocated among the Notes of such Class in proportion to the Percentage
Interests evidenced thereby.
Section
6.04. Control
of the Trust Account and Deferred Interest.
(a) The
Depositor and the Issuer hereby appoint ▇▇▇▇▇ Fargo Bank, N.A. as Securities
Intermediary with respect to the Trust Account, and the Issuer has, pursuant
to
the Indenture, granted to the Indenture Trustee, for the benefit of the
Noteholders, a security interest to secure all amounts due Noteholders hereunder
in and to the Trust Account and the Security Entitlements to all Financial
Assets credited to the Trust Account, including without limitation all amounts,
securities, investments, Financial Assets, investment property and other
property from time to time deposited in or credited to the Trust Account and
all
proceeds thereof. Amounts held from time to time in the Trust Account will
continue to be held by the Securities Intermediary for the benefit of the
Indenture Trustee, as collateral agent, for the benefit of the Noteholders.
Upon
the termination of the Issuer or the discharge of the Indenture, the Indenture
Trustee shall inform the Securities Intermediary of such termination. By
acceptance of their Notes or interests therein, the Noteholders shall be deemed
to have appointed ▇▇▇▇▇ Fargo Bank, N.A. as Securities Intermediary. ▇▇▇▇▇
Fargo
Bank, N.A. ▇▇▇▇▇▇ accepts such appointment as Securities
Intermediary.
(b) With
respect to the Trust Account Property credited to the Trust Account, the
Securities Intermediary agrees that:
(i) with
respect to any Trust Account Property that is held in deposit accounts, each
such deposit account shall be subject to the exclusive custody and control
of
the Securities Intermediary, and the Securities Intermediary shall have sole
signature authority with respect thereto;
(ii) the
sole
assets permitted in the Trust Account shall be those as the Securities
Intermediary agrees to treat as Financial Assets; and
(iii) any
such
Trust Account Property that is, or is treated as, a Financial Asset shall be
physically delivered (accompanied by any required endorsements) to, or credited
to an account in the name of, the Securities Intermediary or other eligible
institution maintaining the Trust Account in accordance with the Securities
Intermediary’s customary procedures such that the Securities Intermediary or
such other institution establishes a Security Entitlement in favor of the
Indenture Trustee with respect thereto over which the Securities Intermediary
or
such other institution has Control;
(c) The
Securities Intermediary hereby confirms that (A) the Trust Account is an account
to which Financial Assets are or may be credited, and the Securities
Intermediary shall, subject to the terms of this Agreement, treat the Indenture
Trustee, as collateral agent, as entitled to exercise the rights that comprise
any Financial Asset credited to the Trust Account, (B) all Trust Account
Property in respect of the Trust Account will be promptly credited by the
Securities Intermediary to such account, and (C) all securities or other
property underlying any Financial Assets credited to the Trust Account shall
be
registered in the name of the Securities Intermediary, endorsed to the
Securities Intermediary or in blank or credited to another securities account
maintained in the name of the Securities Intermediary and in no case will any
Financial Asset credited to the Trust Account be registered in the name of
the
Depositor or the Issuer, payable to the order of the Depositor or the Issuer
or
specially endorsed to the Depositor or the Issuer, except to the extent the
foregoing have been specially endorsed to the Securities Intermediary or in
blank;
(d) The
Securities Intermediary hereby agrees that each item of property (whether
investment property, Financial Asset, security, instrument or cash) credited
to
the Trust Account shall be treated as a Financial Asset;
(e) If
at any
time the Securities Intermediary shall receive an Entitlement Order from the
Indenture Trustee (or the Trust Administrator on its behalf) directing transfer
or redemption of any Financial Asset relating to the Trust Account, the
Securities Intermediary shall comply with such Entitlement Order without further
consent by the Depositor, the Issuer or any other Person. If at any time the
Indenture Trustee or the Trust Administrator notifies the Securities
Intermediary in writing that the Issuer has been terminated or the Indenture
discharged in accordance herewith and with the Trust Agreement or the Indenture,
as applicable, and the security interest granted pursuant to the Indenture
has
been released, then thereafter if the Securities Intermediary shall receive
any
order from the Depositor or the Issuer directing transfer or redemption of
any
Financial Asset relating to the Trust Account, the Securities Intermediary
shall
comply with such Entitlement Order without further consent by the Indenture
Trustee or any other Person;
(f) In
the
event that the Securities Intermediary has or subsequently obtains by agreement,
operation of law or otherwise a security interest in the Trust Account or any
Financial Asset credited thereto, the Securities Intermediary hereby agrees
that
such security interest shall be subordinate to the security interest of the
Indenture Trustee. The Financial Assets credited to the Trust Account will
not
be subject to deduction, set-off, banker’s lien, or any other right in favor of
any Person other than the Indenture Trustee (except that the Securities
Intermediary may set-off (i) all amounts due to it in respect of its customary
fees and expenses for the routine maintenance and operation of the Trust Account
and (ii) the face amount of any checks which have been credited to the Trust
Account but are subsequently returned unpaid because of uncollected or
insufficient funds);
(g) There
are
no other agreements entered into between the Securities Intermediary in such
capacity and the Depositor or the Issuer with respect to the Trust Account.
In
the event of any conflict between this Agreement (or any provision of this
Agreement) and any other agreement now existing or hereafter entered into,
the
terms of this Agreement shall prevail;
(h) The
rights and powers granted under the Indenture and herein to the Indenture
Trustee have been granted in order to perfect its security interest in the
Trust
Account and the Security Entitlements to the Financial Assets credited thereto,
and are powers coupled with an interest and will neither be affected by the
bankruptcy of the Depositor or the Issuer nor by the lapse of time. The
obligations of the Securities Intermediary hereunder shall continue in effect
until the security interest of the Indenture Trustee in the Trust Account,
and
in such Security Entitlements, has been terminated pursuant to the terms of
this
Agreement and the Indenture Trustee or the Issuer, as applicable, has notified
the Securities Intermediary of such termination in writing; and
(i) Notwithstanding
anything else contained herein, the Depositor and the Issuer agree that the
Trust Account will be established only with the Securities Intermediary or
another institution meeting the requirements of this Section, which by
acceptance of its appointment as Securities Intermediary agrees substantially
as
follows: (1) it will comply with Entitlement Orders related to the Trust Account
issued by the Indenture Trustee, as collateral agent, without further consent
by
the Depositor or the Issuer, without further consent by the Depositor; (2)
until
termination of the Issuer or discharge of the Indenture, it will not enter
into
any other agreement related to such accounts pursuant to which it agrees to
comply with Entitlement Orders of any Person other than the Indenture Trustee,
as collateral agent, or the Trust Administrator on its behalf; and (3) all
assets delivered or credited to it in connection with such account and all
investments thereof will be promptly credited to the applicable
account.
(j) Notwithstanding
the foregoing, the Issuer shall have the power, revocable by the Indenture
Trustee or by the Owner Trustee with the consent of the Indenture Trustee,
to
instruct the Indenture Trustee, the Trust Administrator and the Master Servicer
to make withdrawals and payments from the Trust Account for the purpose of
permitting the Master Servicer, the Trust Administrator or the Owner Trustee
to
carry out its respective duties hereunder or permitting the Indenture Trustee
to
carry out its duties under the Indenture.
(k) Each
of
the Depositor and the Issuer agrees to take or cause to be taken such further
actions, to execute, deliver and file or cause to be executed, delivered and
filed such further documents and instruments (including, without limitation,
any
financing statements under the Relevant UCC or this Agreement) as may be
necessary to perfect the interests created by this Section in favor of the
Issuer and the Indenture Trustee and otherwise fully to effectuate the purposes,
terms and conditions of this Section. The Depositor shall:
(l) promptly
execute, deliver and file any financing statements, amendments, continuation
statements, assignments, certificates and other documents with respect to such
interests and perform all such other acts as may be necessary in order to
perfect or to maintain the perfection of the Issuer’s and the Indenture
Trustee’s security interest in the Trust Account Property; and
(i) make
the
necessary filings of financing statements or amendments thereto within five
days
after the occurrence of any of the following: (1) any change in its corporate
name or any trade name or its jurisdiction of organization; (2) any change
in
the location of its chief executive office or principal place of business;
and
(3) any merger or consolidation or other change in its identity or corporate
structure and promptly notify the Issuer and the Indenture Trustee of any such
filings.
(ii) Neither
the Depositor nor the Issuer shall organize under the law of any jurisdiction
other than the State under which each is organized as of the Closing Date
(whether changing its jurisdiction of organization or organizing under an
additional jurisdiction) without giving 30 days prior written notice of such
action to its immediate and mediate transferee, including the Indenture Trustee.
Before effecting such change, each of the Depositor or the Issuer proposing
to
change its jurisdiction of organization shall prepare and file in the
appropriate filing office any financing statements or other statements necessary
to continue the perfection of the interests of its immediate and mediate
transferees, including the Indenture Trustee, in the Trust Account Property.
In
connection with the transactions contemplated by the Operative Agreements
relating to the Trust Account Property, each of the Depositor and the Issuer
authorizes its immediate or mediate transferee to file in any filing office
any
initial financing statements, any amendments to financing statements, any
continuation statements, or any other statements or filings described in this
Section 6.04.
None
of
the Securities Intermediary or any director, officer, employee or agent of
the
Securities Intermediary shall be under any liability to the Indenture Trustee
or
the Noteholders for any action taken, or not taken, in good faith pursuant
to
this Agreement, or for errors in judgment; provided,
however,
that
this provision shall not protect the Securities Intermediary against any
liability to the Indenture Trustee or the Noteholders which would otherwise
be
imposed by reason of the Securities Intermediary’s willful misconduct, bad faith
or negligence in the performance of its obligations or duties hereunder. The
Securities Intermediary and any director, officer, employee or agent of the
Securities Intermediary may rely in good faith on any document of any kind
which, prima facie, is properly executed and submitted by any Person respecting
any matters arising hereunder. The Securities Intermediary shall be under no
duty to inquire into or investigate the validity, accuracy or content of such
document. The Issuer shall indemnify the Securities Intermediary for and hold
it
harmless against any loss, liability or expense arising out of or in connection
with this Agreement and carrying out its duties hereunder, including the costs
and expenses of defending itself against any claim of liability, except in
those
cases where the Securities Intermediary has been guilty of bad faith, negligence
or willful misconduct. The foregoing indemnification shall survive any
termination of this Agreement or the resignation or removal of the Securities
Intermediary.
Section
6.05. Advances
by Master Servicer and Servicer.
(a) Subject
to Section 4.03(c), Advances shall be made in respect of each Servicer
Remittance Date as provided herein. If, on any Determination Date, the Servicer
determines that any Scheduled Payments due during the related Collection Period
have not been received, such Servicer shall advance such amount to the extent
provided in Section 4.03(c) hereof. If any Servicer fails to remit Advances
required to be made under Section 4.03(c) hereof, the Master Servicer shall
itself make, or shall cause the successor Servicer to make, such Advance on
the
Servicer Remittance Date immediately following such Determination Date. If
the
Master Servicer determines that an Advance is required, it shall on the Business
Day immediately prior to the related Payment Date remit to the Trust
Administrator from its own funds (or funds advanced by the applicable Servicer)
for deposit in the Collection Account immediately available funds in an amount
equal to such Advance. The Master Servicer and the Servicer shall be entitled
to
be reimbursed from the Collection Account, and the Servicer shall be entitled
to
be reimbursed from its respective Custodial Account, for all Advances made
by it
as provided in Section 4.02(e). Notwithstanding anything to the contrary herein,
in the event the Master Servicer determines in its reasonable judgment that
an
Advance is a Nonrecoverable Advance, the Master Servicer shall be under no
obligation to make such Advance.
(b) In
the
event that the Master Servicer or Servicer fails for any reason to make an
Advance required to be made pursuant to this Section 6.05, the Indenture
Trustee, as successor Master Servicer, shall, on or before the related Payment
Date, deposit in the Collection Account an amount equal to the excess of (a)
Advances required to be made by the Master Servicer or the Servicer that would
have been deposited in such Collection Account over (b) the amount of any
Advance made by the Master Servicer or the Servicer with respect to such Payment
Date; provided,
however,
that
the Indenture Trustee as successor Master Servicer shall be required to make
such Advance only if it is not prohibited by law from doing so and it has
determined that such Advance would be recoverable from amounts to be received
with respect to such Mortgage Loan, including late payments, Liquidation
Proceeds, Insurance Proceeds, or otherwise. The Indenture Trustee shall be
entitled to be reimbursed from the Collection Account for Advances made by
it
pursuant to this Section 6.05 as if it were the Master Servicer and shall be
entitled to receive all compensation and fees of the Master Servicer in
accordance with Section 8.01(b).
Section
6.06. The
Interest Rate Swap Agreement.
(a) On
or
before the Closing Date, the Issuer, will enter into an interest rate swap
agreement (the “Swap Agreement”) with the Swap Provider. Under the Swap
Agreement, on each Payment Date, the trust will be obligated to pay to the
Swap
Provider from amounts available therefor pursuant to the indenture, an amount
(each, a “Fixed Swap Payment”) equal to the product of (x) 5.36%, (y) the
notional amount for that Payment Date (as set forth in Exhibit I) and (z) a
fraction, the numerator of which is 30 (or, for the first Payment Date, the
number of days elapsed from the Closing Date to but excluding the first Payment
Date on a 30/360 basis), and the denominator of which is 360, and the Swap
Provider will be obligated to pay to the trust an amount (each, a “Floating Swap
Payment”) equal to the product of (x) one-month LIBOR (as determined pursuant to
the Swap Agreement), (y) the notional amount for that Payment Date, and (z)
a
fraction, the numerator of which is the actual number of days elapsed from
the
previous Payment Date to but excluding the current Payment Date (or, for the
first Payment Date, the actual number of days elapsed from the Closing Date
to
but excluding the first Payment Date), and the denominator of which is 360.
A
net payment will be required to be made on each Payment Date (each such net
payment, a “Net Swap Payment”) (a) by the trust, to the Swap Provider, to the
extent that the Fixed Swap Payment exceeds the corresponding Floating Swap
Payment, or (b) by the Swap Provider to the trust to the extent that the
Floating Swap Payment exceeds the corresponding Fixed Swap Payment.
(b) The
notional amount for the Payment Date in June 2006 will be approximately
$602,186,073.68. The Swap Agreement will terminate immediately after the Payment
Date in October 2011 unless terminated earlier upon the occurrence of a Swap
Default, an Early Termination Event or an Additional Termination Event. The
Trust Administrator shall deposit into the Collection Account any amounts
received under the Swap Agreement.
(c) The
respective obligations of the Swap Provider and the Trust Administrator to
pay
specified amounts due under the Swap Agreement will be subject to the following
conditions precedent: (1) no Swap Default or event that with the giving of
notice or lapse of time or both would become a Swap Default, in each case,
in
respect of the other party, shall have occurred and be continuing with respect
to the Swap Agreement and (2) no “Early Termination Date” (as defined in the
ISDA Master Agreement) has occurred or been effectively designated with respect
to the Swap Agreement.
(d) Upon
the
occurrence of any Swap Default under the Swap Agreement, the non-defaulting
party will have the right to designate an Early Termination Date. With respect
to Termination Events (including Additional Termination Events), an Early
Termination Date may be designated by one of the parties (as specified in the
Swap Agreement) and will occur only after notice has been given of the
Termination Event, all as set forth in the Swap Agreement.
(e) Upon
any
Swap Early Termination, the trust or the Swap Provider may be liable to make
a
Swap Termination Payment to the other (regardless, if applicable, of which
of
the parties has caused the termination). The Swap Termination Payment will
be
based on the value of the Swap Agreement computed in accordance with the
procedures set forth in the Swap Agreement taking into account the present
value
of the unpaid amounts that would have been owed to and by the Swap Provider
under the remaining scheduled term of the Swap Agreement. In the event that
the
trust is required to make a Swap Termination Payment, that payment will be
paid
by the Trust Administrator on the related Payment Date, and on any subsequent
Payment Dates until paid in full, generally prior to payments to
Noteholders.
(f) Upon
a
Swap Early Termination, the Trust Administrator, at the direction of the
Depositor, will seek a replacement swap provider to enter into a replacement
swap agreement or similar agreement. To the extent the trust receives a Swap
Termination Payment from the Swap Provider, the Trust Administrator will apply,
as set forth in the Indenture, all or such portion of such Swap Termination
Payment as may be required to the payment of amounts due to a replacement swap
provider under a replacement swap agreement or similar agreement. Furthermore,
to the extent the trust is required to pay a Swap Termination Payment to the
Swap Provider, the Trust Administrator will apply all or a portion of such
amount received from a replacement swap provider upon entering into a
replacement swap agreement or similar agreement to the Swap Termination Payment
amount owing to the Swap Provider. To the extent a replacement swap provider
cannot be found, the Trust Administrator will pay such amounts to the
Noteholders on each Payment Date by calculating the amounts the Trust would
have
received if the Swap Agreement was still in effect.
(g) Upon
the
occurrence of a Downgrade Provision, the Swap Provider will be required to
take
such actions as are set forth in the Swap Agreement,
(h) The
Owner
Trustee shall, at the direction of the Depositor, enforce all of its rights
and
exercise any remedies under the Interest Rate Swap Agreement. In the event
the
Interest Rate Swap Agreement is terminated as a result of the designation by
either party thereto of an Early Termination Date (as defined therein), the
Owner Trustee shall, at the direction of the Depositor, appoint a replacement
counterparty to enter into a replacement swap agreement. The Owner Trustee
shall
have no responsibility with regard to the selection of a replacement swap
provider or the negotiation of a replacement swap agreement. Any Swap
Termination Payment received by the Owner Trustee shall be part of the available
Interest Remittance Amount and shall be used to make any upfront payment
required under a replacement swap agreement and any upfront payment received
from the counterparty to a replacement swap agreement shall be used to pay
any
Swap Termination Payment owed to the Swap Provider.
Section
6.07. Commission
Reporting.
(a) (i)
Using
best efforts, within 10 days after each Payment Date, and no later than 15
days
after each Payment Date (subject to permitted extensions under the Exchange
Act), the Trust Administrator shall, in accordance with industry standards,
prepare and file, on behalf of the Trust, with the Commission via the Electronic
Data Gathering and Retrieval System (“▇▇▇▇▇”), any Form 10-D required by the
Exchange Act, in form and substance as required by the Exchange Act, signed
by a
duly authorized representative of the Master Servicer, with a copy of the
monthly statement to be furnished by the Trust Administrator to the Noteholders
for such Payment Date attached thereto. Any disclosure in addition to the
monthly statement that is required to be included on Form 10-D (“Additional Form
10-D Disclosure”) shall, be reported by the parties set forth on Exhibit K to
the Depositor and the Trust Administrator and directed and approved by the
Depositor pursuant to the following paragraph, and the Trust Administrator
will
have no duty or liability for any failure hereunder to determine or prepare
any
Additional Form 10-D Disclosure, except as set forth in the next
paragraph.
(ii) For
so
long as the Trust is subject to the reporting requirements of the Exchange
Act,
within 5 calendar days after the related Payment Date, (i) the parties set
forth
in Exhibit K as the responsible party shall be required to provide, pursuant
to
Section 6.07(a)(v) below, to the Trust Administrator (by email at ▇▇▇.▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇
and by
facsimile at 410-715-2380) and the Depositor, to the extent known to such party
with respect to themselves or such other party as is specifically identified
on
Exhibit K with respect to such party, in ▇▇▇▇▇-compatible format, or in such
other format as otherwise agreed upon by the Trust Administrator and such party,
the form and substance of any Additional Form 10-D Disclosure, if applicable,
together with an Additional Disclosure Notification in the form attached hereto
as Exhibit L (an “Additional Disclosure Notification”) and (ii) the Depositor
will approve, as to form and substance, or disapprove, as the case may be,
the
inclusion of the Additional Form 10-D Disclosure on Form 10-D. The Trust
Administrator has no duty under this Agreement to monitor or enforce the
performance by the parties listed on Exhibit K of their duties under this
paragraph or proactively solicit or procure from such parties any Additional
Form 10-D Disclosure information. The Depositor will be responsible for any
reasonable fees and expenses assessed or incurred by the Trust Administrator
in
connection with including any Additional Form 10-D Disclosure on Form 10-D
pursuant to this Section.
After
preparing the Form 10-D, the Trust Administrator shall, upon request, forward
electronically a copy of the Form 10-D to the Depositor for review, only to
the
extent that the Form 10-D contains Additional Form 10-D Disclosure. Within
two
Business Days after receipt of such copy (on a best efforts basis, and in no
event later than the 12th calendar day) after the Payment Date, the Depositor
shall notify the Trust Administrator in writing (which may be furnished
electronically) of any changes to or approval of such Form 10-D. In the absence
of receipt of any written changes or approval, or if the Depositor does not
request a copy of a Form 10-D, the Trust Administrator shall be entitled to
assume that such Form 10-D is in final form and the Trust Administrator may
proceed with the execution and filing of the Form 10-D. A duly authorized
representative of the Master Servicer shall sign each Form 10-D. If a Form
10-D
cannot be filed on time or if a previously filed Form 10-D needs to be amended,
the Trust Administrator will follow the procedures set forth in Section
6.07(a)(vi). Promptly (but no later than 1 Business Day) after filing with
the
Commission, the Trust Administrator will make available on its internet website
a final executed copy of each Form 10-D filed by the Trust Administrator. The
parties to this Agreement acknowledge that the performance by the Master
Servicer and the Trust Administrator of its duties under Sections 6.07(a)(i),
(ii) and (v) related to the timely preparation and filing of Form 10-D is
contingent upon such parties strictly observing all applicable deadlines in
the
performance of their duties under such Sections. The Depositor acknowledges
that
the performance by the Master Servicer and the Trust Administrator of its duties
under this Section 6.07(a)(ii) related to the timely preparation, execution
and
filing of Form 10-D is also contingent upon the Servicer, the Custodians and
any
Sub-Servicer or Subcontractor strictly observing deadlines no later than those
set forth in this paragraph that are applicable to the parties to this Agreement
in the delivery to the Trust Administrator of any necessary Additional Form
10-D
Disclosure pursuant to the Custodial Agreement or any other applicable
agreement. Neither the Master Servicer nor the Trust Administrator shall have
any liability for any loss, expense, damage or claim arising out of or with
respect to any failure to properly prepare, execute and/or timely file such
Form
10-D and Form 10-K, where such failure results from the Trust Administrator’s
inability or failure to receive, on a timely basis, any information from any
other party hereto or any Custodian, Sub-Servicer or Subcontractor needed to
prepare, arrange for execution or file such Form 10-D, not resulting from its
own negligence, bad faith or willful misconduct.
(iii) Within
four (4) Business Days after the occurrence of an event requiring disclosure
on
Form 8-K (each such event, a “Reportable Event”), and if requested by the
Depositor, the Trust Administrator shall prepare and file on behalf of the
Trust
a Form 8-K, as required by the Exchange Act, provided that the Depositor shall
file the initial Form 8-K in connection with the issuance of the Notes. Any
disclosure or information related to a Reportable Event or that is otherwise
required to be included on Form 8-K other than the initial Form 8-K (“Form 8-K
Disclosure Information”) shall, be reported by the parties set forth on Exhibit
K as the responsible party with respect to each Reportable Event to the
Depositor and the Trust Administrator and directed and approved by the
Depositor, pursuant to the following paragraph, and the Trust Administrator
will
have no duty or liability for any failure hereunder to determine or prepare
any
Form 8-K Disclosure Information or any Form 8-K, except as set forth in the
next
paragraph.
For
so
long as the Trust is subject to the Exchange Act reporting requirements, no
later than the close of business (New York City Time) on the 2nd
Business
Day after the occurrence of a Reportable Event (i) the parties set forth in
Exhibit K as the responsible party with respect to such Reportable Event shall
be required pursuant to Section 6.07(a)(v) below to provide to the Trust
Administrator and the Depositor, to the extent known to such party with respect
to themselves or such other party as specifically identified on Exhibit K with
respect to such party or such Reportable Event, in ▇▇▇▇▇-compatible format,
or
in such other format as otherwise agreed upon by the Trust Administrator and
such party, the form and substance of any Form 8-K Disclosure Information,
if
applicable, together with an Additional Disclosure Notification and (ii) the
Depositor will approve, as to form and substance, or disapprove, as the case
may
be, the inclusion of the Form 8-K Disclosure Information on Form 8-K. The
Depositor will be responsible for any reasonable fees and expenses assessed
or
incurred by the Trust Administrator in connection with including any Form 8-K
Disclosure Information on Form 8-K pursuant to this Section.
After
preparing the Form 8-K, the Trust Administrator shall, upon request, forward
electronically a copy of the Form 8-K to the Depositor for review. Promptly,
but
no later than the close of business on the third Business Day after the
Reportable Event, the Depositor shall notify the Trust Administrator in writing
(which may be furnished electronically) of any changes to or approval of such
Form 8-K. In the absence of receipt of any written changes or approval, or
if
the Depositor does not request a copy of a Form 8-K, the Trust Administrator
shall be entitled to assume that such Form 8-K is in final form and the Trust
Administrator may proceed with the execution and filing of the Form 8-K. A
duly
authorized representative of the Master Servicer shall sign each Form 8-K.
If a
Form 8-K cannot be filed on time or if a previously filed Form 8-K needs to
be
amended, the Trust Administrator will follow the procedures set forth in Section
6.07(a)(vi). Promptly (but no later than 1 Business Day) after filing with
the
Commission, the Trust Administrator will make available on its internet website
a final executed copy of each Form 8-K filed by the Trust Administrator. The
parties to this Agreement acknowledge that the performance by the Master
Servicer and the Trust Administrator of its duties under this Section
6.07(a)(iii) related to the timely preparation and filing of Form 8-K is
contingent upon such parties strictly observing all applicable deadlines in
the
performance of their duties under this Section 6.07(a)(iii). The Depositor
acknowledges that the performance by the Master Servicer and the Trust
Administrator of its duties under this Section 6.07(a)(iii) related to the
timely preparation, execution and filing of Form 10-D is also contingent upon
the Servicer, the Custodians and any Sub-Servicer or Subcontractor strictly
observing deadlines no later than those set forth in this paragraph that are
applicable to the parties to this Agreement in the delivery to the Trust
Administrator of any necessary Form 8-K Disclosure Information pursuant to
the
Custodial Agreement or any other applicable agreement. Neither the Master
Servicer nor the Trust Administrator shall have any liability for any loss,
expense, damage or claim arising out of or with respect to any failure to
properly prepare, execute and/or timely file such Form 8-K, where such failure
results from the Trust Administrator’s inability or failure to receive, on a
timely basis, any information from any other party hereto or any Custodian,
Sub-servicer or Subcontractor needed to prepare, arrange for execution or file
such Form 8-K, not resulting from its own negligence, bad faith or willful
misconduct.
(iv) (A)
On or
prior to 90 days after the end of each fiscal year of the Trust or such earlier
date as may be required by the Exchange Act (the “10-K Filing Deadline”) (it
being understood that the fiscal year for the Trust ends on December
31st
of each
year), commencing in March 2007, the Trust Administrator shall prepare and
file
on behalf of the Trust a Form 10-K, in form and substance as required by the
Exchange Act. Each such Form 10-K shall include the following items, in each
case to the extent they have been delivered to the Trust Administrator within
the applicable time frames set forth in this Agreement and the Custodial
Agreement, (i) an Annual Compliance Statement for the Servicer, the Master
Servicer, the Trust Administrator and any Servicing Function Participant engaged
by such parties or the Custodian (each, a “Reporting Servicer”), as described
under Section 4.04(d) of this Agreement and the Custodial Agreement, provided,
however, that the Trust Administrator, at its discretion, may omit from the
Form
10-K any Annual Compliance Statement that is not required to be filed with
such
Form 10-K for each Reporting Servicer pursuant to Regulation AB, (ii)(A) the
annual reports on Assessment of Compliance with Relevant Servicing Criteria
for
each Reporting Servicer, as described under Section 4.04(e) of this Agreement
and the Custodial Agreement, and (B) if the report on Assessment of Compliance
with the Relevant Servicing Criteria identifies any material instance of
noncompliance, disclosure identifying such instance of noncompliance, or if
each
Reporting Servicer’s report on Assessment of Compliance with Relevant Servicing
Criteria is not included as an exhibit to such Form 10-K, disclosure that such
report is not included and an explanation why such report is not included
provided, however, that the Trust Administrator, at its discretion, may omit
from the Form 10-K any assessment of compliance or attestation report described
in clause (iii) below that is not required to be filed with such Form 10-K
pursuant to Regulation AB, (iii)(A) the registered public accounting firm
Attestation Report for each Reporting Servicer as described under Section
4.04(e) of this Agreement and the Custodial Agreement, and (B) if any registered
public accounting firm Attestation Report described under Section 4.04(e)
identifies any material instance of noncompliance, disclosure identifying such
instance of noncompliance, or if any such registered public accounting firm
Attestation Report is not included as an exhibit to such Form 10-K, disclosure
that such report is not included and an explanation why such report is not
included, and (iv) a ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Certification (“▇▇▇▇▇▇▇▇-▇▇▇▇▇
Certification”) as described below. Any disclosure or information in addition to
(i) through (iv) above that is required to be included on Form 10-K (“Additional
Form 10-K Disclosure”) shall, be reported by the parties set forth on Exhibit K
as the responsible party to the Depositor and the Trust Administrator and
directed and approved by the Depositor pursuant to the following paragraph,
and
the Trust Administrator will have no duty or liability for any failure hereunder
to determine or prepare any Additional Form 10-K Disclosure, except as set
forth
in the next paragraph.
No
later
than March 15th
of each
year that the Trust is subject to the Exchange Act reporting requirements,
commencing in 2007, (i) the parties set forth in Exhibit K as the responsible
party shall be required to provide pursuant to Section 6.07(a)(v) below to
the
Depositor and to the Trust Administrator (by email at ▇▇▇.▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇
and by
facsimile at 410-715-2380) and the Depositor, to the extent known to such party
with respect to themselves or such other party as is specifically identified
on
Exhibit K with respect to such party, in ▇▇▇▇▇-compatible format, or in such
other format as otherwise agreed upon by the Trust Administrator and such party,
the form and substance of any Additional Form 10-K Disclosure, if applicable,
together with an Additional Disclosure Notification and (ii) the Depositor
will
approve, as to form and substance, or disapprove, as the case may be, the
inclusion of the Additional Form 10-K Disclosure on Form 10-K. The Trust
Administrator has no duty under this Agreement to monitor or enforce the
performance by the parties listed on Exhibit K of their duties under this
paragraph or proactively solicit or procure from such parties any Additional
Form 10-K Disclosure information. The Depositor will be responsible for any
reasonable fees and expenses assessed or incurred by the Trust Administrator
in
connection with including any Additional Form 10-K Disclosure on Form 10-K
pursuant to this Section.
After
preparing the Form 10-K, the Trust Administrator shall forward, upon request,
electronically a copy of the Form 10-K to the Depositor for review. Within
three
Business Days after receipt of such copy, but no later than March 25th, the
Depositor shall notify the Trust Administrator in writing (which may be
furnished electronically) of any changes to or approval of such Form 10-K.
In
the absence of receipt of any written changes or approval, or if the Depositor
does not request a copy of a Form 10-K, the Trust Administrator shall be
entitled to assume that such Form 10-K is in final form and the Trust
Administrator may proceed with the execution and filing of the Form 10-K. A
senior officer of the Master Servicer in charge of the master servicing function
shall sign the Form 10-K. If a Form 10-K cannot be filed on time or if a
previously filed Form 10-K needs to be amended, the Trust Administrator will
follow the procedures set forth in Section 6.07(a)(vi). Promptly (but no later
than 1 Business Day) after filing with the Commission, the Trust Administrator
will make available on its internet website a final executed copy of each Form
10-K filed by the Trust Administrator. The parties to this Agreement acknowledge
that the performance by the Master Servicer and the Trust Administrator of
its
duties under Section 6.07(a)(iv) and Section 6.07(a)(v) related to the timely
preparation, execution and filing of Form 10-K is contingent upon such parties
strictly observing all applicable deadlines in the performance of their duties
under such Sections, Section 4.04(d) and Section 4.04(e). The Depositor
acknowledges that the performance by the Master Servicer and the Trust
Administrator of its duties under this Section 6.07(a)(iv) related to the timely
preparation, execution and filing of Form 10-K is also contingent upon the
Servicer, the Custodians, any Sub-Servicer or Subcontractor and any Servicing
Function Participant strictly observing deadlines no later than those set forth
in this paragraph that are applicable to the parties to this Agreement in the
delivery to the Trust Administrator of any necessary Additional Form 10-K
Disclosure, any annual statement of compliance and any assessment of compliance
and attestation pursuant to the related Custodial Agreement or any other
applicable agreement. Neither the Master Servicer nor the Trust Administrator
shall have any liability for any loss, expense, damage, claim arising out of
or
with respect to any failure to properly prepare, execute and/or timely file
such
Form 10-K, where such failure results from the Trust Administrator’s inability
or failure to receive, on a timely basis, any information from any other party
hereto or any Custodian, Sub-servicer or Subcontractor needed to prepare,
arrange for execution or file such Form 10-K, not resulting from its own
negligence, bad faith or willful misconduct.
Each
Form
10-K shall include a certification, required to be included therewith pursuant
to the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act. Each of the Servicer, the Master Servicer and the
Trust Administrator shall provide, and each such party shall cause any Servicing
Function Participant engaged by it to provide, to the Person who signs the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Certification (the “Certifying Person”), by March 15th
of each
year in which the Trust is subject to the reporting requirements of the Exchange
Act, a certification (a “Back-Up Certification”), in the form attached hereto as
Exhibit H, upon which the Certifying Person, the entity for which the Certifying
Person acts as an officer, and such entity’s officers, directors and Affiliates
(collectively with the Certifying Person, “Certification Parties”) can
reasonably rely. A senior officer of the Master Servicer in charge of the master
servicing function shall serve as the Certifying Person on behalf of the Trust.
Such officer of the Certifying Person can be contacted by e-mail at
▇▇▇.▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇ or by facsimile at ▇▇▇-▇▇▇-▇▇▇▇. In the
event that any such party or any Servicing Function Participant engaged by
such
party is terminated or resigns pursuant to the terms of this Agreement, or
any
other applicable agreement, as the case may be, such party shall provide a
Back-Up Certification to the Certifying Person pursuant to this Section
6.07(a)(iv) with respect to the period of time it was subject to this Agreement
or any other applicable agreement, as the case may be. Notwithstanding the
foregoing, (i) the Master Servicer and the Trust Administrator shall not be
required to deliver a Back-Up Certification to each other if both are the same
Person and the Master Servicer is the Certifying Person and (ii) the Master
Servicer shall not be obligated to sign the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Certification in
the
event that it does not receive any Back-Up Certification required to be
furnished to it pursuant to this section.
(v) With
respect to any Additional Form 10-D Disclosure, Additional Form 10-K Disclosure
or any Form 8-K Disclosure Information (collectively, the “Additional
Disclosure”) relating to the Trust Fund, the Trust Administrator’s obligation to
include such Additional Information in the applicable Exchange Act report is
subject to receipt from the entity that is indicated in Exhibit K as the
responsible party for providing that information, if other than the Trust
Administrator, as and when required as described in Section 6.07(a)(ii) through
(iv) above. Each of the Master Servicer, the Servicer, the Trust Administrator
and Depositor hereby agree to notify and to provide, to the extent known, to
the
Trust Administrator and the Depositor, all Additional Disclosure relating to
the
Trust Fund, with respect to which such party is the responsible party for
providing that information, as indicated in Exhibit L hereof. The Swap Provider
will be obligated pursuant to the Swap Agreement to provide to the Trust
Administrator any information that may be required to be included in any Form
10-D, Form 8-K or Form 10-K. The Servicer shall be responsible for determining
the pool concentration applicable to any Sub-Servicer or originator at any
time,
for purposes of disclosure as required by Items 1108 and 1110 of Regulation
AB.
With respect to any Additional Information provided by the Sponsor or the
Servicer, the parties acknowledge that neither the Sponsor nor the Servicer
shall have any liability or be deemed to have breached any obligation hereunder
if the Depositor pursuant to Sections 6.07(a)(ii) through (iv) reviews such
Additional Information and determines not to provide such information for
inclusion in any Form 8-K, Form 10-K or Form 10-D. Additionally, the Servicer
will not be liable or be deemed to have breached its obligations hereunder
if
the Trust Administrator determines not to file any Annual Compliance Statement,
Assessment of Compliance or any Attestation Report provided by the Servicer
or
any Servicing Function Participant of the Servicer, to the Trust Administrator.
(vi) On
or
prior to January 30 of the first year in which the Trust Administrator is able
to do so under applicable law, the Trust Administrator shall prepare and file
a
Form 15 Suspension Notification relating to the automatic suspension of
reporting in respect of the Trust under the Exchange Act.
In
the
event that the Trust Administrator is unable to timely file with the Commission
all or any required portion of any Form 8-K, Form 10-D or Form 10-K required
to
be filed by this Agreement because required disclosure information was either
not delivered to it or was delivered to it after the delivery deadlines set
forth in this Agreement or for any other reason, the Trust Administrator will
promptly notify electronically the Depositor. In the case of Form 10-D and
Form
10-K, the parties to this Agreement will reasonably cooperate to prepare and
file a Form 12b-25 and a Form 10-D/A and Form 10-K/A as applicable, pursuant
to
Rule 12b-25 of the Exchange Act. In the case of Form 8-K, the Trust
Administrator will, upon receipt of all required Form 8-K Disclosure Information
and upon the approval and direction of the Depositor, include such disclosure
information on the next succeeding Form 10-D. In the event that any previously
filed Form 8-K, Form 10-D or Form 10-K needs to be amended, in connection with
any Additional Form 10-D Disclosure (other than, in the case of Form 10-D,
for
the purpose of restating any Monthly Statement), Additional Form 10-K Disclosure
or Form 8-K Disclosure Information, the Trust Administrator will electronically
notify the Depositor and such other parties to the transaction as are affected
by such amendment, and such parties will cooperate to prepare any necessary
Form
8-K/A, Form 10-D/A or Form 10-K/A. Any Form 15, Form 12b-25 or any amendment
to
Form 8-K or Form 10-D shall be signed by a duly authorized representative or
senior officer in charge of master servicing, as applicable, of the Master
Servicer. The parties to this Agreement acknowledge that the performance by
the
Master Servicer and the Trust Administrator of its duties under this Section
6.07(a)(vi) related to the timely preparation, execution and filing of Form
15,
a Form 12b-25 or any amendment to Form 8-K, Form 10-D or Form 10-K is contingent
upon each such party performing its duties under this Section. Neither the
Master Servicer nor the Trust Administrator shall have any liability for any
loss, expense, damage, claim arising out of or with respect to any failure
to
properly prepare, execute and/or timely file any such Form 15, Form 12b-25
or
any amendments to Form 8-K, Form 10-D or Form 10-K, where such failure results
from the Trust Administrator’s inability or failure to receive, on a timely
basis, any information from any other party hereto or any custodian,
sub-servicer or subcontractor needed to prepare, arrange for execution or file
such Form 15, Form 12b-25 or any amendments to Form 8-K, Form 10-D or Form
10-K,
not resulting from its own negligence, bad faith or willful
misconduct.
The
parties hereto agree to promptly furnish to the Trust Administrator, from time
to time upon request, such further information, including evidence of the
authorization of the person signing any certificate or statement, reports and
financial statements within its control related to this Agreement and the
Mortgage Loans as the Trust Administrator reasonably deems appropriate to
prepare and file all necessary reports with the Commission. The Trust
Administrator shall have no responsibility to file any items other than those
specified in this Section 6.07; provided, however, the Trust Administrator
will
cooperate with the Depositor in connection with any additional filings with
respect to the Trust Fund as the Depositor deems necessary under the Exchange
Act. Fees and expenses incurred by the Trust Administrator in connection with
this Section 6.07 shall not be reimbursable from the Trust Fund.
(b) (A)
The
Trust Administrator shall indemnify and hold harmless the Depositor and the
Servicer 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 Trust Administrator’s obligations under this Section
6.07, Section 4.04(d), Section 4.04(e) or the Trust Administrator’s negligence,
bad faith or willful misconduct in connection therewith or (ii) any material
misstatement or omission in the Annual Statement of Compliance and the
Assessment of Compliance delivered by the Trust Administrator pursuant to
Section 4.04(d) and Section 4.04(e).
(B) The
Depositor shall indemnify and hold harmless the Trust Administrator, the
Servicer and the Master Servicer and their respective 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 a breach of the obligations of the
Depositor under this Section 6.07 or the Depositor’s negligence, bad faith or
willful misconduct in connection therewith.
(C) The
Master Servicer shall indemnify and hold harmless the Trust Administrator,
the
Servicer and the Depositor and their respective 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 obligations of
the
Master Servicer under this Section 6.07, Section 4.04(d), Section 4.04(e) or
the
Master Servicer’s negligence, bad faith or willful misconduct in connection
therewith or (ii) any material misstatement or omission in the Statement as
to
Compliance delivered by the Master Servicer pursuant to Section 4.04(d) or
the
Assessment of Compliance delivered by the Master Servicer pursuant to Section
4.04(e).
(D) The
Servicer shall indemnify and hold harmless the Master Servicer, Trust
Administrator and the Depositor and their respective 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 obligations of
the
Servicer under Section 4.04(d), Section 4.04(e) or Section 6.07, including
any
failure by the Servicer (or any Servicing Function Participant engaged by the
Servicer), to provide any Back-Up Certification, annual statement of compliance,
annual assessment of compliance with Servicing Criteria or attestation report,
any information, data or materials required to be included in any Exchange
Act
report or any other information or material when and as required under Sections
4.04(d), Section 4.04(e) or Section 6.07, or the Servicer’s negligence, bad
faith or willful misconduct in connection therewith and (ii) any
material misstatement or omission contained in any information, disclosure,
report, certification, data, accountants’ letter or other material provided
under Sections 4.04(d),
Section 4.04(3) or Section 6.07
to the
Master Servicer or the Trust Administrator by or on behalf of the Servicer
or on
behalf of any Sub-Servicer or Subcontractor), including any material
misstatement or material omission in (i) any Back-Up Certification, annual
statement of compliance, annual assessment of compliance with Servicing Criteria
or attestation report delivered by the Servicer, or by any Servicing
Function Participant
engaged
by it, pursuant to this Agreement, or (ii) any Additional Form 10-D Disclosure,
Additional Form 10-K Disclosure or Form 8-K Disclosure Information provided
by
the Servicer, provided, by way of clarification, that the determination as
to
whether any material omission exists with respect to such information,
disclosure, report, certification, data or other material provided as specified
above shall be determined by reference to such information disclosure, report,
certification, data or other material provided as specified above and not to
any
other information communicated in connection with any reporting hereunder
without regard to whether such information, disclosure, report, certification,
data or other material provided as specified above or any portion thereof is
presented together with or separately from such other information;
(E) The
Indenture Trustee (in its capacity as Custodian) shall provide the indemnity
required by the Custodial Agreement.
(F) If
the
indemnification provided for herein is unavailable or insufficient to hold
harmless the Depositor, the Master Servicer, the Servicer, the Indenture Trustee
or the Trust Administrator, as applicable, then the defaulting party, in
connection with a breach of its respective obligations under this Section 6.07
or its respective negligence, bad faith or willful misconduct in connection
therewith, agrees that it shall contribute to the amount paid or payable by
the
other parties as a result of the losses, claims, damages or liabilities of
the
other party in such proportion as is appropriate to reflect the relative fault
and the relative benefit of the respective parties. This indemnification shall
survive the termination of this Agreement or the termination of any party to
this Agreement.
(c) Nothing
shall be construed from the foregoing subsections (a) and (b) to require the
Trust Administrator or any officer, director or Affiliate thereof to sign any
Form 10-K or any certification contained therein. Furthermore, the inability
of
the Trust Administrator to file a Form 10-K as a result of the lack of required
information as set forth in Section 6.07(a) or required signatures on such
Form
10-K or any certification contained therein shall not be regarded as a breach
by
the Trust Administrator of any obligation under this Agreement.
(d) Notwithstanding
the provisions of Section 10.03, this Section 6.07 may be amended without the
consent of the Noteholders.
(e) Each
of
the parties agrees to provide to the Master Servicer and the Trust Administrator
such additional information related to such party as the Master Servicer and
the
Trust Administrator may reasonably request, including evidence of the
authorization of the person signing any certificate or statement, financial
information and reports, and such other information related to such party or
its
performance hereunder.
(f) Any
notice or notification required to be delivered by the Trust Administrator
or
Master Servicer to the Depositor pursuant to this Section 6.07, Section 4.04(d),
and Section 4.04(e), may be delivered via facsimile to the legal department
at
(▇▇▇) ▇▇▇-▇▇▇▇, with a copy delivered to the operations group at facsimile
(▇▇▇)
▇▇▇-▇▇▇▇.
ARTICLE
VII
ADMINISTRATION
OF THE AGREEMENTS
Section
7.01. Duties
of the Trust Administrator.
(a) The
Trust
Administrator agrees to perform all of the duties of the Issuer under the
Depository Agreement. In addition to its duties performed under the Depository
Agreement, the Trust Administrator shall take such action that is the duty
of
the Issuer to take with respect to the following matters under the Trust
Agreement, this Agreement and the Indenture:
(i) the
duty
to cause the Note Register to be kept if the Issuer assumes the duties of Note
Registrar, and to give the Indenture Trustee notice of any appointment of a
new
Note Registrar and the location, or change in location, of the Note Register
(Section 2.04 of the Indenture);
(ii) the
duty
to cause the Certificate Register to be kept if the Issuer assumes the duties
of
Certificate Registrar, and to give the Owner Trustee notice of any appointment
of a new Certificate Registrar and the location, or change in location, of
the
Certificate Register (Section 3.03 of the Trust Agreement);
(iii) causing
the preparation of the Notes for execution by the Owner Trustee upon the
registration of any transfer or exchange of the Notes (Sections 2.04 and 2.05
of
the Indenture);
(iv) causing
the preparation of Definitive Notes in accordance with the instructions of
any
Clearing Agency, the duty to attempt to locate a qualified successor to the
Clearing Agency, if necessary, and the preparation of written notice to the
Indenture Trustee of termination of the book-entry system through the Clearing
Agency (Section 2.12 of the Indenture);
(v) the
maintenance of an office for registration of transfer or exchange of Notes
(Section 3.02 of the Indenture);
(vi) the
maintenance of an office for registration of transfer or exchange of the
Ownership Certificate (Section 3.08 of the Trust Agreement);
(vii) the
calculation of accrual of original issue discount and the amortization of
premium on the Notes (clause (v) of the fourth paragraph of Section 3.03 of
the
Indenture);
(viii) upon
written notice or actual knowledge thereof, the notification to the Indenture
Trustee and each Rating Agency of a Servicer Event of Default or a Master
Servicer Event of Default under this Agreement (Section 3.07(d) of the
Indenture);
(ix) upon
written notice or actual knowledge thereof, the delivery of notice to the
Indenture Trustee and each Rating Agency of each Indenture Event of Default
under the Indenture (Section 3.19 of the Indenture);
(x) the
furnishing of the Indenture Trustee with the names and addresses of Holders
of
Notes during any period when the Indenture Trustee is not the Note Registrar
(Section 7.01 of the Indenture);
(xi) causing
the preparation of any continuation statements or amendments necessary to
protect the Collateral (Section 3.05 of the Indenture);
(xii) the
mailing to the Noteholders of notices with respect to their consent to any
supplemental indentures (Sections 9.01, 9.02, 9.03 and 9.06 of the Indenture);
and
(xiii) any
other
duties expressly required to be performed by the Trust Administrator under
the
Indenture or the Trust Agreement.
(b) The
Sponsor shall undertake the duties of the Issuer with respect to the following
matters under the Indenture:
(i) to
cause
the preparation of Issuer Orders (and execute the same on behalf of the Issuer)
(Sections 9.01 and 9.02);
(ii) to
obtain
Opinions of Counsel with respect to the execution of supplemental indentures
and, if necessary, to mail to the Noteholders notices with respect to their
consent to such supplemental indentures (Sections 9.01, 9.02, 9.03 and 9.07
of
the Indenture);
(iii) the
preparation (but not the execution) of the annual Officer’s Certificate
regarding the Issuer’s compliance with the terms of the Indenture (Section 3.09
of the Indenture); and
(iv) causing
the preparation of an Officer’s Certificate and the obtaining of the Opinion of
Counsel (which shall not be at the expense of the Trust Administrator) with
respect to any request by the Issuer to the Indenture Trustee to take any action
under the Indenture (Sections 4.01 and 11.01 of the Indenture);
(v) the
compliance with any request of the Indenture Trustee with respect to the sale
of
the Collateral in a commercially reasonable manner if an Indenture Event of
Default shall have occurred and be continuing under the Indenture (Section
5.04
of the Indenture); and
(vi) causing
the preparation of an Issuer Request and Officer’s Certificate (and executing
the same on behalf of the Issuer) and the obtaining of an Opinion of Counsel
(which shall not be at the expense of the Trust Administrator), if necessary,
for the release of the Collateral, as defined in the Indenture (Section 8.03
of
the Indenture).
(c) The
Issuer will indemnify the Owner Trustee, the Sponsor and the Trust
Administrator, and their respective agents for, and hold them harmless against,
any losses, liability or expense incurred without gross negligence or bad faith
on their part, arising out of or in connection with the acceptance or
administration of the transactions contemplated by the Trust Agreement or this
Agreement, including the reasonable costs and expenses of defending themselves
against any claim or liability in connection with the exercise or performance
of
any of their powers or duties under the Trust Agreement, the Indenture or this
Agreement.
(d) Subject
to subsection (e) of this Section 7.01, and in accordance with the directions
of
the Owner Trustee, the Trust Administrator shall perform or supervise the
performance of such other activities in connection with the Collateral
(including the Operative Agreements) as are not covered by any of the foregoing
provisions and as are expressly requested in writing by the Owner Trustee and
are reasonably within the capability of the Trust Administrator.
(e) In
carrying out the foregoing duties or any of its other obligations under this
Agreement, the Trust Administrator may enter into transactions with or otherwise
deal with any of its Affiliates; provided,
however,
that
the terms of any such transactions or dealings shall be in accordance with
any
directions received from the Issuer and shall be, in the Trust Administrator’s
opinion, no less favorable to the Issuer than would be available from
unaffiliated parties.
In
carrying out the foregoing duties or any of its other obligations under this
Agreement, the Trust Administrator shall be subject to the same standard of
care
and have the same rights, indemnifications and immunities as the Indenture
Trustee under the Indenture, including, without limitation, the right to
reimbursement and indemnification on behalf of the Issuer from funds in the
Collection Account for all losses, costs and expenses of any kind or nature
(including without limitation attorneys’ fees and disbursements) incurred by the
Trust Administrator (including without limitation in its various capacities
as
Paying Agent, Certificate Paying Agent, Certificate Registrar and Note
Registrar) in connection with the performance of its duties hereunder or under
any other Operative Agreement.
The
Trust
Administrator in its capacity as the Certificate Registrar, and upon a request
received from the Owner Trustee, shall promptly notify the Certificateholders
of
(i) any change in the Corporate Trust Office of the Owner Trustee, (ii) any
amendment to the Trust Agreement requiring notice be given to the
Certificateholders and (iii) any other notice required to be given to the
Certificateholders by the Owner Trustee under the Trust Agreement.
Section
7.02. Duties
of the Trust Administrator With Respect to the Indenture, the Trust Agreement
and this Agreement.
(a) The
Trust
Administrator shall take all appropriate action with respect to the following
matters under the Indenture, the Trust Agreement and this
Agreement:
(i) the
duties of an authenticating agent for authentication of the Notes (Sections
2.01, 2.02, 2.05 and 2.10 of the Indenture);
(ii) the
duties of Note Registrar to be kept (Sections 2.03, 2.04 and 2.07 of the
Indenture);
(iii) to
provide notices and instructions to the Clearing Agency (Section 2.11 of the
Indenture);
(iv) the
duties of Paying Agent (Sections 3.03, 4.01, 4.02 and 5.02 of the Indenture);
and
(v) the
duties of agent or attorney-in-fact for the purposes of filing amendments and
continuation statements for the Issuer (Section 3.05 of the
Indenture).
(b) The
Issuer will indemnify the Owner Trustee and the Trust Administrator, and their
respective agents for, and hold them harmless against, any losses, liability
or
expense incurred without gross negligence or bad faith on their part, arising
out of or in connection with the acceptance or administration of the
transactions contemplated by the Trust Agreement or this Agreement, including
the reasonable costs and expenses of defending themselves against any claim
or
liability in connection with the exercise or performance of any of their powers
or duties under the Trust Agreement, the Indenture or this
Agreement.
Section
7.03. Records.
The
Trust Administrator shall maintain appropriate books of account and records
relating to services performed hereunder, which books of account and records
shall be accessible for inspection by the Issuer and the Depositor at any time
during normal business hours.
Section
7.04. Compensation.
The
Trust Administrator will perform the duties and provide the services called
for
under Sections 7.01 and 7.02 above for such compensation as shall be agreed
upon
between the Trust Administrator and the Master Servicer.
Section
7.05. Additional
Information to be Furnished to the Issuer.
The
Depositor shall furnish to the Issuer from time to time such additional
information regarding the Collateral as the Issuer shall reasonably
request.
Section
7.06. Independence
of the Trust Administrator.
For all
purposes of this Agreement, the Trust Administrator shall be an independent
contractor and shall not be subject to the supervision of the Issuer or the
Owner Trustee with respect to the manner in which it accomplishes the
performance of its obligations hereunder. Unless expressly authorized by the
Issuer, the Trust Administrator shall have no authority to act for or represent
the Issuer or the Owner Trustee in any way and shall not otherwise be deemed
an
agent of the Issuer or the Owner Trustee.
Section
7.07. No
Joint Venture.
Nothing
contained in this Agreement (i) shall constitute the Trust Administrator or
the
Depositor, respectively, and either of the Issuer or the Owner Trustee, as
members of any partnership, joint venture, association, syndicate,
unincorporated business or other separate entity, (ii) shall be construed to
impose any liability as such on any of them or (iii) shall be deemed to confer
on any of them any express, implied or apparent authority to incur any
obligation or liability on behalf of the others.
Section
7.08. Other
Activities of Trust Administrator and the Depositor.
Nothing
herein shall prevent the Trust Administrator, the Depositor or their respective
Affiliates from engaging in other businesses or, in its sole discretion, from
acting in a similar capacity as an Trust Administrator for any other person
or
entity even though such person or entity may engage in business activities
similar to those of the Issuer or the Owner Trustee.
Section
7.09. Resignation
and Removal of Trust Administrator.
(a) Subject
to Sections 7.09(d) and 8.01(d) hereof, the Trust Administrator may resign
its
duties hereunder by providing the Issuer with at least 60 days’ prior written
notice.
(b) Subject
to Section 7.09(d) hereof, the Issuer may remove the Trust Administrator without
cause by providing the Trust Administrator with at least 60 days’ prior written
notice.
(c) Subject
to Section 7.09(d) hereof, the Issuer may remove the Trust Administrator
immediately upon written notice of termination from the Issuer to the Trust
Administrator if any of the following events shall occur:
(i) the
Trust
Administrator shall default in the performance of any of its duties under this
Agreement and, after notice of such default, shall not cure such default within
ten days (or, if such default cannot be cured in such time, shall not give
within ten days such assurance of cure as shall be reasonably satisfactory
to
the Issuer); or
(ii) a
court
having jurisdiction in the premises shall (x) enter a decree or order for
relief, which decree or order shall not have been vacated within 60 days, in
respect of the Trust Administrator in any involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or
(y)
appoint a receiver, liquidator, assignee, custodian, trustee, sequestrator
or
similar official for the Trust Administrator or any substantial part of its
property, or (z) order the winding-up or liquidation of the Trust
Administrator’s affairs; or
(iii) the
Trust
Administrator shall commence a voluntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, shall consent to
the
entry of an order for relief in an involuntary case under any such law, or
shall
consent to the appointment of a receiver, liquidator, assignee, trustee,
custodian, sequestrator or similar official for the Trust Administrator or
any
substantial part of its property, shall consent to the taking of possession
by
any such official of any substantial part of its property, shall make any
general assignment for the benefit of creditors or shall fail generally to
pay
its debts as they become due.
The
Trust
Administrator agrees that if any of the events specified in clauses (ii) or
(iii) of this Section 7.09(c) shall occur, it shall give written notice thereof
to the Issuer and the Indenture Trustee within seven days after the occurrence
of such event.
(d) No
resignation or removal of the Trust Administrator pursuant to this Section
shall
be effective until (i) a successor Trust Administrator shall have been appointed
by the Issuer in accordance with the Trust Agreement, (ii) such successor Trust
Administrator shall have agreed in writing to be bound by the terms of this
Agreement in the same manner as the Trust Administrator is bound hereunder
and
(iii) the Master Servicer resigns and is replaced pursuant to Section 8.01(d)
by
such successor Trust Administrator as successor Master Servicer under this
Agreement. If a successor Trust Administrator does not take office within 60
days after the retiring Trust Administrator resigns or is removed, the resigning
or removed Trust Administrator or the Issuer may petition any court of competent
jurisdiction for the appointment of a successor Trust
Administrator.
(e) [Reserved].
(f) Subject
to Sections 7.09(d) above, the Trust Administrator acknowledges that upon the
appointment of a successor Master Servicer pursuant to Section 8.01, the Trust
Administrator shall immediately resign and such successor Master Servicer shall
automatically become the Trust Administrator under this Agreement. Any such
successor Master Servicer shall be required to agree to assume the duties of
the
Trust Administrator under the terms and conditions of this Agreement and the
other Operative Agreements in its acceptance of appointment as successor Master
Servicer.
Section
7.10. Action
upon Termination, Resignation or Removal of the Trust
Administrator.
Promptly upon the effective date of termination of this Agreement or the
resignation or removal of the Trust Administrator pursuant to Section 7.09
hereof, the Trust Administrator shall be entitled to be paid all reimbursable
expenses, including any reasonable out-of-pocket attorneys’ fees, accruing to it
to the date of such termination, resignation or removal. The Trust Administrator
shall forthwith upon such termination pursuant to Section 7.09 deliver to the
successor Trust Administrator all property and documents of or relating to
the
Collateral then in the custody of the Trust Administrator, or if this Agreement
has been terminated, to the Depositor. In the event of the resignation or
removal of the Trust Administrator pursuant to Section 7.09, the Trust
Administrator shall cooperate with the Issuer and take all reasonable steps
requested to assist the Issuer in making an orderly transfer of the duties
of
the Trust Administrator.
ARTICLE
VIII
MASTER
SERVICER EVENTS OF DEFAULT
Section
8.01. Master
Servicer Events of Default; Indenture Trustee To Act; Appointment of
Successor.
(a) The
occurrence of any one or more of the following events shall constitute a “Master
Servicer Event of Default”:
(i) Any
failure by the Master Servicer to furnish to the Trust Administrator the
Mortgage Loan data sufficient to prepare the reports described in Section
5.09(a) which continues unremedied for a period of one (1) Business Day after
the date upon which written notice of such failure shall have been given to
such
Master Servicer by the Indenture Trustee or the Trust Administrator or to such
Master Servicer and the Indenture Trustee by the Holders of not less than 25%
of
the Class Principal Amount of each Class of Notes affected thereby;
or
(ii) Any
failure on the part of the Master Servicer duly to observe or perform in any
material respect any other of the covenants or agreements on the part of the
Master Servicer contained in this Agreement 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 Master Servicer
by the Indenture Trustee or the Trust Administrator or to the Master Servicer
and the Indenture Trustee by the Majority Noteholders; or
(iii) A
decree
or order of a court or agency or supervisory authority having jurisdiction
for
the appointment of a conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings, or for the winding up or liquidation of its affairs, shall have
been entered against the Master Servicer, and such decree or order shall have
remained in force undischarged or unstayed for a period of 60 days or any Rating
Agency reduces or withdraws or threatens to reduce or withdraw the rating of
the
Notes because of the financial condition or loan servicing capability of such
Master Servicer; or
(iv) The
Master 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
Master Servicer or of or relating to all or substantially all of its property;
or
(v) The
Master Servicer shall admit in writing its inability to pay its debts generally
as they become due, file a petition to take advantage of any applicable
insolvency or reorganization statute, make an assignment for the benefit of
its
creditors or voluntarily suspend payment of its obligations; or
(vi) The
Master 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 in Section
5.26
hereof; or
(vii) If
a
representation or warranty set forth in Section 5.01 hereof shall prove to
be
incorrect as of the time made in any respect that materially and adversely
affects the interests of the Noteholders, 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 Master
Servicer by the Indenture Trustee or the Trust Administrator, or to the Master
Servicer and the Indenture Trustee by the Majority Noteholders; or
(viii) A
sale or
pledge of any of the rights of the Master Servicer hereunder or an assignment
of
this Agreement by the Master Servicer or a delegation of the rights or duties
of
the Master Servicer hereunder shall have occurred in any manner not otherwise
permitted hereunder and without the prior written consent of the Indenture
Trustee and the Majority Noteholders; or
(ix) The
Master Servicer has notice or actual knowledge at any time that neither the
Servicer nor its sub-servicer is an FHA Approved Mortgagee, and the Master
Servicer has not terminated the rights and obligations of the Servicer under
this Agreement and replaced the Servicer with an FHA Approved Mortgagee within
60 days of the date the Master Servicer receives such notice or acquires such
actual knowledge; or
(x) Any
failure of the Master Servicer to remit to the Trust Administrator any Advance
required to be made to the Trust Administrator for the benefit of Noteholders
under the terms of this Agreement, which failure continues unremedied as of
the
close of business on the Business Day prior to a Payment Date.
If
a
Master Servicer Event of Default described in clauses (i) through (ix) of this
Section 8.01 shall occur, then, in each and every case, subject to applicable
law, so long as any such Master Servicer Event of Default shall not have been
remedied within any period of time prescribed by this Section 8.01, the
Indenture Trustee, upon obtaining actual knowledge thereof, by notice in writing
to the Master Servicer may, and shall, if so directed by the Majority
Noteholders, terminate all of the rights and obligations of the Master Servicer
hereunder and in and to the Mortgage Loans and the proceeds thereof. If a Master
Servicer Event of Default described in clause (x) of this Section 8.01 shall
occur, then, in each and every case, subject to applicable law, so long as
such
Master Servicer Event of Default shall not have been remedied within the time
period prescribed by clause (x) of this Section 8.01, the Indenture Trustee,
by
notice in writing to the Master Servicer, shall promptly terminate all of the
rights and obligations of the Master Servicer hereunder and in and to the
Mortgage Loans and the proceeds thereof. On or after the receipt by the Master
Servicer of such written notice, all authority and power of the Master Servicer,
and only in its capacity as Master 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 Master Servicer as attorney-in-fact or otherwise,
any
and all documents and other instruments, and to do or accomplish all other
acts
or things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement or assignment
of
the Mortgage Loans and related documents or otherwise. The defaulting Master
Servicer agrees to cooperate with the Indenture Trustee in effecting the
termination of the defaulting Master Servicer’s responsibilities and rights
hereunder as Master Servicer including, without limitation, notifying the
Servicer 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 Master 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 Master
Servicer in the Collection Account maintained by such defaulting Master Servicer
and any other account or fund maintained with respect to the Notes or thereafter
received with respect to the Mortgage Loans. The Master Servicer being
terminated shall bear all reasonable out-of-pocket costs of a master servicing
transfer, including but not limited to those of the Indenture Trustee, legal
fees and expenses, accounting and financial consulting fees and expenses, and
costs of amending the Agreement, if necessary.
The
Indenture Trustee shall be entitled to be reimbursed from the Master Servicer
(or by the Trust Estate, if the Master Servicer is unable to fulfill its
obligations hereunder) for all costs associated with the transfer of servicing
from the predecessor Master 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 required
by the Indenture Trustee to correct any errors or insufficiencies in the
servicing data or otherwise to enable the Indenture Trustee to master service
the Mortgage Loans properly and effectively. If the terminated Master Servicer
does not pay such reimbursement within thirty (30) days of its receipt of an
invoice therefor, such reimbursement shall be an expense of the Trust Estate
and
the Indenture Trustee shall be entitled to withdraw such reimbursement from
amounts on deposit in the Collection Account pursuant to Section 5.08(x);
provided
that the
terminated Master Servicer shall reimburse the Trust Estate for any such expense
incurred by the Trust Estate; and provided,
further,
that
the Indenture Trustee shall take such action, if any, as provided in the
Indenture and as directed by the Noteholders pursuant thereto with respect
to
pursuing any remedy against any party obligated to make such
reimbursement.
Notwithstanding
the termination of its activities as Master Servicer, each terminated Master
Servicer shall continue to be entitled to reimbursement to the extent provided
in Section 5.08 to the extent such reimbursement relates to the period prior
to
such Master Servicer’s termination.
If
any
Master Servicer Event of Default shall occur, of which a Responsible Officer
of
the Indenture Trustee has actual knowledge, the Indenture Trustee shall promptly
notify each Rating Agency of the nature and extent of such Master Servicer
Event
of Default. The Trust Administrator or the Master Servicer shall promptly give
written notice to the Indenture Trustee upon the Master Servicer’s failure to
remit Advances on the date specified herein.
(b) On
and
after the time the Master Servicer receives a notice of termination from the
Indenture Trustee pursuant to Section 8.01(a) or the Indenture Trustee receives
the resignation of the Master Servicer evidenced by an Opinion of Counsel
pursuant to Section 5.27, the Indenture Trustee, unless another master servicer
shall have been appointed, shall be the successor in all respects to the Master
Servicer in its capacity as such under this Agreement and the transactions
set
forth or provided for herein and shall have all the rights and powers and be
subject to all the responsibilities, duties and liabilities relating thereto
and
arising thereafter placed on the Master Servicer hereunder, including the
obligation to make Advances; provided, however,
that any
failure to perform such duties or responsibilities caused by the Master
Servicer’s failure to provide information required by this Agreement shall not
be considered a default by the Indenture Trustee hereunder. In addition, the
Indenture Trustee shall have no responsibility for any act or omission of the
Master Servicer prior to the issuance of any notice of termination and shall
have no liability relating to the representations and warranties of the Master
Servicer set forth in Section 5.01. In the Indenture Trustee’s capacity as such
successor, the Indenture Trustee shall have the same limitations on liability
herein granted to the Master Servicer. As compensation therefor, the Indenture
Trustee shall be entitled to receive all compensation payable to the Master
Servicer under this Agreement.
(c) Notwithstanding
the above, the Indenture Trustee may, if it shall be unwilling to continue
to so
act, or shall, if it is unable to so act, appoint, or petition a court of
competent jurisdiction to appoint, any established housing and home finance
institution servicer, master servicer, servicing or mortgage servicing
institution having a net worth of not less than $15,000,000 and meeting such
other standards for a successor master servicer as are set forth in this
Agreement, as the successor to the Master Servicer in the assumption of all
of
the responsibilities, duties and liabilities of the Master Servicer. Such
successor Master Servicer may be an Affiliate of the Indenture Trustee;
provided, however,
that,
unless such Affiliate meets the net worth requirements and other standards
set
forth herein for a successor master servicer, the Indenture Trustee, in its
individual capacity shall agree, at the time of such designation, to be and
remain liable to the Issuer and the Indenture Trustee for such Affiliate’s
actions and omissions in performing its duties hereunder. In connection with
such appointment and assumption, the Indenture Trustee may make such
arrangements for the compensation of such successor out of payments on the
Mortgage Loans as it and such successor shall agree; provided, however,
that no
such compensation shall be in excess of that permitted to the Master Servicer
hereunder. The Indenture Trustee and such successor shall take such actions,
consistent with this Agreement, as shall be necessary to effectuate any such
succession and may make other arrangements with respect to the servicing to
be
conducted hereunder which are not inconsistent herewith. The Master Servicer
shall cooperate with the Indenture Trustee and any successor master servicer
in
effecting the termination of the Master Servicer’s responsibilities and rights
hereunder including, without limitation, notifying the Servicer of the
assignment of the master servicing functions and providing the Indenture Trustee
and successor master servicer, as applicable, all documents and records in
electronic or other form reasonably requested by it to enable it to assume
the
Master Servicer’s functions hereunder and the transfer to the Indenture Trustee
or such successor master servicer, as applicable, all amounts or investment
property which shall at the time be or should have been deposited by the Master
Servicer in the Collection Account and any other account or fund maintained
with
respect to the Notes or thereafter be received with respect to the Mortgage
Loans. Neither the Indenture Trustee nor any other successor master servicer
shall be deemed to be in default hereunder by reason of any failure to make,
or
any delay in making, any payment hereunder or any portion thereof caused by
(i)
the failure of the Master Servicer to deliver, or any delay in delivering,
cash,
documents or records to it, (ii) the failure of the Master Servicer to cooperate
as required by this Agreement, (iii) the failure of the Master Servicer to
deliver the Mortgage Loan data to the Indenture Trustee as required by this
Agreement or (iv) restrictions imposed by any regulatory authority having
jurisdiction over the Master Servicer.
(d) The
Master Servicer acknowledges that following the resignation of the Trust
Administrator pursuant to Section 7.09(a), the Master Servicer shall immediately
resign and such successor Trust Administrator shall automatically become the
Master Servicer under this Agreement; provided
that
(i)
any such successor Master Servicer shall be required to agree to assume the
duties of the Trust Administrator under the terms and conditions of this
Agreement and the other Operative Agreements in its acceptance of appointment
as
successor Trust Administrator, (ii) any such successor Master Servicer shall
be
an established housing and home finance institution servicer, master servicer,
servicing or mortgage servicing institution having a net worth of not less
than
$15,000,000 and meeting such other standards for a successor master servicer
as
are set forth in this Agreement, (iii) any such successor Master Servicer shall
agree to assume all of the responsibilities, duties and liabilities of a master
servicer, like the Master Servicer and (iv) the appointment of any successor
Master Servicer in connection with the resignation of the Trust Administrator
pursuant to Sections 7.09(a) shall be effective only after receipt of a letter
by the Indenture Trustee from each Rating Agency, at the sole cost and expense
of the replaced Master Servicer, to the effect that such proposed appointment
will not cause a reduction or withdrawal of the then current ratings of the
Notes. Notwithstanding the foregoing, the Master Servicer shall not be required
to resign unless the successor Master ▇▇▇▇▇▇▇▇ and the successor Trust
Administrator agree to receive reasonable compensation which in the aggregate
does not exceed the compensation (including earnings on the Collection Account)
payable to the Master Servicer prior to the appointment of such successor Trust
Administrator.
Section
8.02. Additional
Remedies of Indenture Trustee Upon Master Servicer Event of
Default.
During
the continuance of any Master Servicer Event of Default, so long as such Master
Servicer Event of Default shall not have been remedied, the Indenture Trustee,
in addition to the rights specified in Section 8.01, shall have the right,
in
its own name and as trustee of an express trust, to take all actions now or
hereafter existing at law, in equity or by statute to enforce its rights and
remedies and to protect the interests, and enforce the rights and remedies,
of
the Noteholders (including the institution and prosecution of all judicial,
administrative and other proceedings and the filings of proofs of claim and
debt
in connection therewith). Except as otherwise expressly provided in this
Agreement, no remedy provided for by this Agreement shall be exclusive of any
other remedy, and each and every remedy shall be cumulative and in addition
to
any other remedy, and no delay or omission to exercise any right or remedy
shall
impair any such right or remedy or shall be deemed to be a waiver of any Master
Servicer Event of Default.
Section
8.03. Waiver
of Defaults.
The
Majority Noteholders may, on behalf of all Noteholders, waive any default or
Master Servicer Event of Default by the Master Servicer in the performance
of
its obligations hereunder, except that a default in the making of any required
deposit to the Collection Account that would result in a failure of the Trust
Administrator or the Paying Agent to make any required payment of principal
of
or interest on the Notes may only be waived with the consent of 100% of the
affected Noteholders. Upon any such waiver of a past default, such default
shall
cease to exist, and any Master Servicer Event of Default arising therefrom
shall
be deemed to have been remedied for every purpose of this Agreement. No such
waiver shall extend to any subsequent or other default or impair any right
consequent thereon except to the extent expressly so waived.
Section
8.04. Notification
to Holders.
Upon
termination of the Master Servicer or appointment of a successor to the Master
Servicer, in each case as provided herein, the Indenture Trustee shall promptly
mail notice thereof by first class mail to the Noteholders at their respective
addresses appearing on the applicable Register. The Indenture Trustee shall
also, within 45 days after the occurrence of any Master Servicer Event of
Default known to the Indenture Trustee, give written notice thereof to
Noteholders, unless such Master Servicer Event of Default shall have been cured
or waived prior to the issuance of such notice and within such 45 day
period.
Section
8.05. Directions
by Noteholders and Duties of Indenture Trustee During Master Servicer Event
of
Default.
During
the continuance of any Master Servicer Event of Default, the Majority
Noteholders may direct the time, method and place of conducting any proceeding
for any remedy available to the Indenture Trustee, or exercising any trust
or
power conferred upon the Indenture Trustee, under this Agreement; provided, however,
that the
Indenture Trustee shall be under no obligation to pursue any such remedy, or
to
exercise any of the trusts or powers vested in it by this Agreement (including,
without limitation, (i) the conducting or defending of any administrative action
or litigation hereunder or in relation hereto and (ii) the terminating of the
Master Servicer or any successor master servicer from its rights and duties
as
master servicer hereunder) at the request, order or direction of any of the
Noteholders, unless such Noteholders shall have offered to the Indenture Trustee
security or indemnity reasonably satisfactory to it against the cost, expenses
and liabilities which may be incurred therein or thereby; and, provided
further,
that,
the Indenture Trustee shall have the right to decline to follow any such
direction if the Indenture Trustee, in accordance with an Opinion of Counsel,
determines that the action or proceeding so directed may not lawfully be taken
or if the Indenture Trustee in good faith determines that the action or
proceeding so directed would involve it in personal liability for which it
is
not indemnified to its satisfaction or be unjustly prejudicial to the non
assenting Noteholders.
Section
8.06. Action
Upon Certain Failures of the Master Servicer and Upon Master Servicer Event
of
Default.
In the
event that a Responsible Officer of the Indenture Trustee or the Trust
Administrator shall have actual knowledge of any action or inaction of the
Master Servicer that would become a Master Servicer Event of Default upon the
Master Servicer’s failure to remedy the same after notice, the Indenture Trustee
or Trust Administrator, as applicable, shall give notice thereof to the Master
Servicer.
Section
8.07. [Reserved]
ARTICLE
IX
TERMINATION
Section
9.01. Termination.
The
respective obligations and responsibilities of the Master Servicer, the Trust
Administrator, the Depositor, the Issuer, the Servicer and the Indenture Trustee
created hereby (other than obligations expressly stated to survive the
termination of the Trust) shall terminate on the day after the day on which
the
Notes are paid in full (including payment pursuant to Section 9.02 below) (the
“Termination Date”).
Section
9.02. Termination
Prior to Maturity Date; Optional Redemption.
(a) On
any
Payment Date on which the Aggregate Loan Balance is less than 20% of the
Aggregate Loan Balance as of the Cut-off Date (the first such date, the “Initial
Optional Termination Date”), Aames Investment Acceptance Corporation acting
directly or through one or more Affiliates, shall have the option to purchase
the Mortgage Loans, any REO Property and any other property remaining in the
Trust for a price equal to the Termination Price. The Master Servicer and the
Servicer will be reimbursed from the Termination Price for any outstanding
Advances, Servicing Advances and unpaid Servicing Fees, Master Servicing Fees
and other amounts not previously reimbursed pursuant to the provisions of this
Agreement, as applicable, and the Trust Administrator, the Owner Trustee and
the
Indenture Trustee (including in its capacity as Custodian, if applicable) shall
be reimbursed for any previously unreimbursed amounts for which they are
entitled to be reimbursed pursuant to this Agreement, the Indenture, the
Custodial Agreement (to the extent not paid by the Sponsor pursuant to the
Custodial Agreement) or the Trust Agreement, as applicable. If such option
is
exercised, the Trust will be terminated resulting in a mandatory redemption
of
the Notes. Aames Investment Acceptance Corporation shall deliver written notice
of its intention to exercise such option to the Issuer, the Trust Administrator,
the Indenture Trustee and the Master Servicer not less than 15 days prior to
the
applicable Payment Date. If Aames Investment Acceptance Corporation fails to
exercise such option on the Initial Optional Termination Date, the Note Interest
Rate for each Class of Notes shall be increased as set forth herein beginning
on
the Initial Optional Termination Date and for each Payment Date thereafter.
Aames Investment Acceptance Corporation shall deliver written notice of its
intention to exercise such option to the Issuer, the Indenture Trustee, the
Master Servicer and the Swap Provider not less than ten days prior to the
applicable Payment Date.
In
connection with such purchase, Aames Investment Acceptance Corporation shall
remit the Termination Price to the Trust Administrator for deposit into the
Collection Account and shall direct the Servicer to remit to the Trust
Administrator all amounts then on deposit in the Custodial Account (other than
amounts permitted to be withdrawn by it pursuant to Section 4.02(e)) for deposit
to the Collection Account.
(b) In
addition, if Aames Investment Acceptance Corporation does not exercise its
purchase option pursuant to subsection (a) of this Section 9.02, then, on the
Payment Date following the Determination Date on which the Aggregate Loan
Balance is less than 10% of the Aggregate Loan Balance as of the Cut-off Date,
the Servicer acting directly or through one or more Affiliates, shall have
the
option to purchase the Mortgage Loans, any REO Property and any other property
remaining in the Trust for a price equal to the Termination Price. All
conditions applying to Aames Investment Acceptance Corporation’s right to
purchase the Mortgage Loans pursuant to paragraph (a) above shall also apply
to
the Servicer’s right.
(c) Promptly
following any such purchase pursuant to paragraph (a) or (b) of this Section
and
receipt of an Officer’s Certificate of Aames Investment Acceptance Corporation
or of the Servicer, as applicable, that the purchase price has been deposited
in
the Collection Account, the Indenture Trustee or the applicable Custodian shall
release the Mortgage Files to the purchaser of such Mortgage Loans pursuant
to
this Section 9.02, or otherwise upon its order.
Section
9.03. Certain
Notices upon Final Payment.
The
Master Servicer or the Trust Administrator, as applicable, shall give the
Issuer, the Indenture Trustee, the Owner Trustee, each Rating Agency, each
Noteholder and the Depositor at least 30 days’ prior written notice of the date
on which the Trust is expected to terminate in accordance with Section 9.01,
or
the date on which the Notes will be redeemed in accordance with Section 9.02.
Not later than the fifth Business Day in the Collection Period in which the
final payment in respect to the Notes is payable to the Noteholders, the
Indenture Trustee shall mail to the Noteholders a notice specifying the
procedures with respect to such final payment. The Trust Administrator on behalf
of the Indenture Trustee shall give a copy of such notice to each Rating Agency
at the time such notice is given to Noteholders. Following the final payment
thereon, such Notes shall become void, no longer outstanding and no longer
evidence any right or interest in the Mortgage Loans, the Mortgage Files or
any
proceeds of the foregoing.
ARTICLE
X
MISCELLANEOUS
PROVISIONS
Section
10.01. Binding
Nature of Agreement; Assignment.
This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns.
Section
10.02. Entire
Agreement.
This
Agreement contains the entire agreement and understanding among the parties
hereto with respect to the subject matter hereof, and supersedes all prior
agreements, understandings, inducements and conditions, express or implied,
oral
or written, of any nature whatsoever with respect to the subject matter hereof.
The express terms hereof control and supersede any course of performance and/or
usage of the trade inconsistent with any of the terms hereof.
Section
10.03. Amendment.
(a) This
Agreement may be amended from time to time by the parties hereto, without notice
to or the consent of any of the Holders of the Notes, (i) to cure any ambiguity,
(ii) to conform the provisions of this Agreement to the information contained
in
the Prospectus or to correct or supplement any provision herein, (iii) to make
any other provision with respect to matters or questions arising under this
Agreement or (iv) to add, delete, or amend any provision in order 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 or the Indenture Trustee),
(1) affect the status of the Notes as debt for federal income tax purposes
or
(2) only in the case of an amendment effected pursuant to clause (iii) of such
sentence, adversely affect in any material respect the interests of any Holder.
Prior to entering into any amendment without the consent of Holders pursuant
to
this paragraph, the Indenture Trustee may require an Opinion of Counsel (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, 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 ratings
assigned to the Notes.
(b) This
Agreement may also be amended from time to time by the parties hereto with
the
consent of (i) the Holders of each Class of Notes affected thereby evidencing
Voting Interests aggregating not less than 66-2/3% of each such Class and (ii)
the Holder of the Ownership Certificate, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions
of
this Agreement or modifying in any manner the rights of Noteholders or modifying
in any material respect the rights of the Swap Provider or the Holders of
Certificates; provided,
however,
that no
such amendment may (x) reduce in any manner the amount of, or delay the timing
of, payments that are required to be made in respect of any Notes without the
consent of the Holder of each such Note affected thereby, (y) adversely affect
in any material respect the interests of the Swap Provider or (z) reduce the
percentage of Notes the Holders of which are required to consent to any such
amendment without the consent of the Holders of 100% of the Class Principal
Amount of the Notes. 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
Depositor and to each Rating Agency.
(d) Notwithstanding
any of the other provisions of this Section 10.03, none of the Depositor, the
Servicer, the Master Servicer, the Trust Administrator or the Indenture Trustee
shall enter into any amendment to this Agreement that adversely affects in
any
respect the rights and interests hereunder of the Swap Provider without the
prior written consent of the Swap Provider.
(e) It
shall
not be necessary for the consent of Holders under this Section 10.03 to approve
the particular form of any proposed amendment, but it shall be sufficient if
such consent shall approve the substance thereof. The manner of obtaining such
consents and of evidencing the authorization of the execution thereof by Holders
shall be subject to such reasonable regulations as the Indenture Trustee may
prescribe.
Section
10.04. Acts
of Noteholders.
Except
as otherwise specifically provided herein, whenever Noteholder action, consent
or approval is required under this Agreement, such action, consent or approval
shall be deemed to have been taken or given on behalf of, and shall be binding
upon, all Noteholders if the Majority Noteholders agree to take such action
or
give such consent or approval.
Section
10.05. 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 properties subject to the
Mortgages are situated, and in any other appropriate public recording office
or
elsewhere, such recordation to be effected by the Depositor on direction and
at
the expense of Holders of not less than 66-2/3% of the Note Principal Balance
of
the Notes and of the Holder of the Ownership Certificate requesting such
recordation, but only when accompanied by an Opinion of Counsel to the effect
that such recordation materially and beneficially affects the interests of
the
Noteholders, or is necessary for the administration or servicing of the Mortgage
Loans.
Section
10.06. Governing
Law.
THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE
STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS (OTHER
THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW), AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS.
Section
10.07. Notices.
All
demands, notices and communications hereunder shall be in writing and shall
be
deemed to have been duly given if mailed by overnight courier, addressed as
follows or delivered by facsimile (or such other address as may hereafter be
furnished to the other party by like notice):
(i) if
to the
Sponsor:
Aames
Investment Corporation
▇▇▇
▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Los
Angeles,
California 90071
Attention:
Executive Vice President - Capital Markets
Telephone:
(▇▇▇) ▇▇▇-▇▇▇▇
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
with
a copy
to:
General
Counsel
Telephone:
(▇▇▇) ▇▇▇-▇▇▇▇
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
(ii) if
to the
Servicer:
Aames
Funding
Corporation
▇▇▇
▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇
Los
Angeles,
California 90071
Attention:
Executive Vice President - Capital Markets
Telephone:
(▇▇▇) ▇▇▇-▇▇▇▇
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
with
a copy
to:
General
Counsel
Telephone:
(▇▇▇) ▇▇▇-▇▇▇▇
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
(iii) if
to the
Master Servicer:
▇▇▇▇▇
Fargo
Bank, N.A.
P.O.
Box
98
Columbia,
Maryland 21046
Attention:
Aames Mortgage Investment Trust 2006-1
(or
in the
case of overnight deliveries,
▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇
Columbia,
Maryland 21045)
Telephone:
(▇▇▇) ▇▇▇-▇▇▇▇
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
(iv) if
to the
Trust Administrator:
▇▇▇▇▇
Fargo
Bank, N.A.
P.O.
Box
98
Columbia,
Maryland 21046
Attention:
Aames Mortgage Investment Trust 2006-1
(or
in the
case of overnight deliveries,
▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇
Columbia,
Maryland 21045)
Telephone:
(▇▇▇) ▇▇▇-▇▇▇▇
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
(v) if
to the
Indenture Trustee:
Deutsche
Bank
National Trust Company
1761
East
Saint ▇▇▇▇▇▇ Place
Santa
Ana,
California 92705
Attention:
Trust Administration, AA0601
Telephone:
(▇▇▇) ▇▇▇-▇▇▇▇
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
(vi) if
to the
Depositor:
Financial
Asset Securities Corp.
▇▇▇
▇▇▇▇▇▇▇▇▇
▇▇▇▇
Greenwich,
Connecticut 06830
Attention:
Legal
(vii) if
to the
Issuer:
Aames
Mortgage Investment Trust 2006-1
c/o
Wilmington Trust Company
▇▇▇▇▇▇
Square
North
▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
Wilmington,
Delaware 19890
Attention:
Corporate Trust Administration
(viii) if
to the
Swap Provider:
Bear
▇▇▇▇▇▇▇
Financial Products Inc.
▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇▇
New
York, New
York 10179
Attention:
DPC Manager
All
demands, notices and communications to a party hereunder shall be in writing
and
shall be deemed to have been duly given when delivered to such party at the
relevant address, facsimile number or electronic mail address set forth above
or
at such other address, facsimile number or electronic mail address as such
party
may designate from time to time by written notice in accordance with this
Section 10.07.
Section
10.08. Severability
of Provisions.
If any
one or more of the covenants, agreements, provisions or terms of this Agreement
shall be for any reason whatsoever held invalid, then such covenants,
agreements, provisions or terms shall be deemed severable from the remaining
covenants, agreements, provisions or terms of this Agreement and shall in no
way
affect the validity or enforceability of the other provisions of this Agreement
or of the Notes or the rights of the Holders thereof.
Section
10.09. Indulgences;
No Waivers.
Neither
the failure nor any delay on the part of a party to exercise any right, remedy,
power or privilege under this Agreement shall operate as a waiver thereof,
nor
shall any single or partial exercise of any right, remedy, power or privilege
preclude any other or further exercise of the same or of any other right,
remedy, power or privilege, nor shall any waiver of any right, remedy, power
or
privilege with respect to any occurrence be construed as a waiver of such right,
remedy, power or privilege with respect to any other occurrence. No waiver
shall
be effective unless it is in writing and is signed by the party asserted to
have
granted such waiver.
Section
10.10. Headings
Not To Affect Interpretation.
The
headings contained in this Agreement are for convenience of reference only,
and
they shall not be used in the interpretation hereof.
Section
10.11. Benefits
of Agreement.
Nothing
in this Agreement or in the Notes, express or implied, shall give to any Person,
other than the parties to this Agreement and their successors hereunder and
the
Holders of the Notes, any benefit or any legal or equitable right, power, remedy
or claim under this Agreement. Notwithstanding the foregoing, (i) the Owner
Trustee shall be an express third-party beneficiary of this Agreement and (ii)
Aames Investment Acceptance Corporation shall be an express third-party
beneficiary with respect to Section 9.02.
Section
10.12. Special
Notices to the Rating Agencies.
(a) The
Servicer shall give prompt notice to each Rating Agency of the occurrence of
any
of the following events of which it has notice:
(i) any
amendment to this Agreement pursuant to Section 10.03; and
(ii) the
making of a final payment hereunder.
(b) All
notices to the Rating Agencies provided for by this Section shall be in writing
and sent by first class mail, telecopy or overnight courier, as
follows:
if
to
Moody’s:
▇▇▇▇▇’▇
Investors Service, Inc.
▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇
New
York,
New York 10004
Fax
no.:
(▇▇▇) ▇▇▇-▇▇▇▇
if
to
S&P:
Standard
& Poor’s Ratings Services, a division
of
The
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.
▇▇
▇▇▇▇▇
▇▇▇▇▇▇
New
York,
New York 10041
Fax
no.:
(▇▇▇) ▇▇▇-▇▇▇▇
(c) The
Trust
Administrator shall make available to the Rating Agencies each report prepared
pursuant to Section 5.09.
Section
10.13. Counterparts.
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed to be an original, and all of which together shall constitute one and
the
same instrument.
Section
10.14. Execution
by the Issuer.
It is
expressly understood and agreed by the parties hereto that (a) this Agreement
is
executed and delivered by Wilmington Trust Company, not individually or
personally but solely as Owner Trustee of the Issuer, in the exercise of the
powers and authority conferred and vested in it as trustee, (b) each of the
representations, undertakings and agreements herein made on the part of the
Issuer is made and intended not as personal representations, undertakings and
agreements by Wilmington Trust Company but is made and intended for the purpose
of binding only the Issuer, (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 Issuer or be liable for the
breach or failure of any obligation, representation, warranty or covenant made
or undertaken by the Issuer under this Agreement or any other
document.
Section
10.15. Intention
of the Parties and Interpretation.
Each of
the parties acknowledges and agrees that the purpose of Sections 4.04(d),
4.04(e) and 6.07 of this Agreement is to facilitate compliance by
the Depositor with the provisions of Regulation AB promulgated by the SEC
under the 1934 Act (17 C.F.R. §§ 229.1100 - 229.1123), as such may be amended
from time to time and subject to clarification and interpretive advice as may
be
issued by the staff of the SEC from time to time. Therefore, each of the parties
agrees (a) to comply with requests made by the Depositor in good faith for
delivery of information under the Section 4.04(d), 4.04(e) and 6.07 on the
basis
of evolving interpretations of Regulation AB, (b) the parties shall comply,
with
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 (c) that no consent of the
Noteholders is required with respect to any amendment of this Agreement to
effect any such changes in the parties’ obligations as are necessary to
accommodate evolving interpretations of the provisions of Regulation
AB.
IN
WITNESS WHEREOF, the parties hereto have caused their names to be signed hereto
by their respective officers hereunto duly authorized as of the day and year
first above written.
AAMES
MORTGAGE INVESTMENT TRUST 2006-1,
as
Issuer
|
By:
|
WILMINGTON
TRUST COMPANY, not in its
individual
capacity but solely as Owner
Trustee
|
By:
/s/
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Name:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title:
Vice President
FINANCIAL
ASSET SECURITIES CORP.,
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:
Associate
▇▇▇▇▇
FARGO BANK, N.A.,
as
Trust
Administrator and Master Servicer
By: /s/
▇▇▇▇▇▇ ▇▇▇▇▇▇
Name:
▇▇▇▇▇▇ ▇▇▇▇▇▇
Title:
Vice President
AAMES
FUNDING CORPORATION,
as
Servicer
By: /s/
▇▇▇▇ ▇. ▇▇▇
Name:
▇▇▇▇ ▇. ▇▇▇
Title:
Executive Vice President
AAMES
INVESTMENT CORPORATION, as Sponsor
By: /s/
▇▇▇▇ ▇. ▇▇▇
Name:
▇▇▇▇ ▇. ▇▇▇
Title:
Executive Vice President
STATE
OF )
:
ss.:
COUNTY
OF
)
On
this
___ day of ___________ 2005, before me, personally appeared ____________, known
to me to be a _______ of Wilmington Trust Company, one of the corporations
that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN
WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the
day and year in this certificate first above written.
__________________________________
Notary
Public
[NOTARIAL
SEAL]
STATE
OF )
:
ss.:
COUNTY
OF
)
On
the
___ day of ___________ 2005, before me, personally appeared __________, known
to
me to be a _________________ of Financial Asset Securities Corp., one of the
corporations that executed the within instrument and also known to me to be
the
person who executed it on behalf of said corporation, and acknowledged to me
that such corporation executed the within instrument.
IN
WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the
day and year in this certificate first above written.
__________________________________
Notary
Public
[NOTARIAL
SEAL]
STATE
OF )
:
ss.:
COUNTY
OF
)
On
the
____ of ___________ 2005, before me, a Notary Public in and for said State,
personally appeared ______________ known to me to be a _____________ of Deutsche
Bank National Trust Company, one of the corporations that executed the within
instrument and also known to me to be the person who executed it on behalf
of
said corporation, and acknowledged to me that such corporation executed the
within instrument.
IN
WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the
day and year in this certificate first above written.
__________________________________
Notary
Public
[NOTARIAL
SEAL]
STATE
OF )
:
ss.:
COUNTY
OF
)
On
the
____ of ___________ 2005, before me, a Notary Public in and for said State,
personally appeared ______________ known to me to be a _____________ of ▇▇▇▇▇
Fargo Bank, N.A., a national banking association that executed the within
instrument and also known to me to be the person who executed it on behalf
of
said entity, and acknowledged to me that such entity executed the within
instrument.
IN
WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the
day and year in this certificate first above written.
__________________________________
Notary
Public
[NOTARIAL
SEAL]
STATE
OF )
:
ss.:
COUNTY
OF
)
On
the
____ of ___________ 2005, before me, a Notary Public in and for said State,
personally appeared ______________ known to me to be a _____________ of Aames
Funding Corporation, one of the corporations that executed the within instrument
and also known to me to be the person who executed it on behalf of said
corporation, and acknowledged to me that such corporation executed the within
instrument.
IN
WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the
day and year in this certificate first above written.
__________________________________
Notary
Public
[NOTARIAL
SEAL]
STATE
OF )
:
ss.:
COUNTY
OF
)
On
the
____ of ___________ 2005, before me, a Notary Public in and for said State,
personally appeared ______________ known to me to be a _____________ of Aames
Investment Corporation, one of the corporations that executed the within
instrument and also known to me to be the person who executed it on behalf
of
said corporation, and acknowledged to me that such corporation executed the
within instrument.
IN
WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the
day and year in this certificate first above written.
__________________________________
Notary
Public
[NOTARIAL
SEAL]
EXHIBIT
A-1
FORM
OF
INITIAL CERTIFICATION
_________________
Date
|
Deutsche
Bank National Trust Company
▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇
▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
Trust Administration, AA0601
|
▇▇▇▇▇
Fargo Bank, N.A.
▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn:
Aames Mortgage Investment Trust 2006-1
|
|
Financial
Asset Securities Corp.
▇▇▇▇
▇▇▇▇▇▇▇▇
▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
|
Aames
Funding Corporation
▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
|
Re:
Transfer
and Servicing Agreement (the “Transfer and Servicing Agreement”) dated as of
April 1, 2006 by and among
Financial Asset Securities Corp., as Depositor, Deutsche Bank National Trust
Company, as Indenture Trustee, ▇▇▇▇▇
Fargo Bank,
N.A., as Trust Administrator and Master Servicer, Aames Mortgage Investment
Trust 2006-1, as Issuer,
Aames Funding Corporation,
as Servicer, and
Aames
Investment Corporation, as Sponsor
Ladies
and Gentlemen:
In
accordance with Section 2.02(a) of the Transfer and Servicing Agreement, subject
to review of the contents thereof, the undersigned, as Custodian, hereby
certifies that it has received the documents listed in Section 2.01(b) of the
Transfer and Servicing Agreement for each Mortgage File pertaining to each
Mortgage Loan listed on Schedule A to the Transfer and Servicing Agreement,
subject to any exceptions noted on Schedule I hereto.
Capitalized
words and phrases used herein and not otherwise defined herein shall have the
respective meanings assigned to them in the Transfer and Servicing Agreement.
This certificate is subject in all respects to the terms of Section 2.02 of
the
Transfer and Servicing Agreement and the Transfer and Servicing Agreement
sections cross-referenced therein.
[Custodian]
By:_____________________________________
Name:
Title:
EXHIBIT
A-2
FORM
OF INTERIM CERTIFICATION
_________________
;
Date
|
Deutsche
Bank National Trust Company
▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇
▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
Trust Administration, AA0601
|
▇▇▇▇▇
Fargo Bank, N.A.
▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn:
Aames Mortgage Investment Trust 2006-1
|
|
Financial
Asset Securities Corp.
▇▇▇▇
▇▇▇▇▇▇▇▇
▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
|
Aames
Funding Corporation
▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
|
Re:
Transfer
and Servicing Agreement (the “Transfer and Servicing Agreement”) dated as of
April 1, 2006 by and
among Financial Asset Securities Corp., as Depositor, Deutsche Bank National
Trust Company, as Indenture
Trustee, ▇▇▇▇▇ Fargo Bank, N.A., as Trust Administrator and Master Servicer,
Aames Mortgage Investment
Trust 2006-1, as Issuer, Aames Funding Corporation, as Servicer,
and Aames Investment Corporation, as Sponsor
Ladies
and Gentlemen:
In
accordance with Section 2.02(b) of the Transfer and Servicing Agreement, the
undersigned, as Custodian, hereby certifies that as to each Mortgage Loan listed
in the Mortgage Loan Schedule (other than any Mortgage Loan paid in full or
listed on Schedule I hereto) it (or its custodian) has received the applicable
documents listed in Section 2.01(b) of the Transfer and Servicing
Agreement.
The
undersigned hereby certifies that as to each Mortgage Loan identified on the
Mortgage Loan Schedule, other than any Mortgage Loan listed on Schedule I
hereto, it has reviewed the documents identified above and has determined that
each such document appears regular on its face and appears to relate to the
Mortgage Loan identified in such document.
Capitalized
words and phrases used herein shall have the respective meanings assigned to
them in the Transfer and Servicing Agreement. This certificate is qualified
in
all respects by the terms of said Transfer and Servicing Agreement including,
but not limited to, Section 2.02(b).
[Custodian]
By:_____________________________________
Name:
Title:
EXHIBIT
A-3
FORM
OF FINAL CERTIFICATION
_________________
Date
|
Deutsche
Bank National Trust Company
▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇
▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
Trust Administration, AA0601
|
▇▇▇▇▇
Fargo Bank, N.A.
▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn:
Aames Mortgage Investment Trust 2006-1
|
|
Financial
Asset Securities Corp.
▇▇▇▇
▇▇▇▇▇▇▇▇
▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
|
Aames
Funding Corporation
▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
|
Re:
Transfer
and Servicing Agreement (the “Transfer and Servicing Agreement”) dated as of
April 1, 2006 by and among
Financial Asset Securities Corp., as Depositor, Deutsche Bank National
Trust Company, as Indenture Trustee, ▇▇▇▇▇
Fargo Bank, N.A., as Trust Administrator and Master Servicer, Aames Mortgage
Investment Trust 2006-1, as Issuer,
Aames Funding Corporation, as Servicer,
and Aames Investment Corporation, as Sponsor
Ladies
and Gentlemen:
In
accordance with Section 2.02(d) of the Transfer and Servicing Agreement, the
undersigned, as Custodian on behalf of the Indenture Trustee, hereby certifies
that as to each Mortgage Loan listed in the Mortgage Loan Schedule (other than
any Mortgage Loan paid in full or listed on Schedule I hereto) it (or its
custodian) has received the applicable documents listed in Section 2.01(b)
of
the Transfer and Servicing Agreement.
The
undersigned hereby certifies that as to each Mortgage Loan identified on the
Mortgage Loan Schedule, other than any Mortgage Loan listed on Schedule I
hereto, it has reviewed the documents listed above and has determined that
each
such document appears to be complete and, based on an examination of such
documents, the information set forth in the Mortgage Loan Schedule is
correct.
Capitalized
words and phrases used herein shall have the respective meanings assigned to
them in the Transfer and Servicing Agreement. This certificate is qualified
in
all respects by the terms of said Transfer and Servicing Agreement.
[Custodian]
By:_____________________________________
Name:
Title:
EXHIBIT
A-4
FORM
OF ENDORSEMENT
Pay
to
the order of Deutsche Bank National Trust Company, as indenture trustee (the
“Indenture Trustee”) under the Transfer and Servicing Agreement dated as of
April 1, 2006 by and among Financial Asset Securities Corp., as Depositor,
the
Indenture Trustee, ▇▇▇▇▇ Fargo Bank, N.A., as Trust Administrator and Master
Servicer, Aames Mortgage Investment Trust 2006-1, as Issuer, Aames Funding
Corporation, as Servicer, and Aames Investment Corporation, as Sponsor, relating
to Aames Mortgage Investment Trust 2006-1 Mortgage Backed Notes, Series 2006-1,
without recourse.
__________________________________
[current
signatory on note]
By:_______________________________
Name:
Title:
EXHIBIT
B
[Reserved]
EXHIBIT
C
FORM
OF
LOST NOTE AFFIDAVIT
I,
_________________________________________, being duly sworn, do hereby state
under oath that:
1. I
am a
duly elected ______________________ of Aames Investment Corporation (the
“Company”) and am duly authorized to make this affidavit.
2. This
affidavit is being delivered in connection with the transfer of the Mortgage
Loan described in Paragraph 3 hereof by the Company pursuant to the Transfer
and
Servicing Agreement, dated as of April 1, 2006, among Aames Mortgage Investment
Trust 2006-1, as Issuer, Financial Asset Securities Corp., as Depositor, ▇▇▇▇▇
Fargo Bank, N.A., as Master Servicer and as Trust Administrator, Aames Funding
Corporation, as Servicer, Aames Investment Corporation, as Sponsor, and Deutsche
Bank National Trust Company, as Indenture Trustee, relating to the Aames
Mortgage Investment Trust 2006-1 Mortgage Backed Notes, Series 2006-1 (the
“Agreement”).
3. The
______________ is the payee under the following described Mortgage Note
(“Mortgage Note”) which evidences the obligation of the borrower(s) to repay the
Mortgage Loan:
Loan
Number: ____________________________________
Mortgage
Note Date:_______________________________
Borrower(s):
_____________________________________
Original
Payee (if not the Company): ___________________
Original
Amount:__________________________________
Mortgage
Rate: ___________________________________
Address
of Mortgaged Property: ______________________
________________________________________________
4. The
Company is the lawful owner of the Mortgage Note and has not cancelled, altered,
assigned or hypothecated the Mortgage Note.
5. A
thorough and diligent search for the executed original Mortgage Note was
undertaken and was unsuccessful.
6. Attached
hereto is a true and correct copy of the Mortgage Note.
7. The
Mortgage Note has not been endorsed by the Company in any manner inconsistent
with its transfer of the Mortgage Loan under the Mortgage Loan Purchase
Agreement.
8. Without
limiting the generality of the rights and remedies of the Indenture Trustee
contained in the Agreement, the Company hereby confirms and agrees that in
the
event the inability to produce the executed original Mortgage Note results
in a
breach of the representations, warranties and covenants appearing in Section
2
of the Mortgage Loan Purchase Agreement and Section 3.01 of the Agreement,
the
Company shall repurchase the Mortgage Loan at the Purchase Price and otherwise
in accordance with Section 3.03 of the Agreement. In addition, the Company
covenants and agrees to indemnify the Indenture Trustee and the Trust from
and
hold them harmless against any and all losses, liabilities, damages, claims
or
expenses arising from the Company’s failure to have delivered the Mortgage Note
to the Indenture Trustee, including without limitation any such losses,
liabilities, damages, claims or expenses arising from any action to enforce
the
indebtedness evidenced by the Mortgage Note or any claim by any third party
who
is the holder of such indebtedness by virtue of possession of the Mortgage
Note.
9. In
the
event that the Company locates the executed original Mortgage Note, it shall
promptly provide the Mortgage Note to the Indenture Trustee.
10. Capitalized
terms used but not otherwise defined herein shall have the meanings given to
them in the Agreement.
Date:
_______________________
______________________________
(signature)
______________________________
(print
name)
______________________________
(print
title)
EXHIBIT
D
CUSTODIAL
AGREEMENT
EXHIBIT
D
DEUTSCHE
BANK NATIONAL TRUST COMPANY
as
Custodian
and
AAMES
MORTGAGE INVESTMENT TRUST 2006-1
as
Issuer
and
DEUTSCHE
BANK NATIONAL TRUST COMPANY
as
Indenture Trustee
_____________________________
CUSTODIAL
AGREEMENT
Dated
as
of April 1, 2006
_____________________________
Aames
Mortgage Investment Trust 2006-1
Mortgage
Backed Notes
TABLE
OF
CONTENTS
|
Section
1.
|
Definitions
|
|
Section
2.
|
Delivery
of this Agreement; Delivery of the Custodial Files
|
|
Section
3.
|
Acceptance
of Mortgage Loans by Custodian; Review of Documentation.
|
|
Section
4.
|
Obligations
of the Custodian; Ownership of Mortgage Loan Documents
|
|
Section
5.
|
Release
of Custodial Files.
|
|
Section
6.
|
Fees
of Custodian
|
|
Section
7.
|
Removal
of Custodian With Respect to Some or All of the Mortgage
Loans
|
|
Section
8.
|
Transfer
of Custodial Files Upon Termination
|
|
Section
9.
|
Examination
of Custodial Files
|
|
Section
10.
|
Insurance
of Custodian
|
|
Section
11.
|
Counterparts
|
|
Section
12.
|
Periodic
Statements
|
|
Section
13.
|
GOVERNING
LAW
|
|
Section
14.
|
Copies
of Mortgage Documents
|
|
Section
15.
|
No
Adverse Interest of Custodian
|
|
Section
16.
|
Resignation
by Custodian
|
|
Section
17.
|
Term
of Agreement
|
|
Section
18.
|
Notices
|
|
Section
19.
|
Successors
and Assigns
|
|
Section
20.
|
Limitation
on Liability.
|
|
Section
21.
|
Custodian
Obligations Regarding Genuineness of Documents
|
|
Section
22.
|
Shipment
of Documents
|
|
Section
23.
|
Authorized
Representatives
|
|
Section
24.
|
Amendments
|
|
Section
25.
|
Limited
Role of Owner Trustee; Successor Owner Trustee.
|
|
Section
26.
|
Eligibility
Requirements for the Custodian
|
EXHIBITS
|
EXHIBIT
A
|
MORTGAGE
LOAN SCHEDULE
|
|
EXHIBIT
B-1
|
FORM
OF INITIAL CERTIFICATION
|
|
EXHIBIT
B-2
|
FORM
OF INTERIM CERTIFICATION
|
|
EXHIBIT
B-3
|
FORM
OF FINAL CERTIFICATION
|
|
EXHIBIT
B-4
|
FORM
OF REQUEST FOR RELEASE OF DOCUMENTS AND RECEIPT
|
|
EXHIBIT
B-5
|
FORM
OF LOST NOTE AFFIDAVIT
|
|
EXHIBIT
B-6
|
FORM
OF ENDORSEMENT
|
|
EXHIBIT
C
|
AUTHORIZED
REPRESENTATIVES OF THE CUSTODIAN
|
|
EXHIBIT
D
|
AUTHORIZED
REPRESENTATIVES OF THE INDENTURE TRUSTEE
|
|
EXHIBIT
E
|
AUTHORIZED
REPRESENTATIVES OF THE MASTER SERVICER
|
|
EXHIBIT
F
|
AUTHORIZED
REPRESENTATIVES OF THE SERVICER (AAMES FUNDING
CORPORATION)
|
This
is a
Custodial Agreement (the “Agreement”), dated and effective as of April 1, 2006,
by and among Deutsche Bank National Trust Company, as custodian (in such
capacity, the “Custodian”), Aames Mortgage Investment Trust 2006-1, as issuer
(the “Issuer”), and Deutsche Bank National Trust Company, as indenture trustee
(in such capacity, the “Indenture Trustee”);
W
I T
N E S S E T H:
WHEREAS,
the Indenture Trustee has entered into a transfer and servicing agreement,
dated
as of April 1, 2006 (the “Transfer and Servicing Agreement”), by and among the
Issuer, the Indenture Trustee, Financial Asset Securities Corp., as depositor
(the “Depositor”), ▇▇▇▇▇ Fargo Bank, N.A., as master servicer (in such capacity,
the “Master Servicer”) and as trust administrator (in such capacity, the “Trust
Administrator”), Aames Funding Corporation, as servicer (the “Servicer”), and
Aames Investment Corporation, as seller, pursuant to which the Depositor
has
conveyed certain Mortgage Loans identified on Exhibit A hereto (the “Mortgage
Loan Schedule”) to the Issuer;
WHEREAS,
the Issuer has entered into an indenture dated as of April 1, 2006 (the
“Indenture”), among the Indenture Trustee, the Issuer and the Trust
Administrator, pursuant to which the Issuer has pledged such Mortgage Loans
to
the Indenture Trustee to secure the Issuer’s 2006-1 Mortgage Backed Notes (the
“Notes”);
WHEREAS,
the Indenture Trustee and the Custodian desire that the Custodian shall hold
the
Mortgage Loan Documents (as defined herein) on behalf of the Indenture Trustee
in accordance with the terms hereof, and that the Custodian shall cooperate
with
the Master Servicer in the performance of the Master Servicer’s duties under the
Transfer and Servicing Agreement;
NOW,
THEREFORE, in consideration of the mutual agreements hereinafter set forth,
and
for other good and valuable consideration, the receipt and adequacy of which
is
hereby acknowledged, the Indenture Trustee and the Custodian agree as
follows:
Section
1. Definitions.
All
capitalized terms not defined herein shall have the meanings assigned to
such
terms in the Transfer and Servicing Agreement.
The
Indenture Trustee shall notify the Custodian, in advance, of any material
changes to such Transfer and Servicing Agreement that may affect the rights
and
obligations of the Custodian set forth herein and shall not agree to any
amendment that affects the rights or obligations of the Custodian without
the
Custodian’s prior written consent. Whenever used herein, the following words and
phrases, unless the context otherwise requires, shall have the following
meanings:
Agreement:
This
Custodial Agreement and all amendments and attachments hereto and supplements
hereof.
Custodian:
Deutsche Bank National Trust Company or any of its successors in interest
or
assigns, or any successor to the Custodian under this Agreement as herein
provided.
Custodial
File:
As to
each Mortgage Loan, any Mortgage Loan Documents that are delivered to the
Custodian or which at any time come into the possession of the Custodian
pursuant to this Agreement.
Final
Certification:
A final
certification as to each Mortgage Loan, which Final Certification is delivered
to the Depositor, the Master Servicer, the Servicer and the Indenture Trustee
by
the Custodian in accordance with Section 3(d) hereof and in the form annexed
hereto as Exhibit B-3.
Initial
Certification:
An
initial certification as to each Mortgage Loan, which Initial Certification
is
delivered to the Depositor, the Master Servicer, the Servicer and the Indenture
Trustee by the Custodian in accordance with Section 3(a) hereof and in the
form
annexed hereto as Exhibit B-1.
Interim
Certification:
An
interim certification as to each Mortgage Loan, which Interim Certification
is
delivered to the Depositor, the Master Servicer, the Servicer and the Indenture
Trustee by the Custodian in accordance with Section 3(b) hereof and in the
form
annexed hereto as Exhibit B-2.
Master
Servicer:
▇▇▇▇▇
Fargo Bank, N.A. or its successors in interest.
Mortgage
Loan:
An
individual Mortgage Loan which is the subject of this Agreement, each Mortgage
Loan originally subject to this Agreement being identified on the Mortgage
Loan
Schedule, which Mortgage Loan includes, without limitation, the Custodial
File
which shall include the Mortgage Loan Documents set forth or described in
Section 2 hereof.
Mortgage
Loan Documents:
The
original documents as to each Mortgage Loan, as set forth or described in
Section 2 hereof.
Mortgage
Loan Schedule:
The
schedule attached hereto as Exhibit A, which shall identify each Mortgage
Loan,
as such schedule may be amended from time to time to reflect the addition
of
Mortgage Loans to, or the deletion of Mortgage Loans from, the Trust. Such
schedule shall set forth, among other things, the following information with
respect to each Mortgage Loan: (i) the Mortgage Loan identifying number;
(ii)
city, state and zip code of the Mortgaged Property; (iii) the original principal
amount of the Mortgage Loan; (iv) the Mortgage Rate at origination; (v) the
monthly payment of principal and interest at origination; and (vi) the Mortgage
Pool in which such Mortgage Loan is included. The
Servicer shall be responsible for providing the Indenture Trustee, the Custodian
and the Master Servicer with all amendments to the Mortgage Loan
Schedule.
Seller:
Aames
Investment Corporation under the Mortgage Loan Purchase and Assignment Agreement
dated as of April 1, 2006, by and between Aames Investment Corporation, as
Seller, and Financial Asset Securities Corp., as Purchaser.
Servicer:
Aames
Funding Corporation and
any
of its respective successors in interest and assigns.
Servicing
Officer:
Any
officer of the Servicer involved in, or responsible for, the administration
and
servicing of Mortgage Loans, whose name and specimen signature appear on
a list
of Authorized Representatives annexed hereto as Exhibit F, furnished by the
Servicer to the Indenture Trustee, the Master Servicer, the Custodian and
the
Depositor on the Closing Date, as such list may from time to time be
amended.
Transfer
and Servicing Agreement:
As
defined in the first RECITAL of this Agreement.
Trust:
The
Issuer, a Delaware statutory trust formed under the Trust
Agreement.
Trust
Agreement:
The
trust agreement dated as of May 1, 2006, between the Depositor and the Owner
Trustee, as amended and restated on May 2, 2006, among the Depositor,
the
Trust Administrator
and the
Owner Trustee, as such may be amended or supplemented from time to
time.
Section
2. Delivery
of this Agreement; Delivery of the Custodial Files.
On or
prior to the Closing Date, the Seller shall deliver the Mortgage Loan Schedule
to the Custodian. On the Closing Date, the Indenture Trustee, the Depositor
and
the Custodian shall, if necessary, amend the Mortgage Loan Schedule attached
as
Exhibit A hereto. Subsequent to the Closing Date, in the event of any repurchase
or substitution of any Mortgage Loan, the Indenture Trustee shall instruct
the
Custodian in writing to amend the Mortgage Loan Schedule to reflect such
withdrawals or substitutions of a Deleted Mortgage Loan from this Agreement
and
provide a copy of the applicable certificate from the Depositor or Master
Servicer regarding such withdrawal of a Deleted Mortgage Loan from this
Agreement; and in the case of any substitution of a Mortgage Loan, to reflect
the addition of any Qualifying Substitute Mortgage Loan to this Agreement.
The
Mortgage Loans set forth in the Mortgage Loan Schedule from time to time
shall
be subject to this Agreement.
On
or
prior to the Closing Date, the Depositor shall deliver or cause to be delivered
to and deposited with the Custodian the following original documents (as
to each
Mortgage Loan, the “Mortgage Loan Documents”) pertaining to each of the Mortgage
Loans identified on the Mortgage Loan Schedule annexed hereto:
(a) the
original Mortgage Note, endorsed without recourse either (A) in blank or
(B) in
the form of the Form of Endorsement set forth in Exhibit B-6 hereto (in each
case, with all necessary intervening endorsements, as applicable), or with
respect to any lost Mortgage Note, an original Lost Note Affidavit, in the
form
set forth in Exhibit B-5 hereto, stating that the original Mortgage Note
was
lost, misplaced or destroyed, together with a copy of the related Mortgage
Note;
(b) the
original of any guarantee executed in connection with the Mortgage Note assigned
to the Indenture Trustee;
(c) the
original Mortgage with evidence of recording thereon, and the original recorded
power of attorney, if the Mortgage was executed pursuant to a power of attorney,
with evidence of recording thereon or, if such Mortgage or power of attorney
has
been submitted for recording but has not been returned from the applicable
public recording office, has been lost or is not otherwise available, a copy
of
such Mortgage or power of attorney, as the case may be, certified by an
Officer’s Certificate of the Depositor to be a true and complete copy of the
original submitted for recording, together with a written Opinion of Counsel
acceptable to the Indenture Trustee and the Depositor that an original recorded
Mortgage is not required to enforce the Indenture Trustee’s interest in the
Mortgage Loan;
(d) an
original Assignment of Mortgage, in form and substance acceptable for recording.
The Mortgage shall be assigned either (A) in blank, without recourse, or
(B) to
“Deutsche Bank National Trust Company, as Indenture Trustee of the Aames
Mortgage Investment Trust 2006-1,” without recourse or (C) to the order of the
Indenture Trustee;
(e) if
applicable, such original intervening assignments of Mortgage, notices of
transfer or equivalent instruments (each, an “Intervening Assignment”), as may
be necessary to show a complete chain of assignment from the originator or,
in
the case of an Intervening Assignment that has been lost, a written Opinion
of
Counsel to be delivered to the Depositor stating that such original Intervening
Assignment is not required to enforce the Indenture Trustee’s interest in the
Mortgage Loan;
(f) the
original or a certified copy of lender’s title insurance policy (or, in lieu
thereof, a commitment to issue such title insurance policy, with an original
or
a certified copy of such title insurance policy to follow as soon after the
Closing Date as reasonably practicable) or attorney’s opinion of title and
abstract of title;
(g) the
original or copies of each assumption, modification, written assurance or
substitution agreement, if any, or as to any such agreement which cannot
be
delivered prior to the Closing Date because of a delay caused by the public
recording office where such assumption, modification or substitution agreement
has been delivered for recordation, a photocopy of such assumption, modification
or substitution agreement, pending delivery of the original thereof, together
with an Officer’s Certificate of the Depositor certifying that the copy of such
assumption, modification or substitution agreement delivered to the Custodian
is
a true copy and that the original of such agreement has been forwarded to
the
public recording office;
(h) the
original Primary Mortgage Insurance Policy or certificate, or an electronic
certification evidencing the existence of the Primary Mortgage Insurance
Policy
or certificate, if private mortgage guaranty insurance is required;
and
(i) the
original of any security agreement, chattel mortgage or equivalent instrument
executed in connection with the Mortgage or as to any security agreement
or
equivalent instrument that cannot be delivered on or prior to the Closing
Date
because of a delay caused by the public recording office where such document
has
been delivered for recordation, a photocopy of such document, pending delivery
of the original thereof, together with an Officer’s Certificate of the Depositor
certifying that the copy of such security agreement, chattel mortgage or
their
equivalent delivered to the Custodian is a true copy and that the original
of
such document has been forwarded to the public recording office.
Any
Opinion of Counsel delivered by the Depositor pursuant to this Section shall
be
accompanied by an Officer’s Certificate of the Depositor, upon which the
Custodian shall be entitled to conclusively rely, to the effect that the
Depositor has delivered such Opinion of Counsel to the Indenture Trustee.
From
time to time, the Indenture Trustee, the Master Servicer or the Servicer will
forward to the Custodian additional documents pursuant to the Transfer and
Servicing Agreement or additional documents evidencing an assumption,
modification or extension of a Mortgage Loan approved by the Master Servicer
or
the Servicer in accordance with the Transfer and Servicing
Agreement.
All
such
Mortgage Loan Documents held by the Custodian as to each Mortgage Loan shall
constitute the related Custodial File.
For
Mortgage Loans (if any) that have been prepaid in full after the Cut-off
Date
and prior to the Closing Date, the Depositor, in lieu of delivering the above
documents, herewith delivers to the Custodian an Officer’s Certificate which
shall include a statement to the effect that all amounts received in connection
with such prepayment that are required to be deposited in the Collection
Account
pursuant to Section 4.02(d) of the Transfer and Servicing Agreement have
been so
deposited.
Section
3. Acceptance
of Mortgage Loans by Custodian; Review of Documentation.
(a) The
Custodian, by execution and delivery hereof, acknowledges receipt of the
Custodial Files pertaining to the Mortgage Loans listed on the Mortgage Loan
Schedule, subject to review thereof by the Custodian, on behalf of the Indenture
Trustee, under this Section 3. The Custodian, on behalf of the Indenture
Trustee, shall execute and deliver on the Closing Date an Initial Certification
in the form annexed hereto as Exhibit B-1.
(b) Within
45
days after the Closing Date, the Custodian shall, on behalf of the Indenture
Trustee and for the benefit of Holders of the Notes, review each Custodial
File
to ascertain whether all required documents set forth in Section 2 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 Master Servicer, the Servicer and the Indenture Trustee an Interim
Certification in the form annexed hereto as Exhibit B-2 to the effect that,
as
to each Mortgage Loan listed on the Mortgage Loan Schedule (other than any
Mortgage Loan prepaid in full or any Mortgage Loan specifically identified
in
such certification as not covered by such certification), (i) all of the
applicable documents specified in Section 2 of this Agreement are in its
possession and (ii) such documents have been reviewed by it and appear on
their
face to relate to such Mortgage Loan. The Custodian shall review the documents
to see that they are executed and are endorsed as specified in Section 2
hereof,
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 Custodian shall have no responsibility for verifying
the genuineness or the legal effectiveness of or authority for any signatures
of
or on behalf of any party or endorser or for the perfection or priority of
any
document. Such Interim Certification shall supersede all Initial Certifications
relating to the same Custodial File.
(c) If
in the
course of the review described in paragraph (b) above the Custodian discovers
any document or documents constituting a part of a Custodial File that is
missing, does not appear regular on its face (i.e.,
is
mutilated, damaged, defaced, torn or otherwise physically altered except
to
alterations which the related borrower purportedly has given its written
consent, as evidenced in writing) or appears to be unrelated to a Mortgage
Loan
identified on the Mortgage Loan Schedule (each, a “Material Defect”), the
Custodian shall promptly identify the Mortgage Loan to which such Material
Defect relates in the Interim Certificate delivered to the Depositor, the
Master
Servicer, the Servicer and the Indenture Trustee.
(d) Within
180 days following the Closing Date, the Custodian shall deliver to the
Depositor, the Master Servicer, the Servicer and the Indenture Trustee a
Final
Certification substantially in the form annexed hereto as Exhibit B-3 evidencing
the completeness of the Custodial Files in its possession or control. Such
Final
Certification shall supersede all Initial and Interim Certifications relating
to
the same Custodial File.
(e) For
purposes of the determinations required to be made by the Custodian pursuant
to
paragraphs (a) through (d) of this Section 3, the Custodian shall be entitled
to
conclusively rely upon the diskette, tape or other electronic media (the
“Data
File”) provided by or on behalf of the Depositor with respect to the Mortgage
Loans as to whether (i) any guarantee was executed in connection with any
Mortgage Loan, (ii) any assumption, modification or substitution agreement
was
executed in connection with any Mortgage Loan, (iii) primary mortgage guaranty
insurance is required with respect to any Mortgage Loan or (iv) any security
agreement or equivalent instrument was executed in connection with any Mortgage
Loan.
(f) If,
during the term of this Agreement, the Custodian discovers any Material Defect
with respect to any Custodial File, the Custodian shall give written
specifications of such Material Defect to the Indenture Trustee.
(g) In
order
to comply with laws, rules, regulations and executive orders in effect from
time
to time applicable to banking institutions, including those relating to the
funding of terrorist activities and money laundering (“Applicable Law”),
the Indenture Trustee is required to obtain, verify and record certain
information relating to individuals and entities which maintain a business
relationship with the Indenture Trustee. Accordingly, each of the parties
agrees to provide to the Indenture Trustee upon its request from time to
time such identifying information and documentation as may be available for
such
party in order to enable the Indenture Trustee to comply with Applicable
Law.
Section
4. Obligations
of the Custodian; Ownership of Mortgage Loan Documents.
With
respect to each Custodial File that is delivered to the Custodian or that
comes
into the possession of the Custodian pursuant to this Agreement, the Custodian
acknowledges and agrees that the Custodian is the custodian for the Indenture
Trustee exclusively and that the Indenture Trustee of the Mortgage Loans
has the
legal right to, at any time and in its absolute discretion, direct, in writing,
the Custodian to release any Custodial File or all Custodial Files to the
Indenture Trustee or the Indenture Trustee’s designee, as the case may be, at
such place or places as the Indenture Trustee may designate. The Custodian
shall
hold each Custodial File received by it for the exclusive use and benefit
of the
Indenture Trustee, and shall make disposition thereof only in accordance
with
this Agreement and upon written instructions or certifications of a Servicing
Officer or the written instructions furnished by the Indenture Trustee. The
Custodian shall segregate and maintain continuous custody of all mortgage
documents constituting the Custodial File in secure and fire resistant
facilities in accordance with customary standards (two-hour fire rated) for
such
custody. The Custodian shall conduct, or cause to be conducted, periodic
audits
of the Custodial Files held by it under this Agreement in accordance with
this
Agreement and of the related accounts, records and computer systems in such
a
manner as shall allow the Indenture Trustee to verify the accuracy of the
Custodian’s record keeping. The Custodian shall not be responsible to verify (i)
the validity, legality, enforceability, recordability, perfection, priority,
sufficiency, due authorization or genuineness of any document in the Custodial
File or of any Mortgage Loans or (ii) the collectability, insurability,
effectiveness (including the authority or capacity of any Person to execute
or
issue any document in the Custodial File), or suitability of any Mortgage
Loan
unless specified otherwise in this Agreement. The Custodian shall promptly
report to the Indenture Trustee any failure on its part to hold the Custodial
Files and maintain its accounts, records and computer systems as herein provided
and promptly take appropriate action to remedy such failure.
Section
5. Release
of Custodial Files.
(a) Upon
(i)
becoming aware of the payment in full of any Mortgage Loan, or (ii) the receipt
by the Servicer of a notification that payment in full has been escrowed
in a
manner customary for such purposes, the Servicer promptly shall notify the
Custodian by a certification (which certification will include a statement
to
the effect that all amounts received in connection with such payment that
are
required to be deposited in the custodial account maintained by the Servicer
pursuant to the Transfer and Servicing Agreement have been so deposited)
of a
Servicing Officer and shall request the Custodian, on the request for release
and receipt substantially in the form of Exhibit B-4, to deliver to the Servicer
the related Custodial File. Upon receipt of such certification and request,
the
Custodian shall promptly release within three (3) Business Days the related
Custodial File to the Servicer and the Custodian shall have no further
responsibility with regard to such Custodial File.
(b) The
Custodian shall, upon request of the Master Servicer or the Servicer and
delivery to the Custodian of a request for release and receipt signed by
a
Servicing Officer substantially in the form of Exhibit B-4, promptly
release within three (3) Business Days of receipt of such request the related
Custodial File held in its possession or control to the Master Servicer or
the
Servicer. Such request for release and receipt shall obligate the Master
Servicer or the Servicer to return the Custodial File to the Custodian when
the
need therefor by the Master Servicer or the Servicer no longer exists (but
no
later than the time specified in Exhibit B-4) unless the Mortgage Loan shall
be
liquidated, in which case, upon receipt of a certificate of a Servicing Officer
similar to that hereinabove specified, the Custodial File shall be released
by
the Custodian to the Master Servicer or the Servicer.
Section
6. Fees
of Custodian.
All
fees of the Custodian for its services under this Agreement, and any expenses
incurred but not paid by the Custodian (including but not limited to counsel
fees), will be paid by the Seller on behalf of the Depositor (and by its
acknowledgement hereof, the Seller agrees to pay). The Custodian agrees that
it
will continue to act as Custodian hereunder and perform its duties hereunder,
and if after a 60-day period the Seller has failed to pay the Custodian’s fees,
the Custodian may seek repayment of such fees from the Trust Administrator
who
will pay such fees from amounts on deposit in the Collection Account prior
to
any distributions to Noteholders pursuant to Section 5.08 of the Transfer
and
Servicing Agreement.
Section
7. Removal
of Custodian With Respect to Some or All of the Mortgage Loans.
With or
without cause, the Indenture Trustee may, upon 60 days’ notice, remove and
discharge the Custodian from the performance of its duties under this Agreement
with respect to any or all of the Mortgage Loans by written notice from the
Indenture Trustee to the Custodian, with a copy to the Depositor, the Master
Servicer and the Servicer and delivery of all outstanding Final Certifications.
Having given notice of such removal, the Indenture Trustee promptly shall,
by
written instrument, with a copy to the Depositor and an original to the
successor custodian or document custodian, (i) appoint a successor custodian
to
act on behalf of the Indenture Trustee to replace the Custodian under this
Agreement, (ii) designate a document custodian to receive the Custodial Files
with respect to the Mortgage Loans removed from this Agreement, or (iii)
take
delivery of the Custodial Files. The Indenture Trustee’s appointment of a
successor custodian or document custodian shall be subject to the consent
of the
Depositor and the Seller, which consent shall not be unreasonably withheld.
In
the event of any such removal, the Custodian shall promptly transfer to the
successor custodian, as directed, all affected Custodial Files. In the event
of
removal of the Custodian for cause and the appointment of a successor custodian
under this Agreement, the expenses of transferring the Custodial Files to
the
successor custodian shall be at the expense of the Custodian. In the event
of
removal of the Custodian without cause by the Indenture Trustee and the
appointment of a successor custodian under this Agreement, the Trust Estate
shall be responsible for the expenses of transferring the Custodial Files
to the
successor custodian. In all cases, the fees of the successor custodian hereunder
shall be paid by the Seller on behalf of the Depositor (and subject to the
consent of the Seller if such fees exceed the fees payable to the previous
Custodian) or, if the Seller fails to pay such fees, then as provided in
Section
6 above. Notwithstanding the foregoing, this Agreement shall remain in full
force and effect with respect to any Mortgage Loans for which this Agreement
is
not terminated hereunder.
Section
8. Transfer
of Custodial Files Upon Termination.
If the
Custodian is notified by the Indenture Trustee that the Transfer and Servicing
Agreement has been terminated, upon written request of the Indenture Trustee,
the Custodian shall release to such Persons as the Indenture Trustee shall
designate, in writing, the Custodial Files relating to such Mortgage Loans
as
the Indenture Trustee shall request.
Section
9. Examination
of Custodial Files.
Upon
reasonable (but in no event less than 48 hours) prior notice to the Custodian,
the Servicer, the Master Servicer and the Indenture Trustee and their respective
agents, accountants, attorneys, auditors and prospective purchasers will
be
permitted during the Custodian’s normal business hours to examine the Custodial
Files, documents, records and other papers in the possession of or under
the
control of the Custodian relating to any or all of the Mortgage Loans at
the
expense of the requesting party.
Section
10. Insurance
of Custodian.
At its
own expense, the Custodian shall maintain at all times during the existence
of
this Agreement and keep in full force and effect fidelity insurance, theft
of
documents insurance, and errors and omissions insurance (which includes forgery
insurance). All such insurance shall be in amounts, with standard coverage
and
subject to deductibles, as is customary for insurance typically maintained
by
banks which act as custodian and in amounts and with insurance companies
reasonably acceptable to the Indenture Trustee. A certificate of the respective
insurer as to each such policy, with a copy of such policy attached, shall
be
furnished to the Indenture Trustee, upon request, containing the statement
of
the insurer or endorsement evidencing that such insurance shall not terminate
prior to receipt by the Indenture Trustee, by registered mail, of 30 days’ prior
written notice thereof.
Section
11. Counterparts.
For the
purpose of facilitating the execution of this Agreement as herein provided
and
for other purposes, this Agreement may be executed simultaneously in any
number
of counterparts, each of which counterparts shall be deemed to be an original,
and such counterparts shall constitute one and the same instrument.
Section
12. Periodic
Statements.
On or
before December 31 of each year, or upon the request of the Indenture Trustee
at
any other time, the Custodian shall provide to the Indenture Trustee a list
of
all the Mortgage Loans for which the Custodian holds a Custodial File pursuant
to this Agreement. Such list may be in the form of a copy of the Mortgage
Loan
Schedule with manual additions and deletions to specifically denote any Mortgage
Loans substituted, paid off or repurchased since the date of this
Agreement.
Section
13. GOVERNING
LAW.
THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE
STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS (OTHER
THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW), AND THE OBLIGATIONS,
RIGHTS, AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE
WITH SUCH LAWS.
Section
14. Copies
of Mortgage Documents.
Upon
the request of the Master Servicer, the Servicer or the Indenture Trustee
and at
the reasonable expense of the Seller, the Custodian shall provide the requestor
with copies of the Mortgage Notes, Mortgages, Assignments of Mortgages and
other
documents relating to any or all of the Mortgage Loans held by the
Custodian.
Section
15. No
Adverse Interest of Custodian.
By
execution of this Agreement, the Custodian represents and warrants that it
currently holds, and during the existence of this Agreement shall hold, no
adverse interest, by way of security or otherwise, in any Mortgage Loan,
and
hereby waives and releases any such interest which it may have in any Mortgage
Loan as of the date hereof.
Section
16. Resignation
by Custodian.
The
Custodian may resign as custodian under this Agreement upon at least 60 days’
notice to the Depositor, the Seller, the Master Servicer, the Servicer and
the
Indenture Trustee. If the Custodian resigns without reasonable cause, the
costs
associated with the resignation of the Custodian, including all costs associated
with the transfer of the Custodial Files, shall be borne by the Custodian.
In
the event of such resignation, the Indenture Trustee shall promptly appoint
a
successor custodian to serve as Custodian hereunder. Upon such appointment
the
Custodian shall promptly transfer to the successor custodian, as directed,
all
Custodial Files being administered under this Agreement. If no successor
is so
appointed by the end of such 60-day period, the Custodian shall deliver all
Custodial Files to the Indenture Trustee or as the Indenture Trustee directs.
The Seller shall be responsible for the payment or reimbursement of such
successor custodian’s reasonable fees and expenses in connection with the
performance of such successor custodian’s obligations under this Agreement;
provided that such fees will be subject to the consent of the Seller if such
fees exceed the fees paid to the resigning servicer.
Section
17. Term
of Agreement.
Unless
terminated pursuant to Section 7, Section 8 or Section 16 hereof, this Agreement
shall terminate upon the final payment or other liquidation (or advance with
respect thereto) of the last Mortgage Loan or the disposition of all property
acquired upon foreclosure or deed in lieu of foreclosure of any Mortgage
Loan,
and the final remittance of all funds due the Indenture Trustee under the
Transfer and Servicing Agreement. In such event, all documents remaining
in the
Custodial Files shall be released in accordance with the written instructions
of
the Indenture Trustee.
Section
18. Notices.
Any
demand, notice, consent, report, statement or any other communication hereunder
shall be deemed to have been received on the date delivered to or received
by
the addressee (as evidenced, in the case of registered or certified mail,
by the
date noted on the return receipt). All demands, notices, consents, reports,
statements and any other communications hereunder shall be in writing and
shall
be deemed to have been duly given if mailed, by registered or certified mail,
return receipt requested, or, if by other means, when received by the recipient
party at the address shown below, or at such other addresses as may hereafter
be
furnished to the other parties by like notice:
| (i) |
if
to the Custodian:
|
Deutsche
Bank National Trust Company
1761
East
St. ▇▇▇▇▇▇ Place
Santa
Ana, CA, 92705
Attention:
Mortgage Custody - AA0601
or
such
other address as may hereafter be furnished to the Indenture Trustee in writing
by the Custodian;
| (ii) |
if
to the Master Servicer:
|
▇▇▇▇▇
Fargo Bank, N.A.
▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
Columbia,
Maryland 21045
Attention:
Aames
2006-1
Telephone:
(▇▇▇)
▇▇▇-▇▇▇▇
Facsimile:
(▇▇▇)
▇▇▇-▇▇▇▇
| (iii) |
if
to the Trust Administrator:
|
▇▇▇▇▇
Fargo Bank, N.A.
▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
Columbia,
Maryland 21045
Attention:
Aames
2006-1
Telephone:
(▇▇▇)
▇▇▇-▇▇▇▇
Facsimile:
(▇▇▇)
▇▇▇-▇▇▇▇
| (iv) |
if
to the Indenture Trustee:
|
Deutsche
Bank National Trust Company
1761
East
St. ▇▇▇▇▇▇ Place
Santa
Ana, CA 92705
Attention:
Trust Administration - AA0601
with
a copy to the Depositor and the Seller:
Financial
Asset Securities Corp.
▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇
Greenwich,
Connecticut 06830
Aames
Investment Corporation
▇▇▇
▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇
Los
Angeles, CA 90071
Attention:
Executive Vice President - Capital Markets
Telephone:
(▇▇▇) ▇▇▇-▇▇▇▇
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
with
a
copy to:
General
Counsel
Telephone:
(▇▇▇) ▇▇▇-▇▇▇▇
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
| (v) |
if
to the Servicer:
|
Aames
Funding Corporation
▇▇▇
▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇
Los
Angeles, CA 90071
Attention:
Executive Vice President - Capital Markets
Telephone:
(▇▇▇) ▇▇▇-▇▇▇▇
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
with
a
copy to:
General
Counsel
Telephone:
(▇▇▇) ▇▇▇-▇▇▇▇
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
Section
19. Successors
and Assigns.
This
Agreement shall inure to the benefit of the successors and assigns of the
parties hereto, subject to the limitations herein provided. The Indenture
Trustee shall have the right, subject to the terms of the Transfer and Servicing
Agreement, without the consent of the Custodian or the Depositor (but with
notice in writing to the Custodian), to assign, in whole or in part, its
interest under this Agreement with respect to the Mortgage Loans to one or
more
parties including the Depositor and affiliates thereof, each of which in
turn
may assign its interest under this Agreement with respect to the Mortgage
Loans
to one or more parties, and such parties shall succeed to the rights of the
Indenture Trustee under this Agreement with respect to the applicable Mortgage
Loans. All references to the Indenture Trustee in this Agreement shall be
deemed
to include its assignee or successor and any subsequent assignee, specifically
including the Depositor and the Indenture Trustee. The Custodian shall have
the
right to assign, in whole or in part, its interest under this Agreement only
with the prior written consent of the Indenture Trustee, the Seller and the
Depositor or in accordance with Section 16 hereof.
Section
20. Limitation
on Liability.
(a) Neither
the Custodian nor any of its directors, officers, agents or employees, shall
be
liable for any action taken or omitted to be taken by it or them hereunder
or in
connection herewith in good faith and believed (which belief may be based
upon
the opinion or advice of counsel selected by it in the exercise of reasonable
care) by it or them to be within the purview of this Agreement, except for
its
or their own negligence, lack of good faith or willful misconduct. The Custodian
and any director, officer, employee or agent of the Custodian 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. In no event shall the
Custodian or its directors, officers, agents and employees be held liable
for
any special, indirect, incidental, punitive or consequential damages resulting
from any action taken or omitted to be taken by it or them hereunder or in
connection herewith even if advised of the possibility of such
damages.
(b) Notwithstanding
anything herein to the contrary, the Custodian agrees to indemnify the Trust,
the Depositor, the Seller, the Master Servicer, the Servicer, the Indenture
Trustee and each of their respective officers, directors and agents for any
and
all liabilities, obligations, losses, damages, payments, costs or expenses
of
any kind whatsoever that may be imposed on, incurred by or asserted against
the
Trust, the Depositor, the Seller, the Indenture Trustee, the Master Servicer
or
the Servicer, due to any act or omission by the Custodian with respect to
the
Custodial Files which constitutes negligence, lack of good faith or willful
misconduct on the part of the Custodian; provided, however, that the Custodian
shall not be liable to any of the foregoing Persons for any amount and any
portion of any such amount resulting from the willful misconduct, lack of
good
faith or negligence of such Person. The provisions of this Subsection 20(b)
shall survive the termination of this Custodial Agreement.
(c) The
Issuer hereby agrees to indemnify and defend the Custodian and its directors,
officers, employees and agents for any loss, liability or expense incurred
without negligence, willful misconduct, or bad faith on their part, arising
out
of, or in connection with, the acceptance or administration of the custodial
arrangement created hereunder, including the costs and expenses of defending
themselves against any claim or liability in connection with the exercise
or
performance of any of their powers or duties hereunder.
Section
21. Custodian
Obligations Regarding Genuineness of Documents.
In the
absence of bad faith on the part of the Custodian, the Custodian may
conclusively rely, as to the truth of the statements and the correctness
of the
opinions expressed therein, upon any request, instructions, certificate,
opinion
or other document furnished to the Custodian, reasonably believed by the
Custodian to be genuine and to have been signed or presented by the proper
party
or parties and conforming to the requirements of this Agreement; provided
that the
provisions of this Section shall not in any manner limit or reduce the
responsibilities of the Custodian under Section 3 hereof.
Section
22. Shipment
of Documents.
Written
instructions as to the method of shipment and the shipper(s) that the Custodian
is directed to utilize in connection with transmission of Mortgage Loan
Documents in the performance of the Custodian’s duties hereunder shall be
delivered by the Seller to the Custodian prior to any shipment of any Mortgage
Loan Documents hereunder. The Seller will arrange for the provision of such
services at its sole cost and expense (or, at the Custodian’s option, reimburse
the Custodian for all costs and expenses incurred by the Custodian consistent
with such instructions) and will maintain such insurance against loss or
damage
to Custodial Files and Mortgage Loan Documents as the Servicer deems
appropriate. Without limiting the generality of the provisions of Section
20
above, it is expressly agreed that in no event shall the Custodian have any
liability for any losses or damages to any person or property, arising out
of
actions of the Custodian properly taken pursuant to instructions of the
Indenture Trustee or the Seller. In the event the Custodian does not receive
written instructions as to the method of shipment and shippers from the Seller,
the Custodian is hereby authorized to utilize a nationally recognized courier
service and be reimbursed therefor.
Section
23. Authorized
Representatives.
Each
individual designated as an authorized representative of the Custodian, the
Indenture Trustee, the Master Servicer or the Servicer (an “Authorized
Representative”) is authorized to give and receive notices, requests and
instructions and to deliver certificates and documents in connection with
this
Custodial Agreement on behalf of the Custodian, the Indenture Trustee, the
Master Servicer and the Servicer, respectively, and the specimen signature
for
each such Authorized Representative of the Custodian, the Indenture Trustee,
the
Master Servicer and the Servicer initially authorized hereunder is set forth
on
Exhibits C, D, E and F, respectively. From time to time, the Custodian, the
Indenture Trustee, the Master Servicer or the Servicer may, by delivering
to the
others a revised exhibit, change the information previously given pursuant
to
this Section 23, but each of the parties hereto shall be entitled to rely
conclusively on the then current exhibit until receipt of a superseding
exhibit.
Section
24. Amendments.
This
Agreement may be amended or modified from time to time by the Issuer, the
Indenture Trustee and the Custodian in writing, with prior notice by the
Indenture Trustee to the Master Servicer, the Servicer, the Seller and the
Depositor. In the event of an amendment to the Transfer and Servicing Agreement,
the Depositor shall provide a copy of such amendment to the Custodian. No
amendments or modifications to the Transfer and Servicing Agreement that
have an
impact on this Agreement shall be effective unless agreed to in writing by
the
Custodian.
Section
25. Limited
Role of Owner Trustee; Successor Owner Trustee.
(a) The
execution and delivery of this Agreement by the undersigned Owner Trustee
on
behalf of the Issuer is solely and strictly in its capacity as Owner Trustee
under the Trust Agreement, and not individually, and has been undertaken
at the
direction of the Depositor. It is hereby expressly acknowledged that any
obligations, liabilities, covenants, duties, representations and warranties
hereunder are those of the Issuer only, and not those of the Owner Trustee
and
Wilmington Trust Company in its individual capacity. There shall be no
individual or corporate liability against or on the part of the Owner Trustee
(or any of its officers, directors or employees) under this Agreement, and
there
shall be no recourse against the Owner Trustee in its individual or corporate
capacity (or any of its directors, officers or employees), or against any
of its
properties or assets, for recovery of or as a result of any claim, debt,
liability or obligation (whether of payment or performance) of or against
the
Issuer or the Owner Trustee under or pursuant to this Agreement (whether
arising
out of or relating to any covenant, agreement, representation or warranty,
or
otherwise). Recourse against the Owner Trustee for any claims, liabilities,
debts or obligations under this Agreement is limited to the assets and
properties of the trust established by the Trust Agreement.
(b) It
is
hereby acknowledged that the rights and remedies of the Owner Trustee under
or
pursuant to this Agreement shall automatically be transferred to and vest
in any
successor trustee under the Trust Agreement, in the event of the resignation
or
removal of the Owner Trustee as owner trustee thereunder.
Section
26. Eligibility
Requirements for the Custodian.
The
Custodian and any successor custodian shall at all times (i) be a depository
institution subject to supervision or examination by a federal or state
authority, (ii) have a combined capital and surplus of at least $15,000,000
and
(iii) be qualified to do business in all applicable jurisdictions in which
it
engages in business. In case at any time the Custodian shall cease to be
eligible in accordance with the provisions of this Section, the Custodian
shall
resign immediately in the manner and with the effect specified in Section
16.
Section
27. Compliance
with Regulation AB.
(a) Intent
of the Parties; Reasonableness.
The
Custodian acknowledges and agrees that the purpose of this Section 27 is
to
facilitate compliance by the Depositor with the provisions of Regulation
AB and
related rules and regulations of the Commission. The Depositor shall not
exercise its right to request delivery of information or other performance
under
these provisions other than in good faith, or for purposes other than compliance
with the 1933 Act, the Exchange Act and the rules and regulations of the
Commission under the 1933 Act and the Exchange Act. The Custodian acknowledges
that interpretations of the requirements of Regulation AB may change over
time,
due to interpretive guidance provided by the Commission or its staff and
agrees
to comply with reasonable requests made by the Depositor in good faith for
delivery of information under these provisions on the basis of evolving
interpretations of Regulation AB. The Custodian shall cooperate reasonably
with
the Depositor to deliver to the Depositor (including any of its assignees
or
designees), any and all disclosure, statements, reports, certifications,
records
and any other information necessary in the reasonable, good faith determination
of the Depositor to permit the Depositor to comply with the provisions of
Regulation AB.
(b) Additional
Representations and Warranties of the Custodian.
(i) The
Custodian hereby represents and warrants that the information set forth in
the
Free Writing Prospectus and the Prospectus Supplement under the caption “The
Indenture Trustee and Custodian” (the “Custodian Disclosure”) does not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(ii) The
Custodian shall be deemed to represent to the Depositor as of the date hereof
and on each date on which information is provided to the Depositor under
Section
27(c) that, except as disclosed in writing to the Depositor prior to such
date:
(i) there are no material legal or governmental proceedings pending (or known
to
be contemplated) against it; and (ii) there are no affiliations of a type
described in Item 1119(a) of Regulation AB relating to the Custodian with
respect to the Depositor or any of the following and their affiliates: Aames
Mortgage Investment Trust 2006-1, the
Seller, the Master Servicer, the Servicer, the Trust Administrator, Bear
▇▇▇▇▇▇▇
Financial Products Inc., in its capacity as Swap Provider, or any successor
thereto or other material party as identified in writing to the Custodian
by the
Seller (each a “Transaction Party”).
(iii) If
so
requested by the Depositor on any date following the Closing Date, the Custodian
shall, within five Business Days following such request, confirm in writing
the
accuracy of the representations and warranties set forth in paragraph (ii)
of
this Section 27(b) or, if any such representation and warranty is not accurate
as of the date of such confirmation, provide reasonably adequate disclosure
of
the pertinent facts, in writing, to the requesting party. Any such request
from
the Depositor shall not be given more than once each calendar quarter, unless
the Depositor shall have a reasonable basis for a determination that any
of the
representations and warranties may not be accurate.
(c) Additional
Information to Be Provided by the Custodian.
For so
long as the Notes are outstanding, for the purpose of satisfying the Depositor’s
reporting obligation under the Exchange Act with respect to any class of
Notes,
the Custodian shall (a) notify the Depositor and the Trust Administrator
in
writing of any material litigation or governmental proceedings pending against
the Custodian that would be material to Noteholders, and provide to the
Depositor and the Trust Administrator a written description of such proceedings
and (b) notify the Depositor and the Trust Administrator of any affiliations
of
a type described in Item 1119(a) of Regulation AB relating to the Custodian
with
respect to the Depositor or any Transaction Party and provide to the Depositor
and the Trust Administrator a written description of such affiliations. Any
notices and descriptions required under this Section 27(c) shall be given
no
later than five Business Days prior to the Determination Date following the
month in which the Custodian has knowledge of the occurrence of the relevant
event. As of the date the Depositor or Trust Administrator files each Report
on
Form 10-D or Form 10-K with respect to the Notes, the Custodian will be deemed
to represent that any information previously provided under this Section
27(c),
if any, is materially correct and does not have any material omissions unless
the Custodian has provided an update to such information.
(d) Report
on Assessment of Compliance and Attestation.
On or
before March 15th
of each
calendar year, beginning in 2007 until and unless a Form 15 suspension
notification has been filed with respect to the Trust, the Custodian shall,
at
its own expense:
(i) deliver
to the Trust Administrator a report (in form and substance reasonably
satisfactory to the Trust Administrator) regarding the Custodian’s assessment of
compliance with the Servicing Criteria (set forth in Exhibit G) applicable
to it
during the immediately preceding calendar year, as required under Rules 13a-18
and 15d-18 of the Exchange Act and Item 1122 of Regulation AB. Each
such
report shall include (a) a statement of the Custodian’s responsibility for
assessing compliance with the Servicing Criteria applicable to it, (b) a
statement that the Custodian used the criteria applicable to it identified
in
Exhibit G to assess compliance with the applicable Servicing Criteria, (c)
disclosure of any material instance of noncompliance identified by the
Custodian, and (d) a statement that a registered public accounting firm has
issued an attestation report on the Custodian’s assessment of compliance with
the applicable Servicing Criteria, which report shall be delivered by the
Custodian as provided in this Section 27(d). Such
report shall be addressed to the Depositor and signed by an authorized officer
of the Custodian, and shall address each of the applicable Servicing Criteria;
and
(ii) deliver
to the Trust Administrator a report of a registered public accounting firm
(who
may
also render other services to the Custodian), which is a member of the American
Institute of Certified Public Accountants, that
attests to, and reports on, the assessment of compliance made by the Custodian
and delivered pursuant to the preceding paragraph. Such attestation shall
be in
accordance with Rules 1-02(a)(3) and 2-02(g) of Regulation S-X under the
1933
Act and the Exchange Act.
(iii) The
Custodian has not and shall not engage any subcontractor which is “participating
in the servicing function” within the meaning of Item 1122 of Regulation
AB.
(e) Indemnification;
Remedies.
The
Custodian shall indemnify the Depositor and the Trust Administrator, each
affiliate of the Depositor and the Trust Administrator or each Person who
controls any of such parties (within the meaning of Section 15 of the Securities
Act and Section 20 of the Exchange Act)(each, an “Indemnified Party”); and the
respective present and former directors, officers, employees and agents of
each
of the foregoing, and shall hold each of them harmless from and against any
losses, damages, penalties, fines, forfeitures, legal fees and expenses and
related costs, judgments, and any other costs, fees and expenses that any
of
them may sustain arising out of or based upon (i) any untrue statement of
a
material fact contained or alleged to be contained in the Custodian Disclosure
and any information, report or certification provided under this Section
27(c)
and (d)(i) by or on behalf of the Custodian (collectively, the “Custodian
Information”), or the omission or alleged omission to state in the Custodian
Information a material fact required to be stated in the Custodian Information
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; or (ii) any failure
by
the Custodian to deliver any information, report, certification or accountants’
attestation when and as required to be delivered under this Section
27. This
indemnification shall survive the termination of this Agreement or the
termination, resignation or removal of the Custodian.
In
the
case of any failure of performance described in clause (ii) of the immediately
preceding paragraph, the Custodian shall promptly reimburse the Depositor
for
all costs reasonably incurred by the Depositor in order to obtain the
information, report, certification, accountants’ letter or other material not
delivered as required by the Custodian.
If
the
indemnification provided for herein is unavailable or insufficient to hold
harmless any Indemnified Party, then the Custodian agrees that it shall
contribute to the amount paid or payable by such Indemnified Party as a result
of any claims, losses, damages or liabilities incurred by such Indemnified
Party
in such proportion as is appropriate to reflect the relative fault and the
relative benefit of such Indemnified Party on the one hand and the Custodian
on
the other.
[SIGNATURE
PAGE IMMEDIATELY FOLLOWS]
IN
WITNESS WHEREOF, the parties hereto have caused their names to be signed
hereto
by their respective officers thereunto duly authorized, all as of the day
and
year first above written.
|
DEUTSCHE
BANK NATIONAL TRUST COMPANY,
as Custodian
|
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
|
|
By:
|
|
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Name:
|
|
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Title:
|
|
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DEUTSCHE
BANK NATIONAL TRUST COMPANY, not in its individual capacity but
solely as
Indenture Trustee
|
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By:
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Name:
|
|
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Title:
|
|
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AAMES
MORTGAGE INVESTMENT TRUST 2006-1, as Issuer
|
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By:
|
WILMINGTON
TRUST COMPANY, not in its individual capacity but solely as Owner
Trustee
|
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By:
|
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Name:
|
|
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Title:
|
|
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Acknowledged:
AAMES
INVESTMENT CORPORATION,
as
Seller
|
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By:
|
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Name:
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Title:
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FINANCIAL
ASSET SECURITIES CORP.,
as
Depositor
|
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By:
|
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Name:
|
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Title:
|
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AAMES
FUNDING CORPORATION,
as
Servicer
|
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By:
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Name:
|
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Title:
|
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▇▇▇▇▇
FARGO BANK, N.A.,
as
Master Servicer
|
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By:
|
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Name:
|
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Title:
|
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▇▇▇▇▇
FARGO BANK, N.A.,
as
Trust Administrator
|
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By:
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Name:
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Title:
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EXHIBIT
A
MORTGAGE
LOAN SCHEDULE
EXHIBIT
B-1
FORM
OF INITIAL CERTIFICATION
|
__________________________________
[Date]
|
|
|
Deutsche
Bank National Trust Company
▇▇▇▇
▇▇▇▇ ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇
▇▇▇, ▇▇, ▇▇▇▇▇
Attention:
Trust Administration AA0601
|
▇▇▇▇▇
Fargo Bank, N.A.
▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attention: Aames
Mortgage Investment
Trust
2006-1
|
|
Financial
Asset Securities Corp.
▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
Legal
|
Aames
Funding Corporation
▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Aames
Mortgage Investment
Trust
2006-1
|
|
Re:
|
Custodial
Agreement dated as of April 1, 2006 (the “Custodial Agreement”), among
Deutsche Bank National Trust Company, as Indenture Trustee, Aames
Mortgage
Investment Trust 2006-1, as Issuer, and Deutsche Bank National
Trust
Company, as Custodian, with respect to Aames Mortgage Investment
Trust
2006-1 Mortgage Backed
Notes
|
Ladies
and Gentlemen:
In
accordance with Section 3 of the Custodial Agreement, subject to review of
the
contents thereof, the undersigned, as Custodian, hereby certifies that it
has
received a Custodial File pertaining to each Mortgage Loan listed on the
Mortgage Loan Schedule attached as Exhibit A to the Custodial Agreement,
subject
to any exceptions noted on Schedule I hereto.
Capitalized
words and phrases used but not otherwise defined herein shall have the
respective meanings assigned to them in the Custodial Agreement. This
Certification is subject in all respects to the terms of Section 3 of the
Custodial Agreement and the Custodial Agreement sections cross-referenced
therein.
|
DEUTSCHE
BANK NATIONAL TRUST COMPANY, as Custodian
|
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By:
|
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Name:
|
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Title:
|
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EXHIBIT
B-2
FORM
OF INTERIM CERTIFICATION
|
___________________________________
[Date]
|
|
|
Deutsche
Bank National Trust Company
▇▇▇▇
▇▇▇▇ ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇
▇▇▇, ▇▇, ▇▇▇▇▇
Attention:
Trust Administration AA0601
|
▇▇▇▇▇
Fargo Bank, N.A.
▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attention: Aames
Mortgage Investment
Trust
2006-1
|
|
Financial
Asset Securities Corp.
▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
Legal
|
Aames
Funding Corporation
▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Aames
Mortgage Investment
Trust
2006-1
|
|
Re:
|
Custodial
Agreement dated as of April 1, 2006 (the “Custodial Agreement”), among
Deutsche Bank National Trust Company, as Indenture Trustee, Aames
Mortgage
Investment Trust 2006-1, as Issuer, and Deutsche Bank National
Trust
Company, as Custodian, with respect to Aames Mortgage Investment
Trust
2006-1 Mortgage Backed Notes
|
Ladies
and Gentlemen:
In
accordance with Section 3 of the Custodial Agreement, the undersigned, as
Custodian, hereby certifies that as to each Mortgage Loan listed on the Mortgage
Loan Schedule attached as Exhibit A thereto (other than any Mortgage Loan
paid
in full or listed on Schedule I hereto) it received the applicable documents
listed in Section 2 of the Custodial Agreement as provided therein.
The
undersigned hereby certifies that as to each Mortgage Loan listed on the
Mortgage Loan Schedule attached as Exhibit A thereto (other than any Mortgage
Loan paid in full or listed on Schedule I hereto), it has reviewed the documents
listed in Section 2 of the Custodial Agreement and, subject to Section 3
of the
Custodial Agreement, has determined that each such document appears regular
on
its face, appears to contain the required signatures by or on behalf of the
mortgagor and the mortgagee, and appears to relate to the Mortgage Loan
identified in such documents. Such interim certification shall supersede
the
initial certification relating to the same custodial file.
Capitalized
words and phrases used but not otherwise defined herein shall have the
respective meanings assigned to them in the Custodial Agreement. This
Certification is qualified in all respects by the terms of the Custodial
Agreement including, but not limited to, Section 3 thereof.
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DEUTSCHE
BANK NATIONAL TRUST COMPANY, as Custodian
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By:
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Name:
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Title:
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EXHIBIT
B-3
FORM
OF FINAL CERTIFICATION
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________________________________
[Date]
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Deutsche
Bank National Trust Company
▇▇▇▇
▇▇▇▇ ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇
▇▇▇, ▇▇, ▇▇▇▇▇
Attention:
Trust Administration AA0601
|
▇▇▇▇▇
Fargo Bank, N.A.
▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attention: Aames
Mortgage Investment
Trust
2006-1
|
|
Financial
Asset Securities Corp.
▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
Legal
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Aames
Funding Corporation
▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Aames
Mortgage Investment
Trust
2006-1
|
|
Re:
|
Custodial
Agreement dated as of April 1, 2006 (the “Custodial Agreement”), among
Deutsche Bank National Trust Company, as Indenture Trustee, Aames
Mortgage
Investment Trust 2006-1, as Issuer, and Deutsche Bank National
Trust
Company, as Custodian, with respect to Aames Mortgage Investment
Trust
2006-1 Mortgage Backed
Notes
|
Ladies
and Gentlemen:
In
accordance with Section 3 of the Custodial Agreement, the undersigned, as
Custodian, hereby certifies that as to each Mortgage Loan listed on the Mortgage
Loan Schedule attached as Exhibit A thereto (other than any Mortgage Loan
paid
in full or listed on Schedule I hereto) it has received the applicable documents
listed in Section 2 of the Custodial Agreement.
The
undersigned hereby certifies that as to each Mortgage Loan listed on the
Mortgage Loan Schedule attached as Exhibit A to the Custodial Agreement (other
than any Mortgage Loan paid in full or listed on Schedule I hereto), it has
reviewed the documents listed in Section 2 of the Custodial Agreement and,
subject to Section 3 of the Custodial Agreement, has determined that each
such
document appears to be complete and, based on an examination of such documents,
the information set forth in items (i) through (v) of the definition of Mortgage
Loan Schedule is correct. This final certification shall supersede all initial
and interim certifications relating to the same custodial file.
Capitalized
words and phrases used but not otherwise defined herein shall have the
respective meanings assigned to them in the Custodial Agreement. This
Certification is qualified in all respects by the terms of the Custodial
Agreement.
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DEUTSCHE
BANK NATIONAL TRUST COMPANY, as Custodian
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By:
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Name:
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Title:
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EXHIBIT
B-4
REQUEST
FOR RELEASE OF DOCUMENTS AND RECEIPT
________________________________
[Date]
Deutsche
Bank National Trust Company
1761
East
St. ▇▇▇▇▇▇ Place
Santa
Ana, California 92705
Attention:
Mortgage Custody - Aames 2006-1
In
connection with the administration of the mortgages held by you as Custodian
under a certain custodial agreement dated as of April 1, 2006 among Deutsche
Bank National Trust Company, as Indenture Trustee, Aames Mortgage Investment
Trust 2006-1, and you, as Custodian (the “Custodial Agreement”), the undersigned
Master Servicer (or Servicer) hereby requests a release of the Custodial
File
held by you as Custodian with respect to the following described Mortgage
Loan
for the reason indicated below.
Mortgagor’s
Name:
Address:
Loan
No.:
Reason
for requesting file:
1. Mortgage
Loan paid in full.
The
Master Servicer (or Servicer) hereby certifies that all amounts received
in
connection with the loan have been or will be credited to the Collection
Account
(or the Custodial Account) and remitted to (as applicable) the Trust
Administrator for deposit into the Note Account pursuant to the Transfer
and
Servicing Agreement.
2. The
Mortgage Loan is being foreclosed.
3. Mortgage
Loan substituted.
The
Master Servicer (or Servicer) hereby certifies that a Qualifying Substitute
Mortgage Loan has been assigned and delivered to you along with the related
Custodial File pursuant to the Transfer and Servicing Agreement.
4. Mortgage
Loan repurchased.
The
Master Servicer (or Servicer) hereby certifies that the Purchase Price has
been
credited to the Collection Account (or the Custodial Account) and remitted
to
the Trust Administrator for deposit into the Note Account pursuant to the
Transfer and Servicing Agreement.
5. Other.
(Describe)
The
undersigned acknowledges that the above Custodial File will be held by the
undersigned in accordance with the provisions of the Transfer and Servicing
Agreement and will be returned to you within ten (10) days of our receipt
of the
Custodial File, except if the Mortgage Loan has been paid in full, or
repurchased or substituted for a Qualifying Substitute Mortgage Loan (in
which
case the Custodial File will be retained by us permanently) and except if
the
Mortgage Loan is being foreclosed (in which case the Custodial File will
be
returned when no longer required by us for such purpose).
Capitalized
terms used but not otherwise defined herein shall have the meanings ascribed
to
them in the Custodial Agreement.
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[Name
of Master Servicer (or Servicer)]
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By:
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Name:
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Title:
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Servicing
Officer
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EXHIBIT
B-5
FORM
OF
LOST NOTE AFFIDAVIT AND AGREEMENT
I,
_________________________________________, being duly sworn, do hereby state
under oath that:
1. I
am a
duly elected ______________________ of Aames Investment Corporation (the
“Company”) and am duly authorized to make this affidavit.
2. This
affidavit is being delivered in connection with the transfer of the Mortgage
Loan described in Paragraph 3 hereof by the Company pursuant to the Transfer
and
Servicing Agreement, dated as of April 1, 2006, among Aames Mortgage Investment
Trust 2006-1, as Issuer, Financial Asset Securities Corp., as Depositor,
▇▇▇▇▇
Fargo Bank, N.A., as Master Servicer and as Trust Administrator, Aames Funding
Corporation, as Servicer, Aames Investment Corporation, as Seller, and Deutsche
Bank National Trust Company, as Indenture Trustee, relating to the Aames
Mortgage Investment Trust 2006-1 Mortgage Backed Notes (the
“Agreement”).
3. The
______________ is the payee under the following described Mortgage Note
(“Mortgage Note”) which evidences the obligation of the borrower(s) to repay the
Mortgage Loan:
Loan
Number: __________________________________
Mortgage
Note Date:_____________________________
Borrower(s):
___________________________________
Original
Payee (if not the Company): _________________
Original
Amount:________________________________
Mortgage
Rate: _________________________________
Address
of Mortgaged Property: ____________________
_____________________________________________
4. The
Company is the lawful owner of the Mortgage Note and has not cancelled, altered,
assigned or hypothecated the Mortgage Note.
5. A
thorough and diligent search for the executed original Mortgage Note was
undertaken and was unsuccessful.
6. Attached
hereto is a true and correct copy of the Mortgage Note.
7. The
Mortgage Note has not been endorsed by the Company in any manner inconsistent
with its transfer of the Mortgage Loan under the Mortgage Loan Purchase and
Assignment Agreement.
8. Without
limiting the generality of the rights and remedies of the Indenture Trustee
contained in the Agreement, the Company hereby confirms and agrees that in
the
event the inability to produce the executed original Mortgage Note results
in a
breach of the representations, warranties and covenants appearing in Section
1.04 of the Mortgage Loan Purchase and Assignment Agreement and Section 3.03
of
the Agreement, the Company shall repurchase the Mortgage Loan at the Purchase
Price and otherwise in accordance with Section 3.04 of the Agreement. In
addition, the Company covenants and agrees to indemnify the Indenture Trustee
and the Trust from and hold them harmless against any and all losses,
liabilities, damages, claims or expenses (other than those resulting from
negligence or bad faith of the Indenture Trustee) arising from the Company’s
failure to have delivered the Mortgage Note to the Indenture Trustee, including
without limitation any such losses, liabilities, damages, claims or expenses
arising from any action to enforce the indebtedness evidenced by the Mortgage
Note or any claim by any third party who is the holder of such indebtedness
by
virtue of possession of the Mortgage Note.
9. In
the
event that the Company locates the executed original Mortgage Note, it shall
promptly provide the Mortgage Note to the Indenture Trustee.
10. Capitalized
terms used but not otherwise defined herein shall have the meanings given
to
them in the Agreement.
Date:
_______________________
_______________________________________
(signature)
_______________________________________
(print
name)
_______________________________________
(print
title)
EXHIBIT
B-6
FORM
OF
ENDORSEMENT
Pay
to the order of Deutsche
Bank National Trust Company,
as indenture trustee (the “Indenture Trustee”) under the Indenture dated as of
April
1,
2006, relating to Aames Mortgage Investment Trust 2006-1 Mortgage Backed
Notes,
without recourse.
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[current
signatory on note]
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By:
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Name:
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Title:
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EXHIBIT
C
AUTHORIZED
REPRESENTATIVES OF THE CUSTODIAN
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Name
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Signature
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Title
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EXHIBIT
D
AUTHORIZED
REPRESENTATIVES OF THE INDENTURE TRUSTEE
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Name
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Signature
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Title
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EXHIBIT
E
AUTHORIZED
REPRESENTATIVES OF THE MASTER SERVICER
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Name
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Signature
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Title
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EXHIBIT
F
AUTHORIZED
REPRESENTATIVES OF THE SERVICER
(AAMES
FUNDING CORPORATION)
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Name
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Signature
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Title
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||
EXHIBIT
G
SERVICING
CRITERIA TO BE ADDRESSED IN ASSESSMENT OF COMPLIANCE
The
assessment of compliance to be delivered by the Custodian shall address,
at a
minimum, the criteria identified below as “Applicable Servicing
Criteria”:
|
Servicing
Criteria
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Applicable
Servicing
Criteria
|
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Reference
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Criteria
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General
Servicing Considerations
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||
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1122(d)(1)(i)
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Policies
and procedures are instituted to monitor any performance or other
triggers
and events of default in accordance with the transaction
agreements
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1122(d)(1)(ii)
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If
any material servicing activities are outsourced to third parties,
policies and procedures are instituted to monitor the third party’s
performance and compliance with such servicing activities
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1122(d)(1)(iii)
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Any
requirements in the transaction agreements to maintain a back-up
servicer
for the pool assets are maintained.
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1122(d)(1)(iv)
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A
fidelity bond and errors and omissions policy is in effect on the
party
participating in the servicing function throughout the reporting
period in
the amount of coverage required by and otherwise in accordance
with the
terms of the transaction agreements.
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Cash
Collection and Administration
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1122(d)(2)(i)
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Payments
on pool assets are deposited into the appropriate custodial bank
accounts
and related bank clearing accounts no more than two business days
following receipt, or such other number of days specified in the
transaction agreements.
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1122(d)(2)(ii)
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Disbursements
made via wire transfer on behalf of an obligor or to an investor
are made
only by authorized personnel.
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1122(d)(2)(iii)
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Advances
of funds or guarantees regarding collections, cash flows or distributions,
and any interest or other fees charged for such advances are made,
reviewed and approved as specified in the transaction
agreements.
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1122(d)(2)(iv)
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The
related accounts for the transaction, such as cash reserve accounts
or
accounts established as a form of overcollateralization, are separately
maintained (e.g., with respect to commingling of cash) as set forth
in the
transaction agreements.
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1122(d)(2)(v)
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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 institutions” with respect
to a foreign financial institution means a foreign financial institution
that meets the requirements of Rule 13k-1(b)(1) of the Securities
Exchange
Act.
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1122(d)(2)(vi)
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Unissued
checks are safeguarded so as to prevent unauthorized
access.
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1122(d)(2)(vii)
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Reconciliations
are prepared on a monthly basis for all asset-backed securities
related
bank accounts, including custodial accounts and related bank clearing
accounts. These reconciliations are (A) mathematically accurate;
(B)
prepared within 30 calendar days after the bank statement cutoff
date, or
such other number of days specified in the transaction agreements;
(C)
reviewed and approved by someone other than ther person who prepared
the
reconciliations; and (D) contain explanations for reconciling items,
These
reconciling items are resolved within 90 calendar days of their
original
identification, or such other number of days specified in the transaction
agreements.
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Investor
Remittances and Reporting
|
||
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1122(d)(3)(i)
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Reports
to investors, including those to be filed with the Commission,
are
maintained in accordance with the transaction agreements and applicable
Commission requirements. Specifically, such reports (A) are prepared
in
accordance with timeframes and other terms set forth in the transaction
agreements, (B) provide information calculated in accordance with
the
terms specified in the transaction agreements; (C) are filed with
the
Commission as required by its rules and regulations; and (D) agree
with
investors; or the trustee’s records as to the total unpaid principal
balance and number of pool assets serviced by the
servicer.
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1122(d)(3)(ii)
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Amounts
due to investors are allocated and remitted in accordance with
timeframes,
distribution priority and other terms set forth in the transaction
agreements.
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1122(d)(3)(iii)
|
Disbursements
made to an investor are posted within two business days to the
servicer’s
investor records, or such other number of days specified in the
transaction agreements.
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1122(d)(3)(iv)
|
Amounts
remitted to investors per the investor reports agree with cancelled
checks, or other form of payment, or custodial bank
statements.
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Pool
Asset Administration
|
||
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1122(d)(4)(i)
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Collateral
or security on pool assets is maintained as required by the transaction
agreements or related asset pool documents.
|
√
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1122(d)(4)(ii)
|
Pool
assets and related documents are safeguarded as required by the
transaction agreements.
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√
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1122(d)(4)(iii)
|
Any
additions, removals or substitutions to the asset pool are made,
reviewed
and approved in accordance with any conditions or requirements
in the
transaction agreements
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1122(d)(4)(iv)
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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 days specified in the transaction agreements, and allocated
to
principal, interest or other items (e.g., escrow) in accordance
with the
related pool asset documents.
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1122(d)(4)(v)
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The
servicer’s records regarding the pool assets agree with the servicer’s
records with respect to an obligor’s unpaid principal
balance.
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1122(d)(4)(vi)
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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 accordance with the transaction agreements and related
pool
asset documents.
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1122(d)(4)(vii)
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Loss
mitigation of recovery actions (e.g., forbearance plans, modifications
and
deed in lieu of foreclosure, foreclosures and repossessions, as
applicable) are initiated, conducted and concluded in accordance
with the
timeframes or other requirements established by the transaction
documents.
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1122(d)(4)(viii)
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Records
documenting collection efforts are maintained during the period
a pool
asset is delinquent in accordance with the transaction agreements.,
Such
records are maintained in at least a monthly basis, or such other
period
specified in the transaction agreements, and describe the entity’s
activities in monitoring delinquent pool assets including, for
example,
phone calls, letters and payment rescheduling plans in cases where
delinquency is deemed temporary (e.g., illness or
unemployment).
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1122(d)(4)(ix)
|
Adjustments
to interest rates or rates of return for pool assets with variable
rates
are computed based on the related pool asset documents.
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1122(d)(4)(x)
|
Regarding
any funds held in trust for an obligor (such as escrow accounts);
(A) such
funds are analyzed, in accordance with the obligor’s 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 3-
calendar
days of full repayment of the related pool asset, or such other
number of
days specified in the transaction agreements.
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1122(d)(4)(xi)
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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 service at least 30 calendar days prior
to these
dates, or such other number of days specified in the transaction
agreements.
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1122(d)(4)(xii)
|
Any
late payment penalties in connection with any payment to be made
on behalf
of an obligor are paid from the servicer’s funds and not charged to the
obligor, unless the late payment was due to the obligor’s error or
omission.
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1122(d)(4)(xiii)
|
Disbursements
made on behalf of an obligor are posted within two business days
to the
obligor’s records maintained by the servicer, or such other number of days
specified in the transaction agreements.
|
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1122(d)(4)(xiv)
|
Delinquencies,
charge-offs and uncollectible funds are recognized and recorded
in
accordance with the transaction agreements.
|
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1122(d)(4)(xv)
|
Any
external enhancement or other support, identified in item 1114(a)(1)
through (3) or item 1115 of Regulation AB, is maintained as set
forth in
the transaction agreements.
|
|
EXHIBIT
E
CUSTODIAL
ACCOUNT LETTER AGREEMENT
______________
__,
____
To:
______________________
______________________
______________________
(the
“Depository”)
As
Servicer under the Transfer and Servicing Agreement dated as of April 1, 2006,
by and among Financial Asset Securities Corp., as Depositor, you, as Indenture
Trustee, ▇▇▇▇▇ Fargo Bank, N.A., as Trust Administrator and Master Servicer,
Aames Mortgage Investment Trust 2006-1, as Issuer, Aames Funding Corporation,
as
Servicer and Aames Investment Corporation, as Sponsor (the “Transfer and
Servicing Agreement”), we hereby authorize and request you to establish an
account, as a Custodial Account pursuant to Section 4.02(d) of the Transfer
and
Servicing Agreement, designated as “Aames Funding Corporation in trust for
Deutsche Bank National Trust Company, as Indenture Trustee for Aames Mortgage
Investment Trust 2006-1.” All deposits in the account shall be subject to
withdrawal therefrom by order signed by the Servicer. This letter is submitted
to you in duplicate. Please execute and return one original to us.
AAMES
FUNDING CORPORATION
Servicer
By:
___________________________________
Name:
___________________________
Title: ____________________________
Date:
____________________________
The
undersigned, as Depository, hereby certifies that the above described account
has been established under Account Number __________, at the office of the
Depository indicated above, and agrees to honor withdrawals on such account
as
provided above.
________________________________
Depository
By:
_________________________________
Name:
Title:
Date:
EXHIBIT
F
ESCROW
ACCOUNT LETTER AGREEMENT
______________
__,
____
To:
______________________
______________________
______________________
(the
“Depository”)
As
Servicer under the Transfer and Servicing Agreement dated as of April 1, 2006,
by and among Financial Asset Securities Corp., as Depositor, you, as Indenture
Trustee, ▇▇▇▇▇ Fargo Bank, N.A., as Trust Administrator and Master Servicer,
Aames Mortgage Investment Trust 2006-1, as Issuer, Aames Funding Corporation,
as
Servicer and Aames Investment Corporation, as Sponsor (the “Transfer and
Servicing Agreement”), we hereby authorize and request you to establish an
account, as an Escrow Account pursuant to Section 4.02(f) of the Transfer and
Servicing Agreement, designated as “Aames Funding Corporation in trust for
Deutsche Bank National Trust Company, as Indenture Trustee for Aames Mortgage
Investment Trust 2006-1.” All deposits in the account shall be subject to
withdrawal therefrom by order signed by the Servicer. This letter is submitted
to you in duplicate. Please execute and return one original to us.
AAMES
FUNDING CORPORATION
Servicer
By:
___________________________________
Name:
___________________________
Title: ____________________________
Date:
____________________________
The
undersigned, as Depository, hereby certifies that the above described account
has been established under Account Number ______, at the office of the
Depository indicated above, and agrees to honor withdrawals on such account
as
provided above.
________________________________
Depository
By:
_________________________________
Name:
Title:
Date:
EXHIBIT
G-1
FORM
OF
MONTHLY REMITTANCE ADVICE
|
Column
Name
|
Description
|
Decimal
|
Format
Comment
|
Max
Size
|
|
SER_INVESTOR_NBR
|
A
value assigned by the Servicer to define a group of loans.
|
|
Text
up to 10 digits
|
20
|
|
LOAN_NBR
|
A
unique identifier assigned to each loan by the investor.
|
|
Text
up to 10 digits
|
10
|
|
SERVICER_LOAN_NBR
|
A
unique number assigned to a loan by the Servicer. This may be different
than the LOAN_NBR.
|
|
Text
up to 10 digits
|
10
|
|
BORROWER_NAME
|
The
borrower name as received in the file. It is not separated by first
and
last name.
|
|
Maximum
length of 30 (Last, First)
|
30
|
|
SCHED_PAY_AMT
|
Scheduled
monthly principal and scheduled interest payment that a borrower
is
expected to pay, P&I constant.
|
2
|
No
commas(,) or dollar signs ($)
|
11
|
|
NOTE_INT_RATE
|
The
loan interest rate as reported by the Servicer.
|
4
|
Max
length of 6
|
6
|
|
NET_INT_RATE
|
The
loan gross interest rate less the service fee rate as reported by
the
Servicer.
|
4
|
Max
length of 6
|
6
|
|
SERV_FEE_RATE
|
The
servicer's fee rate for a loan as reported by the Servicer.
|
4
|
Max
length of 6
|
6
|
|
SERV_FEE_AMT
|
The
servicer's fee amount for a loan as reported by the Servicer.
|
2
|
No
commas(,) or dollar signs ($)
|
11
|
|
NEW_PAY_AMT
|
The
new loan payment amount as reported by the Servicer.
|
2
|
No
commas(,) or dollar signs ($)
|
11
|
|
NEW_LOAN_RATE
|
The
new loan rate as reported by the Servicer.
|
4
|
Max
length of 6
|
6
|
|
ARM_INDEX_RATE
|
The
index the Servicer is using to calculate a forecasted
rate.
|
4
|
Max
length of 6
|
6
|
|
ACTL_BEG_PRIN_BAL
|
The
borrower's actual principal balance at the beginning of the processing
cycle.
|
2
|
No
commas(,) or dollar signs ($)
|
11
|
|
ACTL_END_PRIN_BAL
|
The
borrower's actual principal balance at the end of the processing
cycle.
|
2
|
No
commas(,) or dollar signs ($)
|
11
|
|
BORR_NEXT_PAY_DUE_DATE
|
The
date at the end of processing cycle that the borrower's next payment
is
due to the Servicer, as reported by Servicer.
|
|
MM/DD/YYYY
|
10
|
|
SERV_CURT_AMT_1
|
The
first curtailment amount to be applied.
|
2
|
No
commas(,) or dollar signs ($)
|
11
|
|
SERV_CURT_DATE_1
|
The
curtailment date associated with the first curtailment amount.
|
|
MM/DD/YYYY
|
10
|
|
CURT_ADJ_
AMT_1
|
The
curtailment interest on the first curtailment amount, if
applicable.
|
2
|
No
commas(,) or dollar signs ($)
|
11
|
|
SERV_CURT_AMT_2
|
The
second curtailment amount to be applied.
|
2
|
No
commas(,) or dollar signs ($)
|
11
|
|
SERV_CURT_DATE_2
|
The
curtailment date associated with the second curtailment
amount.
|
|
MM/DD/YYYY
|
10
|
|
CURT_ADJ_
AMT_2
|
The
curtailment interest on the second curtailment amount, if
applicable.
|
2
|
No
commas(,) or dollar signs ($)
|
11
|
|
SERV_CURT_AMT_3
|
The
third curtailment amount to be applied.
|
2
|
No
commas(,) or dollar signs ($)
|
11
|
|
SERV_CURT_DATE_3
|
The
curtailment date associated with the third curtailment
amount.
|
|
MM/DD/YYYY
|
10
|
|
CURT_ADJ_AMT_3
|
The
curtailment interest on the third curtailment amount, if
applicable.
|
2
|
No
commas(,) or dollar signs ($)
|
11
|
|
PIF_AMT
|
The
loan "paid in full" amount as reported by the Servicer.
|
2
|
No
commas(,) or dollar signs ($)
|
11
|
|
PIF_DATE
|
The
paid in full date as reported by the Servicer.
|
|
MM/DD/YYYY
|
10
|
|
|
|
|
Action
Code Key: 15=Bankruptcy, 30=Foreclosure, , 60=PIF, 63=Substitution,
65=Repurchase,70=REO
|
2
|
|
ACTION_CODE
|
The
standard FNMA numeric code used to indicate the default/delinquent
status
of a particular loan.
|
|||
|
INT_ADJ_AMT
|
The
amount of the interest adjustment as reported by the
Servicer.
|
2
|
No
commas(,) or dollar signs ($)
|
11
|
|
SOLDIER_SAILOR_ADJ_AMT
|
The
Soldier and Sailor Adjustment amount, if applicable.
|
2
|
No
commas(,) or dollar signs ($)
|
11
|
|
NON_ADV_LOAN_AMT
|
The
Non Recoverable Loan Amount, if applicable.
|
2
|
No
commas(,) or dollar signs ($)
|
11
|
|
LOAN_LOSS_AMT
|
The
amount the Servicer is passing as a loss, if applicable.
|
2
|
No
commas(,) or dollar signs ($)
|
11
|
|
SCHED_BEG_PRIN_BAL
|
The
scheduled outstanding principal amount due at the beginning of the
cycle
date to be passed through to investors.
|
2
|
No
commas(,) or dollar signs ($)
|
11
|
|
SCHED_END_PRIN_BAL
|
The
scheduled principal balance due to investors at the end of a processing
cycle.
|
2
|
No
commas(,) or dollar signs ($)
|
11
|
|
SCHED_PRIN_AMT
|
The
scheduled principal amount as reported by the Servicer for the current
cycle -- only applicable for Scheduled/Scheduled Loans.
|
2
|
No
commas(,) or dollar signs ($)
|
11
|
|
SCHED_NET_INT
|
The
scheduled gross interest amount less the service fee amount for the
current cycle as reported by the Servicer -- only applicable for
Scheduled/Scheduled Loans.
|
2
|
No
commas(,) or dollar signs ($)
|
11
|
|
ACTL_PRIN_AMT
|
The
actual principal amount collected by the Servicer for the current
reporting cycle -- only applicable for Actual/Actual
Loans.
|
2
|
No
commas(,) or dollar signs ($)
|
11
|
|
ACTL_NET_INT
|
The
actual gross interest amount less the service fee amount for the
current
reporting cycle as reported by the Servicer -- only applicable for
Actual/Actual Loans.
|
2
|
No
commas(,) or dollar signs ($)
|
11
|
|
PREPAY_PENALTY_
AMT
|
The
penalty amount received when a borrower prepays on his loan as reported
by
the Servicer.
|
2
|
No
commas(,) or dollar signs ($)
|
11
|
|
PREPAY_PENALTY_
WAIVED
|
The
prepayment penalty amount for the loan waived by the
servicer.
|
2
|
No
commas(,) or dollar signs ($)
|
11
|
|
|
|
|
|
|
|
MOD_DATE
|
The
Effective Payment Date of the Modification for the loan.
|
|
MM/DD/YYYY
|
10
|
|
MOD_TYPE
|
The
Modification Type.
|
|
Varchar
- value can be alpha or numeric
|
30
|
|
DELINQ_P&I_ADVANCE_AMT
|
The
current outstanding principal and interest advances made by
Servicer.
|
2
|
No
commas(,) or dollar signs ($)
|
11
|
EXHIBIT
G-2
STANDARD
LAYOUT FOR MONTHLY DEFAULTED LOAN REPORT
|
Column/Header
Name
|
Description
|
Decimal
|
Format
Comment
|
|
SERVICER_LOAN_NBR
|
A
unique number assigned to a loan by the Servicer. This may be different
than the LOAN_NBR
|
|
|
|
LOAN_NBR
|
A
unique identifier assigned to each loan by the originator.
|
|
|
|
CLIENT_NBR
|
Servicer
Client Number
|
||
|
SERV_INVESTOR_NBR
|
Contains
a unique number as assigned by an external servicer to identify a
group of
loans in their system.
|
|
|
|
BORROWER_FIRST_NAME
|
First
Name of the Borrower.
|
||
|
BORROWER_LAST_NAME
|
Last
name of the borrower.
|
||
|
PROP_ADDRESS
|
Street
Name and Number of Property
|
|
|
|
PROP_STATE
|
The
state where the property located.
|
|
|
|
PROP_ZIP
|
Zip
code where the property is located.
|
|
|
|
BORR_NEXT_PAY_DUE_DATE
|
The
date that the borrower's next payment is due to the servicer at the
end of
processing cycle, as reported by Servicer.
|
MM/DD/YYYY
|
|
|
LOAN_TYPE
|
Loan
Type (i.e. FHA, VA, Conv)
|
|
|
|
BANKRUPTCY_FILED_DATE
|
The
date a particular bankruptcy claim was filed.
|
MM/DD/YYYY
|
|
|
BANKRUPTCY_CHAPTER_CODE
|
The
chapter under which the bankruptcy was filed.
|
|
|
|
BANKRUPTCY_CASE_NBR
|
The
case number assigned by the court to the bankruptcy
filing.
|
|
|
|
POST_PETITION_DUE_DATE
|
The
payment due date once the bankruptcy has been approved by the
courts
|
MM/DD/YYYY
|
|
|
BANKRUPTCY_DCHRG_DISM_DATE
|
The
Date The Loan Is Removed From Bankruptcy. Either by Dismissal, Discharged
and/or a Motion For Relief Was Granted.
|
MM/DD/YYYY
|
|
|
LOSS_MIT_APPR_DATE
|
The
Date The Loss Mitigation Was Approved By The Servicer
|
MM/DD/YYYY
|
|
|
LOSS_MIT_TYPE
|
The
Type Of Loss Mitigation Approved For A Loan Such As;
|
||
|
LOSS_MIT_EST_COMP_DATE
|
The
Date The Loss Mitigation /Plan Is Scheduled To End/Close
|
MM/DD/YYYY
|
|
|
LOSS_MIT_ACT_COMP_DATE
|
The
Date The Loss Mitigation Is Actually Completed
|
MM/DD/YYYY
|
|
|
FRCLSR_APPROVED_DATE
|
The
date DA Admin sends a letter to the servicer with instructions to
begin
foreclosure proceedings.
|
MM/DD/YYYY
|
|
|
ATTORNEY_REFERRAL_DATE
|
Date
File Was Referred To Attorney to Pursue Foreclosure
|
MM/DD/YYYY
|
|
|
FIRST_LEGAL_DATE
|
Notice
of 1st legal filed by an Attorney in a Foreclosure Action
|
MM/DD/YYYY
|
|
|
FRCLSR_SALE_EXPECTED_DATE
|
The
date by which a foreclosure sale is expected to occur.
|
MM/DD/YYYY
|
|
|
FRCLSR_SALE_DATE
|
The
actual date of the foreclosure sale.
|
MM/DD/YYYY
|
|
|
FRCLSR_SALE_AMT
|
The
amount a property sold for at the foreclosure sale.
|
2
|
No
commas(,) or dollar signs ($)
|
|
EVICTION_START_DATE
|
The
date the servicer initiates eviction of the borrower.
|
MM/DD/YYYY
|
|
|
EVICTION_COMPLETED_DATE
|
The
date the court revokes legal possession of the property from the
borrower.
|
MM/DD/YYYY
|
|
|
LIST_PRICE
|
The
price at which an REO property is marketed.
|
2
|
No
commas(,) or dollar signs ($)
|
|
LIST_DATE
|
The
date an REO property is listed at a particular price.
|
MM/DD/YYYY
|
|
|
OFFER_AMT
|
The
dollar value of an offer for an REO property.
|
2
|
No
commas(,) or dollar signs ($)
|
|
OFFER_DATE_TIME
|
The
date an offer is received by DA Admin or by the Servicer.
|
MM/DD/YYYY
|
|
|
REO_CLOSING_DATE
|
The
date the REO sale of the property is scheduled to close.
|
MM/DD/YYYY
|
|
|
REO_ACTUAL_CLOSING_DATE
|
Actual
Date Of REO Sale
|
MM/DD/YYYY
|
|
|
OCCUPANT_CODE
|
Classification
of how the property is occupied.
|
|
|
|
PROP_CONDITION_CODE
|
A
code that indicates the condition of the property.
|
|
|
|
PROP_INSPECTION_DATE
|
The
date a property inspection is performed.
|
MM/DD/YYYY
|
|
|
APPRAISAL_DATE
|
The
date the appraisal was done.
|
MM/DD/YYYY
|
|
|
CURR_PROP_VAL
|
The
current "as is" value of the property based on brokers price opinion
or
appraisal.
|
2
|
|
|
REPAIRED_PROP_VAL
|
The
amount the property would be worth if repairs are completed pursuant
to a
broker's price opinion or appraisal.
|
2
|
|
|
If
applicable:
|
|
|
|
|
DELINQ_STATUS_CODE
|
FNMA
Code Describing Status of Loan
|
||
|
DELINQ_REASON_CODE
|
The
circumstances which caused a borrower to stop paying on a loan. Code
indicates the reason why the loan is in default for this
cycle.
|
||
|
MI_CLAIM_FILED_DATE
|
Date
Mortgage Insurance Claim Was Filed With Mortgage Insurance
Company.
|
MM/DD/YYYY
|
|
|
MI_CLAIM_AMT
|
Amount
of Mortgage Insurance Claim Filed
|
No
commas(,) or dollar signs ($)
|
|
|
MI_CLAIM_PAID_DATE
|
Date
Mortgage Insurance Company Disbursed Claim Payment
|
MM/DD/YYYY
|
|
|
MI_CLAIM_AMT_PAID
|
Amount
Mortgage Insurance Company Paid On Claim
|
2
|
No
commas(,) or dollar signs ($)
|
|
POOL_CLAIM_FILED_DATE
|
Date
Claim Was Filed With Pool Insurance Company
|
MM/DD/YYYY
|
|
|
POOL_CLAIM_AMT
|
Amount
of Claim Filed With Pool Insurance Company
|
2
|
No
commas(,) or dollar signs ($)
|
|
POOL_CLAIM_PAID_DATE
|
Date
Claim Was Settled and The Check Was Issued By The Pool
Insurer
|
MM/DD/YYYY
|
|
|
POOL_CLAIM_AMT_PAID
|
Amount
Paid On Claim By Pool Insurance Company
|
2
|
No
commas(,) or dollar signs ($)
|
|
FHA_PART_A_CLAIM_FILED_DATE
|
Date
FHA Part A Claim Was Filed With HUD
|
MM/DD/YYYY
|
|
|
FHA_PART_A_CLAIM_AMT
|
Amount
of FHA Part A Claim Filed
|
2
|
No
commas(,) or dollar signs ($)
|
|
FHA_PART_A_CLAIM_PAID_DATE
|
Date
HUD Disbursed Part A Claim Payment
|
MM/DD/YYYY
|
|
|
FHA_PART_A_CLAIM_PAID_AMT
|
Amount
HUD Paid on Part A Claim
|
2
|
No
commas(,) or dollar signs ($)
|
|
FHA_PART_B_CLAIM_FILED_DATE
|
Date
FHA Part B Claim Was Filed With HUD
|
MM/DD/YYYY
|
|
|
FHA_PART_B_CLAIM_AMT
|
Amount
of FHA Part B Claim Filed
|
2
|
No
commas(,) or dollar signs ($)
|
|
FHA_PART_B_CLAIM_PAID_DATE
|
Date
HUD Disbursed Part B Claim Payment
|
MM/DD/YYYY
|
|
|
FHA_PART_B_CLAIM_PAID_AMT
|
Amount
HUD Paid on Part B Claim
|
2
|
No
commas(,) or dollar signs ($)
|
|
VA_CLAIM_FILED_DATE
|
Date
VA Claim Was Filed With the Veterans Admin
|
MM/DD/YYYY
|
|
|
VA_CLAIM_PAID_DATE
|
Date
Veterans Admin. Disbursed VA Claim Payment
|
MM/DD/YYYY
|
|
|
VA_CLAIM_PAID_AMT
|
Amount
Veterans Admin. Paid on VA Claim
|
2
|
No
commas(,) or dollar signs ($)
|
The
Loss
Mit Type
field
should show the approved Loss Mitigation Code as follows:
| · |
ASUM-Approved
Assumption
|
| · |
BAP-Borrower
Assistance Program
|
| · |
CO-
Charge Off
|
| · |
DIL-
Deed-in-Lieu
|
| · |
FFA-
Formal Forbearance Agreement
|
| · |
MOD-
Loan Modification
|
| · |
PRE-
Pre-Sale
|
| · |
SS-
Short Sale
|
| · |
MISC-Anything
else approved by the PMI or Pool
Insurer
|
NOTE:
▇▇▇▇▇
Fargo Bank will accept alternative Loss Mitigation Types to those above,
provided that they are consistent with industry standards. If Loss Mitigation
Types other than those above are used, the Servicer must supply ▇▇▇▇▇ Fargo
Bank
with a description of each of the Loss Mitigation Types prior to sending the
file.
The
Occupant
Code
field
should show the current status of the property code as follows:
| · |
Mortgagor
|
| · |
Tenant
|
| · |
Unknown
|
| · |
Vacant
|
The
Property
Condition
field
should show the last reported condition of the property as follows:
| · |
Damaged
|
| · |
Excellent
|
| · |
Fair
|
| · |
Gone
|
| · |
Good
|
| · |
Poor
|
| · |
Special
Hazard
|
| · |
Unknown
|
The
FNMA
Delinquent Reason Code
field
should show the Reason for Delinquency as follows:
|
Delinquency
Code
|
Delinquency
Description
|
|
001
|
FNMA-Death
of principal mortgagor
|
|
002
|
FNMA-Illness
of principal mortgagor
|
|
003
|
FNMA-Illness
of mortgagor’s family member
|
|
004
|
FNMA-Death
of ▇▇▇▇▇▇▇▇▇’s family member
|
|
005
|
FNMA-Marital
difficulties
|
|
006
|
FNMA-Curtailment
of income
|
|
007
|
FNMA-Excessive
Obligation
|
|
008
|
FNMA-Abandonment
of property
|
|
009
|
FNMA-Distant
employee transfer
|
|
011
|
FNMA-Property
problem
|
|
012
|
FNMA-Inability
to sell property
|
|
013
|
FNMA-Inability
to rent property
|
|
014
|
FNMA-Military
Service
|
|
015
|
FNMA-Other
|
|
016
|
FNMA-Unemployment
|
|
017
|
FNMA-Business
failure
|
|
019
|
FNMA-Casualty
loss
|
|
022
|
FNMA-Energy
environment costs
|
|
023
|
FNMA-Servicing
problems
|
|
026
|
FNMA-Payment
adjustment
|
|
027
|
FNMA-Payment
dispute
|
|
029
|
FNMA-Transfer
of ownership pending
|
|
030
|
FNMA-Fraud
|
|
031
|
FNMA-Unable
to contact borrower
|
|
INC
|
FNMA-Incarceration
|
The
FNMA
Delinquent Status Code
field
should show the Status of Default as follows:
|
Status
Code
|
Status
Description
|
|
09
|
Forbearance
|
|
17
|
Pre-foreclosure
Sale Closing Plan Accepted
|
|
24
|
Government
Seizure
|
|
26
|
Refinance
|
|
27
|
Assumption
|
|
28
|
Modification
|
|
29
|
Charge-Off
|
|
30
|
Third
Party Sale
|
|
31
|
Probate
|
|
32
|
Military
Indulgence
|
|
43
|
Foreclosure
Started
|
|
44
|
Deed-in-Lieu
Started
|
|
49
|
Assignment
Completed
|
|
61
|
Second
Lien Considerations
|
|
62
|
Veteran’s
Affairs-No Bid
|
|
63
|
Veteran’s
Affairs-Refund
|
|
64
|
Veteran’s
Affairs-Buydown
|
|
65
|
Chapter
7 Bankruptcy
|
|
66
|
Chapter
11 Bankruptcy
|
|
67
|
Chapter
13 Bankruptcy
|
EXHIBIT
G-3
CALCULATION
OF REALIZED LOSS/GAIN FORM 332- INSTRUCTION SHEET
▇▇▇▇▇
FARGO BANK, N.A.
NOTE:
Do not net or combine items. Show all expenses individually and all credits
as
separate line items. Claim packages are due on the remittance report date.
Late
submissions may result in claims not being passed until the following month.
The
Servicer is responsible to remit all funds pending loss approval and /or
resolution of any disputed items.
(a)
(b) The
numbers on the 332 form correspond with the numbers listed below.
Liquidation
and Acquisition Expenses:
1.
The
Actual Unpaid Principal Balance of the Mortgage Loan. For documentation, an
Amortization Schedule from date of default through liquidation breaking out
the
net interest and servicing fees advanced is required.
2.
The
Total
Interest Due less the aggregate amount of servicing fee that would have been
earned if all delinquent payments had been made as agreed. For documentation,
an
Amortization Schedule from date of default through liquidation breaking out
the
net interest and servicing fees advanced is required.
3. Accrued
Servicing Fees based upon the Scheduled Principal Balance of the Mortgage Loan
as calculated on a monthly basis. For documentation, an Amortization Schedule
from date of default through liquidation breaking out the net interest and
servicing fees advanced is required.
4-12.
Complete
as applicable. Required documentation:
*
For
taxes and insurance advances - see page 2 of 332 form - breakdown required
showing period
of
coverage, base tax, interest, penalty. Advances prior to default require
evidence of servicer efforts to recover advances.
*
For
escrow advances - complete payment history
(to
calculate advances from last positive escrow balance forward)
*
Other
expenses - copies of corporate advance history showing all payments
*
REO
repairs > $1500 require explanation
*
REO
repairs >$3000 require evidence of at least 2 bids.
*
Short
Sale or Charge Off require P&L supporting the decision and WFB’s approved
Officer Certificate
*
Unusual
or extraordinary items may require further documentation.
13.
The
total
of lines 1 through 12.
(c)
Credits:
14-21.
Complete
as applicable. Required documentation:
*
Copy of
the HUD 1 from the REO sale. If a 3rd
Party
Sale, bid instructions and Escrow Agent / Attorney
Letter
of
Proceeds Breakdown.
*
Copy of
EOB for any MI or gov't guarantee
*
All
other credits need to be clearly defined on the 332
form
|
22.
|
The
total of lines 14 through 21.
|
Please
Note: For
HUD/VA loans, use line (18a) for Part A/Initial proceeds and line (18b) for
Part
B/Supplemental proceeds.
Total
Realized Loss (or Amount of Any Gain)
23.
The
total
derived from subtracting line 22 from 13. If the amount represents a realized
gain, show
the
amount in parenthesis ( ).
Calculation
of Realized Loss/Gain Form 332
Prepared
by: __________________ Date:
_______________
Phone:
______________________ Email
Address:_____________________
|
Servicer
Loan No.
|
Servicer
Name
|
Servicer
Address
|
▇▇▇▇▇
FARGO BANK, N.A. Loan No._____________________________
Borrower's
Name: _________________________________________________________
Property
Address: _________________________________________________________
Liquidation
Type: REO Sale
3rd
Party Sale
Short
Sale
Charge
Off
Was
this loan granted a Bankruptcy deficiency or cramdown Yes
No
If
“Yes”,
provide deficiency or cramdown amount
________________________________________
Liquidation
and Acquisition Expenses:
|
(1)
|
Actual
Unpaid Principal Balance of Mortgage Loan
|
$
______________
|
(1)
|
||||
|
(2)
|
Interest
accrued at Net Rate
|
________________
|
(2)
|
||||
|
(3)
|
Accrued
Servicing Fees
|
________________
|
(3)
|
||||
|
(4)
|
Attorney's
Fees
|
________________
|
(4)
|
||||
|
(5)
|
Taxes
(see page 2)
|
________________
|
(5)
|
||||
|
(6)
|
Property
Maintenance
|
________________
|
(6)
|
||||
|
(7)
|
MI/Hazard
Insurance Premiums (see page 2)
|
________________
|
(7)
|
||||
|
(8)
|
Utility
Expenses
|
________________
|
(8)
|
||||
|
(9)
|
Appraisal/BPO
|
________________
|
(9)
|
||||
|
(10)
|
Property
Inspections
|
________________
|
(10)
|
||||
|
(11)
|
FC
Costs/Other Legal Expenses
|
________________
|
(11)
|
||||
|
(12)
|
Other
(itemize)
|
$________________
|
(12)
|
||||
|
Cash
for Keys__________________________
|
________________
|
||||||
|
HOA/Condo
Fees_______________________
|
________________
|
||||||
|
______________________________________
|
________________
|
||||||
|
______________________________________
|
________________
|
||||||
|
Total
Expenses
|
$
_______________
|
(13)
|
|||||
|
Credits:
|
|||||||
|
(14)
|
Escrow
Balance
|
$
_______________
|
(14)
|
||||
|
(15)
|
HIP
Refund
|
________________
|
(15)
|
||||
|
(16)
|
Rental
Receipts
|
________________
|
(16)
|
||||
|
(17)
|
Hazard
Loss Proceeds
|
________________
|
(17)
|
||||
|
(18)
|
Primary
Mortgage Insurance / Gov’t Insurance
|
________________
|
(18a)
|
||||
|
HUD
Part A
|
|||||||
|
HUD
Part B
|
________________
|
(18b)
|
|||||
|
(19)
|
Pool
Insurance Proceeds
|
________________
|
(19)
|
||||
|
(20)
|
Proceeds
from Sale of Acquired Property
|
________________
|
(20)
|
||||
|
(21)
|
Other
(itemize)
|
________________
|
(21)
|
||||
|
_________________________________________
|
_________________
|
||||||
|
_________________________________________
|
|
_________________
|
|||||
|
Total
Credits
|
$________________
|
|
(22)
|
||||
|
Total
Realized Loss (or Amount of Gain)
|
$________________
|
|
(23)
|
||||
Escrow
Disbursement Detail
|
Type
(Tax
/Ins.)
|
Date
Paid
|
Period
of Coverage
|
Total
Paid
|
Base
Amount
|
Penalties
|
Interest
|
EXHIBIT
H
FORM
OF
BACK-UP CERTIFICATION
|
Re:
|
Aames
Mortgage Investment Trust 2006-1
Mortgage
Backed Notes
|
I,
________________________________, the _______________________ of [Aames Funding
Corporation] [Subservicer] [Subcontractor]( the “Company”), certify to Financial
Asset Securities Corp. and the Master Servicer, and their officers, with the
knowledge and intent that they will rely upon this certification,
that:
(1) I
have
reviewed the servicer compliance statement of the Company provided in accordance
with Item 1123 of Regulation AB (the “Compliance Statement”), the report on
assessment of the Company’s compliance with the servicing criteria set forth in
Item 1122(d) of Regulation AB (the “Servicing Criteria”), provided in accordance
with Rules 13a-18 and 15d-18 under Securities Exchange Act of 1934, as amended
(the “Exchange Act”) and Item 1122 of Regulation AB (the “Servicing
Assessment”), the registered public accounting firm’s attestation report
provided in accordance with Rules 13a-18 and 15d-18 under the Exchange Act
and
Section 1122(b) of Regulation AB (the “Attestation
Report”), [and all servicing reports, officer’s certificates and other
information relating to the servicing of the Mortgage Loans by the Company
during 200[ ] that were delivered by the Company to the Master Servicer pursuant
to the Agreement] [Edit as necessary for Subservicer or Subcontractor]
(collectively, the “Company Servicing Information”);
(2) Based
on
my knowledge, the Company Servicing Information, taken as a whole, does not
contain any untrue statement of a material fact or omit to state a material
fact
necessary to make the statements made, in the light of the circumstances under
which such statements were made, not misleading with respect to the period
of
time covered by the Company Servicing Information;
(3) Based
on
my knowledge, all of the Company Servicing Information required to be provided
by the Company under the [Agreement] has been provided to the [Master Servicer]
[Servicer] [Subservicer];
(4) I
am
responsible for reviewing the activities performed by the Company [as servicer,
subservicer or subcontractor] under the [Agreement], and based on my knowledge
and the compliance review conducted in preparing the Compliance Statement and
except as disclosed in the Compliance Statement, the Servicing Assessment or
the
Attestation Report, the Company has fulfilled its obligations under the
[Agreement] in all material respects; and
(5) The
Compliance Statement required to be delivered by the Company pursuant to [the
Agreement], and the Servicing Assessment and Attestation Report required to
be
provided by the Company [and by any Subservicer and Subcontractor pursuant
to
the Agreement—delete as appropriate for certification party], have been provided
to [▇▇▇▇▇ Fargo]. Any material instance of noncompliance with the Servicing
Criteria has been disclosed in such reports.
Date:
By:_____________________
Name:
EXHIBIT
I
Form
of
Interest Rate Swap Agreement
BEAR
▇▇▇▇▇▇▇ FINANCIAL PRODUCTS INC.
▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
NEW
YORK,
NEW YORK 10179
▇▇▇-▇▇▇-▇▇▇▇
|
DATE:
|
May
2, 2006
|
|
TO:
|
Aames
Mortgage Investment Trust 2006-1
c/o
Wilmington Trust Company
▇▇▇▇▇▇
Square North
▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
|
|
ATTENTION:
|
Corporate
Trust Administration
|
|
TELEPHONE:
|
▇▇▇-▇▇▇-▇▇▇▇
|
|
FACSIMILE:
|
▇▇▇-▇▇▇-▇▇▇▇
|
|
FROM:
|
Derivatives
Documentation
|
|
TELEPHONE:
|
▇▇▇-▇▇▇-▇▇▇▇
|
|
FACSIMILE:
|
▇▇▇-▇▇▇-▇▇▇▇
|
|
SUBJECT:
|
Fixed
Income Derivatives Confirmation and Agreement
|
|
REFERENCE
NUMBER:
|
|
The
purpose of this letter agreement (“Agreement”) is to confirm the terms and
conditions of the Transaction entered into on the Trade Date specified below
(the “ Transaction”) between Bear Steams Financial Products Inc. (“BSFP”) and
Aames Mortgage Investment Trust 2006-1 (the “Counterparty”), pursuant to the
Transfer and Servicing Agreement (the “TSA”), dated as of April 1, 2006, among
Aames Mortgage Investment Trust 2006-1, as issuer (the “Issuer”), Financial
Asset Securities Corp., as depositor (the “Depositor”), Deutsche Bank National
Trust Company, as indenture trustee (the “Indenture Trustee”), ▇▇▇▇▇ Fargo Bank,
N.A., as trust administrator (the “Trust Administrator”) and master servicer
(the `Master Servicer”), Aames Funding Corporation, as servicer (the
“Servicer”), and Aames Investment Corporation, as sponsor (the “Sponsor”). This
Agreement, which evidences a complete and binding agreement between you and
us
to enter into the Transaction on the terms set forth below, constitutes a
“Confirmation” as referred to in the “ISDA Form Master Agreement” (as defined
below), as well as a “Schedule” as referred to in the ISDA Form Master
Agreement.
1.
This
Agreement is subject to the 2000 ISDA Definitions, as supplemented by the
Annex
thereto (June 2000 Version) (the “Definitions”), as published by the
International Swaps and Derivatives Association, Inc. (“ISDA”). You and we have
agreed to enter into this Agreement in lieu of negotiating an agreement in
the
form of the 1992 ISDA Master Agreement (Multicurrency-Cross Border) and,
accordingly, an agreement in such form but without any Schedule attached
thereto
and with all elections, modifications and amendments to such form contained
herein (the “ISDA Form Master Agreement”) shall be deemed to have been executed
by you and us on the date we entered into the Transaction. In the event of
any
inconsistency between the provisions of this Agreement and the Definitions
or
the ISDA
Form
Master Agreement, this Agreement shall prevail for purposes of the Transaction.
Terms capitalized but not defined herein except in the Definitions shall
have
the respective meanings attributed to them in the TSA.
2.
The
terms
of the particular Transaction to which this Confirmation relates are as
follows:
|
Notional
Amount:
|
With
respect to any Calculation Period, the amount set forth for such
period in
the Schedule I attached hereto.
|
||||||
|
Trade
Date:
|
April
28, 2006
|
||||||
|
Effective
Date:
|
May
25, 2006
|
||||||
|
Termination
Date:
|
October
25, 2011; provided, however, for the purposes of determining the
Floating
Amount to be paid in respect of the final Calculation Period, such
date
shall be subject to adjustment in accordance with the Business
Day
Convention.
|
||||||
|
Fixed
Amount:
|
|||||||
|
Fixed
Rate Payer:
|
Counterparty
|
||||||
|
Floating
Rate Payer
|
|||||||
|
Period
End Dates:
|
The
25th calendar day of each month during the Term of this Transaction,
commencing June 25, 2006 and ending on the Termination Date, with
No
Adjustment.
|
||||||
|
Floating
Rate Payer
|
|||||||
|
Payment
Date:
|
Early
Payment shall be applicable. The Fixed Rate Payer Payment Dates
shall be
one Business Days prior to each Fixed Rate Payer Period End
Date.
|
||||||
|
Fixed
Rate:
|
5.36000%
|
||||||
|
Fixed
Rate Day
|
|||||||
|
Count
Fraction:
|
30/360
|
||||||
|
Floating
Amounts:
|
|||||||
|
Floating
Rate Payer:
|
BSFP
|
||||||
|
Floating
Rate Payer
|
|||||||
|
Period
End Dates:
|
The
25th calendar day of each month during the Term of this Transaction,
commencing June 25, 2006 and ending on the Termination Date, subject
to
adjustment in accordance with the Business Day
Convention.
|
||||||
|
Floating
Rate Payer
|
|||||||
|
Payment
Dates:
|
Early
Payment shall be applicable. The Floating Rate Payer Payment Dates
shall
be one Business Days prior to each Floating Rate Payer Period End
Date.
|
||||||
|
Floating
Rate Option:
|
USD-LIBOR
BBA
|
||||||
|
Designated
Maturity:
|
One
month
|
||||||
|
Floating
Rate Day
|
|||||||
|
Count
Fraction:
|
Actual/360
|
||||||
|
Reset
Dates:
|
The
first day of each Calculation Period
|
||||||
|
Compounding:
|
Inapplicable
|
||||||
|
Business
Days:
|
New
York
|
||||||
|
Business
Day Convention:
|
Following
|
||||||
|
Additional
Amount:
|
In
connection with entering into this Transaction USD 535,000 is payable
by
BSFP to Counterparty May 2, 2006.
|
||||||
|
3.
|
Additional
Provisions:
|
(1)
Each party hereto is hereby advised and acknowledges that the other
party
has engaged in (or refrained from engaging in) substantial financial
transactions and has taken (or refrained from taking) other material
actions in reliance upon the entry by the parties into the Transaction
being entered into on the terms and conditions set forth herein
and in the
Confirmation relating to such Transaction, as applicable. This
paragraph
(1) shall be deemed repeated on the trade date of each
Transaction.
|
|||||
|
4.
|
Provisions
Deemed Incorporated in a Schedule to the ISDA Form Master
Agreement:
|
||||||
|
1)
|
The
parties agree that subparagraph (ii) of Section 2(c) of the ISDA
Form
Master Agreement will apply to any Transaction.
|
||||||
|
2)
|
Termination
Provisions. For purposes of the ISDA Form Master
Agreement:
|
||||||
|
(a)
“Specified
Entity” is not applicable to BSFP or Counterparty for any
purpose.
|
|||||||
|
(b)
“Specified
Transaction” is not applicable to BSFP or Counterparty for any purpose,
and, accordingly, Section 5(a)(v) shall not apply to BSFP or
Counterparty.
|
|||||||
|
(c)
Section
5(a)(i) of the ISDA Form Master Agreement is hereby amended by
deleting
the word “third’ therein and replacing it with the word
“second.”
|
|||||||
|
(d)
“Breach
of Agreement” provision of Section 5(a)(ii) will not apply to BSFP and
will not apply to Counterparty.
|
|||||||
|
(e)
“Credit
Support Default” provisions of Section 5(a)(iii) will not apply to BSFP
and will not apply to Counterparty.
|
|||||||
|
(f) “Misrepresentation”
provisions of Section 5(a)(iv) will not apply to BSFP and will
not apply
to Counterparty.
|
|||||||
|
(g)
The
“Merger Without Assumption” provision of Section 5(a)(viii) will not apply
to BSFP and will not apply to Counterparty.
|
|||||||
|
(h)
The
“Credit Event Upon Merger” provisions of Section 5(b)(iv) will not apply
to BSFP or Counterparty.
|
|||||||
|
(i)
The
“Bankruptcy” provision of Section 5(a)(vii)(2) will apply to BSFP and will
not apply to Counterparty.
|
|||||||
|
(j)
The
“Automatic Early Termination” provision of Section 6(a) will not apply to
BSFP or to Counterparty.
|
|||||||
|
(k)
Payments
on Early Termination. For the purpose of Section 6(e) of the ISDA
Form
Master Agreement:
|
|||||||
|
(i)
Market
Quotation will apply.
|
|||||||
|
(ii)
The
Second Method will apply.
|
|||||||
|
(l)
“Termination
Currency” means United States Dollars.
|
|||||||
|
3)
|
Tax
Representations.
|
||||||
|
(a)
|
Payer
Representations. For the purpose of Section 3(e) of the ISDA Form
Master
Agreement, each of BSFP and the Counterparty will make the following
representations:
|
||||||
|
It
is not required by any applicable law, as modified by the practice
of any
relevant governmental revenue authority, of any Relevant Jurisdiction
to
make any deduction or withholding for or on account of any Tax
from any
payment (other than interest under Section 2(e), 6(d)(ii) or 6(e)
of the
ISDA Form Master Agreement) to be made by it to the other party
under this
Agreement. In making this representation, it may rely
on:
|
|||||||
|
(i) the
accuracy of any representations made by the other party pursuant
to
Section 3(f) of the ISDA Form Master Agreement;
|
|||||||
|
(ii) the
satisfaction of the agreement contained in Sections 4(a)(i) and
4(a)(iii)
of the ISDA Form Master Agreement and the accuracy and effectiveness
of
any document provided by the other party pursuant to Sections 4(a)(i)
and
4(a)(iii) of the ISDA Form Master Agreement; and
|
|||||||
|
(iii) the
satisfaction of the agreement of the other party contained in Section
4(d)
of the ISDA Form Master Agreement, provided that it shall not be
a breach
of this representation where reliance is placed on clause (ii)
and the
other party does not deliver a form or document under Sections
4(a)(i) and
4(a)(iii) of the ISDA Form Master Agreement by reason of material
prejudice to its legal or commercial position.
|
|||||||
|
(b)
|
Payee
Representations. For the purpose of Section 3(f) of the ISDA Form
Master
Agreement, each of BSFP and the Counterparty make the following
representations.
|
||||||
|
The
following representation will apply to BSFP:
|
|||||||
|
BSFP
is a corporation organized under the laws of the State of Delaware
and its
U.S. taxpayer identification number is ▇▇-▇▇▇▇▇▇▇.
|
|||||||
|
The
following representation will apply to the
Counterparty:
|
|||||||
|
The
beneficial owner of the payments made to it under this Agreement
is either
(i) a “U.S. person” (as that term is used in section 1.1441-4(a)(3)(ii) of
United States Treasury Regulations) for United States federal income
tax
purposes and an “Exempt recipient” within the meaning of section
1.6049-4(c)(1)(ii) of United States Treasury Regulations, or (ii)
a “non
U.S. branch of a foreign person” as that term is used in section
1.1441-4(a)(3)(ii) of the United States Treasury Regulations (the
“Regulations”) for United States federal income tax purposes, and it is a
“foreign person” as that term is used in section 1.6041-4(a)(4) of the
Regulations for United States federal income tax
purposes.
|
|||||||
|
4)
|
[Reserved]
|
||||||
|
5)
|
Documents
to be Delivered.
For the purpose of Section 4(a) of the ISDA Form Master
Agreement:
|
||||||
|
(1)
|
Tax
forms, documents, or certificates to be delivered are:
|
||||||
|
Party
required to deliver
document
|
Form/Document/
Certificate
|
Date
by which to
be
delivered
|
|||||
|
BSFP
and the Counterparty
|
Any
document required or reasonably requested to
allow
the other party to make payments under this Agreement without any
deduction or withholding for
or
on the account of any Tax or with such deduction
or
withholding at a reduced rate
|
Promptly
after the earlier of (i) reasonable demand by either party or (ii)
learning that such form or document is required
|
|||||
|
(2)
|
Other
documents to be delivered are:
|
||||||
|
Party
required
to
deliver document
|
Form/Document/
Certificate
|
Date
by which to
be
delivered
|
Covered
by Section 3(d) Representation
|
|
|
BSFP
and the Counterparty
|
Any
documents required by the receiving party to evidence the authority
of the
delivering party (which, in the case of the Owner Trustee, shall
be the
TSA and Indenture or its Credit Support Provider, if any, for it
to
execute and deliver this Agreement, any Confirmation, and any Credit
Support Documents to which it is a party, and to evidence the authority
of
the delivering party or its Credit Support Provider to perform
its
obligations under this Agreement, such Confirmation and/or Credit
Support
Document, as the case may be
|
Upon
the execution and delivery of this Agreement and such
Confirmation
|
Yes
|
|
|
BSFP
and
the
Counterparty
|
A
certificate of an authorized officer of the party, as to the incumbency
and authority
of
the respective officers of the party signing this Agreement, any
relevant
Credit Support Document, or any Confirmation, as the case may
be
|
Upon
the execution and delivery of this Agreement and such
Confirmation
|
Yes
|
|
|
BSFP
|
A
copy of its most recent audited consolidated financial
statements
|
Promptly
after the request of by other Party
|
||
|
Counterparty
|
An
executed copy of the TSA
|
Within
30 days after the date of this Agreement.
|
No
|
|
|
BSFP
|
Legal
opinion(s) with respect to such party and its Credit Support Provider,
if
any, for
it
reasonably satisfactory in form and substance to the other party
relating
to the enforceability of the party’s obligations under this
Agreement.
|
Upon
the execution and delivery of this Agreement and any
Confirmation
|
No
|
|
|
6)
|
Miscellaneous.
Miscellaneous
|
|||||
|
(a)
|
Address
for Notices: For the purposes of Section 12(a) of the ISDA Form
Master
Agreement:
|
|||||
|
Address
for notices or communications to BSFP:
|
||||||
|
Address:
|
▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
|
|||||
|
Attention:
|
DPC
Manager
|
|||||
|
Facsimile:
|
(▇▇▇)
▇▇▇-▇▇▇▇
|
|||||
|
with
a copy to:
|
||||||
|
Address:
|
One
Metrotech Center North, Brooklyn, New York 11201
|
|||||
|
Attention:
|
Derivative
Operations - 7th Floor
|
|||||
|
Facsimile:
|
(▇▇▇)
▇▇▇-▇▇▇▇
|
|||||
|
(For
all purposes)
|
||||||
|
Address
for notices or communications to the Counterparty:
|
||||||
|
Address:
|
Aames
Mortgage Investment Trust 2006-1
c/o
Wilmington Trust Company
▇▇▇▇▇▇
Square North
▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
|
|||||
|
Attention:
|
Corporate
Trust Administration
|
|||||
|
Facsimile:
|
▇▇▇-▇▇▇-▇▇▇▇
|
|||||
|
Phone:
|
▇▇▇-▇▇▇-▇▇▇▇
|
|||||
|
with
a copy to:
|
||||||
|
Address:
|
▇▇▇▇▇
Fargo Bank, N.A.
▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
|
|||||
|
Attention:
|
Aames
Mortgage Investment Trust 2006-1
|
|||||
|
Facsimile:
|
▇▇▇-▇▇▇-▇▇▇▇
|
|||||
|
Telephone:
|
▇▇▇-▇▇▇-▇▇▇▇
|
|||||
|
Address:
|
Aames
Investment Corporation
▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention:
Chief Financial Officer
Facsimile
No.: ▇▇▇-▇▇▇-▇▇▇▇
Telephone
No.: ▇▇▇-▇▇▇-▇▇▇▇
|
|||||
|
Aames
Investment Corporation
▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention:
General Counsel Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇ Telephone No.:
▇▇▇-▇▇▇-▇▇▇▇
|
||||||
|
(For
all purposes)
|
||||||
|
(b)
|
Process
Agent. For the purpose of Section 13(c):
|
|||||
|
BSFP
appoints as its
Process
Agent:
|
Not
Applicable
|
|||||
|
The
Counterparty appoints as its Process Agent:
|
Not
Applicable
|
|||||
|
(c)
|
Offices.
The provisions of Section 10(a) will not apply to this Agreement;
neither
BSFP nor the Counterparty have any Offices other than as set forth
in the
Notices Section and BSFP agrees that, for purposes of Section 6(b)
of the
ISDA Form Master Agreement, it shall not in future have any Office
other
than one in the United States.
|
|||||
|
(d)
|
Multibranch
Party. For the purpose of Section 10(c) of the ISDA Form Master
Agreement:
|
|||||
|
BSFP
is not a Multibranch Party.
|
||||||
|
The
Counterparty is not a Multibranch Party.
|
||||||
|
(e)
|
Calculation
Agent. The Calculation Agent is BSFP.
|
|||||
|
(f)
|
Credit
Support Document. Not applicable for either BSFP or the
Counterparty.
|
|||||
|
(g)
|
Credit
Support Provider.
|
|||||
|
BSFP:
Not
Applicable
|
||||||
|
The
Counterparty: Not
Applicable
|
||||||
|
(h)
|
Governing
Law. The parties to this Agreement hereby agree that the law of
the State
of New York shall govern their rights and duties in whole, without
regard
to the conflict of law provisions thereof other than New York General
Obligations Law Sections 5-1401 and 1402.
|
|||||
|
(i)
Severability.
If any term, provision, covenant, or condition of this Agreement,
or the
application thereof to any party or circumstance, shall be held
to be
invalid or unenforceable (in whole or in part) for any reason,
the
remaining terms, provisions, covenants, and conditions hereof shall
continue in full force and effect as if this Agreement had been
executed
with the invalid or unenforceable portion eliminated, so long as
this
Agreement as so modified continues to express, without material
change,
the original intentions of the parties as to the subject matter
of this
Agreement and the deletion of such portion of this Agreement will
not
substantially impair the respective benefits or expectations of
the
parties.
|
||||||
|
The
parties shall endeavor to engage in good faith negotiations to
replace any
invalid or unenforceable term, provision, covenant or condition
with a
valid or enforceable term, provision, covenant or condition, the
economic
effect of which comes as close as possible to that of the invalid
or
unenforceable term, provision, covenant or condition.
|
||||||
|
(j)
Consent
to Recording. Each party hereto consents to the monitoring or recording,
at any time and from time to time, by the other party of any and
all
communications between officers or employees of the parties, waives
any
further notice of such monitoring or recording, and agrees to notify
its
officers and employees of such monitoring or recording.
|
||||||
|
(k)
Waiver
of Jury Trial. Each party waives any right it may have to a trial
by jury
in respect of any Proceedings relating to this Agreement or any
Credit
Support Document.
|
||||||
|
7) “Affiliate”
will have the meaning specified in Section 14 of the ISDA Form
Master
Agreement, provided
that neither BSFP nor Counterparty shall be deemed to have any
Affiliates
for purposes of this Agreement, including for purposes of Section
6(b)(ii).
|
||||||
|
8)
Section 3 of the ISDA Form Master Agreement is hereby amended by
adding at
the end thereof the following subsection (g):
|
||||||
|
“(g) Relationship
Between Parties.
|
||||||
|
Each
party represents to the other party on each date when it enters
into a
Transaction that: --
|
||||||
|
(1) Nonreliance.
It is not relying on any statement or representation of the other
party
regarding the Transaction (whether written or oral), other than
the
representations expressly made in this Agreement or the Confirmation
in
respect of that Transaction.
|
||||||
|
(2) Evaluation
and Understanding.
|
||||||
|
(i)
It has the capacity to evaluate (internally or through independent
professional advice) the Transaction and has made its own decision
to
enter into the Transaction; and
|
||||||
|
(ii) It
understands the terms, conditions and risks of the Transaction
and is
willing and able to accept those terms and conditions and to assume
those
risks, financially and otherwise.
|
||||||
|
(3)
Purpose.
It is entering into the Transaction for the purposes of managing
its
borrowings or investments, hedging its underlying assets or
liabilities or
in connection with a line of business.
|
||||||
|
(4) Principal.
It is entering into the Transaction as principal, and not as agent
or in
any other capacity, fiduciary or otherwise and the other party
is not
acting as a fiduciary for or an adviser to it in respect of the
Transaction.”
|
||||||
|
9)
Limitation
of Liability. It
is expressly understood and agreed by the parties hereto that (i)
this
Agreement is executed and delivered by Wilmington Trust Company
(“Wilmington”), not individually or personally but solely as the Owner
Trustee of the Counterparty, in the exercise of the powers and
authority
conferred and vested in it under the Amended and Restated Trust
Agreement
dated May 2, 2006, by and among Financial Asset Securities Corp.,
as
Depositor (the “Depositor”), Wilmington Trust Company, as Owner Trustee
(the “Owner Trustee”), and ▇▇▇▇▇ Fargo Bank, N.A., as Trust Administrator
(the “Trust Administrator”), (ii) each of the representations,
undertakings and agreements herein made on the part of the Counterparty
is
made and intended not as personal representations, undertakings
and
agreements by Wilmington but is made and intended for the purpose
of
binding only the Counterparty, (iii) under no circumstances shall
Wilmington in its individual capacity be personally liable for
the breach
or failure of any obligation, representation, warranty or covenant
made or
undertaken by the Counterparty under this Agreement or any other
related
documents and (iv) nothing herein contained shall be construed
as creating
any liability on Wilmington, 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 parties hereto.
|
||||||
|
10)
Proceedings.
BSFP shall not institute against or cause any other person to institute
against, or join any other person in instituting against Counterparty
any
bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings, or other proceedings under any federal or state bankruptcy
or
similar law for a period of one year and one day following payment
in full
of the Notes.
|
||||||
|
11)
Set-off.
The provisions for Set-off set forth in Section 6(e) of the ISDA
Form
Master Agreement shall not apply for purposes of this Transaction.
Notwithstanding any provision of this Agreement or any other existing
or
future agreement, each party irrevocably waives any and all rights
it may
have to set off, net, recoup or otherwise withhold or suspend or
condition
payment or performance of any obligation between it and the other
party
hereunder against any obligation between it and the other party
under any
other agreements.
|
||||||
|
12)
Additional
Termination Events.
Additional Termination Events will apply:
|
||||||
|
(i)
If a Rating Agency Downgrade has occurred and BSFP has not complied
with
Section 13 below, then an Additional Termination Event shall have
occurred
with respect to BSFP and BSFP shall be the sole Affected Party
with
respect to such an Additional Termination Event.
|
||||||
|
(ii)
Amendments to TSA. Without the prior written consent of BSFP, Counterparty
shall not consent to any amendment or supplemental agreement to
the TSA if
such amendment or supplemental agreement could reasonably be expected
to
have a material adverse effect on the interests of BSFP. Counterparty
will
furnish to BSFP a copy of each proposed and each executed amendment
or
supplemental agreement and copies of any related Rating Agency
confirmation therewith, if any. The failure by Counterparty to
comply with
the above shall constitute an Additional Termination Event hereunder,
upon
which Counterparty shall be the sole Affected Party and all Transactions
hereunder shall be Affected Transactions.
|
||||||
|
(iii)
Swap Disclosure Event. If, upon the occurrence of a Swap Disclosure
Event
(as defined in Section 16 of this Agreement), BSFP has not, within
10 days
after such Swap Disclosure Event complied with any of the provisions
set
forth in Section 16 (iii) below, then an Additional Termination
Event
shall have occurred with respect to BSFP and BSFP shall be the
sole
Affected Party with respect to such Additional Termination
Event.
|
||||||
|
13)
Rating
Agency Downgrade.
In the event that BSFP’s long-term unsecured and unsubordinated debt
rating is withdrawn or reduced below “AA-” by S&P or its long-term
unsecured and unsubordinated debt rating is withdrawn or reduced
below
“Aa3” by ▇▇▇▇▇’▇ (and together with S&P, the “Swap Rating Agencies”,
and such rating thresholds, “Approved Rating Thresholds”), then within 30
days after such rating withdrawal or downgrade (unless, within
30 days
after such withdrawal or downgrade, each such Swap Rating Agency
has
reconfirmed the rating of the Notes, which was in effect immediately
prior
to such withdrawal or downgrade), BSFP shall, subject to the Rating
Agency
Condition and at its own expense, either (i) cause another entity
to
replace BSFP as party to this Agreement that meets or exceeds the
Approved
Rating Thresholds on terms substantially similar to this Agreement,
(ii)
obtain a guaranty of, or a contingent agreement of another person
with the
Approved Rating Thresholds to honor, BSFP’s obligations under this
Agreement, (iii) post collateral under a Credit Support Annex which
will
be sufficient to restore the immediately prior ratings of the Notes;
or
(iv) establish any other arrangement satisfactory to the applicable
Swap
Rating Agency, which will be sufficient to restore the immediately
prior
ratings of the Notes. In the event that BSFP’s long-term unsecured and
unsubordinated debt rating is withdrawn or reduced below “BBB-” by
S&P, then within 10 business days after such rating withdrawal or
downgrade, BSFP shall, subject to the Rating Agency Condition and
at its
own expense, either (i) secure another entity to replace BSFP as
party to
this Agreement that meets or exceeds the Approved Rating Thresholds
on
terms substantially similar to this Agreement or (ii) obtain a
guaranty
of, or a contingent agreement of another person with the Approved
Rating
Thresholds, to honor, BSFP’s obligations under this Agreement. BSFP’s
failure to do any of the foregoing shall, at the Counterparty’s option,
constitute an Additional Termination Event with BSFP as the Affected
Party. For purposes of this provision, “Rating Agency Condition” means,
with aspect to any particular proposed act or omission to act hereunder
that the party acting or failing to act must consult with each
of the Swap
Rating Agencies then providing a rating of the Notes and receive
from each
of the Swap Rating Agencies a prior written confirmation that the
proposed
action or inaction would not cause a downgrade or withdrawal of
the then
current rating of the Notes.
|
||||||
|
14)
Transfer,
Amendment and Assignment.
No transfer, amendment, waiver, supplement, assignment or other
modification of this Transaction shall be permitted by either party
unless
the Swap Rating Agencies, have been provided notice of the same
and
confirms in writing (including by facsimile transmission) after
such
notice is given that it will not downgrade, qualify, withdraw or
otherwise
modify its then-current rating of the Notes.
|
||||||
|
15)
Limited
Recourse Non petition.
The liability of the Counterparty in relation to this Agreement
and any
Confirmation hereunder is limited in recourse to the Trust Estate
(as
defined in the TSA) and distributions of interest proceeds and
principal
proceeds thereon applied in accordance with the terms of the TSA
BSFP
shall have no right to institute any proceedings for the enforcement
of
the lien of the Trust Estate unless the Indenture Trustee shall
have
commenced proceedings pursuant to the TSA for the enforcement of
the lien
of the Indenture Trustee for the benefit of the secured parties
(as
defined in the TSA) and BSFP shall only enforce such a lien in
conjunction
with the enforcement of the rights of such Secured Parties in the
manner
set forth in the TSA. Upon application of the Trust Estate (and
proceeds
thereon) in accordance with the TSA, BSFP shall not be entitled
to take
any further steps against the Counterparty to recover any sums
due but
still unpaid hereunder or thereunder, all claims in respect of
which shall
be extinguished.
|
||||||
|
16)
Compliance with Regulation AB.
|
||||||
|
(i)
BSFP agrees and acknowledges that Aames Mortgage Investment Trust
2006-1
(“Aames”) is required under Regulation AB under the Securities Act of
1933, as amended, and the Securities Exchange Act of 1934, as amended
(the
“Exchange Act”) (“Regulation AB”), to disclose certain financial
information regarding BSFP or its group of affiliated entities,
if
applicable, depending on the aggregate “significance percentage” of this
Agreement and any other derivative contracts between BSFP or its
group of
affiliated entities, if applicable, and Aames, as calculated from
time to
time in accordance with Item 1115 of Regulation AB.
|
||||||
|
(ii)
It shall be a swap disclosure event (“Swap Disclosure Event”) if, on any
Business Day after the date hereof, Aames requests from Party A
the
applicable financial information described in Item 1115 of Regulation
AB
(such request to be based on a reasonable determination by ▇▇▇▇▇,
in good
faith, that such information is required under Regulation AB) (the
“Swap
Financial Disclosure”).
|
||||||
|
(iii)
Upon the occurrence of a Swap Disclosure Event, BSFP, at its own
expense,
shall (a) provide to Aames the Swap Financial Disclosure, (b) secure
another entity to replace BSFP as party to this Agreement on terms
substantially similar to this Agreement and subject to prior notification
to the Swap Rating Agencies, which entity (or a guarantor therefor)
meets
or exceeds the Approved Rating Thresholds ando which satisfies
the Rating
Agency Condition and which entity is able to comply with the requirements
of Item 1115 of Regulation AB or (c) obtain a guaranty of the BSFP’s
obligations under this Agreement from an affiliate of the BSFP
that is
able to comply with the financial information disclosure requirements
of
Item 1115 of Regulation AB, such that disclosure provided in respect
of
the affiliate will satisfy any disclosure requirements applicable
to the
Swap Provider, and cause such affiliate to provide Swap Financial
Disclosure. If permitted by Regulation AB, any required Swap Financial
Disclosure may be provided by incorporation by reference from reports
filed pursuant to the Exchange Act.
|
||||||
|
(iv)
BSFP agrees that, in the event that BSFP provides Swap Financial
Disclosure to Aames in accordance with Section 16(iii)(a) or causes
its
affiliate to provide Swap Financial Disclosure to Aames in accordance
with
Section 16(iii)(c), it will indemnify and hold harmless Aames,
its
respective directors or officers and any person controlling Aames,
from
and against any and all losses, claims, damages and liabilities
caused by
any untrue statement or alleged untrue statement of a material
fact
contained in such Swap Financial Disclosure or caused by any omission
or
alleged omission to state in such Swap Financial Disclosure a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made,
not
misleading.
|
||||||
|
(17)
Third Party Beneficiary. ▇▇▇▇▇ shall be a third party beneficiary
of this
Agreement.
|
||||||
|
NEITHER
THE BEAR ▇▇▇▇▇▇▇ COMPANIES INC. NOR ANY SUBSIDIARY OR AFFILIATE
OF THE
BEAR ▇▇▇▇▇▇▇ COMPANIES INC. OTHER THAN BSFP IS AN OBLIGOR OR A
CREDIT
SUPPORT PROVIDER ON THIS AGREEMENT.
|
||||||
|
5. Account
Details and
Settlement
Information:
|
Payments
to BSFP:
Citibank,
N.A., New York
ABA
Number: ▇▇▇-▇▇▇▇-▇▇, for the account of Bear, Steams Securities
Corp.
Account
Number: 0925-3186, for further credit to Bear Steams Financial
Products
Inc. Sub-account
Number:
102-04654-1-3
Attention:
Derivatives Department
|
|||||
|
Acknowledgment
of Charge.
Provider hereby acknowledges that Counterparty has granted a first
priority security interest in its rights under this Agreement and
has
assigned this Agreement to the Indenture Trustee pursuant to the
Indenture, and consents thereto, and BSFP hereby consents to any
transfer
of such rights pursuant to an exercise of creditor’s remedies in respect
of such security interest or assignment. BSFP hereby agrees that,
unless
notified in writing by the Indenture Trustee of other payment
instructions, any and all amounts payable by BSFP to Counterparty
under
this Agreement shall be paid to the Indenture Trustee at the following
account:
|
||||||
|
Payments
to Counterparty:
▇▇▇▇▇
Fargo Bank, N.A.
ABA
#: ▇▇▇-▇▇▇-▇▇▇
For
credit to: SAS Clearing
Acct#:
3970771416
FC
to: Aames 2006-1, Interest Rate Swap Acct # 50916200
|
||||||
|
This
Agreement may be executed in several counterparts, each of which
shall be
deemed an original but all of which together shall constitute one
and the
same instrument.
|
||||||
|
Counterparty
hereby agrees to check this Confirmation and to confirm that the
foregoing
correctly sets forth the terms of the Transaction by signing in
the space
provided below and returning to BSFP a facsimile of the fully-executed
Confirmation to ▇▇▇-▇▇▇-▇▇▇▇.
For inquiries regarding U.S. Transactions, please contact ▇▇▇▇▇
▇▇▇▇▇▇
by
telephone at ▇▇▇-▇▇▇-▇▇▇▇.
For all other inquiries please contact Derivatives
Documentation
by
telephone at ▇▇▇-▇-▇▇▇-▇▇▇▇.
Originals will be provided for your execution upon your
request.
|
||||||
|
We
are very pleased to have executed this Transaction with you and
we look
forward to completing other transactions with you in the near
future.
|
||||||
|
Very
truly yours,
|
||||||
|
BEAR
▇▇▇▇▇▇▇ FINANCIAL PRODUCTS INC.
|
||||||
|
By: _____________________________
|
||||||
|
Name:
|
||||||
|
Title:
|
||||||
|
Counterparty,
acting through its duly authorized signatory, ▇▇▇▇▇▇ agrees to,
accepts
and confirms the terms of the foregoing as of the Trade
Date.
|
||||||
|
AAMES
MORTGAGE INVESTMENT TRUST 2006-1 By: Wilmington Trust Company,
not in its
individual capacity but solely as Owner Trustee of Aames Mortgage
Investment Trust 2006-1
|
||||||
|
By: _____________________________
|
||||||
|
Name:
|
||||||
|
Title:
|
||||||
|
am
|
||||||
SCHEDULE
I
(all
such
dates subject to adjustment in accordance with the Business Day
Convention)
|
From
and including
|
To
but excluding
|
Notional
Amount (USD)
|
|
Effective
Date
|
06/25/06
|
602,186,073.68
|
|
06/25/06
|
07/25/06
|
591,785,982.21
|
|
07/25/06
|
08/25/06
|
580,366,114.67
|
|
08/25/06
|
09/25/06
|
567,964,846.04
|
|
09/25/06
|
10/25/06
|
554,628,014.07
|
|
10/25/06
|
11/25/06
|
540,450,032.53
|
|
11/25/06
|
12/25/06
|
525,655,656.61
|
|
12/25/06
|
01/25/07
|
510,572,469.53
|
|
01/25/07
|
02/25/07
|
495,917,871.49
|
|
02/25/07
|
03/25/07
|
481,683,668.20
|
|
03/25/07
|
04/25/07
|
467,858,222.28
|
|
04/25/07
|
05/25/07
|
454,429,777.11
|
|
05/25/07
|
06/25/07
|
441,386,914.88
|
|
06/25/07
|
07/25/07
|
428,718,546.83
|
|
07/25/07
|
08/25/07
|
416,413,903.75
|
|
08/25/07
|
09/25/07
|
404,462,526.72
|
|
09/25/07
|
10/25/07
|
392,778,024.45
|
|
10/25/07
|
11/25/07
|
381,227,088.38
|
|
11/25/07
|
12/25/07
|
330,886,781.06
|
|
12/25/07
|
01/25/08
|
133,734,035.28
|
|
01/25/08
|
02/25/08
|
126,567,214.04
|
|
02/25/08
|
03/25/08
|
120,758,572.00
|
|
03/25/08
|
04/25/08
|
115,456,477.70
|
|
04/25/08
|
05/25/08
|
110,703,390.54
|
|
05/25/08
|
06/25/08
|
106,484,604.43
|
|
06/25/08
|
07/25/08
|
102,706,290.24
|
|
07/25/08
|
08/25/08
|
99,296,797.35
|
|
08/25/08
|
09/25/08
|
96,200,494.33
|
|
09/25/08
|
10/25/08
|
93,359,314.93
|
|
10/25/08
|
11/25/08
|
90,610,752.19
|
|
11/25/08
|
12/25/08
|
83,642,805.81
|
|
12/25/08
|
01/25/09
|
79,054,751.55
|
|
01/25/09
|
02/25/09
|
76,800,609.77
|
|
02/25/09
|
03/25/09
|
74,642,647.38
|
|
03/25/09
|
04/25/09
|
72,547,598.96
|
|
04/25/09
|
05/25/09
|
70,513,540.43
|
|
05/25/09
|
06/25/09
|
68,538,609.66
|
|
06/25/09
|
07/25/09
|
66,621,004.37
|
|
07/25/09
|
08/25/09
|
64,758,980.15
|
|
08/25/09
|
09/25/09
|
62,950,848.46
|
|
09/25/09
|
10/25/09
|
61,194,974.79
|
|
10/25/09
|
11/25/09
|
59,489,776.82
|
|
11/25/09
|
12/25/09
|
57,833,722.68
|
|
12/25/09
|
01/25/10
|
56,225,329.27
|
|
01/25/10
|
02/25/10
|
54,663,160.61
|
|
02/25/10
|
03/25/10
|
53,145,826.25
|
|
03/25/10
|
04/25/10
|
51,671,979.82
|
|
04/25/10
|
05/25/10
|
50,240,317.49
|
|
05/25/10
|
06/25/10
|
48,849,576.58
|
|
06/25/10
|
07/25/10
|
47,498,534.20
|
|
07/25/10
|
08/25/10
|
46,186,005.96
|
|
08/25/10
|
09/25/10
|
44,910,844.61
|
|
09/25/10
|
10/25/10
|
43,646,991.36
|
|
10/25/10
|
11/25/10
|
41,420,965.36
|
|
11/25/10
|
12/25/10
|
35,460,573.47
|
|
12/25/10
|
01/25/11
|
32,952,670.31
|
|
01/25/11
|
02/25/11
|
32,130,418.45
|
|
02/25/11
|
03/25/11
|
31,328,362.35
|
|
03/25/11
|
04/25/11
|
30,546,011.19
|
|
04/25/11
|
05/25/11
|
29,782,885.97
|
|
05/25/11
|
06/25/11
|
29,038,519.27
|
|
06/25/11
|
07/25/11
|
28,312,454.92
|
|
07/25/11
|
08/25/11
|
27,604,247.80
|
|
08/25/11
|
09/25/11
|
26,913,463.50
|
|
09/25/11
|
Termination
Date
|
26,239,678.13
|
EXHIBIT
J
SERVICING
CRITERIA TO BE ADDRESSED
IN
ASSESSMENT OF COMPLIANCE
Definitions
Primary
Servicer - transaction party having borrower contact
Master
Servicer - aggregator of pool assets
Securities
Administrator - waterfall calculator (may be the Trustee, or may be the Master
Servicer)
Back-up
Servicer - named in the transaction (in the event a Back up Servicer becomes
the
Primary Servicer, follow Primary Servicer obligations)
Custodian
- safe keeper of pool assets
Paying
Agent - distributor of funds to ultimate investor
Trustee
-
fiduciary of the transaction
Note:
The
definitions above describe the essential function that the party performs,
rather than the party’s title. So, for example, in a particular transaction, the
trustee may perform the “paying agent” and “securities administrator” functions,
while in another transaction, the securities administrator may perform these
functions.
Where
there are multiple checks for criteria the attesting party will identify in
their management assertion that they are attesting only to the portion of the
distribution chain they are responsible for in the related transaction
agreements.
Key:
X
- obligation
[X]
- under consideration for obligation
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Reg
AB Reference
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Servicing
Criteria
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Primary
Servicer
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Master
Servicer
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Trust
Admin.
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Trustee/
Custodian
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General
Servicing Considerations
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|||||
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1122(d)(1)(i)
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Policies
and procedures are instituted to monitor any performance or other
triggers
and events of default in accordance with the transaction
agreements.
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X
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X
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X
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1122(d)(1)(ii)
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If
any material servicing activities are outsourced to third parties,
policies and procedures are instituted to monitor the third party’s
performance and compliance with such servicing activities.
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X
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X
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X
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1122(d)(1)(iii)
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Any
requirements in the transaction agreements to maintain a back-up
servicer
for the Pool Assets are maintained.
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||||
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1122(d)(1)(iv)
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A
fidelity bond and errors and omissions policy is in effect on the
party
participating in the servicing function throughout the reporting
period in
the amount of coverage required by and otherwise in accordance with
the
terms of the transaction agreements.
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X
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X
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||
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Cash
Collection and Administration
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|||||
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1122(d)(2)(i)
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Payments
on pool assets are deposited into the appropriate custodial bank
accounts
and related bank clearing accounts no more than two business days
following receipt, or such other number of days specified in the
transaction agreements.
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X
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X
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X
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1122(d)(2)(ii)
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Disbursements
made via wire transfer on behalf of an obligor or to an investor
are made
only by authorized personnel.
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X
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X
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X
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1122(d)(2)(iii)
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Advances
of funds or guarantees regarding collections, cash flows or distributions,
and any interest or other fees charged for such advances, are made,
reviewed and approved as specified in the transaction agreements.
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X
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X
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||
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1122(d)(2)(iv)
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The
related accounts for the transaction, such as cash reserve accounts
or
accounts established as a form of over collateralization, are separately
maintained (e.g., with respect to commingling of cash) as set forth
in the
transaction agreements.
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X
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X
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X
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1122(d)(2)(v)
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Each
custodial account is maintained at a federally insured depository
institution as set forth in the transaction agreements. For purposes
of
this criterion, “federally insured depository institution” with respect to
a foreign financial institution means a foreign financial institution
that
meets the requirements of Rule 13k-1(b)(1) of the Securities Exchange
Act.
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X
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X
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X
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1122(d)(2)(vi)
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Unissued
checks are safeguarded so as to prevent unauthorized access.
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X
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1122(d)(2)(vii)
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Reconciliations
are prepared on a monthly basis for all asset-backed securities related
bank accounts, including custodial accounts and related bank clearing
accounts. These reconciliations are (A) mathematically accurate;
(B)
prepared within 30 calendar days after the bank statement cutoff
date, or
such other number of days specified in the transaction agreements;
(C)
reviewed and approved by someone other than the person who prepared
the
reconciliation; and (D) contain explanations for reconciling items.
These
reconciling items are resolved within 90 calendar days of their original
identification, or such other number of days specified in the transaction
agreements.
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X
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X
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X
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Investor
Remittances and Reporting
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|||||
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1122(d)(3)(i)
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Reports
to investors, including those to be filed with the Commission, are
maintained in accordance with the transaction agreements and applicable
Commission requirements. Specifically, such reports (A) are prepared
in
accordance with timeframes and other terms set forth in the transaction
agreements; (B) provide information calculated in accordance with
the
terms specified in the transaction agreements; (C) are filed with
the
Commission as required by its rules and regulations; and (D) agree
with
investors’ or the trustee’s records as to the total unpaid principal
balance and number of Pool Assets serviced by the Servicer.
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X
(with
respect to (B) and (D) only)
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X
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X
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1122(d)(3)(ii)
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Amounts
due to investors are allocated and remitted in accordance with timeframes,
distribution priority and other terms set forth in the transaction
agreements.
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N/A
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X
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X
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1122(d)(3)(iii)
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Disbursements
made to an investor are posted within two business days to the Servicer’s
investor records, or such other number of days specified in the
transaction agreements.
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N/A
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X
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X
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1122(d)(3)(iv)
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Amounts
remitted to investors per the investor reports agree with cancelled
checks, or other form of payment, or custodial bank statements.
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X
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X
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X
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Pool
Asset Administration
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|||||
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1122(d)(4)(i)
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Collateral
or security on pool assets is maintained as required by the transaction
agreements or related pool asset documents.
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X
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X
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1122(d)(4)(ii)
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Pool
assets and related documents are safeguarded as required by the
transaction agreements
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X
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X
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1122(d)(4)(iii)
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Any
additions, removals or substitutions to the asset pool are made,
reviewed
and approved in accordance with any conditions or requirements in
the
transaction agreements.
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X
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1122(d)(4)(iv)
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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 days specified in the transaction agreements, and allocated
to
principal, interest or other items (e.g., escrow) in accordance with
the
related pool asset documents.
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X
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1122(d)(4)(v)
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The
Servicer’s records regarding the pool assets agree with the Servicer’s
records with respect to an obligor’s unpaid principal balance.
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X
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1122(d)(4)(vi)
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Changes
with respect to the terms or status of an obligor's pool assets (e.g.,
loan modifications or re-agings) are made, reviewed and approved
by
authorized personnel in accordance with the transaction agreements
and
related pool asset documents.
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X
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1122(d)(4)(vii)
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Loss
mitigation or recovery actions (e.g., forbearance plans, modifications
and
deeds in lieu of foreclosure, foreclosures and repossessions, as
applicable) are initiated, conducted and concluded in accordance
with the
timeframes or other requirements established by the transaction
agreements.
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X
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1122(d)(4)(viii)
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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 is deemed temporary (e.g., illness or unemployment).
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X
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1122(d)(4)(ix)
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Adjustments
to interest rates or rates of return for pool assets with variable
rates
are computed based on the related pool asset documents.
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X
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1122(d)(4)(x)
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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 assets, or such other
number of
days specified in the transaction agreements.
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X
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1122(d)(4)(xi)
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Payments
made on behalf of an obligor (such as tax or insurance payments)
are made
on or before the related penalty or expiration dates, as indicated
on the
appropriate bills or notices for such payments, provided that such
support
has been received by the servicer at least 30 calendar days prior
to these
dates, or such other number of days specified in the transaction
agreements.
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X
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1122(d)(4)(xii)
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Any
late payment penalties in connection with any payment to be made
on behalf
of an obligor are paid from the Servicer’s funds and not charged to the
obligor, unless the late payment was due to the obligor’s error or
omission.
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X
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1122(d)(4)(xiii)
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Disbursements
made on behalf of an obligor are posted within two business days
to the
obligor’s records maintained by the servicer, or such other number of days
specified in the transaction agreements.
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X
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1122(d)(4)(xiv)
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Delinquencies,
charge-offs and uncollectible accounts are recognized and recorded
in
accordance with the transaction agreements.
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X
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X
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1122(d)(4)(xv)
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Any
external enhancement or other support, identified in Item 1114(a)(1)
through (3) or Item 1115 of Regulation AB, is maintained as set forth
in
the transaction agreements.
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X
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EXHIBIT
K
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 Trust
Administrator pursuant to Section 6.07(a).
Under
Item 1 of Form 10-D: a) items marked “5.09 statement” are required to be
included in the periodic Payment Date statement under Section 5.09, provided
by
the Trust Administrator based on information received from the Servicer and
the
Master Servicer; and b) items marked “Form 10-D report” are required to be in
the Form 10-D report but not the 5.09 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.
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Form
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Item
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Description
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Responsible
Party
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10-D
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Must
be filed within 15 days of the Payment Date.
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1
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Distribution
and Pool Performance Information
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Item
1121(a) - Distribution and Pool Performance
Information
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(1)
Any applicable record dates, accrual dates, determination dates for
calculating distributions and actual distribution dates for the
distribution period.
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5.09
statement
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(2)
Cash flows received and the sources thereof for distributions, fees
and
expenses.
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5.09
statement
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(3)
Calculated amounts and distribution of the flow of funds for the
period
itemized by type and priority of payment, including:
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5.09
statement
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(i)
Fees or expenses accrued and paid, with an identification of the
general
purpose of such fees and the party receiving such fees or
expenses.
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5.09
statement
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(ii)
Payments accrued or paid with respect to enhancement 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.
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5.09
statement
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(iii)
Principal, interest and other distributions accrued and paid on the
asset-backed securities by type and by class or series and any principal
or interest shortfalls or carryovers.
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5.09
statement
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(iv)
The amount of excess cash flow or excess spread and the disposition
of
excess cash flow.
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5.09
statement
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(4)
Beginning and ending principal balances of the asset-backed
securities.
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5.09
statement
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(5)
Interest rates applicable to the pool assets and the asset-backed
securities, as applicable. Consider providing interest rate information
for pool assets in appropriate distributional groups or incremental
ranges.
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5.09
statement
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(6)
Beginning and ending balances of transaction accounts, such as reserve
accounts, and material account activity during the period.
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5.09
statement
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(7)
Any amounts drawn on any credit enhancement or other 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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5.09
statement
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(8)
Number and amount of pool assets at the beginning and ending of each
period, and updated pool composition information, such as weighted
average
coupon, weighted average remaining term, pool factors and prepayment
amounts.
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5.09
statement
Updated
pool composition information fields to be as specified by Depositor
from
time to time
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(9)
Delinquency and loss information for the period.
In
addition, describe any material changes to the information specified
in
Item 1100(b)(5) of Regulation AB regarding the pool
assets.
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5.09
statement: Servicer and Master Servicer.
Form
10-D report: Depositor
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(10)
Information on the amount, terms and general purpose of any advances
made
or reimbursed during the period, including the general use of funds
advanced and the general source of funds for
reimbursements.
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5.09
statement: Master Servicer and Servicer
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(11)
Any material modifications, extensions or waivers to pool asset terms,
fees, penalties or payments during the distribution period or that
have
cumulatively become material over time.
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Form
10-D report; Servicer
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(12)
Material breaches of pool asset representations or warranties or
transaction covenants.
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Form
10-D report: Servicer
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(13)
Information on ratio, coverage or other tests used for determining
any
early amortization, liquidation or other performance trigger and
whether
the trigger was met.
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5.09
statement
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(14)
Information regarding any new issuance of asset-backed securities
backed
by the same asset pool,
[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 with a prefunding or revolving
period
and pool asset substitutions and repurchases (and purchase rates,
if
applicable), and cash flows available for future purchases, such
as the
balances of any prefunding 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 originate, acquire or select the new pool
assets.
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Form
10-D report: Depositor
Form
10-D report: Depositor and Servicer
Form
10-D report: Depositor, Master Servicer and Servicer
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Item
1121(b) - Pre-Funding or Revolving Period Information
Updated
pool information as required under Item 1121(b).
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Depositor
/ N/A
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2
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Legal
Proceedings
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Item
1117 - Legal proceedings pending against the following entities,
or their
respective property, that is material to Noteholders, including
proceedings known to be contemplated by governmental
authorities:
Sponsor
Depositor
Indenture
Trustee
Trust
Administrator
Issuing
entity
Master
Servicer
Servicer
Custodian
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Sponsor
Depositor
Indenture
Trustee
Trust
Administrator
Depositor
Master
Servicer
Servicer
Custodian
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3
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Sales
of Securities and Use of Proceeds
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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 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.
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Depositor
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4
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Defaults
Upon Senior Securities
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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)
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Trust
Administrator
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||
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5
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Submission
of Matters to a Vote of Security Holders
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||
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Information
from Item 4 of Part II of Form 10-Q
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Trust
Administrator
|
||
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6
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Significant
Obligors of Pool Assets
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||
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Item
1112(b) - Significant
Obligor Financial Information*
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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.
|
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7
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Significant
Enhancement Provider Information
|
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Item
1114(b)(2) - Credit Enhancement Provider Financial
Information*
Determining
applicable disclosure threshold
Obtaining
required financial information or effecting incorporation by
reference
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N/A
N/A
|
||
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Item
1115(b) - Derivative Counterparty Financial Information*
Determining
current maximum probable exposure
Determining
current significance percentage
Obtaining
required financial information or effecting incorporation by
reference
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Depositor
Depositor
Depositor
|
||
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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
Items.
|
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8
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Other
Information
|
||
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Disclose
any information required to be reported on Form 8-K during the period
covered by the Form 10-D but not reported
|
The
party responsible for the applicable Form 8-K item as indicated
below
|
||
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9
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Exhibits
|
||
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Distribution
report
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Trust
Administrator
|
||
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Exhibits
required by Item 601 of Regulation S-K, such as material
agreements
|
Depositor
|
||
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8-K
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Must
be filed within four business days of an event reportable on Form
8-K.
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||
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1.01
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Entry
into a Material Definitive Agreement
|
||
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Disclosure
is required regarding entry into or amendment of any definitive agreement
that is material to the securitization, even if depositor is not
a party.
Examples:
servicing agreement, custodial agreement.
Note:
disclosure not required as to definitive agreements that are fully
disclosed in the prospectus
|
All
parties to this Agreement, to the extent such party is a party to
such
agreement or amendment
|
||
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1.02
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Termination
of a Material Definitive Agreement
|
||
|
Disclosure
is required regarding termination of any definitive agreement that
is
material to the securitization (other than expiration in accordance
with
its terms), even if depositor is not a party.
Examples:
servicing agreement, custodial agreement.
|
All
parties to this Agreement to the extent such party is a party to
such
agreement
|
||
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1.03
|
Bankruptcy
or Receivership
|
||
|
Disclosure
is required regarding the bankruptcy or receivership, if known to
the
Depositor, Master Servicer or Indenture Trustee, with respect to
any of
the following:
Sponsor
(Seller), Depositor, Servicer, Indenture Trustee, Swap Provider,
Cap
Provider, Custodian
|
Depositor/Servicer
(as to itself)/Indenture Trustee (as to itself and Custodian)/Trust
Administrator
|
||
|
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 event, including
event
of default, that would materially alter the payment priority/distribution
of cash flows/amortization schedule.
Disclosure
will be made of events other than waterfall triggers which are disclosed
in the 5.09 statement
|
Depositor/Trust
Administrator
|
||
|
3.03
|
Material
Modification to Rights of Security Holders
|
||
|
Disclosure
is required of any material modification to documents defining the
rights
of Noteholders, including the Transfer and Servicing
Agreement
|
Party
requesting material modification
|
||
|
5.03
|
Amendments
to Articles of Incorporation or Bylaws; Change in Fiscal
Year
|
||
|
Disclosure
is required of any amendment “to the governing documents of the issuing
entity”
|
Depositor
|
||
|
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 4.07]
|
Depositor
|
||
|
6.02
|
Change
of Master Servicer or Indenture Trustee
|
||
|
Requires
disclosure of any removal, replacement, substitution or addition
of any
master servicer, affiliated servicer, other servicer servicing 10%
or more
of pool assets at time of report, other material servicers, certificate
administrator or indenture trustee. Reg AB disclosure about any new
servicer or indenture trustee is also required.
|
Servicer
(with respect to itself or any Subservicer used by it) or Master
Servicer
Depositor
|
||
|
6.03
|
Change
in Credit Enhancement or Other External Support
|
||
|
Covers
termination of any enhancement in manner other than by its terms,
the
addition of an enhancement, or a material change in the enhancement
provided. Applies to external credit enhancements as well as derivatives.
Reg AB disclosure about any new enhancement provider is also
required.
|
Depositor
|
||
|
6.04
|
Failure
to Make a Required Distribution
|
Trust
Administrator
|
|
|
6.05
|
Securities
Act Updating Disclosure
|
||
|
If
any material pool characteristic differs by 5% or more at the time
of
issuance of the securities from the description in the final prospectus,
provide updated Reg AB disclosure about the actual asset
pool.
|
Depositor
|
||
|
If
there are any new servicers or originators required to be disclosed
under
Regulation AB as a result of the foregoing, provide the information
called
for in Items 1108 and 1110 respectively.
|
Depositor
|
||
|
7.01
|
Regulation
FD Disclosure
|
All
parties to this Agreement
|
|
|
8.01
|
Other
Events
|
||
|
Any
event, with respect to which information is not otherwise called
for in
Form 8-K, that the registrant deems of importance to security
holders.
|
Depositor
|
||
|
9.01
|
Financial
Statements and Exhibits
|
Depositor
|
|
|
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 during the fourth
quarter covered by the Form 10-K but not reported
|
The
party responsible for the applicable Form 8-K item as indicated
above
|
||
|
15
|
Exhibits
and Financial Statement Schedules
|
||
|
Item
1112(b) - Significant
Obligor Financial Information
|
N/A
|
||
|
Item
1114(b)(2) - Credit Enhancement Provider Financial
Information
Determining
applicable disclosure threshold
Obtaining
required financial information or effecting incorporation by
reference
|
N/A
N/A
|
||
|
Item
1115(b) - Derivative Counterparty Financial Information
Determining
current maximum probable exposure
Determining
current significance percentage
Obtaining
required financial information or effecting incorporation by
reference
|
Depositor
Depositor
Depositor
|
||
|
Item
1117 -
Sponsor
Depositor
Indenture
Trustee
Issuing
entity
Master
Servicer
Servicer
Custodian
|
Sponsor
Depositor
Indenture
Trustee
Issuing
entity
Master
Servicer
Servicer
Custodian
|
||
|
Item
1119 - Affiliations and relationships between the following entities,
or
their respective affiliates, that are material to
Noteholders:
Sponsor
Depositor
Indenture
Trustee
Issuing
entity
Master
Servicer
Originator
Custodian
Credit
Enhancer/Support Provider, if any Significant Obligor, if
any
|
Sponsor
(only with respect to the Servicer, the Originator, the Indenture
Trustee,
the Custodian, the Master Servicer, the Trust Administrator and the
Swap
Provider)
Depositor
Indenture
Trustee (only with respect to affiliations and relationships with
the
sponsor, depositor or issuing entity)
Issuing
entity
Master
Servicer
Depositor
Custodian
(only with respect to affiliations and relationships with the sponsor,
depositor or issuing entity)
Depositor
Depositor
|
||
|
Item
1122 - Assessment of Compliance with Servicing
Criteria
|
Each
Party participating in the servicing function
|
||
|
Item
1123 -Servicer Compliance Statement
|
Master
Servicer, Servicer and Trust
Administrator
|
||
EXHIBIT
L
ADDITIONAL
DISCLOSURE NOTIFICATION
**SEND
TO ▇▇▇▇▇ FARGO VIA FAX TO ▇▇▇-▇▇▇-▇▇▇▇ AND VIA EMAIL TO
▇▇▇.▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇ AND VIA OVERNIGHT MAIL TO THE ADDRESS
IMMEDIATELY BELOW. SEND TO THE DEPOSITOR AT THE ADDRESS
BELOW**
▇▇▇▇▇
Fargo Bank, N.A. as Securities Administrator
Old
Annapolis Road
Columbia,
Maryland 21045
Fax:
(▇▇▇) ▇▇▇-▇▇▇▇
E-mail:
▇▇▇.▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇
Financial
Asset Securities Corp.
▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇
Greenwich,
Connecticut 06080
Attn:
Corporate Trust Services - Aames Mortgage Investment Trust 2006-1-SEC REPORT
PROCESSING
RE:
**Additional Form [ ] Disclosure**Required
Ladies
and Gentlemen:
In
accordance with Section [ ] of the Transfer and Servicing Agreement, dated
as of
April 1, 2006, among the Issuer, Depositor, ▇▇▇▇▇ Fargo Bank, N.A. as master
servicer, and trust administrator (the “Master Servicer” and “Trust
Administrator”), Deutsche Bank National Trust Company, a national banking
association, as indenture trustee (the “Indenture Trustee”), Aames Funding
Corporation as servicer (the “Servicer”) and Aames Investment Corporation as
sponsor (the “Sponsor”). The Undersigned, as [ ], hereby notifies you that
certain events have come to our attention that [will][may] need to be disclosed
on Form [ ].
Description
of Additional Form [ ] Disclosure:
List
of
Any Attachments hereto to be included in the Additional Form [ ]
Disclosure:
Any
inquiries related to this notification should be directed to [ ], phone number:
[ ]; email address: [ ].
[NAME
OF
PARTY]
as
[role]
By:
__________________
Name:
Title:
SCHEDULE
A
MORTGAGE
LOAN SCHEDULE
[ON
FILE
WITH THE CUSTODIAN.]