GE-WMC MORTGAGE SECURITIES, L.L.C.
Depositor
[NAME OF SERVICER]
Servicer
and
[NAME OF TRUSTEE].
Trustee
________________________________________
POOLING AND SERVICING AGREEMENT
Dated as of _____, ____
________________________________________
Mortgage Pass-Through Certificates
Series 200__-___
TABLE OF CONTENTS
SECTION
ARTICLE I
DEFINITIONS..........................................................................................
SECTION 1.01. Defined Terms.....................................................................
SECTION 1.02. Allocation of Certain Interest Shortfalls.........................................
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; ORIGINAL ISSUANCE OF CERTIFICATES......................................
SECTION 2.01. Conveyance of Mortgage Loans......................................................
SECTION 2.02. Acceptance of REMIC I by the Trustee..............................................
SECTION 2.03. Repurchase or Substitution of Mortgage Loans by the Originator, the Seller or
the Depositor; Payment of Prepayment Charge Payment Amounts.......................
SECTION 2.04. [Reserved]........................................................................
SECTION 2.05. Representations, Warranties and Covenants of the Servicer.........................
SECTION 2.06. Issuance of the REMIC I Regular Interests and the Class R-I Interest..............
SECTION 2.07. Conveyance of the REMIC I Regular Interests; Acceptance of REMIC I and REMIC
II by the Trustee.................................................................
SECTION 2.08. Issuance of Class R Certificates..................................................
ARTICLE III
ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS...................................................
SECTION 3.01. Servicer to Act as Servicer.......................................................
SECTION 3.02. Collection of Certain Mortgage Loan Payments......................................
SECTION 3.03. [Reserved]........................................................................
SECTION 3.04. Collection Account, Escrow Account and Distribution Account.......................
SECTION 3.05. Permitted Withdrawals From the Collection Account, Escrow Account and
Distribution Account..............................................................
SECTION 3.06. Investment of Funds in the Collection Account, the Escrow Account, the REO
Account and the Distribution Account..............................................
SECTION 3.07. Payment of Taxes, Insurance and Other Charges.....................................
SECTION 3.08. Maintenance of Hazard Insurance...................................................
SECTION 3.09. Maintenance of Mortgage Blanket Insurance.........................................
SECTION 3.10. Fidelity Bond; Errors and Omissions Insurance.....................................
SECTION 3.11. Enforcement of Due-On-Sale Clauses; Assumption Agreements.........................
SECTION 3.12. Realization Upon Defaulted Mortgage Loans.........................................
SECTION 3.13. Title, Management and Disposition of REO Property.................................
SECTION 3.14. [Reserved]........................................................................
SECTION 3.15. Reports of Foreclosure and Abandonment of Mortgaged Properties....................
SECTION 3.16. Optional Purchase of Defaulted Mortgage Loans.....................................
SECTION 3.17. Trustee to Cooperate; Release of Mortgage Files...................................
SECTION 3.18. Servicing Compensation............................................................
SECTION 3.19. Statement as to Compliance........................................................
SECTION 3.20. Independent Public Accountants' Servicing Report..................................
SECTION 3.21. Access to Certain Documentation...................................................
ARTICLE IV
PAYMENTS TO CERTIFICATEHOLDERS.......................................................................
SECTION 4.01. Distributions.....................................................................
SECTION 4.02. Statements to Certificateholders..................................................
SECTION 4.03. Remittance Reports and Other Reports to the Trustee; P&I Advances; Payments in
Respect of Prepayment Interest Shortfalls.........................................
SECTION 4.04. Allocation of Realized Losses.....................................................
SECTION 4.05. Compliance with Withholding Requirements..........................................
SECTION 4.06. Commission Reporting..............................................................
SECTION 4.07. Reserved..........................................................................
SECTION 4.08. Reserved..........................................................................
SECTION 4.09. Net WAC Rate Carryover Reserve Account............................................
ARTICLE V
THE CERTIFICATES.....................................................................................
SECTION 5.01. The Certificates.................................................................
SECTION 5.02. Registration of Transfer and Exchange of Certificates............................
SECTION 5.03. Mutilated, Destroyed, Lost or Stolen Certificates................................
SECTION 5.04. Persons Deemed Owners............................................................
SECTION 5.05. Certain Available Information....................................................
ARTICLE VI
THE DEPOSITOR AND THE SERVICER.......................................................................
SECTION 6.01. Liability of the Depositor and the Servicer......................................
SECTION 6.02. Merger or Consolidation of the Depositor or the Servicer.........................
SECTION 6.03. Limitation on Liability of the Depositor, the Servicer and Others................
SECTION 6.04. Limitation on Resignation of the Servicer........................................
SECTION 6.05. Rights of the Depositor in Respect of the Servicer...............................
SECTION 6.06. Sub-Servicing Agreements Between the Servicer and Sub-Servicers..................
SECTION 6.07. Successor Sub-Servicers..........................................................
SECTION 6.08. Liability of the Servicer........................................................
SECTION 6.09. No Contractual Relationship Between Sub-Servicers and the Trustee or
Certificateholders...............................................................
SECTION 6.10. Assumption or Termination of Sub-Servicing Agreements by Trustee.................
SECTION 6.11. Sub-Servicing Accounts...........................................................
ARTICLE VII
DEFAULT.............................................................................................
SECTION 7.01. Servicer Events of Default.......................................................
SECTION 7.02. Trustee to Act; Appointment of Successor.........................................
SECTION 7.03. Notification to Certificateholders...............................................
SECTION 7.04. Waiver of Servicer Events of Default.............................................
ARTICLE VIII
CONCERNING THE TRUSTEE..............................................................................
SECTION 8.01. Duties of Trustee................................................................
SECTION 8.02. Certain Matters Affecting the Trustee............................................
SECTION 8.03. The Trustee Not Liable for Certificates or Mortgage Loans........................
SECTION 8.04. Trustee May Own Certificates....................................................
SECTION 8.05. Trustee's Fees and Expenses......................................................
SECTION 8.06. Eligibility Requirements for Trustee.............................................
SECTION 8.07. Resignation and Removal of the Trustee...........................................
SECTION 8.08. Successor Trustee................................................................
SECTION 8.09. Merger or Consolidation of Trustee...............................................
SECTION 8.10. Appointment of Co-Trustee or Separate Trustee....................................
SECTION 8.11. Appointment of Custodians........................................................
SECTION 8.12. Appointment of Office or Agency..................................................
SECTION 8.13. Representations and Warranties of the Trustee....................................
ARTICLE IX
TERMINATION..........................................................................................
SECTION 9.01. Termination Upon Repurchase or Liquidation of All Mortgage Loans.................
SECTION 9.02. Additional Termination Requirements..............................................
ARTICLE X
REMIC PROVISIONS.....................................................................................
SECTION 10.01. REMIC Administration.............................................................
SECTION 10.02. Prohibited Transactions and Activities...........................................
SECTION 10.03. Servicer and Trustee Indemnification.............................................
ARTICLE XI
MISCELLANEOUS PROVISIONS.............................................................................
SECTION 11.01. Amendment........................................................................
SECTION 11.02. Recordation of Agreement; Counterparts...........................................
SECTION 11.03. Limitation on Rights of Certificateholders.......................................
SECTION 11.04. Governing Law....................................................................
SECTION 11.05. Notices..........................................................................
SECTION 11.06. Severability of Provisions.......................................................
SECTION 11.07. Notice to Rating Agencies........................................................
SECTION 11.08. Article and Section References...................................................
SECTION 11.09. Grant of Security Interest.......................................................
EXHIBITS
Exhibit A-1 Form of Class A Certificate
Exhibit A-2 Form of Subordinate Certificate
Exhibit A-3 Form of Class C Certificate
Exhibit A-4 Form of Class P Certificate
Exhibit A-5 Form of Class R Certificate
Exhibit B Form of Lost Note Affidavit
Exhibit C-1 Form of Trustee's Initial Certification
Exhibit C-2 Form of Trustee's Final Certification
Exhibit C-3 Form of Trustee's Receipt of Mortgage Note
Exhibit D Form of Mortgage Loan Purchase Agreement
Exhibit E Request for Release
Exhibit F-1 Form of Transferor Representation Letter and Form of Transferee Representation Letter in
Connection with Transfer of Class C and Class P Certificates Pursuant to Rule 144A Under the
1933 Act
Exhibit F-2 Form of Transfer Affidavit and Agreement and Form of Transferor Affidavit in Connection with
Transfer of Residual Certificates
Exhibit G Form of Certification with respect to ERISA and the Code
Exhibit H Form of Cap Contract
Exhibit I Form of Limited Power of Attorney
Exhibit J-1 Form of Certification to Be Provided by the Depositor with Form 10-K
Exhibit J-2 Form of Certification to Be Provided to Depositor by the Trustee
Exhibit J-3 Form of Certification to Be Provided to Depositor by the Servicer
Exhibit K Annual Statement of Compliance pursuant to Section 3.19
Schedule 1 Mortgage Loan Schedule
Schedule 2 Prepayment Charge Schedule
This Pooling and Servicing Agreement, is dated and effective
as of ____, ___, among GE-WMC MORTGAGE SECURITIES, L.L.C., as Depositor, [NAME
OF SERVICER], as Servicer and [NAME OF TRUSTEE], as Trustee.
PRELIMINARY STATEMENT:
The Depositor intends to sell or transfer pass-through
certificates (collectively, the "Certificates"), to be issued hereunder in
multiple classes, which in the aggregate shall evidence the entire beneficial
ownership interest in each REMIC (as defined herein) created hereunder. The
Trust Fund shall consist of a segregated pool of assets consisting of the
Mortgage Loans and certain other related assets subject to this Agreement.
REMIC I
As provided herein, the Trustee shall elect to treat the
segregated pool of assets consisting of the Mortgage Loans and certain other
related assets (other than any Servicer Prepayment Charge Payment Amounts, the
Net WAC Rate Carryover Reserve Account and the Cap Contract) subject to this
Agreement as a REMIC for federal income tax purposes, and such segregated pool
of assets shall be designated as "REMIC I." The Class R-I Interest shall be the
sole class of "residual interests" in REMIC I for purposes of the REMIC
Provisions (as defined herein). The following table irrevocably sets forth the
designation, the REMIC I Remittance Rate, the initial Uncertificated Balance
and, for purposes of satisfying Treasury regulation Section 1.860G-1(a)(4)(iii),
the "latest possible maturity date" for each of the REMIC I Regular Interests
(as defined herein). None of the REMIC I Regular Interests shall be
certificated.
REMIC I Initial Latest Possible
Designation Remittance Rate Uncertificated Balance ($) Maturity Date(1)
-------------------------------------------------------------------------------------------------------
AA Variable(2)
A Variable(2)
M1 Variable(2)
M2 Variable(2)
M3 Variable(2)
B1 Variable(2)
B2 Variable(2)
B3 Variable(2)
B4 Variable(2)
ZZ Variable(2)
P Variable(2)
________________
(1) For purposes of Section 1.860G-1(a)(4)(iii) of the Treasury regulations,
the Distribution Date immediately following the maturity date for the
Mortgage Loan with the latest maturity date has been designated as the
"latest possible maturity date" for each REMIC I Regular Interest.
(2) Calculated in accordance with the definition of "REMIC I Remittance Rate"
herein.
REMIC II
As provided herein, the Trustee shall elect to treat the
segregated pool of assets consisting of the REMIC I Regular Interests as a REMIC
for federal income tax purposes, and such segregated pool of assets shall be
designated as "REMIC II." The Class R-II Interest shall evidence the sole class
of "residual interests" in REMIC II for purposes of the REMIC Provisions under
federal income tax law. The following table irrevocably sets forth the
designation, the Pass-Through Rate, the initial aggregate Certificate Principal
Balance and, for purposes of satisfying Treasury regulation Section
1.860G-1(a)(4)(iii), the "latest possible maturity date" for the indicated
Classes of Certificates.
Initial Aggregate Latest Possible
Designation Pass-Through Rate Certificate Principal Balance Maturity Date(1)
---------------------------------------------------------------------------------------------------
Class A Variable(2)
Class M-1 Variable(2)
Class M-2 Variable(2)
Class M-3 Variable(2)
Class B-1 Variable(2)
Class B-2 Variable(2)
Class B-3 Variable(2)
Class B-4 Variable(2)
Class C Variable(2)(3)
Class P N/A(4)
________________
(1) For purposes of Section 1.860G-1(a)(4)(iii) of the Treasury regulations,
the Distribution Date immediately following the maturity date for the
Mortgage Loan with the latest maturity date has been designated as the
"latest possible maturity date" for each Class of Certificates.
(2) Calculated in accordance with the definition of "Pass-Through Rate" herein.
(3) The Class C Certificates shall accrue interest at their variable
Pass-Through Rate on the Notional Amount of the Class C Certificates
outstanding from time to time which shall equal the aggregate
Uncertificated Balance of the REMIC I Regular Interests (other than REMIC I
Regular Interest P). The Class C Certificates shall not accrue interest on
its Uncertificated Balance.
(4) The Class P Certificates shall not accrue interest.
As of the Cut-off Date, the Mortgage Loans had an aggregate
Scheduled Principal Balance equal to $______.
In consideration of the mutual agreements herein contained,
the Depositor, the Servicer and the Trustee agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms.
Whenever used in this Agreement, including, without
limitation, in the Preliminary Statement hereto, the following words and
phrases, unless the context otherwise requires, shall have the meanings
specified in this Article. Unless otherwise specified, all calculations
described herein shall be made on the basis of a 360-day year consisting of
twelve 30-day months and all calculations on each Regular Interest shall be made
on the basis of a 360-day year and the actual number of days in the month.
"Accrued Certificate Interest": With respect to any Class of
Certificates (other than the Class P Certificates and the Residual Certificates)
and each Distribution Date, interest accrued during the related Interest Accrual
Period at the Pass-Through Rate for such Certificate for such Distribution Date
on the Certificate Principal Balance, in the case of the Adjustable-Rate
Certificates, or on the Notional Amount, in the case of the Class C
Certificates, of such Certificate immediately prior to such Distribution Date.
The Class P Certificates are not entitled to distributions in respect of
interest and, accordingly, shall not accrue interest. All distributions of
interest on the Adjustable-Rate Certificates shall be calculated on the basis of
a 360-day year and the actual number of days in the applicable Interest Accrual
Period. All distributions of interest on the Class C Certificates shall be based
on a 360-day year consisting of twelve 30-day months. Accrued Certificate
Interest with respect to each Distribution Date, as to any Class A Certificate
or Subordinate Certificate, shall be reduced by an amount equal to the portion
allocable to such Certificate pursuant to Section 1.02 hereof of the sum of (a)
the aggregate Prepayment Interest Shortfall, if any, for such Distribution Date
to the extent not covered by payments pursuant to Section 4.03(e) or allocated
to the Class C Certificates pursuant to Section 1.02 and (b) the aggregate
amount of any Relief Act Interest Shortfall, if any, for such Distribution Date
not allocated to the Class C Certificates pursuant to Section 1.02. Accrued
Certificate Interest with respect to each Distribution Date and any Class C
Certificate shall be reduced by (a) Prepayment Interest Shortfalls, if any,
allocated to such Class of Certificates pursuant to Section 1.02 hereof, (b)
Relief Act Interest Shortfalls, if any, allocated to such Class of Certificates
pursuant to Section 1.02 hereof and (c) an amount equal to the portion of
Realized Losses, if any, allocable to interest on the Class C Certificate
pursuant to Section 4.04 hereof.
"Adjustable-Rate Certificates": The Class A Certificates and
the Subordinate Certificates.
"Adjustable-Rate Mortgage Loan": Each of the Mortgage Loans
identified on the Mortgage Loan Schedule as having a Mortgage Rate that is
subject to adjustment.
"Adjustment Date": With respect to each Adjustable-Rate
Mortgage Loan, the first day of the month in which the Mortgage Rate of such
Mortgage Loan changes pursuant to the related Mortgage Note. The first
Adjustment Date following the Cut-off Date as to each Adjustable-Rate Mortgage
Loan is set forth in the Mortgage Loan Schedule.
"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.
"Agreement": This Pooling and Servicing Agreement and all
amendments hereof and supplements hereto.
"Allocated Realized Loss Amount": With respect to any
Distribution Date and any Class of Subordinate Certificates, the sum of Realized
Losses allocated to such Class of Certificates on such Distribution Date
pursuant to Section 4.04.
"Allocated Realized Loss Reimbursement Amount": With respect
to any Distribution Date and any Class of Subordinate Certificates, (i) the sum
of all Allocated Realized Loss Amounts allocated to such Class of Certificates
minus (ii) the sum of all amounts distributed to such Class of Certificates on
previous Distribution Dates pursuant to Section 4.01(a)(4)(ii), minus (iii) the
sum of the increases in the Certificate Principal Balance of such Class of
Certificates due to the receipt of Subsequent Recoveries as provided in Section
4.01(a)(5).
"Applicable Regulations": As to any Mortgage Loan, all
federal, state and local laws, statutes, rules and regulations applicable
thereto.
"Assignment": An assignment of Mortgage, notice of transfer or
equivalent instrument, in recordable form (excepting therefrom if applicable,
the mortgage recordation information which has not been returned by the
applicable recorder's office and/or the assignee's name), which is sufficient
under the laws of the jurisdiction wherein the related Mortgaged Property is
located to reflect of record the sale of the Mortgage.
"Available Distribution Amount": With respect to any
Distribution Date, an amount equal to (1) the sum of:
(a) the aggregate of the amounts on deposit in the Collection
Account and Distribution Account as of the close of business on the related
Determination Date, including any Subsequent Recoveries,
(b) without duplication, the aggregate of any amounts received
in respect of an REO Property withdrawn from any REO Account and deposited in
the Distribution Account for such Distribution Date pursuant to Section 3.13,
(c) Compensating Interest, if any, deposited in the
Distribution Account by the Servicer for such Distribution Date pursuant to
Section 4.03 and
(d) the aggregate of any P&I Advances made by the Servicer for
such Distribution Date pursuant to Section 4.03,
REDUCED (TO NOT LESS THAN ZERO) BY (2) the portion of the
amount described in clause (1)(a) above that represents:
(i) Monthly Payments on the Mortgage Loans received from a
Mortgagor on or prior to the Determination Date but due during any Due Period
subsequent to the related Due Period,
(ii) Principal Prepayments on the Mortgage Loans received
after the related Prepayment Period (together with any interest payments
received with such Principal Prepayments to the extent they represent the
payment of interest accrued on the Mortgage Loans during a period subsequent to
the end of the prior calendar month),
(iii) Liquidation Proceeds, Insurance Proceeds and Subsequent
Recoveries received in respect of the Mortgage Loans after the related
Prepayment Period,
(iv) amounts reimbursable or payable to the Depositor, the
Servicer, the Trustee, the Seller, the Originator or any Sub-Servicer pursuant
to Section 3.05, Section 3.06 or Section 7.01 or otherwise payable in respect of
Extraordinary Trust Fund Expenses,
(v) the Trustee Fee and the Custodian Fee payable from the
Distribution Account pursuant to Section 8.05,
(vi) amounts deposited in the Collection Account or the
Distribution Account in error and
(vii) the amount of any Prepayment Charges collected by the
Servicer and the amount of any Servicer Prepayment Charge Payment Amounts.
"Balloon Loan": Any Mortgage Loan that provided on the date of
origination for an amortization schedule extending beyond its stated maturity
date.
"Balloon Payment": With respect to any Balloon Loan, as of any
date of determination, the Monthly Payment payable on the stated maturity date
of such Mortgage Loan.
"Bankruptcy Code": The Bankruptcy Reform Act of 1978 (Title 11
of the United States Code), as amended.
"Bankruptcy Loss": With respect to any Mortgage Loan, a
Realized Loss resulting from a Deficient Valuation or Debt Service Reduction.
"Book-Entry Certificate": Any Certificate registered in the
name of the Depository or its nominee. Initially, the Book-Entry Certificates
shall be the Class A Certificates and the Subordinate Certificates.
"Book-Entry Custodian": The custodian appointed pursuant to
Section 5.01.
"Business Day": Any day other than a Saturday, a Sunday or a
day on which banking or savings and loan institutions in the State of
California, the State of Connecticut, the State of ___, the State of ___, the
State of ___ or in any city in which the Corporate Trust Office of the Trustee
is located, are authorized or obligated by law or executive order to be closed.
["Cap Amount": For each Class of Adjustable-Rate Certificates,
an amount equal to (i) the aggregate amount received by the Trust Fund from the
Cap Contract, multiplied by (ii) a fraction equal to (a) the Certificate
Principal Balance of such Class immediately prior to the applicable Distribution
Date divided by (b) the aggregate Certificate Principal Balance immediately
prior to the applicable Distribution Date of all Classes of Adjustable-Rate
Certificates, directly benefitting from such Cap Contract.]
"Cap Contract": The interest rate corridor between ____, as
Trustee, and the counterparty thereunder, for the benefit of the Holders of the
Class A Certificates and the Subordinate Certificates, collectively, a form of
which is attached hereto as Exhibit H.
"Certificate": Any one of the Depositor's Mortgage
Pass-Through Certificates, Series ___-__, Class A, Class M-1, Class M-2, Class
M-3, Class B-1 Class B-2, Class B-3, Class B-4, Class C, Class P and Class R,
issued under this Agreement.
"Certificate Factor": With respect to any Class of Regular
Certificates as of any Distribution Date, a fraction, expressed as a decimal
carried to six places, the numerator of which is the Certificate Principal
Balance (or the Notional Amount, in the case of the Class C Certificates) of
such Class of Certificates on such Distribution Date (after giving effect to any
distributions of principal and allocations of Realized Losses in reduction of
the Certificate Principal Balance (or the Notional Amount, in the case of the
Class C Certificates) of such Class of Certificates to be made on such
Distribution Date), and the denominator of which is the initial aggregate
Certificate Principal Balance (or the Notional Amount, in the case of the Class
C Certificates) of such Class of Certificates as of the Closing Date.
"Certificateholder" or "Holder": The Person in whose name a
Certificate is registered in the Certificate Register, except that a
Disqualified Organization or a Non-United States Person shall not be a Holder of
a Residual Certificate for any purposes hereof and, solely for the purposes of
giving any consent pursuant to this Agreement, any Certificate registered in the
name of the Depositor, the Seller or the Originator or any Affiliate thereof
shall be deemed not to be outstanding and the Voting Rights to which it is
entitled shall not be taken into account in determining whether the requisite
percentage of Voting Rights necessary to effect any such consent has been
obtained, except as otherwise provided in Section 11.01. The Trustee may
conclusively rely upon a certificate of the Depositor, the Seller or the
Originator, in determining whether a Certificate is held by an Affiliate
thereof. All references herein to "Holders" or "Certificateholders" shall
reflect the rights of Certificate Owners as they may indirectly exercise such
rights through the Depository and participating members thereof, except as
otherwise specified herein; provided, however, that the Trustee shall be
required to recognize as a "Holder" or "Certificateholder" only the Person in
whose name a Certificate is registered in the Certificate Register.
"Certificate Margin": With respect to each Adjustable-Rate
Certificate and, for purposes of the Marker Rate, the specified REMIC I Regular
Interest, as follows:
Certificate Margin
REMIC I Regular ------------------------------
Class Interest (1) (%) (2) (%)
----------------------------------------------------------------------
A A
M-1 M1
M-2 M2
M-3 M3
B-1 B1
B-2 B2
B-3 B3
B-4 B4
__________
(1) For the Interest Accrual Period for each Distribution Date on or prior
to the Optional Termination Date.
(2) For the Interest Accrual Period for each Distribution Date after the
Optional Termination Date.
"Certificate Owner": With respect to a Book-Entry Certificate,
the Person who is the beneficial owner of such Certificate as reflected on the
books of the Depository or on the books of a Depository Participant or on the
books of an indirect participating brokerage firm for which a Depository
Participant acts as agent.
"Certificate Principal Balance": With respect to each Class A
Certificate, Subordinate Certificate or Class P Certificate and (i) in the case
of any date of determination up to and including the first Distribution Date,
the initial Certificate Principal Balance of such Certificate, as stated on the
face thereof and (ii) as of any date of determination after the first
Distribution Date, the Certificate Principal Balance of such Certificate on the
Distribution Date immediately prior to such date of determination plus, with
respect to each Subordinate Certificate, any increase in the Certificate
Principal Balance of such Certificate pursuant to Section 4.01 due to the
receipt of Subsequent Recoveries minus all distributions allocable to principal
made thereon on such Distribution Date and, in the case of a Subordinate
Certificate, Realized Losses allocated thereto on such immediately prior
Distribution Date. With respect to each Class C Certificate as of any date of
determination, an amount equal to the Percentage Interest evidenced by such
Certificate times the excess, if any, of (A) the then aggregate Uncertificated
Balance of the REMIC I Regular Interests over (B) the then aggregate Certificate
Principal Balance of the Class A Certificates, the Subordinate Certificates and
the Class P Certificates then outstanding.
"Certificate Register": The register maintained pursuant to
Section 5.02.
"Certificate Registrar": The registrar appointed pursuant to
Section 5.02
"Class": Collectively, all of the Certificates bearing the
same class designation.
"Class A Certificate": Any one of the Class A Certificates
executed by the Trustee and authenticated and delivered by the Certificate
Registrar, substantially in the form annexed hereto as Exhibit A-1 and
evidencing a (i) Regular Interest in REMIC II for purposes of the REMIC
Provisions and (ii) the right to receive Net WAC Rate Carryover Amounts.
"Class A Interest Distribution Amount": With respect to any
Distribution Date, an amount equal to the sum of (i) the Interest Distribution
Amount for such Distribution Date for the Class A Certificates, and (ii) the
Interest Carry Forward Amount, if any, for the Class A Certificates.
"Class A Principal Distribution Amount": With respect to any
Distribution Date, an amount, not less than zero, equal to the excess of (x) the
aggregate Certificate Principal Balance of the Class A Certificates immediately
prior to such Distribution Date over (y) the lesser of (A) the product of (i)
___% and (ii) the aggregate Stated Principal Balance of the Mortgage Loans as of
the last day of the related Due Period (after giving effect to scheduled
payments of principal due during the related Due Period, to the extent received
or advanced, and unscheduled collections of principal received during the
related Prepayment Period) and (B) the aggregate Stated Principal Balance of the
Mortgage Loans as of the last day of the related Due Period (after giving effect
to scheduled payments of principal due during the related Due Period, to the
extent received or advanced, and unscheduled collections of principal received
during the related Prepayment Period) minus $_______.
"Class B-1 Certificate": Any one of the Class B-1
Certificates executed by the Trustee and authenticated and delivered by the
Certificate Registrar, substantially in the form annexed hereto as Exhibit A-2
and evidencing (i) a Regular Interest in REMIC II for purposes of the REMIC
Provisions and (ii) the right to receive Net WAC Rate Carryover Amounts.
"Class B-1 Principal Distribution Amount": With respect to any
Distribution Date, an amount, not less than zero, equal to the lesser of (I) the
Certificate Principal Balance of the Class B-1 Certificates immediately prior to
such Distribution Date and (II) the excess of (x) the sum of (i) the aggregate
Certificate Principal Balance of the Class A Certificates (after taking into
account the payment of the Class A Principal Distribution Amount on such
Distribution Date), (ii) the Certificate Principal Balance of the Class M-1
Certificates (after taking into account the payment of the Class M-1 Principal
Distribution Amount on such Distribution Date), (iii) the Certificate Principal
Balance of the Class M-2 Certificates (after taking into account the payment of
the Class M-2 Principal Distribution Amount on such Distribution Date), (iv) the
Certificate Principal Balance of the Class M-3 Certificates (after taking into
account the payment of the Class M-3 Principal Distribution Amount on such
Distribution Date) and (v) the Certificate Principal Balance of the Class B-1
Certificates immediately prior to such Distribution Date over (y) the lesser of
(A) the product of (i) ___% and (ii) the aggregate Stated Principal Balance of
the Mortgage Loans as of the last day of the related Due Period (after giving
effect to scheduled payments of principal due during the related Due Period, to
the extent received or advanced, and unscheduled collections of principal
received during the related Prepayment Period) and (B) the aggregate Stated
Principal Balance of the Mortgage Loans as of the last day of the related Due
Period (after giving effect to scheduled payments of principal due during the
related Due Period, to the extent received or advanced, and unscheduled
collections of principal received during the related Prepayment Period) minus
$_____.
"Class B-2 Certificate": Any one of the Class B-2 Certificates
executed by the Trustee and authenticated and delivered by the Certificate
Registrar, substantially in the form annexed hereto as Exhibit A-2 and
evidencing (i) a Regular Interest in REMIC II for purposes of the REMIC
Provisions and (ii) the right to receive Net WAC Rate Carryover Amounts.
"Class B-2 Principal Distribution Amount": With respect to any
Distribution Date, an amount, not less than zero, equal to the lesser of (I) the
Certificate Principal Balance of the Class B-2 Certificates immediately prior to
such Distribution Date and (II) the excess of (x) the sum of (i) the aggregate
Certificate Principal Balance of the Class A Certificates (after taking into
account the payment of the Class A Principal Distribution Amount on such
Distribution Date), (ii) the Certificate Principal Balance of the Class M-1
Certificates (after taking into account the payment of the Class M-1 Principal
Distribution Amount on such Distribution Date), (iii) the Certificate Principal
Balance of the Class M-2 Certificates (after taking into account the payment of
the Class M-2 Principal Distribution Amount on such Distribution Date), (iv) the
Certificate Principal Balance of the Class M-3 Certificates (after taking into
account the payment of the Class M-3 Principal Distribution Amount on such
Distribution Date), (v) the Certificate Principal Balance of the Class B-1
Certificates (after taking into account the payment of the Class B-1 Principal
Distribution Amount on such Distribution Date) and (vi) the Certificate
Principal Balance of the Class B-2 Certificates immediately prior to such
Distribution Date over (y) the lesser of (A) the product of (i) ___% and (ii)
the aggregate Stated Principal Balance of the Mortgage Loans as of the last day
of the related Due Period (after giving effect to scheduled payments of
principal due during the related Due Period, to the extent received or advanced,
and unscheduled collections of principal received during the related Prepayment
Period) and (B) the aggregate Stated Principal Balance of the Mortgage Loans as
of the last day of the related Due Period (after giving effect to scheduled
payments of principal due during the related Due Period, to the extent received
or advanced, and unscheduled collections of principal received during the
related Prepayment Period) minus $______.
"Class B-3 Certificate": Any one of the Class B-3 Certificates
executed by the Trustee and authenticated and delivered by the Certificate
Registrar, substantially in the form annexed hereto as Exhibit A-2 and
evidencing (i) a Regular Interest in REMIC II for purposes of the REMIC
Provisions and (ii) the right to receive Net WAC Rate Carryover Amounts.
"Class B-3 Principal Distribution Amount": With respect to any
Distribution Date, an amount, not less than zero, equal to the lesser of (I) the
Certificate Principal Balance of the Class B-3 Certificates immediately prior to
such Distribution Date and (II) the excess of (x) the sum of (i) the aggregate
Certificate Principal Balance of the Class A Certificates (after taking into
account the payment of the Class A Principal Distribution Amount on such
Distribution Date), (ii) the Certificate Principal Balance of the Class M-1
Certificates (after taking into account the payment of the Class M-1 Principal
Distribution Amount on such Distribution Date), (iii) the Certificate Principal
Balance of the Class M-2 Certificates (after taking into account the payment of
the Class M-2 Principal Distribution Amount on such Distribution Date), (iv) the
Certificate Principal Balance of the Class M-3 Certificates (after taking into
account the payment of the Class M-3 Principal Distribution Amount on such
Distribution Date), (v) the Certificate Principal Balance of the Class B-1
Certificates (after taking into account the payment of the Class B-1 Principal
Distribution Amount on such Distribution Date), (vi) the Certificate Principal
Balance of the Class B-2 Certificates (after taking into account the payment of
the Class B-2 Principal Distribution Amount on such Distribution Date) and (vii)
the Certificate Principal Balance of the Class B-3 Certificates immediately
prior to such Distribution Date over (y) the lesser of (A) the product of (i)
____% and (ii) the aggregate Stated Principal Balance of the Mortgage Loans as
of the last day of the related Due Period (after giving effect to scheduled
payments of principal due during the related Due Period, to the extent received
or advanced, and unscheduled collections of principal received during the
related Prepayment Period) and (B) the aggregate Stated Principal Balance of the
Mortgage Loans as of the last day of the related Due Period (after giving effect
to scheduled payments of principal due during the related Due Period, to the
extent received or advanced, and unscheduled collections of principal received
during the related Prepayment Period) minus $___________.
"Class B-4 Certificate": Any one of the Class B-4 Certificates
executed by the Trustee and authenticated and delivered by the Certificate
Registrar, substantially in the form annexed hereto as Exhibit A-2 and
evidencing (i) a Regular Interest in REMIC II for purposes of the REMIC
Provisions and (ii) the right to receive Net WAC Rate Carryover Amounts.
"Class B-4 Principal Distribution Amount": With respect to any
Distribution Date, an amount, not less than zero, equal to the lesser of (I) the
Certificate Principal Balance of the Class B-4 Certificates immediately prior to
such Distribution Date and (II) the excess of (x) the sum of (i) the aggregate
Certificate Principal Balance of the Class A Certificates (after taking into
account the payment of the Class A Principal Distribution Amount on such
Distribution Date), (ii) the Certificate Principal Balance of the Class M-1
Certificates (after taking into account the payment of the Class M-1 Principal
Distribution Amount on such Distribution Date), (iii) the Certificate Principal
Balance of the Class M-2 Certificates (after taking into account the payment of
the Class M-2 Principal Distribution Amount on such Distribution Date), (iv) the
Certificate Principal Balance of the Class M-3 Certificates (after taking into
account the payment of the Class M-3 Principal Distribution Amount on such
Distribution Date), (v) the Certificate Principal Balance of the Class B-1
Certificates (after taking into account the payment of the Class B-1 Principal
Distribution Amount on such Distribution Date), (vi) the Certificate Principal
Balance of the Class B-2 Certificates (after taking into account the payment of
the Class B-2 Principal Distribution Amount on such Distribution Date), (vii)
the Certificate Principal Balance of the Class B-3 Certificates (after taking
into account the payment of the Class B-3 Principal Distribution Amount on such
Distribution Date) and (viii) the Certificate Principal Balance of the Class B-4
Certificates immediately prior to such Distribution Date over (y) the lesser of
(A) the product of (i) ____% and (ii) the aggregate Stated Principal Balance of
the Mortgage Loans as of the last day of the related Due Period (after giving
effect to scheduled payments of principal due during the related Due Period, to
the extent received or advanced, and unscheduled collections of principal
received during the related Prepayment Period) and (B) the aggregate Stated
Principal Balance of the Mortgage Loans as of the last day of the related Due
Period (after giving effect to scheduled payments of principal due during the
related Due Period, to the extent received or advanced, and unscheduled
collections of principal received during the related Prepayment Period) minus
$_____.
"Class C Certificate": Any one of the Class C Certificates
executed by the Trustee and authenticated and delivered by the Certificate
Registrar, substantially in the form annexed hereto as Exhibit A-3 and
evidencing (i) a Regular Interest in REMIC II for purposes of the REMIC
Provisions and (ii) the obligation to pay Net WAC Rate Carryover Amounts.
"Class M-1 Certificate": Any one of the Class M-1 Certificates
executed by the Trustee and authenticated and delivered by the Certificate
Registrar, substantially in the form annexed hereto as Exhibit A-2 and
evidencing (i) a Regular Interest in REMIC II for purposes of the REMIC
Provisions and (ii) the right to receive Net WAC Rate Carryover Amounts.
"Class M-1 Principal Distribution Amount": With respect to any
Distribution Date, an amount, not less than zero, equal to the lesser of (I) the
Certificate Principal Balance of the Class M-1 Certificates immediately prior to
such Distribution Date and (II) the excess of (x) the sum of (i) the aggregate
Certificate Principal Balance of the Class A Certificates (after taking into
account the payment of the Class A Principal Distribution Amount on such
Distribution Date) and (ii) the Certificate Principal Balance of the Class M-1
Certificates immediately prior to such Distribution Date over (y) the lesser of
(A) the product of (i) ___% and (ii) the aggregate Stated Principal Balance of
the Mortgage Loans as of the last day of the related Due Period (after giving
effect to scheduled payments of principal due during the related Due Period, to
the extent received or advanced, and unscheduled collections of principal
received during the related Prepayment Period) and (B) the aggregate Stated
Principal Balance of the Mortgage Loans as of the last day of the related Due
Period (after giving effect to scheduled payments of principal due during the
related Due Period, to the extent received or advanced, and unscheduled
collections of principal received during the related Prepayment Period) minus
$___.
"Class M-2 Certificate": Any one of the Class M-2 Certificates
executed by the Trustee and authenticated and delivered by the Certificate
Registrar, substantially in the form annexed hereto as Exhibit A-2 and
evidencing (i) a Regular Interest in REMIC II for purposes of the REMIC
Provisions and (ii) the right to receive Net WAC Rate Carryover Amounts.
"Class M-2 Principal Distribution Amount": With respect to any
Distribution Date, an amount, not less than zero, equal to the lesser of (I) the
Certificate Principal Balance of the Class M-2 Certificates immediately prior to
such Distribution Date and (II) the excess of (x) the sum of (i) the aggregate
Certificate Principal Balance of the Class A Certificates (after taking into
account the payment of the Class A Principal Distribution Amount on such
Distribution Date), (ii) the Certificate Principal Balance of the Class M-1
Certificates (after taking into account the payment of the Class M-1 Principal
Distribution Amount on such Distribution Date) and (iii) the Certificate
Principal Balance of the Class M-2 Certificates immediately prior to such
Distribution Date over (y) the lesser of (A) the product of (i) ___% and (ii)
the aggregate Stated Principal Balance of the Mortgage Loans as of the last day
of the related Due Period (after giving effect to scheduled payments of
principal due during the related Due Period, to the extent received or advanced,
and unscheduled collections of principal received during the related Prepayment
Period) and (B) the aggregate Stated Principal Balance of the Mortgage Loans as
of the last day of the related Due Period (after giving effect to scheduled
payments of principal due during the related Due Period, to the extent received
or advanced, and unscheduled collections of principal received during the
related Prepayment Period) minus $____.
"Class M-3 Certificate": Any one of the Class M-3 Certificates
executed by the Trustee and authenticated and delivered by the Certificate
Registrar, substantially in the form annexed hereto as Exhibit A-2 and
evidencing (i) a Regular Interest in REMIC II for purposes of the REMIC
Provisions and (ii) the right to receive Net WAC Rate Carryover Amounts.
"Class M-3 Principal Distribution Amount": With respect to any
Distribution Date, an amount, not less than zero, equal to the lesser of (I) the
Certificate Principal Balance of the Class M-3 Certificates immediately prior to
such Distribution Date and (II) the excess of (x) the sum of (i) the aggregate
Certificate Principal Balance of the Class A Certificates (after taking into
account the payment of the Class A Principal Distribution Amount on such
Distribution Date), (ii) the Certificate Principal Balance of the Class M-1
Certificates (after taking into account the payment of the Class M-1 Principal
Distribution Amount on such Distribution Date), (iii) the Certificate Principal
Balance of the Class M-2 Certificates (after taking into account the payment of
the Class M-2 Principal Distribution Amount on such Distribution Date) and (iv)
the Certificate Principal Balance of the Class M-3 Certificates immediately
prior to such Distribution Date over (y) the lesser of (A) the product of (i)
___% and (ii) the aggregate Stated Principal Balance of the Mortgage Loans as of
the last day of the related Due Period (after giving effect to scheduled
payments of principal due during the related Due Period, to the extent received
or advanced, and unscheduled collections of principal received during the
related Prepayment Period) and (B) the aggregate Stated Principal Balance of the
Mortgage Loans as of the last day of the related Due Period (after giving effect
to scheduled payments of principal due during the related Due Period, to the
extent received or advanced, and unscheduled collections of principal received
during the related Prepayment Period) minus $_______.
"Class P Certificate": Any one of the Class P Certificates
executed by the Trustee and authenticated and delivered by the Certificate
Registrar, substantially in the form annexed hereto as Exhibit A-4, representing
the right to distributions as set forth herein and therein and evidencing a
regular interest in REMIC II for purposes of the REMIC Provisions.
"Class R Certificate": Any one of the Class R Certificates
executed by the Trustee and authenticated and delivered by the Certificate
Registrar, substantially in the form annexed hereto as Exhibit A-5 and
evidencing the ownership of the Class R-I Interest and the Class R-II Interest.
"Class R-I Interest": The uncertificated Residual Interest in
REMIC I.
"Class R-II Interest": The uncertificated Residual Interest in
REMIC II.
"Closing Date": ____,___.
"Code": The Internal Revenue Code of 1986, as amended, or any
successor law.
"Collection Account": The account or accounts created and
maintained by the Servicer pursuant to Section 3.04(a), which shall be entitled
"[NAME OF SERVICER], as Servicer for [NAME OF TRUSTEE], as Trustee, in trust for
the registered holders of GE-WMC Mortgage Securities, L.L.C., Mortgage
Pass-Through Certificates, Series 200__-___." The Collection Account must be an
Eligible Account.
"Combined Loan-to-Value Ratio": As of any date of
determination, and with respect to second lien Mortgage Loans, the fraction,
expressed as a percentage, the numerator of which is (i) the sum of (a) the
outstanding principal balance of the related first-lien mortgage loan plus (b)
the Stated Principal Balance of the related second-lien Mortgage Loan and the
denominator of which is (ii) the Value of the related Mortgaged Property.
"Commission": The Securities and Exchange Commission.
"Compensating Interest": As defined in Section 4.03(e) hereof.
"Corporate Trust Office": The corporate trust office of the
Trustee at which at any particular time its corporate trust business with
respect to this Agreement shall be administered, which office, at the date of
the execution of this Agreement is located at (i) for purposes of the transfer
and exchange of the Certificates, _______, Attention: Corporate Trust Services,
and (ii) for all other purposes, ________.
"Corresponding Certificate": With respect to each REMIC I
Regular Interest, the Certificate with the corresponding designation.
"Cumulative Loss Percentage": With respect to any Distribution
Date, the percentage equivalent of a fraction, the numerator of which is the
aggregate amount of Realized Losses incurred from the Cut-off Date to the last
day of the preceding calendar month (reduced by the aggregate amount of
Subsequent Recoveries received from the Cut-off Date through the last day of the
related Due Period) and the denominator of which is the aggregate Stated
Principal Balance of the Mortgage Loans as of the Cut-off Date.
"Custodian": The Trustee or if the Trustee is not the
Custodian, the custodian pursuant to the Custodial Agreement.
"Custodial Agreement": The custodial agreement dated as of the
Cut-off Date, among the Servicer, the Trustee and the Custodian providing for
the safekeeping of the Mortgage Files on behalf of the Trust Fund in accordance
with this Agreement.
"Custodian Fee": The amount payable to the Custodian on each
Distribution Date by the Trustee pursuant to Section 8.05 as compensation for
all services rendered by it under the Custodial Agreement equal to $___ for each
Mortgage File in the Custodian's possession corresponding a Mortgage Loan.
"Custodian Fee Rate": The per annum fee paid to the Custodian
on each Distribution Date equal to the Custodian Fee expressed as a percentage
of the aggregate Stated Principal Balance of the Mortgage Loans.
"Cut-off Date": With respect to any Mortgage Loan, the close
of business on ___,___. With respect to all Qualified Substitute Mortgage Loans,
their respective dates of substitution. References herein to the "Cut-off Date,"
when used with respect to more than one Mortgage Loan, shall be to the
respective Cut-off Dates for such Mortgage Loans.
"DBRS": Dominion Bond Rating Services, Inc. or its successor
in interest.
"Debt Service Reduction": With respect to any Mortgage Loan, a
reduction in the scheduled Monthly Payment for such Mortgage Loan by a court of
competent jurisdiction in a proceeding under the Bankruptcy Code, except such a
reduction resulting from a Deficient Valuation.
"Deficient Valuation": With respect to any Mortgage Loan, a
valuation of the related Mortgaged Property by a court of competent jurisdiction
in an amount less than the then outstanding Stated Principal Balance of the
Mortgage Loan, which valuation results from a proceeding initiated under the
Bankruptcy Code.
"Definitive Certificates": As defined in Section 5.01(b).
"Deleted Mortgage Loan": A Mortgage Loan replaced or to be
replaced by a Qualified Substitute Mortgage Loan.
"Delinquent": A Mortgage Loan is "delinquent" if any payment
due thereon is not made pursuant to the terms of such Mortgage Loan by the close
of business on the related Due Date. A 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 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 day
delinquent," 90-days delinquent" and so on.
"Delinquency Percentage": With respect to any Distribution
Date, the percentage equivalent of a fraction, the numerator of which is the
rolling three month average of the Stated Principal Balance of all Mortgage
Loans that are 60 or more days Delinquent, are in foreclosure, have been
converted to REO Properties or have been discharged by reason of bankruptcy, and
the denominator of which is the aggregate Stated Principal Balance of the
Mortgage Loans and REO Properties as of the last day of the related Due Period;
provided, however, that any Mortgage Loan purchased by the Servicer pursuant to
Section 3.16 shall not be included in either the numerator or the denominator
for purposes of calculating the Delinquency Percentage.
"Depositor": GE-WMC Mortgage Securities, L.L.C., a Delaware
limited liability company, or its successor in interest.
"Depository": The Depository Trust Company, or any successor
Depository hereafter named. The nominee of the initial Depository, for purposes
of registering those Certificates that are to be Book-Entry Certificates, is
Cede & Co. The Depository shall at all times be a "clearing corporation" as
defined in Section 8-102(3) of the Uniform Commercial Code of the State of New
York and a "clearing agency" registered pursuant to the provisions of Section
17A of the Securities Exchange Act of 1934, as amended.
"Depository Institution": Any depository institution or trust
company, including the Trustee, that (a) is incorporated under the laws of the
United States of America or any State thereof, (b) is subject to supervision and
examination by federal or state banking authorities and (c) has outstanding
unsecured commercial paper or other short-term unsecured debt obligations that
are rated "P-1" by ▇▇▇▇▇'▇, "F-1" by Fitch, "A-1" by S&P and "R-1 (highest)" by
DBRS, if rated by DBRS (or comparable ratings if Moody's, Fitch, S&P and DBRS
are not the Rating Agencies).
"Depository Participant": A broker, dealer, bank or other
financial institution or other Person for whom from time to time a Depository
effects book-entry transfers and pledges of securities deposited with the
Depository.
"Determination Date": With respect to each Distribution Date,
the [fifteenth] day of the calendar month in which such Distribution Date occurs
or, if such [fifteenth] day is not a Business Day, the Business Day immediately
preceding such [fifteenth] day.
"Directly Operate": With respect to any REO Property, the
furnishing or rendering of services to the tenants thereof, the management or
operation of such REO Property, the holding of such REO Property primarily for
sale to customers, the performance of any construction work thereon or any use
of such REO Property in a trade or business conducted by REMIC I other than
through an Independent Contractor; provided, however, that the Trustee (or the
Servicer on behalf of the Trustee) shall not be considered to Directly Operate
an REO Property solely because the Trustee (or the Servicer on behalf of the
Trustee) establishes rental terms, chooses tenants, enters into or renews
leases, deals with taxes and insurance, or makes decisions as to repairs or
capital expenditures with respect to such REO Property.
"Disqualified Organization": Any of the following: (i) the
United States, any State or political subdivision thereof, any possession of the
United States, or any agency or instrumentality of any of the foregoing (other
than an instrumentality which is a corporation if all of its activities are
subject to tax and, except for ▇▇▇▇▇▇▇ Mac, a majority of its board of directors
is not selected by such governmental unit), (ii) any foreign government, any
international organization, or any agency or instrumentality of any of the
foregoing, (iii) any organization (other than certain farmers' cooperatives
described in Section 521 of the Code) which is exempt from the tax imposed by
Chapter 1 of the Code (including the tax imposed by Section 511 of the Code on
unrelated business taxable income), (iv) rural electric and telephone
cooperatives described in Section 1381(a)(2)(C) of the Code, (v) an "electing
large partnership" and (vi) any other Person so designated by the Trustee based
upon an Opinion of Counsel that the holding of an Ownership Interest in a
Residual Certificate by such Person may cause any Trust REMIC or any Person
having an Ownership Interest in any Class of Certificates (other than such
Person) to incur a liability for any federal tax imposed under the Code that
would not otherwise be imposed but for the Transfer of an Ownership Interest in
a Residual Certificate to such Person. The terms "United States," "State" and
"international organization" shall have the meanings set forth in Section 7701
of the Code or successor provisions.
"Distribution Account": The trust account or accounts created
and maintained by the Trustee pursuant to Section 3.04(e), which shall be
entitled "[NAME OF TRUSTEE], as Trustee, in trust for the registered Holders of
GE-WMC Mortgage Securities, L.L.C., Mortgage Pass-Through Certificates, Series
200_-___." The Distribution Account must be an Eligible Account.
"Distribution Date": The 25th day of any month, or if such
25th day is not a Business Day, the next succeeding Business Day, commencing in
_____, ___.
"Due Date": With respect to each Distribution Date, the first
day of the calendar month in which such Distribution Date occurs, which is the
day of the month on which the Monthly Payment is due on a Mortgage Loan,
exclusive of any days of grace.
"Due Period": With respect to any Distribution Date, the
period from and including the second day of the month immediately preceding the
month in which such Distribution Date occurs to and including the related Due
Date.
"Eligible Account": Any of (i) an account or accounts
maintained with a Depository Institution or trust company, the short-term
unsecured debt obligations of which are rated "P-1" by ▇▇▇▇▇'▇, "F-1" by Fitch,
"R-1" by DBRS and "A-1+" by S&P (or comparable ratings if Moody's, Fitch, DBRS
and S&P are not the Rating Agencies) at the time any amounts are held on deposit
therein, (ii) an account or accounts the deposits in which are fully insured by
the FDIC or (iii) a trust account or accounts maintained with the corporate
trust department of a federal or state chartered depository institution or trust
company acting in its fiduciary capacity. Eligible Accounts may bear interest.
"ERISA": The Employee Retirement Income Security Act of 1974,
as amended.
"Escrow Account": The account or accounts created and
maintained pursuant to Section 3.04(c).
"Escrow Payments": The amounts constituting taxes, and/or fire
and hazard insurance premiums escrowed by the Mortgagor with the mortgagee
pursuant to a voluntary escrow agreement related to any Mortgage Loan.
"Estate in Real Property": A fee simple estate or leasehold
estate in a parcel of land.
"Expense Adjusted Net Maximum Mortgage Rate": With respect to
any Mortgage Loan (or the related REO Property), as of any date of
determination, a per annum rate of interest equal to the applicable Maximum
Mortgage Rate (or the Mortgage Rate for such Mortgage Loan in the case of any
Fixed-Rate Mortgage Loan) as of the first day of the month preceding the month
in which the Distribution Date occurs minus the sum of (i) the Servicing Fee
Rate, (ii) the Trustee Fee Rate and (iii) the Custodian Fee Rate.
"Expense Adjusted Net Mortgage Rate": With respect to any
Mortgage Loan (or the related REO Property), as of any date of determination, a
per annum rate of interest equal to the applicable Mortgage Rate thereon as of
the first day of the month preceding the month in which the Distribution Date
occurs minus the sum of (i) the Servicing Fee Rate, (ii) the Trustee Fee Rate
and (iii) the Custodian Fee Rate.
"Extraordinary Trust Fund Expense": Any amounts reimbursable
to the Trustee or any director, officer, employee or agent of the Trustee, from
the Trust Fund pursuant to Section 8.05, any amounts payable from the
Distribution Account in respect of taxes pursuant to Section 10.01(g)(iii) and
any amounts payable by the Trustee for the recording of the Assignments pursuant
to Section 2.01.
"▇▇▇▇▇▇ ▇▇▇": ▇▇▇▇▇▇ ▇▇▇, formally known as the Federal
National Mortgage Association, or any successor thereto.
"FDIC": Federal Deposit Insurance Corporation or any successor
thereto.
"FICO" means Fair ▇▇▇▇▇ & Co., or any successor thereto.
"Final Recovery Determination": With respect to any defaulted
Mortgage Loan or any REO Property (other than a Mortgage Loan or REO Property
purchased by the Originator, the Seller, the Depositor or the Servicer pursuant
to or as contemplated by Section 2.03, Section 3.16 or Section 9.01), a
determination made by the Servicer that all Insurance Proceeds, Liquidation
Proceeds and other payments or recoveries which the Servicer, in its reasonable
good faith judgment, expects to be finally recoverable in respect thereof have
been so recovered. The Servicer shall maintain records, prepared by a Servicing
Officer, of each Final Recovery Determination made thereby.
"Fitch": Fitch, Inc., or its successor in interest.
"Fixed-Rate Mortgage Loan": Each of the Mortgage Loans
identified on the Mortgage Loan Schedule as having a fixed Mortgage Rate.
"Formula Rate": For any Distribution Date and each Class of
Adjustable-Rate Certificates, the lesser of (i) One-Month LIBOR plus the related
Certificate Margin and (ii) the related Maximum Cap Rate.
"▇▇▇▇▇▇▇ Mac": ▇▇▇▇▇▇▇ Mac, formally known as the Federal Home
Loan Mortgage Corporation, or any successor thereto.
"Gross Margin": With respect to each Adjustable-Rate Mortgage
Loan, the fixed percentage set forth in the related Mortgage Note that is added
to the Index on each Adjustment Date in accordance with the terms of the related
Mortgage Note to determine the Mortgage Rate for such Adjustable-Rate Mortgage
Loan.
"Highest Priority" As of any date of determination, the Class
of Subordinate Certificates then outstanding with a Certificate Principal
Balance greater than zero, with the highest priority for payments pursuant to
Section 4.01, in the following order of decreasing priority: the Class M-1
Certificates, the Class M-2 Certificates, the Class M-3 Certificates, the Class
B-1 Certificates, the Class B-2 Certificates, the Class B-3 Certificates and the
Class B-4 Certificates.
["HOEPA": The Home Ownership and Equity Protection Act of
1994.]
"Indenture": An indenture relating to the issuance of notes
secured by all or a portion of the Class C Certificates, the Class P
Certificates and/or the Residual Certificates, which may or may not be
guaranteed by an insurer.
"Independent": When used with respect to any specified Person,
any such Person who (a) is in fact independent of the Depositor, the Servicer,
the Seller, the Originator and their respective Affiliates, (b) does not have
any direct financial interest in or any material indirect financial interest in
the Depositor, the Seller, the Originator, the Servicer or any Affiliate thereof
and (c) is not connected with the Depositor, the Seller, the Originator, the
Servicer or any Affiliate thereof as an officer, employee, promoter,
underwriter, trustee, partner, director or Person performing similar functions;
provided, however, that a Person shall not fail to be Independent of the
Depositor, the Seller, the Originator, the Servicer or any Affiliate thereof
merely because such Person is the beneficial owner of 1% or less of any class of
securities issued by the Depositor or the Servicer or any Affiliate thereof, as
the case may be.
"Independent Contractor": Either (i) any Person (other than
the Servicer) that would be an "independent contractor" with respect to REMIC I
within the meaning of Section 856(d)(3) of the Code if such REMIC were a real
estate investment trust (except that the ownership tests set forth in that
section shall be considered to be met by any Person that owns, directly or
indirectly, 35% or more of any Class of Certificates), so long as such REMIC
does not receive or derive any income from such Person and provided that the
relationship between such Person and such REMIC is at arm's length, all within
the meaning of Treasury Regulation Section 1.856-4(b)(5), or (ii) any other
Person (including the Servicer) if the Trustee has received an Opinion of
Counsel to the effect that the taking of any action in respect of any REO
Property by such Person, subject to any conditions therein specified, that is
otherwise herein contemplated to be taken by an Independent Contractor shall not
cause such REO Property to cease to qualify as "foreclosure property" within the
meaning of Section 860G(a)(8) of the Code (determined without regard to the
exception applicable for purposes of Section 860D(a) of the Code), or cause any
income realized in respect of such REO Property to fail to qualify as Rents from
Real Property.
"Index": With respect to each Adjustable-Rate Mortgage Loan
and each related Adjustment Date, [the average of the interbank offered rates
for six-month United States dollar deposits in the London market as published in
THE WALL STREET JOURNAL and as most recently available as of the first business
day 45 days or more prior to such Adjustment Date, as specified in the related
Mortgage Note].
"Insurance Proceeds": Proceeds of any title policy, hazard
policy or other insurance policy covering a Mortgage Loan, to the extent such
proceeds are not to be applied to the restoration of the related Mortgaged
Property or released to the Mortgagor in accordance with the procedures that the
Servicer would follow in servicing mortgage loans held for its own account,
subject to the terms and conditions of the related Mortgage Note and Mortgage.
"Interest Accrual Period": With respect to any Distribution
Date and the Adjustable-Rate Certificates, the period from and including the
Distribution Date in the month immediately preceding the month in which such
Distribution Date occurs (or, in the case of the first Distribution Date, from
and including the Closing Date) to and including the day preceding such
Distribution Date. With respect to any Distribution Date and the Class C
Certificates and the REMIC I Regular Interests, the one-month period ending on
the last day of the calendar month preceding the month in which such
Distribution Date occurs.
"Interest Carry Forward Amount": With respect to any
Distribution Date and the Class A Certificates or any Class of Subordinate
Certificates, the sum of (i) the amount, if any, by which (a) the Interest
Distribution Amount for such Class of Certificates as of the immediately
preceding Distribution Date exceeded (b) the actual amount distributed on such
Class of Certificates in respect of interest on such immediately preceding
Distribution Date and (ii) the amount of any Interest Carry Forward Amount for
such Class of Certificates remaining undistributed from the previous
Distribution Date, plus accrued interest thereon calculated at the related
Pass-Through Rate for the most recently ended Interest Accrual Period.
"Interest Determination Date": With respect to the
Adjustable-Rate Certificates, and solely for purposes of calculating the Marker
Rate, REMIC I Regular Interest A, REMIC I Regular Interest M1, REMIC I Regular
Interest M2, REMIC I Regular Interest M3, REMIC I Regular Interest B1, REMIC I
Regular Interest B2, REMIC I Regular Interest B3, and REMIC I Regular Interest
B4 and any Interest Accrual Period therefor, the second LIBOR Business Day
preceding the commencement of such Interest Accrual Period.
"Interest Distribution Amount": With respect to any
Distribution Date and the Class A Certificates, any Class of Subordinate
Certificates or the Class C Certificates, the aggregate Accrued Certificate
Interest on the Certificates of such Class for such Distribution Date.
"Interest Remittance Amount": With respect to any Distribution
Date, that portion of the Available Distribution Amount for such Distribution
Date that represents interest received or advanced on the Mortgage Loans.
"Investment Account": As defined in Section 3.06.
"Late Collections": With respect to any Mortgage Loan for
which a P&I Advance or Servicing Advance was made, all amounts received
subsequent to the date on which such P&I Advance or Servicing Advance was made,
whether as late payments of Monthly Payments or as Insurance Proceeds,
Liquidation Proceeds, Subsequent Recoveries or otherwise, which represent late
payments or collections of principal and/or interest due (without regard to any
acceleration of payments under the related Mortgage and Mortgage Note) but that
were Delinquent the date on which such P&I Advance or Servicing Advance was
made, and not previously recovered.
"LIBOR Business Day": Any day on which banks in the City of
London and City of New York are open and conducting transactions in United
States dollars.
"Liquidation Event": With respect to any Mortgage Loan, any of
the following events: (i) such Mortgage Loan is paid in full; (ii) a Final
Recovery Determination is made as to such Mortgage Loan; or (iii) such Mortgage
Loan is removed from REMIC I by reason of its being purchased, sold or replaced
pursuant to or as contemplated by Section 2.03, Section 3.16 or Section 9.01.
With respect to any REO Property, either of the following events: (i) a Final
Recovery Determination is made as to such REO Property; or (ii) such REO
Property is removed from REMIC I by reason of its being purchased pursuant to
Section 9.01.
"Liquidation Proceeds": The amount (other than Insurance
Proceeds or amounts received in respect of the rental of any REO Property prior
to REO Disposition) received by the Servicer in connection with (i) the taking
of all or a part of a Mortgaged Property by exercise of the power of eminent
domain or condemnation, (ii) the liquidation of a defaulted Mortgage Loan
through a trustee's sale, foreclosure sale or otherwise or (iii) the repurchase,
substitution or sale of a Mortgage Loan or an REO Property pursuant to or as
contemplated by Section 2.03, Section 3.13, Section 3.16 or Section 9.01.
"Loan-to-Value Ratio": As of any date of determination and
with respect to first lien Mortgage Loans, the fraction, expressed as a
percentage, the numerator of which is the Stated Principal Balance of the
related Mortgage Loan at such date and the denominator of which is the Value of
the related Mortgaged Property.
"Lost Note Affidavit": With respect to any Mortgage Loan as to
which the original Mortgage Note has been permanently lost, misplaced or
destroyed and has not been replaced, an affidavit from the Originator certifying
that the original Mortgage Note has been lost, misplaced or destroyed (together
with a copy of the related Mortgage Note) and indemnifying the Trust Fund
against any loss, cost or liability resulting from the failure to deliver the
original Mortgage Note, substantially in the form of Exhibit B hereto.
"Marker Rate": With respect to the Class C Certificates and
any Distribution Date, a per annum rate equal to two (2) times the weighted
average of the REMIC I Remittance Rate for REMIC I Regular Interest A, REMIC I
Regular Interest M1, REMIC I Regular Interest M2, REMIC I Regular Interest M3,
REMIC I Regular Interest B1, REMIC I Regular Interest B2, REMIC I Regular
Interest B3, REMIC I Regular Interest B4 and REMIC I Regular Interest ZZ, with
the rate on each such REMIC I Regular Interest (other than REMIC I Regular
Interest ZZ) subject to the lesser of (i) LIBOR plus the related Certificate
Margin and (ii) the Net WAC Pass-Through Rate for the purpose of this
calculation for such Distribution Date and with the rate on REMIC I Regular
Interest ZZ subject to a cap of zero for the purpose of this calculation;
provided, however, that solely for this purpose, calculations of the REMIC I
Remittance Rate and the related caps with respect to REMIC I Regular Interest A,
REMIC I Regular Interest M1, REMIC I Regular Interest M2, REMIC I Regular
Interest M3, REMIC I Regular Interest B1, REMIC I Regular Interest B2, REMIC I
Regular Interest B3 and REMIC I Regular Interest B4 shall be multiplied by a
fraction, the numerator of which is the actual number of days in the Interest
Accrual Period and the denominator of which is 30.
"Maximum Cap Rate": For any Distribution Date with respect to
the Class A Certificates and the Subordinate Certificates, a per annum rate
equal to the product of (x) the weighted average of the Expense Adjusted Net
Maximum Mortgage Rates of the Mortgage Loans, weighted on the basis of the
outstanding Stated Principal Balances of the Mortgage Loans as of the first day
of the month preceding the month of such Distribution Date (after giving effect
to scheduled payments of principal due during the related Due Period, to the
extent received or advanced, and unscheduled collections of principal received
during the related Prepayment Period) and (y) a fraction, the numerator of which
is 30 and the denominator of which is the actual number of days elapsed in the
related Interest Accrual Period.
"Maximum Uncertificated Interest Deferral Amount": With
respect to any Distribution Date, the excess of (i) accrued interest at the
REMIC I Remittance Rate applicable to REMIC I Regular Interest ZZ for such
Distribution Date on a balance equal to the Uncertificated Balance of REMIC I
Regular Interest ZZ minus the REMIC I Overcollateralization Amount, in each case
for such Distribution Date, over (ii) Uncertificated Interest on REMIC I Regular
Interest A, REMIC I Regular Interest M1, REMIC I Regular Interest M2, REMIC I
Regular Interest M3, REMIC I Regular Interest B1, REMIC I Regular Interest B2,
REMIC I Regular Interest B3 and REMIC I Regular Interest B4 for such
Distribution Date, with the rate on each such REMIC I Regular Interest subject
to a cap equal to the lesser of (i) One-Month LIBOR plus the related Certificate
Margin and (ii) the related Net WAC Pass-Through Rate; provided, however, that
solely for this purpose, calculations of the REMIC I Remittance Rate and the
related caps with respect to each such REMIC I Regular Interest (other than
REMIC I Regular Interest ZZ) shall be multiplied by a fraction, the numerator of
which is the actual number of days in the Interest Accrual Period and the
denominator of which is 30.
"Maximum Mortgage Rate": With respect to each Adjustable-Rate
Mortgage Loan, the percentage set forth in the related Mortgage Note as the
maximum Mortgage Rate thereunder.
"Minimum Mortgage Rate": With respect to each Adjustable-Rate
Mortgage Loan, the percentage set forth in the related Mortgage Note as the
minimum Mortgage Rate thereunder.
"MERS": Mortgage Electronic Registration Systems, Inc., a
corporation organized and existing under the laws of the State of Delaware, or
any successor thereto.
"MERS Mortgage Loan": Any Mortgage Loan registered with MERS
on the MERS(R) System.
"MERS(R) System": The system of recording transfers of
mortgages electronically maintained by MERS.
"Monthly Payment": With respect to any Mortgage Loan, the
scheduled monthly payment of principal and interest on such Mortgage Loan which
is payable by the related Mortgagor from time to time under the related Mortgage
Note, determined: (a) after giving effect to (i) any Deficient Valuation and/or
Debt Service Reduction with respect to such Mortgage Loan and (ii) any reduction
in the amount of interest collectible from the related Mortgagor pursuant to the
Relief Act; (b) without giving effect to any extension granted or agreed to by
the Servicer pursuant to Section 3.02; and (c) on the assumption that all other
amounts, if any, due under such Mortgage Loan are paid when due.
"Moody's": ▇▇▇▇▇'▇ Investors Service, Inc., or its successor
in interest.
"Mortgage": The mortgage, deed of trust or other instrument
creating a first lien or second lien on a Mortgaged Property securing a Mortgage
Note.
"Mortgage File": The mortgage documents listed in Section 2.01
pertaining to a particular Mortgage Loan and any additional documents required
to be added to the Mortgage File pursuant to this Agreement.
"Mortgage Loan": Each mortgage loan transferred and assigned
to the Trustee pursuant to Section 2.01 or Section 2.03(d) of this Agreement as
held from time to time as a part of REMIC I, the Mortgage Loans so held being
identified in the Mortgage Loan Schedule.
"Mortgage Loan Purchase Agreement": The agreement between the
Seller and the Depositor, regarding the transfer of the Mortgage Loans by the
Seller to or at the direction of the Depositor, or the agreement between the
Seller and the Originator, regarding the transfer of the Mortgage Loans by the
Originator to or at the direction of the Seller, as applicable, each
substantially in the form of Exhibit D annexed hereto.
"Mortgage Loan Schedule": As of any date, the list of Mortgage
Loans included in REMIC I on such date, attached hereto as Schedule 1. The
Mortgage Loan Schedule shall set forth the following information with respect to
each Mortgage Loan:
(1) the Originator's Mortgage Loan identifying number;
(2) [Reserved];
(3) the state and zip code of the Mortgaged Property;
(4) a code indicating whether the Mortgaged Property is
owner-occupied;
(5) the type of Residential Dwelling constituting the
Mortgaged Property;
(6) the original months to maturity;
(7) the Loan-to-Value Ratio or Combined Loan-to-Value Ratio at
origination;
(8) the Mortgage Rate in effect immediately following the
Cut-off Date;
(9) the date on which the first Monthly Payment was due on the
Mortgage Loan;
(10) the stated maturity date;
(11) the amount of the Monthly Payment due on the first Due
Date after the Cut-off Date;
(12) the last Due Date on which a Monthly Payment was actually
applied to the unpaid Stated Principal Balance;
(13) the original principal amount of the Mortgage Loan;
(14) the Scheduled Principal Balance of the Mortgage Loan as
of the close of business on the Cut-off Date;
(15) a code indicating the purpose of the Mortgage Loan (I.E.,
purchase, refinance cashout, or refinance no cashout);
(16) the [risk grade assigned] by the Originator;
(17) the Value of the Mortgaged Property;
(18) the purchase price of the Mortgaged Property, if
applicable;
(19) the FICO score of the primary Mortgagor;
(20) a code indicating whether a Prepayment Charge is
applicable and if so, the term and the amount of such Prepayment
Charge;
(21) a code indicating the type of Mortgage Loan (E.G.,
balloon loan, interest only loan);
(22) a code indicating the documentation program (I.E., Full
Documentation, Limited Documentation or Stated Income);
(23) the Mortgage Rate at origination; and
(24) with respect to the Adjustable-Rate Mortgage Loans:
(i) the Gross Margin;
(ii) the Maximum Mortgage Rate;
(iii) the Minimum Mortgage Rate;
(iv) the Periodic Rate Cap;
(v) the maximum first Adjustment Date Mortgage
Rate adjustment; and
(vi) the first Adjustment Date immediately
following the Cut-off Date.
The Mortgage Loan Schedule shall set forth the following
information with respect to the Mortgage Loans and in the aggregate as of the
Cut-off Date: (1) the number of Mortgage Loans; (2) the current aggregate Stated
Principal Balance of the Mortgage Loans; (3) the weighted average Mortgage Rate
of the Mortgage Loans; and (4) the weighted average remaining term to maturity
of the Mortgage Loans. The Mortgage Loan Schedule shall be amended from time to
time by the Depositor in accordance with the provisions of this Agreement. With
respect to any Qualified Substitute Mortgage Loan, the Cut-off Date shall refer
to the related Cut-off Date for such Mortgage Loan, determined in accordance
with the definition of Cut-off Date herein.
"Mortgage Note": The original executed note or other evidence
of the indebtedness of a Mortgagor under a Mortgage Loan, including any riders
thereto.
"Mortgage Pool": The pool of Mortgage Loans, identified on
Schedule 1 from time to time, and any REO Properties acquired in respect
thereof.
"Mortgage Rate": With respect to each Mortgage Loan, the
annual rate at which interest accrues on such Mortgage Loan from time to time in
accordance with the provisions of the related Mortgage Note, which rate (i) with
respect to each Fixed-Rate Mortgage Loan shall remain constant at the rate set
forth in the Mortgage Loan Schedule as the Mortgage Rate in effect immediately
following the Cut-off Date and (ii) with respect to the Adjustable-Rate Mortgage
Loans, (A) as of any date of determination until the first Adjustment Date
following the Cut-off Date shall be the rate set forth in the Mortgage Loan
Schedule as the Mortgage Rate in effect immediately following the Cut-off Date
and (B) as of any date of determination thereafter shall be the rate as adjusted
on the most recent Adjustment Date equal to the sum, rounded to the nearest
0.125% as provided in the Mortgage Note, of the Index, as most recently
available as of a date prior to the Adjustment Date as set forth in the related
Mortgage Note, plus the related Gross Margin; provided that the Mortgage Rate on
such Adjustable-Rate Mortgage Loan on any Adjustment Date shall never be more
than the lesser of (i) the sum of the Mortgage Rate in effect immediately prior
to the Adjustment Date plus the related Periodic Rate Cap, if any, and (ii) the
related Maximum Mortgage Rate, and shall never be less than the greater of (i)
the Mortgage Rate in effect immediately prior to the Adjustment Date less the
Periodic Rate Cap, if any, and (ii) the related Minimum Mortgage Rate. With
respect to each Mortgage Loan that becomes an REO Property, as of any date of
determination, the annual rate determined in accordance with the immediately
preceding sentence as of the date such Mortgage Loan became an REO Property.
"Mortgaged Property": The underlying property identified in
the related Mortgage as securing a Mortgage Loan, including any REO Property,
consisting of an Estate in Real Property improved by a Residential Dwelling
(excluding for purposes of construing the representations or warranties made in
the Mortgage Loan Purchase Agreement, any improvements thereupon not considered
by the appraiser in determining the Value of such Mortgaged Property).
"Mortgagor": The obligor(s) on a Mortgage Note.
"Net Monthly Excess Cashflow": With respect to any
Distribution Date, the sum of (i) the excess of (x) the Available Distribution
Amount for such Distribution Date over (y) the sum for such Distribution Date of
(A) the Class A Interest Distribution Amount, (B) the Interest Distribution
Amounts distributable to the Subordinate Certificates and (C) the Principal
Remittance Amount and (ii) any Overcollateralization Reduction Amount for such
Distribution Date.
"Net Mortgage Rate": With respect to any Mortgage Loan (or the
related REO Property) as of any date of determination, a per annum rate of
interest equal to the then applicable Mortgage Rate for such Mortgage Loan minus
the Servicing Fee Rate.
"Net WAC Pass-Through Rate": For any Distribution Date with
respect to the Class A Certificates and the Subordinate Certificates, a per
annum rate equal to the product of (x) (a) the weighted average of the Expense
Adjusted Net Mortgage Rates of the Mortgage Loans, weighted on the basis of the
outstanding Stated Principal Balances of the Mortgage Loans as of the first day
of the month preceding the month of such Distribution Date (after giving effect
to scheduled payments of principal due during the related Due Period, to the
extent received or advanced, and unscheduled collections of principal received
during the related Prepayment Period) and (y) a fraction, the numerator of which
is 30 and the denominator of which is the actual number of days elapsed in the
related Interest Accrual Period; for federal income tax purposes, however, the
equivalent of the foregoing, expressed as the weighted average of the REMIC I
Remittance Rate on the REMIC I Regular Interests, weighted on the basis of the
Uncertificated Balance of each such REMIC I Regular Interest.
"Net WAC Rate Carryover Amount": With respect to the Class A
Certificates and any Class of the Subordinate Certificates and any Distribution
Date, the sum of (A) the excess, if any, of (i) the amount of interest such
Certificates would have accrued for such Distribution Date had the applicable
Pass-Through Rate been calculated at the related Formula Rate, over (ii) the
amount of interest accrued on such Certificates at the related Net WAC
Pass-Through Rate for such Distribution Date and (B) the related Net WAC Rate
Carryover Amount for the previous Distribution Date not previously paid,
together with interest thereon at a rate equal to the related Formula Rate
applicable for such Class in each case for the Interest Accrual Period for the
current Distribution Date.
"Net WAC Rate Carryover Reserve Account": The Net WAC Rate
Carryover Reserve Account established and maintained pursuant to Section 4.09.
"Net WAC Rate Carryover Reserve Account Deposit": With respect
to the Net WAC Rate Carryover Reserve Account, an amount equal to $5,000, which
the Depositor shall deposit into the Net WAC Rate Carryover Reserve Account
pursuant to Section 4.09 hereof.
"New Lease": Any lease of REO Property entered into on behalf
of REMIC I, including any lease renewed or extended on behalf of REMIC I, if
REMIC I has the right to renegotiate the terms of such lease.
"Nonrecoverable Advance": Any P&I Advance previously made or
proposed to be made in respect of a Mortgage Loan or REO Property that, in the
good faith business judgment of the Servicer, will not or, in the case of a
proposed P&I Advance, would not be ultimately recoverable from related Late
Collections, Insurance Proceeds or Liquidation Proceeds on such Mortgage Loan or
REO Property as provided herein.
"Nonrecoverable Servicing Advance": Any Servicing Advance
previously made or proposed to be made in respect of a Mortgage Loan or REO
Property that, in the good faith business judgment of the Servicer, will not or,
in the case of a proposed Servicing Advance, would not be ultimately recoverable
from related Late Collections, Insurance Proceeds or Liquidation Proceeds on
such Mortgage Loan or REO Property as provided herein.
"Non-United States Person": Any Person other than a United
States Person.
"Notional Amount": With respect to the Class C Certificates
and any Distribution Date, the aggregate Uncertificated Balance of the REMIC I
Regular Interests (other than REMIC I Regular Interest P), immediately prior to
such Distribution Date.
"Officers' Certificate": With respect to the Depositor, a
certificate signed by the President, Vice President or Secretary. With respect
to the Servicer, any officer who is authorized to act for the Servicer in
matters relating to this Agreement, and whose action is binding upon the
Servicer, initially including those individuals whose names appear on the list
of authorized officers delivered at the closing. "One-Month LIBOR": With respect
to the Adjustable-Rate Certificates, REMIC I Regular Interest A, REMIC I Regular
Interest M1, REMIC I Regular Interest M2, REMIC I Regular Interest M3, REMIC I
Regular Interest B1, REMIC I Regular Interest B2, REMIC I Regular Interest B3
and REMIC I Regular Interest B4 and any Interest Accrual Period therefor, the
rate determined by the Trustee on the related Interest Determination Date on the
basis of the offered rate for one-month U.S. dollar deposits, as such rate
appears on Telerate Page 3750 as of 11:00 a.m. (London time) on such Interest
Determination Date; provided that if such rate does not appear on Telerate Page
3750, the rate for such date shall be determined on the basis of the offered
rates of the Reference Banks for one-month U.S. dollar deposits, as of 11:00
a.m. (London time) on such Interest Determination Date. In such event, the
Trustee shall request the principal London office of each of the Reference Banks
to provide a quotation of its rate. If on such Interest Determination Date, two
or more Reference Banks provide such offered quotations, One-Month LIBOR for the
related Interest Accrual Period shall be the arithmetic mean of such offered
quotations (rounded upwards, if necessary, to the nearest whole multiple of
1/16%). If on such Interest Determination Date, fewer than two Reference Banks
provide such offered quotations, One-Month LIBOR for the related Interest
Accrual Period shall be the higher of (i) LIBOR as determined on the previous
Interest Determination Date and (ii) the Reserve Interest Rate. Notwithstanding
the foregoing, if, under the priorities described above, LIBOR for an Interest
Determination Date would be based on LIBOR for the previous Interest
Determination Date for the third consecutive Interest Determination Date, the
Trustee shall select, after consultation with the Depositor, an alternative
comparable index (over which the Trustee has no control), used for determining
one-month Eurodollar lending rates that is calculated and published (or
otherwise made available) by an independent party.
"Opinion of Counsel": A written opinion of counsel, who may,
without limitation, be salaried counsel for the Depositor or the Servicer
acceptable to the Trustee if such opinion is delivered to the Trustee, except
that any opinion of counsel relating to (a) the qualification of any Trust REMIC
as a REMIC or (b) compliance with the REMIC Provisions must be an opinion of
Independent outside counsel.
"Optional Termination Date": The first Distribution Date on
which the aggregate Stated Principal Balance of the Mortgage Loans and REO
Properties remaining in the Trust Fund is reduced to an amount less than 10% of
the aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off
Date.
"Originator": _________.
"Overcollateralization Amount": With respect to any
Distribution Date, the excess, if any, of (a) the aggregate Stated Principal
Balances of the Mortgage Loans and REO Properties immediately following such
Distribution Date (after giving effect to scheduled payments of principal due
during the related Due Period, to the extent received or advanced, and
unscheduled collections of principal received during the related Prepayment
Period), over (b) the sum of the aggregate Certificate Principal Balance of the
Class A Certificates, the Subordinate Certificates and the Class P Certificates
as of such Distribution Date (after giving effect to distributions to be made on
such Distribution Date).
"Overcollateralization Increase Amount": With respect to any
Distribution Date, the lesser of (a) the excess, if any, of (i) the
Overcollateralization Target Amount applicable to such Distribution Date over
(ii) the Overcollateralization Test Amount applicable to such Distribution Date
and (b) the Net Monthly Excess Cashflow for such Distribution Date.
"Overcollateralization Reduction Amount": With respect to any
Distribution Date, an amount equal to the lesser of (a) the excess, if any, of
(i) the Overcollateralization Test Amount for such Distribution Date over (ii)
the Overcollateralization Target Amount for such Distribution Date and (b) the
Principal Remittance Amount.
"Overcollateralization Target Amount": With respect to any
Distribution Date (i) prior to the Stepdown Date, ___% of the aggregate Stated
Principal Balance of the Mortgage Loans as of the Cut-off Date, (ii) on or after
the Stepdown Date provided a Trigger Event is not in effect, the greater of (x)
___% of the aggregate Stated Principal Balance of the Mortgage Loans as of the
last day of the related Due Period (after giving effect to scheduled payments of
principal due during the related Due Period, to the extent received or advanced
and unscheduled collections of principal received during the related Prepayment
Period) and (y) $____, or (iii) on or after the Stepdown Date and if a Trigger
Event is in effect, the Overcollateralization Target Amount for the immediately
preceding Distribution Date. Notwithstanding the foregoing, on and after any
Distribution Date following the reduction of the aggregate Certificate Principal
Balance of the Class A Certificates and the Subordinate Certificates to zero,
the Overcollateralization Target Amount shall be zero.
"Overcollateralization Test Amount": With respect to any
Distribution Date, the excess, if any, of (a) the aggregate Stated Principal
Balances of the Mortgage Loans and REO Properties immediately following such
Distribution Date (after giving effect to scheduled payments of principal due
during the related Due Period, to the extent received or advanced, and
unscheduled collections of principal received during the related Prepayment
Period), over (b) the sum of the aggregate Certificate Principal Balance of the
Class A Certificates, the Subordinate Certificates and the Class P Certificates
immediately preceding such Distribution Date minus the Principal Remittance
Amount for such Distribution Date.
"Ownership Interest": As to any Certificate, any ownership or
security interest in such Certificate, including any interest in such
Certificate as the Holder thereof and any other interest therein, whether direct
or indirect, legal or beneficial, as owner or as pledgee.
"P&I Advance": As to any Mortgage Loan or REO Property, any
advance made by the Servicer or a successor Servicer in respect of any
Distribution Date representing the aggregate of all payments of principal (other
than Balloon Payments) and interest, net of the Servicing Fee, that were due
during the related Due Period on the Mortgage Loans and that were delinquent on
the related Determination Date, plus certain amounts representing assumed
payments not covered by any current net income on the Mortgaged Properties
acquired by foreclosure or deed in lieu of foreclosure as determined pursuant to
Section 4.03.
"Pass-Through Rate": With respect to any Class of
Adjustable-Rate Certificates and any Distribution Date, the least of (x)
One-Month LIBOR plus the related Certificate Margin for such Distribution Date,
(y) the Maximum Cap Rate for such Distribution Date and (z) the Net WAC
Pass-Through Rate for such Distribution Date.
With respect to the Class C Certificates and any Distribution
Date, a rate per annum equal to the percentage equivalent of a fraction, the
numerator of which is (x) the sum of (i) 100% of the interest on REMIC I Regular
Interest P and (ii) interest on the Uncertificated Balance of each REMIC I
Regular Interest listed in clause (y) at a rate equal to the related REMIC I
Remittance Rate minus the Marker Rate and the denominator of which is (y) the
aggregate Uncertificated Balance of REMIC I Regular ▇▇▇▇▇▇▇▇▇ ▇▇, ▇, ▇▇, ▇▇, ▇▇,
▇▇, ▇▇, ▇▇, ▇▇ and ZZ.
"Percentage Interest": With respect to any Class of
Certificates (other than the Residual Certificates), the undivided percentage
ownership in such Class evidenced by such Certificate, expressed as a
percentage, the numerator of which is the initial Certificate Principal Balance
or Notional Amount represented by such Certificate and the denominator of which
is the aggregate initial Certificate Principal Balance or Notional Amount of all
of the Certificates of such Class. The Class A Certificates and the Subordinate
Certificates (other than the Class B-4 Certificates) are issuable only in
minimum Percentage Interests corresponding to minimum initial Certificate
Principal Balances of $25,000 and integral multiples of $1.00 in excess thereof.
The Class B-4 Certificates are issuable only in minimum Percentage Interests
corresponding to minimum initial Certificate Principal Balances of $50,000 and
integral multiples of $1.00 in excess thereof. The Class P Certificates are
issuable only in minimum Percentage Interests corresponding to minimum initial
Certificate Principal Balances of $20 and integral multiples thereof. The Class
C Certificates are issuable only in minimum Percentage Interests corresponding
to minimum initial Notional Amount of $10,000 and integral multiples of $1.00 in
excess thereof; provided, however, that a single Certificate of such Class of
Certificates may be issued having a Percentage Interest corresponding to the
remainder of the aggregate initial Certificate Principal Balance or Notional
Amount of such Class or to an otherwise authorized denomination for such Class
plus such remainder. With respect to any Residual Certificate, the undivided
percentage ownership in such Class evidenced by such Certificate, as set forth
on the face of such Certificate. The Residual Certificates are issuable in
Percentage Interests of 20% and multiples thereof.
"Periodic Rate Cap": With respect to each Adjustable-Rate
Mortgage Loan and any Adjustment Date therefor, the fixed percentage set forth
in the related Mortgage Note, which is the maximum amount by which the Mortgage
Rate for such Mortgage Loan may increase or decrease (without regard to the
Maximum Mortgage Rate or the Minimum Mortgage Rate) on such Adjustment Date from
the Mortgage Rate in effect immediately prior to such Adjustment Date.
"Permitted Investments": Any one or more of the following
obligations or securities acquired at a purchase price of not greater than par,
regardless of whether issued by the Depositor, the Servicer, the Trustee or any
of their respective Affiliates:
(i) direct obligations of, or obligations fully guaranteed as
to timely payment of principal and interest by, the United States or
any agency or instrumentality thereof, provided such obligations are
backed by the full faith and credit of the United States;
(ii) demand and time deposits in, certificates of deposit of,
or bankers' acceptances (which shall each have an original maturity of
not more than 90 days and, in the case of bankers' acceptances, shall
in no event have an original maturity of more than 365 days or a
remaining maturity of more than 30 days) denominated in United States
dollars and issued by, any Depository Institution;
(iii) repurchase obligations with respect to any security
described in clause (i) above entered into with a Depository
Institution (acting as principal);
(iv) securities bearing interest or sold at a discount that
are issued by any corporation incorporated under the laws of the United
States of America or any state thereof and that are rated by each
Rating Agency that rates such securities in its highest long-term
unsecured rating categories at the time of such investment or
contractual commitment providing for such investment;
(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 30 days after the date of
acquisition thereof) that is rated by each Rating Agency that rates
such securities in its highest short-term unsecured debt rating
available at the time of such investment; and
(vi) units of money market funds, including money market funds
managed or advised by the Trustee or an Affiliate thereof, that have
been rated "Aaa" by Moody's, "AAA" by Fitch, "AAA" by DBRS and "AAAm"
by S&P (if rated by the respective Rating Agency);
provided, however, that no instrument described hereunder shall evidence either
the right to receive (a) only interest with respect to the obligations
underlying such instrument or (b) both principal and interest payments derived
from obligations underlying such instrument and the interest and principal
payments with respect to such instrument provide a yield to maturity at par
greater than 120% of the yield to maturity at par of the underlying obligations.
"Permitted Transferee": Any Transferee of a Residual
Certificate other than a Disqualified Organization or Non-United States Person.
"Person": Any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Plan": Any employee benefit plan or certain other retirement
plans and arrangements, including individual retirement accounts and annuities,
▇▇▇▇▇ plans and bank collective investment funds and insurance company general
or separate accounts in which such plans, accounts or arrangements are invested,
that are subject to ERISA or Section 4975 of the Code.
"Prepayment Assumption": _____.
"Prepayment Charge": With respect to any Prepayment Period,
any prepayment premium, fee or charge payable by a Mortgagor in connection with
any Principal Prepayment pursuant to the terms of the related Mortgage Note as
from time to time held as a part of the Trust Fund, the Prepayment Charges so
held being identified in the Prepayment Charge Schedule (other than any Servicer
Prepayment Charge Payment Amount).
"Prepayment Charge Schedule": As of any date, the list of
Prepayment Charges included in the Trust Fund on such date, attached hereto as
Schedule 2 (including the prepayment charge summary attached thereto). The
Prepayment Charge Schedule shall set forth the following information with
respect to each Prepayment Charge:
(i) the Mortgage Loan identifying number;
(ii) a code indicating the type of Prepayment Charge;
(iii) the date on which the first Monthly Payment was due on
the related Mortgage Loan;
(iv) the term of the related Prepayment Charge;
(v) the original Stated Principal Balance of the related
Mortgage Loan; and
(vi) the Stated Principal Balance of the related Mortgage Loan
as of the Cut-off Date.
The Prepayment Charge Schedule shall be amended from time to
time by the Servicer in accordance with the provisions of this Agreement and a
copy of such amended Prepayment Charge Schedule shall be furnished by the
Servicer to the Trustee.
"Prepayment Interest Excess": With respect to any Distribution
Date, for each Mortgage Loan that was the subject of a Principal Prepayment in
full during the portion of the related Prepayment Period occurring between the
first day of the calendar month in which such Distribution Date occurs and the
Determination Date in the calendar month in which such Distribution Date occurs,
an amount equal to interest (to the extent received) at the applicable Net
Mortgage Rate on the amount of such Principal Prepayment for the number of days
from and including the first day of the calendar month in which such
Distribution Date occurs to and including the last date through which interest
is collected from the related Mortgagor. To the extent not otherwise retained by
the Servicer, the Servicer may withdraw such Prepayment Interest Excess from the
Collection Account in accordance with Section 3.05(a)(iv).
"Prepayment Interest Shortfall": With respect to any
Distribution Date, for each Mortgage Loan that was the subject of a Principal
Prepayment in full during the portion of the related Prepayment Period occurring
between the first day of the related Prepayment Period and the last day of the
calendar month preceding the month in which such Distribution Date occurs, an
amount equal to interest at the applicable Net Mortgage Rate on the amount of
such Principal Prepayment for the number of days from and including the day
after the last date on which interest is collected from the related Mortgagor to
and including the last day of the calendar month preceding such Distribution
Date. The obligations of the Servicer in respect of any Prepayment Interest
Shortfall are set forth in Section 4.03(e).
"Prepayment Period": With respect to any Distribution Date,
the period from and including the day after the Determination Date in the
calendar month preceding the calendar month in which such Distribution Date
occurs (or, in the case of the first Distribution Date, from and including
______) to and including the Determination Date in the calendar month in which
such Distribution Date occurs.
"Principal Distribution Amount": With respect to any
Distribution Date, the lesser of (a) the excess of the Available Distribution
Amount over the aggregate of the Interest Distribution Amounts payable to the
Class A and Subordinate Certificates on such Distribution Date, and (b) the sum
of: (i) the Principal Remittance Amount for such Distribution Date, and (ii) the
amount of any Overcollateralization Increase Amount for such Distribution Date;
LESS (iii) the amount of any Overcollateralization Reduction Amount for such
Distribution Date. In no event shall the Principal Distribution Amount with
respect to any Distribution Date be (x) less than zero or (y) greater than the
then outstanding aggregate Certificate Principal Balance of the Class A and
Subordinate Certificates.
"Principal Prepayment": Any payment of principal made by the
Mortgagor on a Mortgage Loan which is received in advance of its scheduled Due
Date and which is not accompanied by an amount of interest representing the full
amount of scheduled interest due on any Due Date in any month or months
subsequent to the month of prepayment.
"Principal Remittance Amount": With respect to any
Distribution Date, the sum of: (i) the principal portion of each Monthly Payment
on the Mortgage Loans due during the related Due Period, to the extent received
on or prior to the related Determination Date or advanced prior to such
Distribution Date; (ii) the Stated Principal Balance of any Mortgage Loan that
was purchased during the related Prepayment Period pursuant to or as
contemplated by Section 2.03, Section 3.16 or Section 9.01 and the amount of any
shortfall deposited in the Collection Account in connection with the
substitution of a Deleted Mortgage Loan pursuant to Section 2.03 during the
related Prepayment Period; and (iii) the principal portion of all other
unscheduled collections (including, without limitation, Principal Prepayments,
Subsequent Recoveries, Insurance Proceeds, Liquidation Proceeds and REO
Principal Amortization) received during the related Prepayment Period on the
Mortgage Loans, net of any portion thereof that represents a recovery of
principal for which a P&I Advance was made by the Servicer pursuant to Section
4.03 in respect of a preceding Distribution Date.
["Prospectus Supplement": The Prospectus Supplement, dated
_____, relating to the public offering of the Class A Certificates and
Subordinate Certificates (other than the Class B-4 Certificates).]
"PTCE": A Prohibited Transaction Class Exemption.
"Purchase Price": With respect to any Mortgage Loan or REO
Property to be purchased pursuant to or as contemplated by Section 2.03, Section
3.16 or Section 9.01, and as confirmed by an Officers' Certificate from the
Servicer to the Trustee, an amount equal to the sum of (i) 100% of the Stated
Principal Balance thereof as of the date of purchase (or such other price as
provided in Section 9.01), (ii) in the case of (x) a Mortgage Loan, accrued
interest on such Stated Principal Balance at the applicable Net Mortgage Rate in
effect from time to time from the Due Date as to which interest was last covered
by a payment by the Mortgagor or a P&I Advance by the Servicer, which payment or
P&I Advance had as of the date of purchase been distributed pursuant to Section
4.01, through the end of the calendar month in which the purchase is to be
effected and (y) an REO Property, the sum of (1) accrued interest on such Stated
Principal Balance at the applicable Net Mortgage Rate in effect from time to
time from the Due Date as to which interest was last covered by a payment by the
Mortgagor or an advance by the Servicer through the end of the calendar month
immediately preceding the calendar month in which such REO Property was acquired
plus (2) REO Imputed Interest for such REO Property for each calendar month
commencing with the calendar month in which such REO Property was acquired and
ending with the calendar month in which such purchase is to be effected, net of
the total of all net rental income, Insurance Proceeds, Liquidation Proceeds and
P&I Advances that as of the date of purchase had been distributed as or to cover
REO Imputed Interest pursuant to Section 4.01, (iii) any unreimbursed Servicing
Advances and P&I Advances and any unpaid Servicing Fees allocable to such
Mortgage Loan or REO Property, (iv) any amounts previously withdrawn from the
Collection Account in respect of such Mortgage Loan or REO Property pursuant to
Sections 3.05(a)(v) and 3.16 and (v) in the case of a Mortgage Loan required to
be purchased pursuant to Section 2.03, expenses reasonably incurred or to be
incurred by the Servicer or the Trustee in respect of the breach or defect
giving rise to the purchase obligation, as well as any costs and damages
incurred by the Trust Fund in connection with any violation by such loan of any
predatory or abusive lending law.
"Qualified Substitute Mortgage Loan": A mortgage loan
substituted for a Deleted Mortgage Loan pursuant to the terms of this Agreement
which must, on the date of such substitution, (i) have an outstanding Stated
Principal Balance, after application of all scheduled payments of principal and
interest due during or prior to the month of substitution, not in excess of the
Scheduled Principal Balance of the Deleted Mortgage Loan as of the Due Date in
the calendar month during which the substitution occurs, (ii) have a Mortgage
Rate as of the Due Date in the calendar month during which the substitution
occurs not less than (and not more than one percentage point in excess of) the
Mortgage Rate of the Deleted Mortgage Loan, (iii) with respect to any
Adjustable-Rate Mortgage Loan, have a Maximum Mortgage Rate not less than the
Maximum Mortgage Rate on the Deleted Mortgage Loan, (iv) with respect to any
Adjustable-Rate Mortgage Loan, have a Minimum Mortgage Rate not less than the
Minimum Mortgage Rate of the Deleted Mortgage Loan, (v) with respect to
Adjustable-Rate Mortgage Loan, have a Gross Margin equal to the Gross Margin of
the Deleted Mortgage Loan, (vi) with respect to any Adjustable-Rate Mortgage
Loan, have a next Adjustment Date not more than two months later than the next
Adjustment Date on the Deleted Mortgage Loan, (vii) have a remaining term to
maturity not greater than (and not more than one year less than) that of the
Deleted Mortgage Loan, (viii) have the same Due Date as the Due Date on the
Deleted Mortgage Loan, (ix) have a Loan-to-Value Ratio or Combined 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, (x) have a risk grading
determined by the Originator at least equal to the risk grading assigned on the
Deleted Mortgage Loan, (xi) have been underwritten or reunderwritten by the
Originator in accordance with the same underwriting criteria and guidelines as
the Deleted Mortgage Loan, (xii) have a Prepayment Charge provision at least
equal to the Prepayment Charge provision of the Deleted Mortgage Loan and (xiii)
conform to each representation and warranty set forth in Section 6 of the
Mortgage Loan Purchase Agreement applicable to the Deleted Mortgage Loan. 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 terms described in clause (vii) hereof shall be
determined on the basis of weighted average remaining terms to maturity, the
Loan-to-Value Ratios described in clause (ix) hereof shall be satisfied as to
each such mortgage loan, the risk gradings 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 (xiii) hereof must be satisfied as to each Qualified Substitute Mortgage
Loan or in the aggregate, as the case may be.
"Rating Agency" or "Rating Agencies": [▇▇▇▇▇'▇, Fitch and S&P]
or their successors. If such agencies or their successors are no longer in
existence, "Rating Agencies" shall be such nationally recognized statistical
rating agencies, or other comparable Persons, designated by the Depositor,
notice of which designation shall be given to the Trustee and the Servicer.
"Realized Loss": With respect to each Mortgage Loan as to
which a Final Recovery Determination has been made, an amount (not less than
zero) equal to (i) the unpaid Stated Principal Balance of such Mortgage Loan as
of the commencement of the calendar month in which the Final Recovery
Determination was made, plus (ii) accrued interest from the Due Date as to which
interest was last paid by the Mortgagor through the end of the calendar month in
which such Final Recovery Determination was made, calculated in the case of each
calendar month during such period (A) at an annual rate equal to the annual rate
at which interest was then accruing on such Mortgage Loan and (B) on a principal
amount equal to the Stated Principal Balance of such Mortgage Loan as of the
close of business on the Distribution Date during such calendar month, plus
(iii) any amounts previously withdrawn from the Collection Account in respect of
such Mortgage Loan pursuant to Section 3.05(a)(v) and Section 3.12(c), minus
(iv) the proceeds, if any, received in respect of such Mortgage Loan during the
calendar month in which such Final Recovery Determination was made, net of
amounts that are payable therefrom to the Servicer with respect to such Mortgage
Loan pursuant to Section 3.05(a)(ii).
If the Servicer receives Subsequent Recoveries with respect to
any Mortgage Loan, the amount of Realized Losses with respect to that Mortgage
Loan shall be reduced to the extent such recoveries are applied to principal
distributions on any Distribution Date.
With respect to any REO Property as to which a Final Recovery
Determination has been made, an amount (not less than zero) equal to (i) the
unpaid Stated Principal Balance of the related Mortgage Loan as of the date of
acquisition of such REO Property on behalf of REMIC I, plus (ii) accrued
interest from the Due Date as to which interest was last paid by the Mortgagor
in respect of the related Mortgage Loan through the end of the calendar month
immediately preceding the calendar month in which such REO Property was
acquired, calculated in the case of each calendar month during such period (A)
at an annual rate equal to the annual rate at which interest was then accruing
on the related Mortgage Loan and (B) on a principal amount equal to the Stated
Principal Balance of the related Mortgage Loan as of the close of business on
the Distribution Date during such calendar month, plus (iii) REO Imputed
Interest for such REO Property for each calendar month commencing with the
calendar month in which such REO Property was acquired and ending with the
calendar month in which such Final Recovery Determination was made, plus (iv)
any amounts previously withdrawn from the Collection Account in respect of the
related Mortgage Loan pursuant to Section 3.05(a)(v) and Section 3.12(c), minus
(v) the aggregate of all P&I Advances made by the Servicer in respect of such
REO Property or the related Mortgage Loan for which the Servicer has been or, in
connection with such Final Recovery Determination, shall be reimbursed pursuant
to Section 3.13 out of rental income, Insurance Proceeds and Liquidation
Proceeds received in respect of such REO Property, minus (vi) the total of all
net rental income, Insurance Proceeds and Liquidation Proceeds received in
respect of such REO Property that has been, or in connection with such Final
Recovery Determination, shall be transferred to the Distribution Account
pursuant to Section 3.13.
With respect to each Mortgage Loan which has become the
subject of a Deficient Valuation, the difference between the Stated Principal
Balance of the Mortgage Loan outstanding immediately prior to such Deficient
Valuation and the Stated Principal Balance of the Mortgage Loan as reduced by
the Deficient Valuation.
With respect to each Mortgage Loan which has become the
subject of a Debt Service Reduction, the portion, if any, of the reduction in
each affected Monthly Payment attributable to a reduction in the Mortgage Rate
imposed by a court of competent jurisdiction. Each such Realized Loss shall be
deemed to have been incurred on the Due Date for each affected Monthly Payment.
"Record Date": With respect to each Distribution Date and any
Adjustable-Rate Certificate that is a Book-Entry Certificate, the Business Day
immediately preceding such Distribution Date. With respect to each Distribution
Date and any other Class of Certificates, including any Definitive Certificates,
the last Business Day of the month immediately preceding the month in which such
Distribution Date occurs.
"Reference Banks": Four leading banks selected by the Trustee
(after consultation with the Depositor) which are engaged in transactions in
Eurodollar deposits in the international Eurocurrency market (i) with an
established place of business in London, (ii) not controlling, under the control
of or under common control with the Depositor or any Affiliate thereof and (iii)
which have been designated as such by the Trustee.
"Refinanced Mortgage Loan": A Mortgage Loan the proceeds of
which were not used to purchase the related Mortgaged Property.
"Regular Certificate": Any Class A Certificate, Subordinate
Certificate, Class P Certificate or Class C Certificate.
"Regular Interest": A "regular interest" in a REMIC within the
meaning of Section 860G(a)(1) of the Code.
"Regulation AB": Subpart 229.1100 - Asset Backed Securities
(Regulation AB), 17 C.F.R. ▇▇.▇▇. 229.1100-229, 1123, as amended from time to
time.
"Relief Act": The Servicemembers Civil Relief Act or any
applicable state law providing similar relief.
"Relief Act Interest Shortfall": With respect to any
Distribution Date and any Mortgage Loan, any reduction in the amount of interest
collectible on such Mortgage Loan for the most recently ended calendar month as
a result of the application of the Relief Act.
"REMIC": A "real estate mortgage investment conduit" within
the meaning of Section 860D of the Code.
"REMIC Available Funds": With respect to any Distribution
Date, an amount equal to (1) the sum of (a) the aggregate of the amounts on
deposit in the Collection Account and Distribution Account as of the close of
business on the related Determination Date, including any Subsequent Recoveries,
(b) the aggregate of any amounts received in respect of an REO Property
withdrawn from any REO Account and deposited in the Distribution Account for
such Distribution Date pursuant to Section 3.13, (c) Compensating Interest, if
any, deposited in the Distribution Account by the Servicer for such Distribution
Date pursuant to Section 4.03 and (d) the aggregate of any P&I Advances made by
the Servicer for such Distribution Date pursuant to Section 4.03, reduced (to
not less than zero) by (2) the portion of the amount described in clause (1)(a)
above that represents (i) Monthly Payments on the Mortgage Loans received from a
Mortgagor on or prior to the Determination Date but due during any Due Period
subsequent to the related Due Period, (ii) Principal Prepayments on the Mortgage
Loans received after the related Prepayment Period (together with any interest
payments received with such Principal Prepayments to the extent they represent
the payment of interest accrued on the Mortgage Loans during a period subsequent
to the end of the prior calendar month), (iii) Liquidation Proceeds, Insurance
Proceeds and Subsequent Recoveries received in respect of the Mortgage Loans
after the related Prepayment Period, (iv) amounts reimbursable or payable to the
Depositor, the Servicer, the Trustee, the Seller, the Originator or any
Sub-Servicer pursuant to Section 3.05, Section 3.06 or Section 7.01 or otherwise
payable in respect of Extraordinary Trust Fund Expenses, (v) the Trustee Fee and
the Custodian Fee payable from the Distribution Account pursuant to Section
8.05, (vi) amounts deposited in the Collection Account or the Distribution
Account in error and (vii) the amount of any Prepayment Charges collected by the
Servicer and the amount of any Servicer Prepayment Charge Payment Amounts.
"REMIC I": The segregated pool of assets subject hereto,
constituting the primary trust created hereby and to be administered hereunder,
with respect to which a REMIC election is to be made, consisting of: (i) such
Mortgage Loans and Prepayment Charges as from time to time are subject to this
Agreement, together with the Mortgage Files relating thereto, and together with
all collections thereon and proceeds thereof, (ii) any REO Property, together
with all collections thereon and proceeds thereof, (iii) the Trustee's rights
with respect to the Mortgage Loans under all insurance policies required to be
maintained pursuant to this Agreement and any proceeds thereof, (iv) the
Depositor's rights under the Mortgage Loan Purchase Agreement (including any
security interest created thereby) to the extent conveyed pursuant to Section
2.01 and (v) the Collection Account (other than any amounts representing any
Servicer Prepayment Charge Payment Amounts), the Distribution Account (other
than any amounts representing any Servicer Prepayment Charge Payment Amounts)
and any REO Account and such assets that are deposited therein from time to time
and any investments thereof, together with any and all income, proceeds and
payments with respect thereto. Notwithstanding the foregoing, however, REMIC I
specifically excludes any Servicer Prepayment Charge Payment Amounts, the Net
WAC Rate Carryover Reserve Account, the Cap Contract, all payments and other
collections of principal and interest due on the Mortgage Loans on or before the
Cut-off Date and all Prepayment Charges payable in connection with Principal
Prepayments made before the Cut-off Date.
"REMIC I Interest Loss Allocation Amount": With respect to
any Distribution Date, an amount (subject to adjustment based on the actual
number of days elapsed in the respective Interest Accrual Periods for the
indicated Regular Interests for such Distribution Date) equal to (a) the product
of (i) the aggregate Stated Principal Balance of the Mortgage Loans and REO
Properties then outstanding and (ii) the REMIC I Remittance Rate for REMIC I
Regular Interest AA minus the Marker Rate, divided by (b) 12.
"REMIC I Overcollateralization Target Amount": 1.00% of the
Overcollateralization Target Amount.
"REMIC I Overcollateralized Amount": With respect to any date
of determination, (i) the aggregate Uncertificated Balance of the REMIC I
Regular Interests minus (ii) the aggregate Uncertificated Balance of REMIC I
Regular Interest A, REMIC I Regular Interest M1, REMIC I Regular Interest M2,
REMIC I Regular Interest M3, REMIC I Regular Interest B1, REMIC I Regular
Interest B2, REMIC I Regular Interest B3 and REMIC I Regular Interest B4, in
each case as of such date of determination.
"REMIC I Principal Loss Allocation Amount": With respect to
any Distribution Date, an amount equal to the product of (i) the aggregate
Stated Principal Balance of the Mortgage Loans and REO Properties then
outstanding and (ii) one minus a fraction, the numerator of which is two times
the aggregate Uncertificated Balance of REMIC I Regular Interest A, REMIC I
Regular Interest M1, REMIC I Regular Interest M2, REMIC I Regular Interest M3,
REMIC I Regular Interest B1, REMIC I Regular Interest B2, REMIC I Regular
Interest B3 and REMIC I Regular Interest B4 and the denominator of which is the
aggregate Uncertificated Balance of REMIC I Regular Interest A, REMIC I Regular
Interest M1, REMIC I Regular Interest M2, REMIC I Regular Interest M3, REMIC I
Regular Interest B1, REMIC I Regular Interest B2, REMIC I Regular Interest B3,
REMIC I Regular Interest B4 and REMIC I Regular Interest ZZ.
"REMIC I Regular Interest": Any of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a "regular interest" in REMIC I and listed in the Preliminary
Statement. Each REMIC I Regular Interest shall accrue interest at the related
REMIC I Remittance Rate in effect from time to time, and shall be entitled to
distributions of principal, subject to the terms and conditions hereof, in an
aggregate amount equal to its initial Uncertificated Balance as set forth in the
Preliminary Statement hereto.
"REMIC I Remittance Rate": With respect to each REMIC I
Regular Interest, the weighted average of the Expense Adjusted Net Mortgage
Rates of the Mortgage Loans.
"REMIC II": The segregated pool of assets consisting of all
of the REMIC I Regular Interests conveyed in trust to the Trustee, for the
benefit of the Holders of the Regular Certificates and the Class R Certificate
(in respect of the Class R-II Interest), pursuant to Article II hereunder, and
all amounts deposited therein, with respect to which a separate REMIC election
is to be made.
"REMIC II Certificate": Any Regular Certificate or Class R
Certificate.
"REMIC II Regular Interest": Any Class A Certificate,
Subordinate Certificate, Class P Certificate or Class C Certificate.
"REMIC Provisions": Provisions of the federal income tax law
relating to real estate mortgage investment conduits, which appear at Sections
860A through 860G of the Code, and related provisions, and proposed, temporary
and final regulations and published rulings, notices and announcements
promulgated thereunder, as the foregoing may be in effect from time to time.
"REMIC Regular Interest": Any REMIC I Regular Interest or
REMIC II Regular Interest.
"Remittance Report": A report in form and substance that is
acceptable to the Trustee and the Depositor in electronic format prepared by the
Servicer pursuant to Section 4.03 with such additions, deletions and
modifications as agreed to by the Trustee, the Depositor and the Servicer.
"Rents from Real Property": With respect to any REO Property,
gross income of the character described in Section 856(d) of the Code as being
included in the term "rents from real property."
"REO Account": Each of the accounts maintained by the Servicer
in respect of an REO Property pursuant to Section 3.13, which account may be the
Collection Account subject to Section 3.13.
"REO Disposition": The sale or other disposition of an REO
Property on behalf of REMIC I.
"REO Imputed Interest": As to any REO Property, for any
calendar month during which such REO Property was at any time part of REMIC I,
one month's interest at the applicable Net Mortgage Rate on the Stated Principal
Balance of such REO Property (or, in the case of the first such calendar month,
of the related Mortgage Loan, if appropriate) as of the close of business on the
Distribution Date in such calendar month.
"REO Principal Amortization": With respect to any REO
Property, for any calendar month, the excess, if any, of (a) the aggregate of
all amounts received in respect of such REO Property during such calendar month,
whether in the form of rental income, sale proceeds (including, without
limitation, that portion of the Termination Price paid in connection with a
purchase of all of the Mortgage Loans and REO Properties pursuant to Section
9.01 that is allocable to such REO Property) or otherwise, net of any portion of
such amounts (i) payable pursuant to Section 3.13(c) in respect of the proper
operation, management and maintenance of such REO Property or (ii) payable or
reimbursable to the Servicer pursuant to Section 3.13(d) for unpaid Servicing
Fees in respect of the related Mortgage Loan and unreimbursed Servicing Advances
and P&I Advances in respect of such REO Property or the related Mortgage Loan,
over (b) the REO Imputed Interest in respect of such REO Property for such
calendar month.
"REO Property": A Mortgaged Property acquired by the Servicer
on behalf of REMIC I through foreclosure or deed-in-lieu of foreclosure, as
described in Section 3.13.
"Representative": _____.
"Request for Release": A release signed by a Servicing
Officer, in the form of Exhibit E attached hereto.
"Reserve Interest Rate": With respect to any Interest
Determination Date, the rate per annum that the Trustee determines to be either
(i) the arithmetic mean (rounded upwards if necessary to the nearest whole
multiple of 1/16%) of the one-month U.S. dollar lending rates which New York
City banks selected by the Trustee are quoting on the relevant Interest
Determination Date to the principal London offices of leading banks in the
London interbank market or (ii) in the event that the Trustee can determine no
such arithmetic mean, the lowest one-month U.S. dollar lending rate which New
York City banks selected by the Trustee are quoting on such Interest
Determination Date to leading European banks.
"Residential Dwelling": Any one of the following: (i) an
attached or detached one-family dwelling, (ii) a detached two- to four-family
dwelling, (iii) a one-family dwelling unit in a condominium project or (iv) a
detached or attached one-family dwelling in a planned unit development, none of
which is a co-operative, mobile or manufactured home (unless such mobile or
manufactured home is defined as real property under applicable state law).
"Residual Certificate": The Class R Certificates.
"Residual Interest": The sole class of "residual interests" in
a REMIC within the meaning of Section 860G(a)(2) of the Code.
"Responsible Officer": When used with respect to the Trustee,
any officer assigned to and working in the Corporate Trust Office or in a
similar group 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.
"Scheduled Principal Balance": With respect to any Mortgage
Loan: (a) as of the Cut-off Date, the outstanding Stated Principal Balance of
such Mortgage Loan as of such date, net of the principal portion of all unpaid
Monthly Payments, if any, due on or before such date; (b) as of any Due Date
subsequent to the Cut-off Date up to and including the Due Date in the calendar
month in which a Liquidation Event occurs with respect to such Mortgage Loan,
the Scheduled Principal Balance of such Mortgage Loan as of the Cut-off Date,
minus the sum of (i) the principal portion of each Monthly Payment due on or
before such Due Date but subsequent to the Cut-off Date, whether or not
received, (ii) all Principal Prepayments received before such Due Date but after
the Cut-off Date, (iii) the principal portion of all Liquidation Proceeds and
Insurance Proceeds received before such Due Date but after the Cut-off Date, net
of any portion thereof that represents principal due (without regard to any
acceleration of payments under the related Mortgage and Mortgage Note) on a Due
Date occurring on or before the date on which such proceeds were received and
(iv) any Realized Loss incurred with respect thereto as a result of a Deficient
Valuation occurring before such Due Date, but only to the extent such Realized
Loss represents a reduction in the portion of principal of such Mortgage Loan
not yet due (without regard to any acceleration of payments under the related
Mortgage and Mortgage Note) as of the date of such Deficient Valuation; and (c)
as of any Due Date subsequent to the occurrence of a Liquidation Event with
respect to such Mortgage Loan, zero. With respect to any REO Property: (a) as of
any Due Date subsequent to the date of its acquisition on behalf of the Trust
Fund up to and including the Due Date in the calendar month in which a
Liquidation Event occurs with respect to such REO Property, an amount (not less
than zero) equal to the Scheduled Principal Balance of the related Mortgage Loan
as of the Due Date in the calendar month in which such REO Property was
acquired, minus the aggregate amount of REO Principal Amortization, if any, in
respect of such REO Property for all previously ended calendar months; and (b)
as of any Due Date subsequent to the occurrence of a Liquidation Event with
respect to such REO Property, zero.
"Seller": ________, or its successor in interest, in its
capacity as seller under the related Mortgage Loan Purchase Agreement.
"Senior Enhancement Percentage": For any Distribution Date,
the percentage equivalent of a fraction, calculated after taking into account
distribution of the Principal Distribution Amount then entitled to distributions
of principal on such Distribution Date, the numerator of which is the sum of the
aggregate Certificate Principal Balance of the Subordinate Certificates, the
Class P Certificates and the Class C Certificates, and the denominator of which
is the aggregate Stated Principal Balance of the Mortgage Loans as of the last
day of the related Due Period (after giving effect to scheduled payments of
principal due during the related Due Period, to the extent received or advanced,
and unscheduled collections of principal received during the related Prepayment
Period).
"Servicer": ________________, or any successor Servicer
appointed as herein provided, in its capacity as Servicer hereunder.
"Servicer Event of Default": One or more of the events
described in Section 7.01.
"Servicer Prepayment Charge Payment Amount": The amounts
payable by the Servicer pursuant to Section 2.03(b) in respect of any waived
Prepayment Charges.
"Servicer Remittance Date": With respect to any Distribution
Date, ____ p.m. New York time on the ___ day of the calendar month in which the
related Distribution Date occurs or if such ___ day is not a Business Day, the
Business Day immediately succeeding such ___ day
"Servicer Reporting Date": With respect to any Distribution
Date, the __day of the calendar month in which such Distribution Date occurs or,
if such __ day is not a Business Day, the Business Day immediately succeeding
such ___ day.
"Servicing Advances": The customary, necessary and reasonable
"out-of-pocket" costs and expenses (including reasonable attorneys' fees and
expenses) incurred by the Servicer in the performance of its servicing
obligations in connection with a default, delinquency or other unanticipated
event, including, but not limited to, the cost of (i) the preservation,
restoration and protection of a Mortgaged Property, (ii) any enforcement or
judicial proceedings, including foreclosures, in respect of a particular
Mortgage Loan, (iii) the conservation, management (including reasonable fees in
connection therewith) and liquidation of any REO Property and (iv) the
performance of its obligations under Section 3.01, Section 3.04(d), Section
3.08, Section 3.12 and Section 3.13. Servicing Advances also include any
reasonable "out-of-pocket" costs and expenses (including reasonable attorneys'
fees and expenses) incurred by the Servicer in connection with executing and
recording instruments of satisfaction, deeds of reconveyance or Assignments in
connection with any foreclosure in respect of any Mortgage Loan to the extent
not recovered from the related Mortgagor or otherwise payable under this
Agreement. The Servicer shall not be required to make any Nonrecoverable
Servicing Advance in respect of a Mortgage Loan or REO Property.
"Servicing Fee": With respect to each Mortgage Loan and for
any calendar month, an amount equal to one month's interest (or in the event of
any payment of interest which accompanies a Principal Prepayment in full made by
the Mortgagor during such calendar month, interest for the number of days
covered by such payment of interest) at the applicable Servicing Fee Rate on the
same principal amount on which interest on such Mortgage Loan accrues for such
calendar month. A portion of such Servicing Fee may be retained by any
Sub-Servicer as its servicing compensation.
"Servicing Fee Rate": ____% per annum.
"Servicing Officer": Any employee of the Servicer involved in,
or responsible for, the administration and servicing of the Mortgage Loans,
whose names appear on a list of Servicing Officers furnished by the Servicer to
the Trustee and the Depositor on the Closing Date, as such list may from time to
time be amended.
"Servicing Standard": The standard set forth in the first
paragraph of Section 3.01.
"Servicing Transfer Date": _______.
"Single Certificate": With respect to any Class of
Certificates (other than the Class P Certificates and the Residual
Certificates), a hypothetical Certificate of such Class evidencing a Percentage
Interest for such Class corresponding to an initial Certificate Principal
Balance or Notional Amount of $1,000. With respect to the Class P Certificates
and the Residual Certificates, a hypothetical Certificate of such Class
evidencing a 20% Percentage Interest in such Class.
"S&P": Standard & Poor's Ratings Services, a division of The
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., or its successor in interest.
"Startup Day": With respect to each Trust REMIC, the day
designated as such pursuant to Section 10.01(b) hereof.
"Stated Principal Balance": With respect to any Mortgage Loan:
(a) as of any date of determination up to but not including the Distribution
Date on which the proceeds, if any, of a Liquidation Event with respect to such
Mortgage Loan would be distributed, the outstanding principal balance of such
Mortgage Loan as of the Cut-off Date, as shown in the Mortgage Loan Schedule,
minus the sum of (i) the principal portion of each Monthly Payment due on a Due
Date subsequent to the Cut-off Date, to the extent received from the Mortgagor
or advanced by the Servicer and distributed pursuant to Section 4.01 on or
before such date of determination, (ii) all Principal Prepayments received after
the Cut-off Date, to the extent distributed pursuant to Section 4.01 on or
before such date of determination, (iii) all Liquidation Proceeds and Insurance
Proceeds applied by the Servicer as recoveries of principal in accordance with
the provisions of Section 3.12, to the extent distributed pursuant to Section
4.01 on or before such date of determination and (iv) any Realized Loss incurred
with respect thereto as a result of a Deficient Valuation made during or prior
to the Prepayment Period for the most recent Distribution Date coinciding with
or preceding such date of determination; and (b) as of any date of determination
coinciding with or subsequent to the Distribution Date on which the proceeds, if
any, of a Liquidation Event with respect to such Mortgage Loan would be
distributed, zero. With respect to any REO Property: (a) as of any date of
determination up to but not including the Distribution Date on which the
proceeds, if any, of a Liquidation Event with respect to such REO Property would
be distributed, an amount (not less than zero) equal to the Stated Principal
Balance of the related Mortgage Loan as of the date on which such REO Property
was acquired on behalf of REMIC I, minus the sum of (i) if such REO Property was
acquired before the Distribution Date in any calendar month, the principal
portion of the Monthly Payment due on the Due Date in the calendar month of
acquisition, to the extent advanced by the Servicer and distributed pursuant to
Section 4.01 on or before such date of determination, and (ii) the aggregate
amount of REO Principal Amortization in respect of such REO Property for all
previously ended calendar months, to the extent distributed pursuant to Section
4.01 on or before such date of determination; and (b) as of any date of
determination coinciding with or subsequent to the Distribution Date on which
the proceeds, if any, of a Liquidation Event with respect to such REO Property
would be distributed, zero.
"Stepdown Date": The earlier to occur of (i) the first
Distribution Date on which the aggregate Certificate Principal Balance of the
Class A Certificates has been reduced to zero and (ii) the later to occur of (a)
the Distribution Date occurring in _____ and (b) the first Distribution Date on
which the Senior Enhancement Percentage for the Class A Certificates (calculated
for this purpose only after taking into account distributions of principal on
the Mortgage Loans but prior to any distribution of the Class A Principal
Distribution Amount to the Certificates then entitled to distributions of
principal on such Distribution Date) is equal to or greater than ____%.
"Subordinate Certificate": Any one of the Class M-1
Certificates, Class M-2 Certificates, Class M-3 Certificates, Class B-1
Certificates, Class B-2 Certificates, Class B-3 Certificates and Class B-4
Certificates.
"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 6.06.
"Sub-Servicing Account": An account established by a
Sub-Servicer which meets the requirements set forth in Section 6.11 and is
otherwise acceptable to the Servicer.
"Sub-Servicing Agreement": The written contract between the
Servicer and a Sub-Servicer relating to servicing and administration of certain
Mortgage Loans as provided in Section 6.06.
"Subsequent Recoveries": As of any Distribution Date,
unexpected amounts received by the Servicer (net of any related expenses
permitted to be reimbursed pursuant to Section 3.04) specifically related to a
Mortgage Loan that was the subject of a liquidation or an REO Disposition prior
to the related Prepayment Period that resulted in a Realized Loss.
"Substitution Shortfall Amount": As defined in Section
2.03(c).
"Tax Returns": The federal income tax return on Internal
Revenue Service Form 1066, U.S. Real Estate Mortgage Investment Conduit Income
Tax Return, including Schedule Q thereto, Quarterly Notice to Residual Interest
Holders of REMIC Taxable Income or Net Loss Allocation, or any successor forms,
to be filed on behalf of each REMIC in the Trust Fund due to its classification
as a REMIC under the REMIC Provisions, together with any and all other
information reports or returns that may be required to be furnished to the
Certificateholders or filed with the Internal Revenue Service or any other
governmental taxing authority under any applicable provisions of federal, state
or local tax laws.
"Telerate Page 3750": The display designated as page "3750" on
Moneyline Telerate (or such other page as may replace page 3750 on that report
for the purpose of displaying London interbank offered rates of major banks).
"Termination Price": As defined in Section 9.01.
"Terminator": As defined in Section 9.01.
"Transfer": Any direct or indirect transfer, sale, pledge,
hypothecation, or other form of assignment of any Ownership Interest in a
Certificate.
"Transferee": Any Person who is acquiring by Transfer any
Ownership Interest in a Certificate.
"Transferor": Any Person who is disposing by Transfer of any
Ownership Interest in a Certificate.
"Trigger Event": A Trigger Event is in effect with respect to
a Distribution Date on and after the Stepdown Date if:
(a) the Delinquency Percentage for the Mortgage Loans exceeds
___% of the Senior Enhancement Percentage for the prior Distribution Date, or
(b) the Cumulative Loss Percentage exceeds the applicable
percentages set forth below with respect to such Distribution Date:
DISTRIBUTION DATE OCCURRING IN PERCENTAGE
------------------------------ ----------
"Trust Fund": Collectively, all of the assets of each Trust
REMIC, Servicer Prepayment Charge Payment Amounts and the Net WAC Rate Carryover
Reserve Account (including any payments made under the Cap Contract deposited
therein).
"Trust REMIC": Each of REMIC I and REMIC II.
"Trustee": _______, a ______, or its successor in interest, or
any successor Trustee appointed as herein provided.
"Trustee Fee": With respect to each Distribution Date, the sum
of the following with respect to each Mortgage Loan: the product of the Trustee
Fee Rate and the same principal amount on which interest on such Mortgage Loan
accrues for the prior calendar month.
"Trustee Fee Rate": ____% per annum.
"Uncertificated Balance": The amount of any REMIC I Regular
Interest outstanding as of any date of determination. As of the Closing Date,
the Uncertificated Balance of each REMIC I Regular Interest shall equal the
amount set forth in the Preliminary Statement hereto as its initial
uncertificated balance. On each Distribution Date, the Uncertificated Balance of
each REMIC I Regular Interest shall be reduced by all distributions of principal
made on such REMIC I Regular Interest on such Distribution Date pursuant to
Section 4.01 and, if and to the extent necessary and appropriate, shall be
further reduced on such Distribution Date by Realized Losses as provided in
Section 4.04. The Uncertificated Balance of REMIC I Regular Interest ZZ shall be
increased by interest deferrals as provided in Section 4.01(a)(1). The
Uncertificated Balance of each REMIC Regular Interest shall never be less than
zero.
"Uncertificated Interest": With respect to any REMIC I Regular
Interest for any Distribution Date, one month's interest at the REMIC I
Remittance Rate applicable to such REMIC I Regular Interest for such
Distribution Date, accrued on the Uncertificated Balance thereof immediately
prior to such Distribution Date. Uncertificated Interest in respect of any REMIC
I Regular Interest shall accrue on the basis of a 360-day year consisting of
twelve 30-day months. Uncertificated Interest with respect to each Distribution
Date, as to any REMIC I Regular Interest, shall be reduced by an amount equal to
the sum of (a) the aggregate Prepayment Interest Shortfall, if any, for such
Distribution Date to the extent not covered by payments pursuant to Section
4.03(e) and (b) the aggregate amount of any Relief Act Interest Shortfall, if
any allocated, in each case, to such REMIC I Regular Interest pursuant to
Section 1.02. In addition, Uncertificated Interest with respect to each
Distribution Date, as to any REMIC I Regular Interest shall be reduced by
Realized Losses, if any, allocated to such REMIC I Regular Interest pursuant to
Section 1.02 and Section 4.04.
["Underwriters' Exemption": As defined in the Prospectus
Supplement.]
"Uninsured Cause": Any cause of damage to a Mortgaged Property
such that the complete restoration of such property is not fully reimbursable by
the hazard insurance policies required to be maintained pursuant to Section
3.08.
"United States Person": A citizen or resident of the United
States, a corporation, partnership or other entity created or organized in, or
under the laws of, the United States, any state thereof or the District of
Columbia (except, in the case of a partnership, to the extent provided in
regulations); provided that, solely for purposes of the restrictions on the
transfer of Residual Certificates, no partnership or other entity treated as a
partnership for United States federal income tax purposes shall be treated as a
United States Person unless all persons that own an interest in such partnership
either directly or through any entity that is not a corporation for United
States federal income tax purposes are required by the applicable operative
agreement to be United States Persons, or an estate whose income is subject to
United States federal income tax regardless of its source, or a trust if a court
within the United States is able to exercise primary supervision over the
administration of the trust and one or more United States persons have the
authority to control all substantial decisions of the trust. To the extent
prescribed in regulations by the Secretary of the Treasury, which have not yet
been issued, a trust which was in existence on August 20, 1996 (other than a
trust treated as owned by the grantor under subpart E of part I of subchapter J
of chapter 1 of the Code), and which was treated as a United States person on
August 20, 1996 may elect to continue to be treated as a United States person
notwithstanding the previous sentence. The term "United States" shall have the
meaning set forth in Section 7701 of the Code.
"Value": With respect to any Mortgaged Property, the lesser of
(i) the value thereof as determined by an appraisal made for the originator of
the Mortgage Loan at the time of origination of the Mortgage Loan by an
appraiser who met the minimum requirements of the Financial Institutions Reform,
Recovery and Enforcement Act of 1989, and (ii) the purchase price paid for the
related Mortgaged Property by the Mortgagor with the proceeds of the Mortgage
Loan, provided, however, in the case of a Refinanced Mortgage Loan, such value
of the Mortgaged Property is based solely upon the value determined by an
appraisal made for the originator of such Refinanced Mortgage Loan at the time
of origination of such Refinanced Mortgage Loan by an appraiser who met the
minimum requirements of the Financial Institutions Reform, Recovery and
Enforcement Act of 1989 or, subject to the Originator's underwriting guidelines,
an insured automated valuation model.
"Voting Rights": The portion of the voting rights of all of
the Certificates which is allocated to any Certificate. With respect to any date
of determination, 97% of all Voting Rights shall be allocated among the Holders
of the Class A Certificates, the Subordinate Certificates and the Class C
Certificates in proportion to the then outstanding Certificate Principal
Balances of their respective Certificates, 1% of all Voting Rights shall be
allocated to the Holders of the Class P Certificates and 1% of all Voting Rights
shall be allocated among the Holders of the Residual Certificates. The Voting
Rights allocated to each Class of Certificate shall be allocated among Holders
of each such Class in accordance with their respective Percentage Interests as
of the most recent Record Date; provided that any Certificate registered in the
name of the Depositor, the Seller or the Originator or any Affiliate thereof
shall be deemed not to be outstanding and the Voting Rights to which it is
entitled shall not be taken into account in determining whether the requisite
percentage of Voting Rights necessary to effect any such consent has been
obtained, except as otherwise provided in Section 11.01.
SECTION 1.02. Allocation of Certain Interest Shortfalls.
For purposes of calculating the amount of Accrued Certificate
Interest and the amount of the Interest Distribution Amount for the Class A
Certificates, the Subordinate Certificates and the Class C Certificates for any
Distribution Date, the aggregate amount of any Prepayment Interest Shortfalls
(to the extent not covered by payments by the Servicer pursuant to Section
4.03(e)) and any Relief Act Interest Shortfalls incurred in respect of the
Mortgage Loans for any Distribution Date shall be allocated first, to reduce the
interest accrued on the Class C Certificates to the extent of one month's
interest at the applicable Pass-Through Rate on the Notional Amount of such
Certificate and thereafter, among the Class A Certificates and the Subordinate
Certificates on a PRO RATA basis based on, and to the extent of, one month's
interest at the then applicable respective Pass-Through Rate on the respective
Certificate Principal Balance of each such Certificate.
For purposes of calculating the amount of Uncertificated
Interest for the REMIC I Regular Interests for any Distribution Date, the
aggregate amount of any Prepayment Interest Shortfalls (to the extent not
covered by payments by the Servicer pursuant to Section 4.03(e)) and any Relief
Act Interest Shortfalls incurred in respect of the Mortgage Loans for any
Distribution Date shall be allocated among REMIC I Regular Interest A, REMIC I
Regular Interest M1, REMIC I Regular Interest M2, REMIC I Regular Interest M3,
REMIC I Regular Interest B1, REMIC I Regular Interest B2, REMIC I Regular
Interest B3, REMIC I Regular Interest B4 and REMIC I Regular Interest ZZ, on a
PRO RATA basis based on, and to the extent of, one month's interest at the then
applicable respective REMIC I Remittance Rate on the respective Uncertificated
Balance of each such REMIC I Regular Interest.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
SECTION 2.01. Conveyance of Mortgage Loans.
The Depositor, concurrently with the execution and delivery
hereof, does hereby transfer, assign, set over and otherwise convey to the
Trustee without recourse for the benefit of the Certificateholders all the
right, title and interest of the Depositor, including any security interest
therein for the benefit of the Depositor, in and to the Mortgage Loans
identified on the Mortgage Loan Schedule, the rights of the Depositor under the
Mortgage Loan Purchase Agreements (including, without limitation, the
Depositor's right in the representations and warranties and the repurchase
obligations of the Originator and the Seller contained therein), any payments
made under the Cap Contract and all other assets included or to be included in
REMIC I. Such assignment includes all interest and principal received by or on
behalf of the Depositor or the Servicer on or with respect to the Mortgage Loans
(other than payments of principal and interest due on such Mortgage Loans on or
before the Cut-off Date). The Depositor herewith delivers to the Trustee an
executed copy of the Mortgage Loan Purchase Agreements, and the Trustee on
behalf of the Certificateholders, acknowledges receipt of the same.
In connection with such transfer and assignment, the Depositor
does hereby deliver to, and deposit with, the Custodian on behalf of the Trustee
the following documents or instruments with respect to each Mortgage Loan so
transferred and assigned, and the Depositor shall, in accordance with Section
2.09, deliver or cause to be delivered to the Custodian, the following documents
or instruments (a "MORTGAGE FILE"):
(i) the original Mortgage Note, with all riders, endorsed in
blank, without recourse, or in the following form: "Pay to the order of
______, as Trustee under the applicable agreement, without recourse,"
with all prior and intervening endorsements showing a complete chain of
endorsement from the originator to the Person so endorsing to the
Trustee, or with respect to any lost Mortgage Note, an original Lost
Note Affidavit; provided however, that such substitutions of Lost Note
Affidavits for original Mortgage Notes may occur only with respect to
Mortgage Loans, the aggregate Cut-off Date Principal Balance of which
is less than or equal to ____% of the Pool Balance as of the Cut-off
Date;
(ii) in the case of each Mortgage Loan that is not a MERS
Mortgage Loan, the original Mortgage, with all riders, with evidence of
recording thereon, and a copy, certified by the appropriate recording
office, of the recorded power of attorney, if the Mortgage was executed
pursuant to a power of attorney, with evidence of recording thereon;
(iii) in the case of each Mortgage Loan that is not a MERS
Mortgage Loan, an original Assignment assigned in blank, without
recourse;
(iv) in the case of each Mortgage Loan that is not a MERS
Mortgage Loan, the original recorded intervening Assignment or
Assignments showing a complete chain of assignment from the originator
to the Person assigning the Mortgage to the Trustee as contemplated by
the immediately preceding clause (iii) or the original unrecorded
intervening Assignments;
(v) the original or copies of each assumption, modification,
written assurance or substitution agreement, if any; and
(vi) the original lender's title insurance policy or an
attorney's opinion of title or similar guarantee of title acceptable to
mortgage lenders generally in the jurisdiction where the Mortgaged
Property is located, together with all endorsements or riders which
were issued with or subsequent to the issuance of such policy, or in
the event such original title policy is unavailable, a written
commitment or uniform binder or preliminary report of title issued by
the title insurance or escrow company.
In addition, in connection with the assignment of any MERS
Mortgage Loan, the Depositor agrees that it will cause, at its expense, the
MERS(R) System to indicate that such Mortgage Loans have been assigned by the
Depositor to the Trustee in accordance with this Agreement for the benefit of
the Certificateholders by including (or deleting, in the case of Mortgage Loans
which are repurchased in accordance with this Agreement) in such computer files
the information required by the MERS(R) System to identify the series of the
Certificates issued in connection with such Mortgage Loans. The Depositor
further agrees that it will not, and will not permit the Servicer to, and the
Servicer agrees that it will not, alter the information referenced in this
paragraph with respect to any related Mortgage Loan during the term of this
Agreement unless and until such Mortgage Loan is repurchased in accordance with
the terms of this Agreement.
If any of the documents referred to in Sections 2.01(ii),
(iii) or (iv) above has as of the Closing Date been submitted for recording but
either (x) has not been returned from the applicable public recording office or
(y) has been lost or such public recording office has retained the original of
such document, the obligations of the Depositor to deliver such documents shall
be deemed to be satisfied upon (1) delivery to the Trustee, or to the
appropriate Custodian on behalf of the Trustee, of a copy of each such document
certified by the Originator in the case of (x) above or the applicable public
recording office in the case of (y) above to be a true and complete copy of the
original that was submitted for recording and (2) if such copy is certified by
the Originator, delivery to the Trustee, or to the appropriate Custodian on
behalf of the Trustee, promptly upon receipt thereof of either the original or a
copy of such document certified by the applicable public recording office to be
a true and complete copy of the original. If the original lender's title
insurance policy was not delivered pursuant to Section 2.01(vi) above, the
Depositor shall deliver or cause to be delivered to the Trustee, or to the
appropriate Custodian on behalf of the Trustee, promptly after receipt thereof,
the original lender's title insurance policy. The Depositor shall deliver or
cause to be delivered to the Trustee, or to the appropriate Custodian on behalf
of the Trustee, promptly upon receipt thereof any other original documents
constituting a part of a Mortgage File received with respect to any Mortgage
Loan, including, but not limited to, any original documents evidencing an
assumption or modification of any Mortgage Loan.
The Originator shall promptly (and in no event later than
thirty (30) Business Days, subject to extension upon a mutual agreement between
the Originator and the Trustee), following the later of (i) the Closing Date,
(ii) the date on which the Originator receives the Assignment from the Custodian
and (iii) the date of receipt by the Originator of the recording information for
a Mortgage, submit or cause to be submitted for recording, at no expense to the
Trust Fund, the Servicer or the Trustee in the appropriate public office for
real property records, each Assignment referred to in Sections 2.01(iii) and
(iv) above and shall execute each original Assignment referred to in Section
2.01(iii) above in the following form: "_______", as Trustee under the
applicable agreement." In the event that any such Assignment is lost or returned
unrecorded because of a defect therein, the Originator shall promptly prepare or
cause to be prepared a substitute Assignment or cure or cause to be cured such
defect, as the case may be, and thereafter cause each such Assignment to be duly
recorded.
Notwithstanding the foregoing, however, for administrative
convenience and facilitation of servicing and to reduce closing costs, the
Assignments shall not be required to be submitted for recording [(except with
respect to any Mortgage Loan located in Maryland)] unless such failure to record
would result in a withdrawal or a downgrading by any Rating Agency of the rating
on any Class of Certificates; provided further, however, each Assignment shall
be submitted for recording by the Originator in the manner described above, at
no expense to the Trust Fund, the Servicer or the Trustee, upon the earliest to
occur of: (i) reasonable direction by Holders of Certificates entitled to at
least 25% of the Voting Rights, (ii) [reserved], (iii) the occurrence of a
bankruptcy or insolvency relating to the Originator, (iv) the occurrence of a
servicing transfer as described in Section 7.02 hereof, (v) with respect to any
one Assignment, the occurrence of a bankruptcy, insolvency or foreclosure
relating to the Mortgagor under the related Mortgage and (vi) with respect to
any Assignments, the payment in full of the related Mortgage Note.
Notwithstanding the foregoing, if the Originator is unable to pay the cost of
recording the Assignments, such expense shall be paid by the Trustee and shall
be reimbursable to the Trustee as an Extraordinary Trust Fund Expense.
In the event that any Assignments are not recorded or are
improperly recorded, the Servicer shall have no liability for its failure to
receive or act on notices not received relating to such failure to record or the
improper recording of such Assignments. The Originator shall be required to
forward all notices regarding Assignments it receives to the Servicer. In the
event that the Trust Fund or the Servicer suffers a loss directly related to the
Originator's failure to forward such notices, the Originator shall be required
to reimburse and indemnify the Servicer and/or the Trust Fund for such loss.
All original documents relating to the Mortgage Loans that are
not delivered to the Trustee, or to the appropriate Custodian on behalf of the
Trustee, are and shall be held by or on behalf of the Originator, the Seller,
the Depositor or the Servicer, as the case may be, in trust for the benefit of
the Trustee on behalf of the Certificateholders. In the event that any such
original document is required pursuant to the terms of this Section to be a part
of a Mortgage File, such document shall be delivered promptly to the Trustee, or
to the appropriate Custodian on behalf of the Trustee. Any such original
document delivered to or held by the Depositor that is not required pursuant to
the terms of this Section to be a part of a Mortgage File, shall be delivered
promptly to the Servicer.
SECTION 2.02. Acceptance of REMIC I by the Trustee.
Subject to the provisions of Section 2.01 and subject to any
exceptions noted on the exception report described in the next paragraph below,
the Trustee acknowledges receipt (or, with respect to Mortgage Loans subject to
a Custodial Agreement, receipt by the respective Custodian as the duly appointed
agent of the Trustee) of the documents referred to in Section 2.01 (other than
such documents described in Section 2.01(v)) above and all interests and all
other assets included in the definition of "REMIC I" under clauses (i), (iii),
(iv) and (v) (to the extent of amounts deposited into the Distribution Account)
and declares that it, or such Custodian as its agent, holds and shall hold such
documents and the other documents delivered to it constituting a Mortgage File,
and that it holds or shall hold all such assets and such other assets included
in the definition of "REMIC I" in trust for the exclusive use and benefit of all
present and future Certificateholders.
On or prior to the Closing Date, the Trustee agrees, for the
benefit of the Certificateholders, to execute and deliver (or cause the
Custodian to execute and deliver) to each of the Depositor and the Servicer an
acknowledgment of receipt of the Mortgage Note (with any exceptions noted),
substantially in the form attached as Exhibit C-3 hereto.
The Trustee agrees, for the benefit of the Certificateholders,
to review (or cause a Custodian on its behalf to review) each Mortgage Note
within 45 days of the Closing Date and to certify in substantially the form
attached hereto as Exhibit C-1 (or cause the Custodian to certify in the form of
the Initial Certification attached to the Custodial Agreement) that, as to each
Mortgage Loan listed in the Mortgage Loan Schedule (other than any Mortgage Loan
paid in full or any Mortgage Loan specifically identified in the exception
report annexed thereto as not being covered by such certification), (i) all
documents constituting part of such Mortgage File (other than such documents
described in Section 2.01(v)) required to be delivered to it pursuant to this
Agreement are in its possession, (ii) such documents have been reviewed by it or
such Custodian and are not mutilated, torn or defaced unless initialed by the
related borrower and relate to such Mortgage Loan, (iii) based on its or the
Custodian's examination and only as to the foregoing, the information set forth
in the Mortgage Loan Schedule that corresponds to items (1) through (3), (6),
(9), (10), (13), (15) and (19) of the definition of "Mortgage Loan Schedule"
accurately reflects information set forth in the Mortgage File. It is herein
acknowledged that, in conducting such review, the Trustee or such Custodian was
under no duty or obligation (i) to inspect, review or examine any such
documents, instruments, certificates or other papers to determine whether they
are genuine, enforceable, or appropriate for the represented purpose or whether
they have actually been recorded or that they are other than what they purport
to be on their face or (ii) to determine whether any Mortgage File should
include any of the documents specified in clause (v) of Section 2.01.
Prior to the first anniversary date of this Agreement the
Trustee shall deliver (or cause the Custodian to deliver) to the Depositor and
the Servicer a final certification in the form annexed hereto as Exhibit C-2 (or
shall cause the Custodian to deliver to the Trustee, the Depositor and the
Servicer a final certification in the form attached to the Custodial Agreement)
evidencing the completeness of the Mortgage Files, with any applicable
exceptions noted thereon, with respect to all of the Mortgage Loans. Upon the
request of the Servicer, any exception report related to the final certification
shall be provided in an electronic computer readable format as mutually agreed
upon by the Servicer, the Depositor and the Trustee (or the Custodian on behalf
of the Trustee).
If in the process of reviewing the Mortgage Files and making
or preparing, as the case may be, the certifications referred to above, the
Trustee or any Custodian finds any document or documents constituting a part of
a Mortgage File to be missing, mutilated, torn or defaced or does not conform to
the requirements identified above, at the conclusion of its review the Trustee
(or the Custodian on behalf of the Trustee) shall so notify the Depositor and
the Servicer. In addition, upon the discovery by the Depositor, the Servicer or
the Trustee of a breach of any of the representations and warranties made by the
Originator in the related Mortgage Loan Purchase Agreement in respect of any
Mortgage Loan which materially adversely affects the value of such Mortgage Loan
or the interests of the related Certificateholders in such Mortgage Loan, the
party discovering such breach shall give prompt written notice to the other
parties.
The Trustee (or the Custodian on behalf of the Trustee) shall,
at the written request and expense of any Certificateholder or Certificate
Owner, provide a written report to such Certificateholder or Certificate Owner,
of all Mortgage Files released to the Servicer for servicing purposes.
SECTION 2.03. Repurchase or Substitution of Mortgage Loans by the
Originator, the Seller or the Depositor; Payment of Prepayment
Charge Payment Amounts.
(a) Upon discovery or receipt of notice (including notice
under Section 2.02) of any materially defective document in, or that a document
is missing from, the Mortgage File or of the breach by the Originator of any
representation, warranty or covenant under the related Mortgage Loan Purchase
Agreement in respect of any Mortgage Loan which materially adversely affects the
value of such Mortgage Loan or the interest therein of the Certificateholders,
the Trustee shall promptly notify the Originator and the Servicer of such
defect, missing document or breach and request that the Originator deliver such
missing document or cure such defect or breach within 90 days from the date the
Originator had knowledge or was notified of such missing document, defect or
breach, and if the Originator does not deliver such missing document or cure
such defect or breach in all material respects during such period, the Trustee
shall enforce the obligations of the Originator under the related Mortgage Loan
Purchase Agreement to repurchase such Mortgage Loan from REMIC I at the Purchase
Price within 90 days after the date on which the Originator was notified
(subject to Section 2.03(d)) of such missing document, defect or breach, if and
to the extent that the Seller or Originator is obligated to do so under the
related Mortgage Loan Purchase Agreement. The Purchase Price for the repurchased
Mortgage Loan shall be deposited in the Collection Account, and the Trustee (or
the Custodian on behalf of the Trustee), upon receipt of written certification
from the Servicer of such deposit, shall release to the Originator the related
Mortgage File and shall request the Trustee to (and the Trustee (or the
Custodian on behalf of the Trustee) shall) execute and deliver such instruments
of transfer or assignment, in each case without recourse, as the Originator
shall furnish to it and as shall be necessary to vest in the Originator any
Mortgage Loan released pursuant hereto and the Trustee shall not have any
further responsibility with regard to such Mortgage File. In lieu of
repurchasing any such Mortgage Loan as provided above, if so provided in the
related Mortgage Loan Purchase Agreement, the Originator may cause such Mortgage
Loan to be removed from REMIC I (in which case it shall become a Deleted
Mortgage Loan) and substitute one or more Qualified Substitute Mortgage Loans in
the manner and subject to the limitations set forth in Section 2.03(c). It is
understood and agreed that the obligation of the Originator to cure or to
repurchase (or to substitute for) any Mortgage Loan as to which a document is
missing, a material defect in a document exists or as to which a breach
described above has occurred and is continuing shall constitute the sole remedy
respecting such omission, defect or breach available to the Trustee on behalf of
the Certificateholders.
(b)(i) Promptly upon the earlier of discovery by the Servicer
or receipt of notice by the Servicer of the breach of any representation,
warranty or covenant of the Servicer set forth in Section 2.05, which materially
and adversely affects the value of any Mortgage Loan or the interests of the
Certificateholders in any Mortgage Loan, the Servicer shall cure such breach in
all material respects.
(ii) Notwithstanding the provisions of Section 2.03(b)(i)
above, on the later of (x) the Servicer Remittance Date next following the
earlier of discovery by the Servicer or receipt of notice by the Servicer of the
breach of the Prepayment Charge covenant made by the Servicer in Section
2.05(ix), which breach materially and adversely affects the interests of the
Holders of the Class P Certificates to any Prepayment Charge and (y) the
Servicer Remittance Date next following the Prepayment Period relating to such a
breach, the Servicer shall deposit into the Collection Account, as a Servicer
Prepayment Charge Payment Amount, the amount of the waived Prepayment Charge.
(c) Any substitution of Qualified Substitute Mortgage Loans
for Deleted Mortgage Loans made pursuant to Section 2.03(a), in the case of the
Originator, or Section 2.03(b), in the case of the Depositor, must be effected
prior to the date which is two years after the Startup Day for REMIC I.
As to any Deleted Mortgage Loan for which the Originator, the
Seller or the Depositor substitutes a Qualified Substitute Mortgage Loan or
Loans, such substitution shall be effected by the Originator, the Seller or the
Depositor, as the case may be, delivering to the Trustee (or the Custodian on
behalf of the Trustee), for such Qualified Substitute Mortgage Loan or Loans,
the Mortgage Note, the Mortgage, the Assignment to the Trustee, and such other
documents and agreements, with all necessary endorsements thereon, as are
required by Section 2.01, together with an Officers' Certificate providing that
each such Qualified Substitute Mortgage Loan satisfies the definition thereof
and specifying the Substitution Shortfall Amount (as described below), if any,
in connection with such substitution. The Trustee (or the Custodian on behalf of
the Trustee) shall acknowledge receipt for such Qualified Substitute Mortgage
Loan or Loans and, within ten Business Days thereafter, review such documents as
specified in Section 2.02 and deliver to the Depositor and the Servicer, with
respect to such Qualified Substitute Mortgage Loan or Loans, a certification
substantially in the form attached hereto as Exhibit C-1, with any applicable
exceptions noted thereon. Within one year of the date of substitution, the
Trustee (or the Custodian on behalf of the Trustee) shall deliver to the
Depositor and the Servicer a certification substantially in the form of Exhibit
C-2 hereto with respect to such Qualified Substitute Mortgage Loan or Loans,
with any applicable exceptions noted thereon. Monthly Payments due with respect
to Qualified Substitute Mortgage Loans in the month of substitution are not part
of REMIC I and shall be retained by the Depositor, the Originator or the Seller,
as the case may be. For the month of substitution, distributions to
Certificateholders shall reflect the Monthly Payment due on such Deleted
Mortgage Loan on or before the Due Date in the month of substitution, and the
Depositor, the Originator or the Seller, as the case may be, shall thereafter be
entitled to retain all amounts subsequently received in respect of such Deleted
Mortgage Loan. The Depositor shall give or cause to be given written notice to
the Certificateholders and the Servicer that such substitution has taken place,
shall amend the Mortgage Loan Schedule and, if applicable, the Prepayment Charge
Schedule, to reflect the removal of such Deleted Mortgage Loan from the terms of
this Agreement and the substitution of the Qualified Substitute Mortgage Loan or
Loans and shall deliver a copy of such amended Mortgage Loan Schedule to the
Trustee and the Servicer. Upon such substitution, such Qualified Substitute
Mortgage Loan or Loans shall constitute part of the Mortgage Pool and shall be
subject in all respects to the terms of this Agreement and, in the case of a
substitution effected by the Originator, the related Mortgage Loan Purchase
Agreement, including all applicable representations and warranties thereof.
For any month in which the Depositor, the Seller or the
Originator substitutes one or more Qualified Substitute Mortgage Loans for one
or more Deleted Mortgage Loans, the Originator or the Trustee shall determine
the amount (the "SUBSTITUTION SHORTFALL AMOUNT"), if any, by which the aggregate
Purchase Price of all such Deleted Mortgage Loans exceeds the aggregate of, as
to each such Qualified Substitute Mortgage Loan, the Scheduled Principal Balance
thereof as of the date of substitution, together with one month's interest on
such Scheduled Principal Balance at the applicable Net Mortgage Rate. On the
date of such substitution, the Depositor, the Seller or the Originator, as the
case may be, shall deliver or cause to be delivered to the Servicer for deposit
in the Collection Account an amount equal to the Substitution Shortfall Amount,
if any, and the Trustee, upon receipt of the related Qualified Substitute
Mortgage Loan or Loans and certification by the Servicer of such deposit, shall
cause the Custodian to release to the Depositor, the Seller or the Originator,
as the case may be, the related Mortgage File or Files and shall request the
Trustee to (and the Trustee (or the Custodian on behalf of the Trustee) shall)
execute and deliver such instruments of transfer or assignment, in each case
without recourse, as Depositor, the Seller or the Originator, as the case may
be, shall deliver to it and as shall be necessary to vest therein any Deleted
Mortgage Loan released pursuant hereto.
In addition, Depositor, the Seller or the Originator, as the
case may be, shall obtain at its own expense and deliver to the Trustee an
Opinion of Counsel to the effect that such substitution shall not cause (a) any
federal tax to be imposed on any Trust REMIC, including without limitation, any
federal tax imposed on "prohibited transactions" under Section 860F(a)(1) of the
Code or on "contributions after the startup date" under Section 860G(d)(1) of
the Code, or (b) any Trust REMIC to fail to qualify as a REMIC at any time that
any Certificate is outstanding.
(d) Upon discovery by the Depositor, the Originator, the
Servicer or the Trustee that any Mortgage Loan does not constitute a "qualified
mortgage" within the meaning of Section 860G(a)(3) of the Code, the party
discovering such fact shall within two Business Days give written notice thereof
to the other parties. In connection therewith, the Originator, the Seller or the
Depositor shall repurchase or, subject to the limitations set forth in Section
2.03(c), substitute one or more Qualified Substitute Mortgage Loans for the
affected Mortgage Loan within 90 days of the earlier of discovery or receipt of
such notice with respect to such affected Mortgage Loan. Such repurchase or
substitution shall be made by the Originator. Any such repurchase or
substitution shall be made in the same manner as set forth in Section 2.03(a).
The Trustee shall reconvey to the Depositor, the Seller or the Originator, as
the case may be, the Mortgage Loan to be released pursuant hereto in the same
manner, and on the same terms and conditions, as it would a Mortgage Loan
repurchased for breach of a representation or warranty.
SECTION 2.04. [Reserved].
SECTION 2.05. Representations, Warranties and Covenants of the Servicer.
The Servicer hereby represents, warrants and covenants to the
Trustee, for the benefit of each of the Trustee, the Certificateholders and the
Depositor that as of the Closing Date or as of such date specifically provided
herein:
(i) The Servicer is a _______ duly organized, validly existing
and in good standing under the laws of the State of ____ and is duly
authorized and qualified to transact any and all business contemplated
by this Agreement to be conducted by the Servicer in any state in which
a Mortgaged Property is located or is otherwise not required under
applicable law to effect such qualification and, in any event, is in
compliance with the doing business laws of any such State, to the
extent necessary to ensure its ability to enforce each Mortgage Loan
and to service the Mortgage Loans in accordance with the terms of this
Agreement;
(ii) The Servicer has the full power and authority to service
each Mortgage Loan, and to execute, deliver and perform, and to enter
into and consummate the transactions contemplated by this Agreement and
has duly authorized by all necessary corporate action on the part of
the Servicer the execution, delivery and performance of this Agreement;
and this Agreement, assuming the due authorization, execution and
delivery hereof by the Depositor and the Trustee, constitutes a legal,
valid and binding obligation of the Servicer, enforceable against the
Servicer in accordance with its terms, except to the extent that (a)
the enforceability hereof may be limited by bankruptcy, insolvency,
moratorium, receivership and other similar laws relating to creditors'
rights generally and (b) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to the
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought;
(iii) The execution and delivery of this Agreement by the
Servicer, the servicing of the Mortgage Loans by the Servicer
hereunder, the consummation of any other of the transactions herein
contemplated, and the fulfillment of or compliance with the terms
hereof are in the ordinary course of business of the Servicer and shall
not (A) result in a breach of any term or provision of the
organizational documents of the Servicer or (B) conflict with, result
in a breach, violation or acceleration of, or result in a default
under, the terms of any other material agreement or instrument to which
the Servicer is a party or by which it may be bound, or any statute,
order or regulation applicable to the Servicer of any court, regulatory
body, administrative agency or governmental body having jurisdiction
over the Servicer; and the Servicer is not a party to, bound by, or in
breach or violation of any indenture or other agreement or instrument,
or subject to or in violation of any statute, order or regulation of
any court, regulatory body, administrative agency or governmental body
having jurisdiction over it, which materially and adversely affects or,
to the Servicer's knowledge, would in the future materially and
adversely affect, (x) the ability of the Servicer to perform its
obligations under this Agreement or (y) the business, operations,
financial condition, properties or assets of the Servicer taken as a
whole;
(iv) The Servicer is an approved servicer for ▇▇▇▇▇▇ ▇▇▇ or
▇▇▇▇▇▇▇ Mac in good standing and is a HUD approved mortgagee pursuant
to Section 203 and Section 211 of the National Housing Act;
(v) No litigation is pending, or to the best of the Servicer's
knowledge threatened, against the Servicer that would materially and
adversely affect the execution, delivery or enforceability of this
Agreement or the ability of the Servicer to service the Mortgage Loans
or to perform any of its other obligations hereunder in accordance with
the terms hereof;
(vi) There are no actions or proceedings against, or
investigations known to it of, the Servicer before any court,
administrative or other tribunal (A) that might prohibit its entering
into this Agreement, (B) seeking to prevent the consummation of the
transactions contemplated by this Agreement or (C) that might prohibit
or materially and adversely affect the performance by the Servicer of
its obligations under, or validity or enforceability of, this
Agreement;
(vii) 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 the consummation of the transactions
contemplated by this Agreement, except for such consents, approvals,
authorizations or orders, if any, that have been obtained prior to the
Closing Date;
(viii) The Servicer shall furnish, in accordance with the Fair
Credit Reporting Act and its implementing regulations, accurate and
complete information (e.g., favorable and unfavorable) on its borrower
credit files to Equifax, Experian and Trans Union Credit Information
company or their successors on a monthly basis;
(ix) For Principal Prepayments in full, the Servicer shall not
waive any Prepayment Charge or part of a Prepayment Charge unless, (i)
the enforceability thereof shall have been limited by bankruptcy,
insolvency, moratorium, receivership and other similar laws relating to
creditors' rights generally, (ii) the collectability thereof shall have
been limited due to acceleration in connection with a foreclosure or
other involuntary payment or otherwise limited or prohibited by
applicable law, (iii) in the Servicer's reasonable judgment, as
described in Section 3.01 hereof, (x) such waiver relates to a default
or a Mortgage Loan that is Delinquent, (y) such waiver would maximize
recovery of total proceeds taking into account the value of such
Prepayment Charge and related Mortgage Loan and (z) doing so is
standard and customary in servicing similar Mortgage Loans (including
any waiver of a Prepayment Charge in connection with a refinancing of a
Mortgage Loan that is related to a default or a Mortgage Loan that is
Delinquent), or (iv) the collection of such Prepayment Charge would be
considered "predatory" pursuant to written guidance published or issued
by any applicable federal, state or local regulatory authority acting
in its official capacity and having jurisdiction over such matters. In
no event shall the Servicer waive a Prepayment Charge in connection
with a refinancing of a Mortgage Loan that is not Delinquent or related
to a default;
(x) The information set forth in the monthly tape provided to
the Trustee or any of its Affiliates shall be true and correct in all
material respects;
(xi) The Servicer shall transmit full-file credit reporting
data for each Mortgage Loan pursuant to ▇▇▇▇▇▇ ▇▇▇ Guide Announcement
95-19 and that for each Mortgage Loan, the Servicer agrees it shall
report one of the following statuses each month as follows: new
origination, current, delinquent (30-59 days, 60-89 days, 90-119 days,
120 or more days, etc.), foreclosed, in bankruptcy or charged-off;
(xii) The Servicer has the facilities, procedures, and
experienced personnel necessary for the sound servicing of the Mortgage
Loans;
(xiii) The Servicer acknowledges and agrees that the Servicing
Fee represents reasonable compensation for performing such services and
that the entire Servicing Fee shall be treated by the Servicer, for
accounting and tax purposes, as compensation for the servicing and
administration of the Mortgage Loans pursuant to this Agreement;
(xiv) 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;
(xv) The written statements, reports and other documents
prepared and furnished or to be prepared and furnished by the Servicer
pursuant to this Agreement or in connection with the transactions
contemplated hereby do not contain any untrue statement of material
fact or omit to state a material fact necessary to make the statements
contained therein not misleading;
(xvi) The Servicer possesses all licenses, permits and
approvals necessary to Service the Mortgage Loans in accordance with
the Servicing Standard set forth in Section 3.01, pursuant to the terms
and provision of this Agreement and all applicable laws, and to the
best of Servicer's knowledge, all such permits, licenses and approvals
are in full force and effect and none have been suspended or revoked,
and there are presently pending or, to the Servier's knowledge,
threatened no proceedings to suspend, terminate, restrict or revoke any
such permits, license or approvals; and
(xvii) The Servicer is rated __________ by S&P, _________ by
▇▇▇▇▇'▇ and _______ by Fitch, and to the best of Servicer's knowledge
there is no pending or contemplated reduction of such ratings, and the
Servicer shall give the Trustee and the Depositor prompt written notice
in the event there is a reduction of the Servicer's rating by any
rating agency.
It is understood and agreed that the representations,
warranties and covenants set forth in this Section 2.05 shall survive delivery
of the Mortgage Files to the Trustee or to a Custodian, as the case may be, and
shall inure to the benefit of the Trustee, the Depositor and the
Certificateholders. Upon discovery by any of the Depositor, the Servicer or the
Trustee of a breach of any of the foregoing representations, warranties and
covenants which materially and adversely affects the value of any Mortgage Loan,
Prepayment Charge or the interests therein of the Certificateholders, the party
discovering such breach shall give prompt written notice (but in no event later
than two Business Days following such discovery) to the Trustee and the
Depositor. Subject to Section 7.01, the obligation of the Servicer set forth in
Section 2.03(b) to cure breaches (or in the case of the representations,
warranties and covenants set forth in Section 2.05(vii) and Section 2.05(viii)
above, to otherwise remedy such breaches pursuant to Section 2.03(b)) shall
constitute the sole remedies against the Servicer available to the
Certificateholders, the Depositor or the Trustee on behalf of the
Certificateholders respecting a breach of the representations, warranties and
covenants contained in this Section 2.05.
SECTION 2.06. Issuance of the REMIC I Regular Interests and the Class R-I
Interest.
The Trustee acknowledges the assignment to it of the Mortgage
Loans and the delivery to it or the Custodian of the Mortgage Files, subject to
the provisions of Section 2.01 and Section 2.02, together with the assignment to
it of all other assets included in REMIC I, the receipt of which is hereby
acknowledged. Concurrently with such assignment and delivery and in exchange
therefor, the Trustee, pursuant to the written request of the Depositor executed
by an officer of the Depositor, has executed, authenticated and delivered to or
upon the order of the Depositor, the Class R-I Interest in authorized
denominations. The interests evidenced by the Class R-I Interest, together with
the REMIC I Regular Interests, constitute the entire beneficial ownership
interest in REMIC I. The rights of the Class R Certificateholders and REMIC I
(as holder of the REMIC I Regular Interests) to receive distributions from the
proceeds of REMIC I in respect of the Class R-I Interest and the REMIC I Regular
Interests, respectively, and all ownership interests evidenced or constituted by
the Class R-I Interest and the REMIC I Regular Interests, shall be as set forth
in this Agreement.
SECTION 2.07. Conveyance of the REMIC I Regular Interests; Acceptance of
REMIC I and REMIC II by the Trustee.
(a) The Depositor, concurrently with the execution and
delivery hereof, does hereby transfer, assign, set over and otherwise convey in
trust to the Trustee without recourse all the right, title and interest of the
Depositor in and to the assets described in the definition of REMIC I for the
benefit of the Holders of the REMIC I Regular Interests (which are
uncertificated) and the Class R Certificates (in respect of the Class R-I
Interest). The Trustee acknowledges receipt of the assets described in the
definition of REMIC I and declares that it holds and shall hold the same in
trust for the exclusive use and benefit of the Holders of the REMIC I Regular
Interests and the Class R Certificates (in respect of the Class R-I Interest).
The interests evidenced by the Class R-I Interest, together with the REMIC I
Regular Interests, constitute the entire beneficial ownership interest in REMIC
I.
(b) The Depositor, concurrently with the execution and
delivery hereof, does hereby transfer, assign, set over and otherwise convey in
trust to the Trustee without recourse all the right, title and interest of the
Depositor in and to the REMIC I Regular Interests (which are uncertificated) for
the benefit of the Holders of the REMIC II Regular Interests and the Class R
Certificates (in respect of the Class R-II Interest). The Trustee acknowledges
receipt of the REMIC I Regular Interests and declares that it holds and shall
hold the same in trust for the exclusive use and benefit of the Holders of the
REMIC II Regular Interests and the Class R Certificates (in respect of the Class
R-II Interest). The interests evidenced by the Class R-II Interest, together
with the Regular Certificates, constitute the entire beneficial ownership
interest in REMIC II.
SECTION 2.08. Issuance of Class R Certificates.
(a) The Trustee acknowledges the assignment to it of the REMIC
I Regular Interests and, concurrently therewith and in exchange therefor,
pursuant to the written request of the Depositor executed by an officer of the
Depositor, the Trustee has executed, authenticated and delivered to or upon the
order of the Depositor, the Class R Certificates in authorized denominations.
The interests evidenced by the Class R Certificates, together with the REMIC I
Regular Interests and the Regular Certificates constitute the entire beneficial
ownership interest in REMIC I and REMIC II.
ARTICLE III
ADMINISTRATION AND SERVICING
OF THE MORTGAGE LOANS
SECTION 3.01. Servicer to Act as Servicer.
The Servicer shall service and administer the Mortgage Loans
on behalf of the Trustee and in the best interests of and for the benefit of the
Certificateholders (as determined by the Servicer in its reasonable judgment) in
accordance with (i) the terms of the respective Mortgage Loans and any insurance
policies related thereto, (ii) all Applicable Regulations, (iii) the terms of
this Agreement, and (iv) to the extent consistent with the preceding
requirements, in the same manner in which it services and administers similar
mortgage loans for its own portfolio, giving due consideration to customary and
usual standards of practice of prudent mortgage lenders and loan servicers
administering similar mortgage loans but without regard to:
(i) any relationship that the Servicer, any Sub-Servicer or
any Affiliate of the Servicer or any Sub-Servicer may have with the
related Mortgagor;
(ii) the ownership or non-ownership of any Certificate by the
Servicer or any Affiliate of the Servicer;
(iii) the Servicer's obligation to make P&I Advances or
Servicing Advances; or
(iv) the Servicer's or any Sub-Servicer's right to receive
compensation for its services hereunder or with respect to any
particular transaction (all of the foregoing, the "SERVICING
STANDARD").
To the extent consistent with the foregoing the Servicer shall
also seek to maximize the timely and complete recovery of principal and interest
on the Mortgage Notes related to the Mortgage Loans. Subject only to the
above-described Servicing Standard, the Servicer shall have full power and
authority, acting alone or through Sub-Servicers as provided in Section 6.06, to
do or cause to be done any and all things in connection with such servicing and
administration which it may deem necessary or desirable. Without limiting the
generality of the foregoing, the Servicer in its own name or in the name of a
Sub-Servicer is hereby authorized and empowered by the Trustee to and shall, to
the extent provided for under this Agreement and in accordance with the
Servicing Standard, (i) execute and deliver, on behalf of the Certificateholders
and the Trustee, any and all instruments of satisfaction or cancellation, or of
partial or full release or discharge, or of forbearance, or of modification and
all other comparable instruments, with respect to the Mortgage Loans and the
Mortgaged Properties, (ii) institute foreclosure proceedings or obtain a
deed-in-lieu of foreclosure to convert the ownership of such properties, and to
hold or cause to be held title to such properties, in the name of the Trust
Fund, on behalf of the Trustee and the Certificateholders, (iii) market, sell
and transfer title of REO Properties held in the name of the Trust Fund to third
party purchasers upon terms and conditions the Servicer deems reasonable under
the Servicing Standard, (iv) bring or respond to civil actions or complaints (in
its own name or that of the Trust Fund or the Trustee on behalf of the Trust
Fund) related to any Mortgage Loan, Mortgaged Property or REO Property held by
the Trust Fund and (v) execute any other document necessary or appropriate to
enable the Servicer to carry out its servicing and administrative duties
hereunder consistent with the Servicing Standard.
At the written request of the Servicer, the Trustee shall
execute and furnish to the Servicer such documents as are necessary or
appropriate to enable the Servicer to carry out its servicing and administrative
duties hereunder. By execution of this Agreement, the Trustee, on behalf of the
Trust Fund, hereby grants to the Servicer a power of attorney in the form of
Exhibit I hereto, to execute any and all documents necessary to carry out any
and all servicing duties described in this Agreement (including the taking of
and transferring title of REO Properties to third parties held in the name of
the Trustee for the benefit of the Trust) and expressly confirms that this
paragraph along with the face page and a copy of the signature page (duly
executed) to this Agreement shall constitute the power of attorney for
evidentiary and/or recording purposes. The Trustee shall not be liable for the
actions of the Servicer or any Sub-Servicers under such powers of attorney.
Consistent with the terms of this Agreement and with respect
to any Mortgage Loan that is Delinquent or in default, 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 if such waiver, modification, postponement or indulgence is in
conformity with the Servicing Standard; provided, however, that:
(A) the Servicer shall not make future advances (except as
provided in Section 4.03);
(B) 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 any principal or interest payments, reduce
the outstanding Stated Principal Balance (except for reductions
resulting from actual payments of principal) or extend the final
maturity date on such Mortgage Loan (unless as provided in Section
3.02, (i) the Mortgagor is Delinquent or (ii) the Mortgagor is in
default with respect to the Mortgage Loan); and
(C) the Servicer shall not permit any waiver, postponement or
indulgence or consent to (i) partial releases of Mortgages, (ii)
alterations, (iii) removal, demolition or division of properties
subject to Mortgages, (iv) modification or (v) second mortgage
subordination agreements with respect to any Mortgage Loan that in any
case would: (i) affect adversely the status of any Trust REMIC as a
REMIC,(ii) cause any Trust REMIC to be subject to a tax on "prohibited
transactions" or "contributions" pursuant to the REMIC Provisions, or
(iii) both (x) effect an exchange or reissuance of such Mortgage Loan
under Section 1001 of the Code (or Treasury regulations promulgated
thereunder) and (y) cause any Trust REMIC constituting part of the
Trust Fund to fail to qualify as a REMIC under the Code or the
imposition of any tax on "prohibited transactions" or "contributions"
after the Startup Day under the REMIC Provisions.
The Servicer may delegate any of its responsibilities under
this Agreement; provided, however, that no such delegation shall release the
Servicer from the responsibilities or liabilities arising under this Agreement.
All references to Servicer in this Agreement shall be deemed to include any
Sub-Servicer duly appointed by the Servicer pursuant to this Agreement.
Consistent with the foregoing and this Agreement, the Servicer
shall seek to maximize the collection of amounts due, and minimize losses that
might be incurred, in connection with any Mortgage Loan. For any Delinquent or
defaulted Mortgage Loan, the Servicer (a) shall pursue collection from the
related Mortgagor of all amounts due under the terms of such Mortgage Loan, (b)
at such time as in the judgment of the Servicer such collection efforts have
been exhausted but in no case to exceed a period of __ months since such
Mortgage Loan became Delinquent, the Servicer shall consider other workout
activities pursuant to Section 3.02 to maximize collections and minimize losses,
and (c) at such time as in the judgment of the Servicer such workout activities
have been exhausted, the Servicer shall seek all other remedies that in its best
judgment are available to maximize collections and minimize losses through
foreclosure sale in respect of Mortgaged Properties or through any legal action
brought to obtain judgment against the related Mortgagor or to obtain a
deficiency judgment, or to enforce any other remedies or rights provided by the
Mortgage Note or Mortgage or otherwise available at law or in equity.
SECTION 3.02. Collection of Certain Mortgage Loan Payments.
The Servicer shall make reasonable efforts to collect all
payments called for under the terms and provisions of the Mortgage Loans, and
shall, to the extent such procedures shall be consistent with this Agreement and
the terms and provisions of any applicable insurance policies, follow such
collection procedures as it would follow with respect to mortgage loans
comparable to the Mortgage Loans and held for its own account. Consistent with
the foregoing, the Servicer may in its discretion, with respect to any Mortgage
Loan that is Delinquent or in default, (i) waive any late payment charge or, if
applicable, penalty interest, (ii) waive any provisions of such Mortgage Loan
requiring the related Mortgagor to submit to mandatory arbitration with respect
to disputes arising thereunder or (iii) extend the due dates for the Monthly
Payments due on the related Mortgage Note for a period of not greater than 180
days; provided that any extension pursuant to clause (iii) above shall not
affect the amortization schedule of such Mortgage Loan for purposes of any
computation hereunder. In connection with any such modification, the Servicer
may reimburse itself for any unpaid P&I Advances with respect to such modified
Mortgage Loan at the time of such modification, in accordance with Section
3.05(a) of this Agreement. In the event of any such arrangement pursuant to
clause (iii) above, the Servicer shall make timely advances on such Mortgage
Loan during such extension pursuant to Section 4.03 and in accordance with the
original amortization schedule of such Mortgage Loan without modification
thereof by reason of such arrangements.
Notwithstanding the foregoing, in the event that any Mortgage
Loan is Delinquent or in default, the Servicer, consistent with the Servicing
Standard, may also waive, modify or vary any term of such Mortgage Loan
(including modifications that would change the Mortgage Rate, forgive the
payment of principal or interest or extend the final maturity date of such
Mortgage Loan), accept payment from the related Mortgagor of an amount less than
the Stated Principal Balance in final satisfaction of such Mortgage Loan, or
consent to the postponement of strict compliance with any such term or otherwise
grant indulgence to any Mortgagor (any and all such waivers, modifications,
variances, forgiveness of principal or interest, postponements, or indulgences
collectively referred to herein as "forbearance"). The Servicer's analysis
supporting any forbearance and the conclusion that any forbearance meets the
standards of Section 3.01 shall be reflected in writing in the Mortgage File.
In the event that a shortfall in any collection on or
liability with respect to any Mortgage Loan results from or is attributable to
adjustments to Mortgage Rates, Monthly Payments or Stated Principal Balances
that were made by the Servicer in a manner not consistent with the terms of the
related Mortgage Note and this Agreement, the Servicer, upon discovery or
receipt of notice thereof, immediately shall deliver to the Trustee for deposit
in the Distribution Account from its own funds the amount of any such shortfall
and shall indemnify and hold harmless the Trust Fund, the Trustee, the Depositor
and any successor Servicer in respect of any such liability. Such indemnities
shall survive the termination or discharge of this Agreement.
SECTION 3.03. [Reserved].
SECTION 3.04. Collection Account, Escrow Account and Distribution Account.
(a) COLLECTION ACCOUNT. On behalf of the Trust Fund, the
Servicer shall segregate and hold all funds collected and received pursuant to
each Mortgage Loan separate and apart from any of its own funds and general
assets and shall establish and maintain in the name of the Trustee one or more
accounts (such account or accounts, the "COLLECTION ACCOUNT") in accordance with
this Section 3.04, held in trust for the benefit of the Trustee and the
Certificateholders. The Trustee shall not be responsible for reconciling the
Collection Account.
(b) DEPOSITS TO THE COLLECTION ACCOUNT. On behalf of the Trust
Fund, the Servicer shall deposit in the Collection Account, in no event more
than two Business Days after the Servicer's receipt thereof, the following
payments and collections received or made by it subsequent to the Cut-off Date
with respect to the Mortgage Loans or payments (other than Principal
Prepayments) received by it on or prior to the Cut-off Date but allocable to a
Due Period subsequent thereto:
(i) all payments on account of principal, including Principal
Prepayments, on the Mortgage Loans and REO Properties;
(ii) all payments on account of interest (excluding Prepayment
Interest Excess collected on any Mortgage Loan during the related
Prepayment Period) on the Mortgage Loans and REO Properties adjusted to
the Net Mortgage Rate;
(iii) all Insurance Proceeds and Liquidation Proceeds (other
than proceeds to be held in the Escrow Account and applied to the
restoration or repair of the Mortgaged Property or released to the
Mortgagor in accordance with the Servicing Standard), Subsequent
Recoveries and any amounts received in respect of the rental of any REO
Property prior to REO Disposition;
(iv) all proceeds related to the purchase, substitution or
repurchase of any Mortgage Loan or REO Property in accordance with
Section 2.03;
(v) any amounts required to be deposited by the Servicer
pursuant to Section 3.09 in connection with the deductible clause in
any blanket hazard insurance policy, such deposit being made from the
Servicer's own funds, without reimbursement therefor;
(vi) any amounts required to be deposited by the Servicer
pursuant to Section 3.06 in connection with any losses realized on
Permitted Investments with respect to funds held in the Collection
Account;
(vii) all amounts required to be deposited in connection with
shortfalls in principal amount of Qualified Substitute Mortgage Loans
pursuant to Section 2.03 (for purposes of this clause (vii), the
Cut-off Date with respect to any Qualified Substitute Mortgage Loan
shall be deemed to be the date of substitution);
(viii) any amounts required to be deposited by the Servicer
pursuant to Section 4.03(b) or otherwise under this Agreement; and
(ix) all Prepayment Charges collected by the Servicer and all
Servicer Prepayment Charge Payment Amounts payable by the Servicer
pursuant to Section 2.03(b)(ii).
The foregoing requirements for deposit to the Collection
Account shall be exclusive, it being understood and agreed that, without
limiting the generality of the foregoing, payments in the nature of Prepayment
Interest Excess, late payment charges, assumption fees, insufficient funds
charges, modification fees and other ancillary fees (but not Prepayment Charges)
need not be deposited by the Servicer in the Collection Account and shall upon
collection, belong to the Servicer as additional compensation for its servicing
activities. In the event the Servicer shall deposit in the Collection Account
any amount not required to be deposited therein, it may at any time withdraw
such amount from the Collection Account, any provision herein to the contrary
notwithstanding.
(c) ESCROW ACCOUNT. The Servicer shall segregate and hold all
funds collected and received pursuant to each Mortgage Loan which constitute
Escrow Payments separate and apart from any of its own funds and general assets
and shall establish and maintain in the name of the Trustee one or more accounts
(such account or accounts, the "ESCROW ACCOUNT") held in trust for the benefit
of the Certificateholders and the Trustee.
(d) DEPOSITS TO THE ESCROW ACCOUNT. The Servicer shall deposit
or cause to be deposited in the clearing account (which account must be an
Eligible Account) in which it customarily deposits payments and collections on
mortgage loans in connection with its mortgage loan servicing activities on a
daily basis, and in no event more than one Business Day after the Servicer's
receipt thereof, and shall thereafter deposit in the Escrow Account, in no event
more than two Business Days after the deposit of such funds into the clearing
account, as and when received or as otherwise required hereunder, 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 Insurance Proceeds which are to be applied to the
restoration or repair of any Mortgaged Property.
(e) DISTRIBUTION ACCOUNT. On behalf of the Trust Fund, the
Trustee shall segregate and hold all funds collected and received pursuant to
this Agreement separate and apart from any of its own funds and general assets
and shall establish and maintain in the name of the Trustee one or more
segregated accounts (such account or accounts, the "DISTRIBUTION ACCOUNT"), held
in trust for the benefit of the Certificateholders.
(f) TRUSTEE DEPOSITS TO THE DISTRIBUTION ACCOUNT. Upon
receipt, the Trustee shall deposit or cause to be deposited into the
Distribution Account all payments of any nature received from the Servicer in
accordance with this Agreement. The Trustee shall deposit in the Distribution
Account any amounts required to be deposited pursuant to Section 3.06 in
connection with losses realized on Permitted Investments with respect to funds
held in the Distribution Account.
(g) SERVICER TRANSFER OF FUNDS TO THE DISTRIBUTION ACCOUNT. On
behalf of the Trust Fund, the Servicer shall deliver to the Trustee in
immediately available funds for deposit in the Distribution Account by 1:00 p.m.
(New York time) on the Servicer Remittance Date, (i) that portion of the
Available Distribution Amount (calculated without regard to the references in
clause (2) of the definition thereof to amounts that may be withdrawn from the
Distribution Account) for the related Distribution Date then on deposit in the
Collection Account, and (ii) without duplication, the amount of all Prepayment
Charges collected by the Servicer and all Servicer Prepayment Charge Payment
Amounts payable by the Servicer pursuant to Section 2.03(b)(ii) (to the extent
not related to Principal Prepayments occurring after the related Prepayment
Period).
In addition, the Servicer shall deliver to the Trustee from
time to time as required by this Agreement, for deposit and the Trustee shall so
deposit, in the Distribution Account:
(i) any P&I Advances, as required pursuant to Section 4.03;
(ii) any amounts required to be deposited pursuant to Section
3.13 in connection with any REO Property;
(iii) any amounts to be paid in connection with a purchase of
Mortgage Loans and REO Properties pursuant to Section 3.16 and Section
9.01;
(iv) any Compensating Interest as required pursuant to Section
4.03(e);
(v) [reserved];
(vi) any amounts required to be paid by the Servicer pursuant
to Section 3.06 in connection with any losses realized on Permitted
Investments with respect to funds held in the Collection Account; and
(vii) any amounts required to be paid to the Trustee from the
assets of the Trust Fund on deposit in the Collection Account pursuant
to this Agreement, including but not limited to amounts required to be
paid to the Trustee pursuant to Section 7.02 and Section 8.05.
Funds held in the Collection Account pursuant to Section
3.04(b) may at any time be delivered by the Servicer to the Trustee for deposit
into the Distribution Account and for all purposes of this Agreement shall be
deemed to be a part of the Collection Account until the Business Day prior to
the Distribution Date; provided, however, that the Trustee shall have the sole
authority to withdraw any funds held pursuant to this paragraph. In the event
the Servicer shall deliver to the Trustee for deposit in the Distribution
Account any amount not required to be deposited therein, it may at any time
request that the Trustee withdraw such amount from the Distribution Account and
remit to it any such amount, any provision herein to the contrary
notwithstanding.
(h) INVESTMENT OF ACCOUNT FUNDS. Funds on deposit in the
Collection Account, the Distribution Account, any REO Account and any Escrow
Account may be invested in Permitted Investments in accordance with the
provisions set forth in Section 3.06. Any investment earnings or interest paid
on funds deposited in the Collection Account, the Distribution Account, any REO
Account and any Escrow Account (subject to Section 3.05(b)) shall accrue to the
benefit of the Servicer. Any amounts in the Distribution Account earned for the
benefit of the Servicer shall be remitted by the Trustee to the Servicer not
later than the third Business Day of the month immediately succeeding the month
in which such amounts were earned.
Funds on deposit in the Net WAC Rate Carryover Reserve Account
may be invested in Permitted Investments in accordance with Section 3.06,
subject to any limitations set forth in Section 4.09 (with respect to the Net
WAC Rate Carryover Reserve Account) and any investment earnings or interest paid
shall accrue to the benefit of the party designated in such section and the
party so designated shall deposit in the related account from its own funds the
amount of any loss incurred on Permitted Investments in such account.
(i) CREATION, LOCATION AND SUBSEQUENT TRANSFERS OF ACCOUNTS.
Each account created pursuant to this Agreement must be an Eligible Account. On
or prior to the Closing Date, the Servicer and the Trustee shall give notice, to
each other, and the Depositor of the location of any account created by it
pursuant to this Agreement. From time to time, the Servicer and the Trustee may
each transfer any account created by it to a different depository institution
provided that upon such transfer the written notice is provided to all other
parties listed in the preceding sentence.
(j) In order to comply with its duties under the U.S.A.
Patriot Act of 2001, the Trustee shall obtain and verify certain information and
documentation from the owners of the accounts that the Trustee establishes
pursuant to this Agreement including, but not limited to, each account owner's
name, address, and other identifying information.
SECTION 3.05. Permitted Withdrawals From the Collection Account, Escrow
Account and Distribution Account.
(a) COLLECTION ACCOUNT. The Servicer may, from time to time,
withdraw from the Collection Account for the following purposes or as described
in Section 4.03:
(i) to remit to the Trustee for deposit in the Distribution
Account the amounts required to be so remitted pursuant to Section
3.04(g) or permitted to be so remitted pursuant to the last paragraph
of Section 3.04(g);
(ii) subject to Section 3.12(c), to reimburse itself for (a)
any unpaid Servicing Fees, (b) any unreimbursed Servicing Advances and
(c) any ▇▇▇▇▇▇▇▇▇▇▇▇ ▇&▇ Advances, the Servicer's right to reimburse
itself pursuant to this subclause (ii) being limited to any Late
Collections, Liquidation Proceeds, Subsequent Recoveries and Insurance
Proceeds received on the related Mortgage Loan and any amounts received
in respect of the rental of the related REO Property prior to an REO
Disposition that represent payments of principal and/or interest
respecting which any such advance was made;
(iii) to reimburse itself for (a) any unpaid Servicing Fees to
the extent not recoverable under Section 3.05(a)(ii), (b) any unpaid
P&I Advances or Servicing Advances that have been deemed Nonrecoverable
Advances or Nonrecoverable Servicing Advances and (c) to reimburse
itself for any P&I Advances previously made from amounts held from time
to time in the Collection Account that are not then required to be
distributed, including upaid P&I Advances on Mortgages Loans modified
pursuant to Section 3.02 where (x) such P&I Advance is added to the
unpaid Stated Principal Balance of such Mortgage Loan or (y) a portion
of the unpaid Stated Principal Balance of such Mortgage Loan has been
forgiven (provided that such amounts must be deposited into the
Collection Account prior to the next Distribution Date);
(iv) to pay to itself any Prepayment Interest Excess to the
extent not otherwise retained;
(v) to reimburse itself for any amounts paid pursuant to
Section 3.12(b) (and not otherwise previously reimbursed);
(vi) to pay to itself as servicing compensation any interest
earned on funds in the Collection Account;
(vii) subject to Section 4.03(b), to reimburse the Servicer in
respect of any ▇▇▇▇▇▇▇▇▇▇▇▇ ▇&▇ Advances to the extent of funds held in
the Collection Account for future distribution that were not included
in the Available Distribution Amount for the preceding Distribution
Date (provided that such amounts must be deposited into the Collection
Account prior to the next Distribution Date);
(viii) to reimburse the Servicer or the Depositor for expenses
incurred by or reimbursable to the Servicer or the Depositor, as the
case may be, pursuant to Section 6.03;
(ix) to remit to the Trustee any amounts that the Trustee is
permitted to be paid or reimbursed from the assets of the Trust Fund
pursuant to the terms of this Agreement, including the terms of Section
7.02(a) and Section 8.05;
(x) to reimburse the Servicer (if the Servicer is not an
Affiliate of the Originator) or the Trustee, as the case may be, for
enforcement expenses reasonably incurred in respect of the breach or
defect giving rise to the purchase obligation under Section 2.03 that
were included in the Purchase Price of the Mortgage Loan, including any
expenses arising out of the enforcement of the purchase obligation;
(xi) to pay to the Servicer, Depositor, the Seller or the
Originator, as the case may be, with respect to each Mortgage Loan that
has previously been purchased or replaced pursuant to Section 2.03 or
Section 3.16(a) all amounts received thereon subsequent to the date of
purchase or substitution, as the case may be;
(xii) to transfer funds in the Collection Account maintained
at a particular depository to the Collection Account maintained at a
different depository, pursuant to Section 3.04(i);
(xiii) to withdraw any funds deposited therein in error; and
(xiv) to clear and terminate the Collection Account upon the
termination of this Agreement.
The Servicer shall keep and maintain separate accounting, on a
Mortgage Loan by Mortgage Loan basis, for the purpose of justifying any
withdrawal from the Collection Account, to the extent held by or on behalf of
it, pursuant to subclauses (ii), (iii), (iv), (v), (vi), (vii), (viii), (x) and
(xi) above. The Servicer shall provide written notification to the Trustee on or
prior to the next succeeding Servicer Reporting Date, upon making any
withdrawals from the Collection Account pursuant to subclause (viii) above.
(b) ESCROW ACCOUNT. The Servicer may, from time to time,
withdraw from the Escrow Account for the following purposes:
(i) to effect payments of ground rents, taxes, assessments,
water rates, hazard insurance premiums and comparable items;
(ii) to reimburse the Servicer for any Servicing Advance made
by the Servicer with respect to a related Mortgage Loan but only from
amounts received on the related Mortgage Loan which represent late
payments or Late Collections of Escrow Payments thereunder;
(iii) to refund to the Mortgagor any funds as may be
determined to be overages;
(iv) for transfer to the Collection Account in accordance with
the terms of this Agreement, including without limitation any Insurance
Proceeds;
(v) for application to restoration or repair of the Mortgaged
Property;
(vi) to pay to the Servicer, or to the Mortgagor to the extent
required by the related Mortgage Loan or Applicable Regulations, 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.
In the event the Servicer shall deposit in an Escrow Account
any amount not required to be deposited therein, it may at any time withdraw
such amount from such Escrow Account, any provision herein to the contrary
notwithstanding. As part of its servicing duties, the Servicer shall pay to the
Mortgagor interest on funds in the Escrow Account, to the extent required by the
related Mortgage Loan or Applicable Regulations, and to the extent that interest
earned on funds in the Escrow Account is insufficient, shall pay such interest
from its own funds, without any reimbursement therefor. The Servicer may pay to
itself any excess interest on funds in the Escrow Account, to the extent such
action is in conformity with the Servicing Standard, is permitted by law and
such amounts are not required to be paid to Mortgagors or used for any of the
other purposes set forth above.
(c) DISTRIBUTION ACCOUNT. The Trustee shall, from time to
time, make withdrawals from the Distribution Account, for any of the following
purposes:
(i) to pay Extraordinary Trust Fund Expenses or reimburse
itself for the payment of Extraordinary Trust Fund Expenses;
(ii) to make distributions to Certificateholders in accordance
with Section 4.01;
(iii) to pay to itself and the Custodian amounts to which
either is entitled pursuant to Section 8.05;
(iv) to pay the Servicer any interest income earned on funds
deposited in the Distribution Account pursuant to Section 3.06;
(v) to reimburse itself pursuant to Section 7.01;
(vi) to pay any amounts in respect of taxes pursuant to
Section 10.01(g)(iii); and
(vii) to clear and terminate the Distribution Account pursuant
to Section 9.01. SECTION 3.06. Investment of Funds in the Collection
Account, the Escrow Account, the REO Account and the Distribution
Account.
(a) The Servicer may direct any depository institution
maintaining the Collection Account, the Escrow Account (subject to Section
3.05(b)), the Distribution Account (for the period beginning on the Servicer
Remittance Date, to but not including the Business Day immediately preceding the
related Distribution Date) and the REO Account and the Trustee may direct any
depository institution maintaining the Distribution Account (for the period
beginning on the Business Day immediately preceding the Distribution Date, to
but not including the Distribution Date) (for purposes of this Section 3.06,
each an "INVESTMENT ACCOUNT"), to invest the funds in such Investment Account in
one or more Permitted Investments bearing interest or sold at a discount, and
maturing, unless payable on demand, (i) no later than the Business Day
immediately preceding the date on which such funds are required to be withdrawn
from such account pursuant to this Agreement, if a Person other than the Trustee
is the obligor thereon, and (ii) no later than the date on which such funds are
required to be withdrawn from such Investment Account pursuant to this
Agreement, if the Trustee is the obligor thereon. All such Permitted Investments
shall be held to maturity, unless payable on demand. Any investment of funds in
an Investment Account shall be made in the name of the Trustee (in its capacity
as such) or in the name of a nominee of the Trustee. The Trustee shall be
entitled to sole possession (except with respect to investment direction of
funds held in the Collection Account, the Escrow Account, and the REO Account)
over each such investment and (except with respect to the income on funds held
in the Collection Account, the Escrow Account and the REO Account) the income
thereon, and any certificate or other instrument evidencing any such investment
shall be delivered directly to the Trustee or its agent, together with any
document of transfer necessary to transfer title to such investment to the
Trustee or its nominee. In the event amounts on deposit in an Investment Account
are at any time invested in a Permitted Investment payable on demand, the
Trustee shall:
(i) consistent with any notice required to be given
thereunder, demand that payment thereon be made on the last day such
Permitted Investment may otherwise mature hereunder in an amount equal
to the lesser of (1) all amounts then payable thereunder and (2) the
amount required to be withdrawn on such date; and
(ii) demand payment of all amounts due thereunder promptly
upon determination by a Responsible Officer of the Trustee that such
Permitted Investment would not constitute a Permitted Investment in
respect of funds thereafter on deposit in the Investment Account.
(b) All income in the nature of interest from the investment
of funds in the Escrow Account (subject to Section 3.05(b)) and the REO Account
shall be for the benefit of the Servicer as compensation for the Servicer's
services pursuant to this Agreement. The Servicer shall deposit in the
Collection Account, the Escrow Account, and the REO Account, as applicable, from
its own funds the amount of any loss incurred in respect of any such Permitted
Investment made with funds in such account immediately upon realization of such
loss.
(c) All income and gain net of any losses realized from
amounts on deposit in the Distribution Account shall be for the benefit of the
Servicer as compensation for the Servicer's services pursuant to this Agreement.
Any amounts in such Distribution Account earned shall be remitted by the Trustee
to the Servicer not later than the third Business Day of the month immediately
succeeding the month in which such amounts were earned. The amount of any losses
incurred in the Distribution Account in respect of any such investments shall be
deposited by the Servicer in the Distribution Account out of the Servicer's own
funds immediately upon notice thereof from the Trustee.
(d) Except as otherwise expressly provided in this Agreement,
if any default occurs in the making of a payment due under any Permitted
Investment, or if a default occurs in any other performance required under any
Permitted Investment, the Trustee may and, subject to Section 8.01 and Section
8.02(a)(v), upon the request of the Holders of Certificates representing more
than 50% of the Voting Rights allocated to any Class of Certificates, shall take
such action as may be appropriate to enforce such payment or performance,
including the institution and prosecution of appropriate proceedings.
SECTION 3.07. Payment of Taxes, Insurance and Other Charges.
With respect to each first lien Mortgage Loan, the Servicer
shall maintain accurate records reflecting the status of ground rents, taxes,
assessments, water rates and other charges which are or may become a lien upon
the Mortgaged Property and the status of fire and hazard insurance coverage and,
as to those Mortgage Loans subject to a voluntary escrow agreement, shall
obtain, from time to time, all bills for the payment of such charges (including
renewal premiums) and shall effect payment thereof prior to the applicable
penalty or termination date and at a time appropriate for securing maximum
discounts allowable, 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 or Applicable Regulations. The Servicer assumes full responsibility for
the timely payment of all such bills and shall effect timely payments of all
such bills irrespective of the Mortgagor's faithful performance in the payment
of same or the making of the Escrow Payments and shall make Servicing Advances
from its own funds to effect such payments.
To the extent that a Mortgage does not provide for Escrow
Payments, the Servicer (i) shall determine whether any such payments are made by
the Mortgagor in a manner and at a time that 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 and (ii) shall ensure that all insurance required to be maintained on the
Mortgaged Property pursuant to this Agreement is maintained. If any such payment
has not been made and the Servicer receives notice of a tax lien with respect to
the Mortgage Loan being imposed, the Servicer will, to the extent required to
avoid loss of the Mortgaged Property, advance or cause to be advanced funds
necessary to discharge such lien on the Mortgaged Property.
SECTION 3.08. Maintenance of Hazard Insurance.
The Servicer shall cause to be maintained for each Mortgage
Loan fire insurance with extended coverage on the related Mortgaged Property in
an amount which is at least equal to the least of (i) the current Stated
Principal Balance of such Mortgage Loan, (ii) the amount necessary to fully
compensate for any damage or loss to the improvements that are a part of such
property on a replacement cost basis and (iii) the maximum insurable value of
the improvements which are a part of such Mortgaged Property, in each case in an
amount not less than such amount as is necessary to avoid the application of any
coinsurance clause contained in the related hazard insurance policy. The
Servicer shall also cause to be maintained fire insurance with extended coverage
on each REO Property in an amount which is at least equal to the lesser of (i)
the maximum insurable value of the improvements which are a part of such
property and (ii) the outstanding Stated Principal Balance of the related
Mortgage Loan, plus accrued interest at the Mortgage Rate and related Servicing
Advances (each measured at the time it became an REO Property). The Servicer
shall comply in the performance of this Agreement with all reasonable rules and
requirements of each insurer under any such hazard policies. Any amounts to be
collected by the Servicer under any such policies (other than amounts to be
applied to the restoration or repair of the property subject to the related
Mortgage or amounts to be released to the Mortgagor in accordance with the
procedures that the Servicer would follow in servicing loans held for its own
account, subject to the terms and conditions of the related Mortgage and
Mortgage Note) shall be deposited in the Collection Account, subject to
withdrawal pursuant to Section 3.05, if received in respect of a Mortgage Loan,
or in the REO Account, subject to withdrawal pursuant to Section 3.13, if
received in respect of an REO Property. Any cost incurred by the Servicer in
maintaining any such insurance shall not, for the purpose of calculating
distributions to Certificateholders, be added to the unpaid Stated Principal
Balance of the related Mortgage Loan, notwithstanding that the terms of such
Mortgage Loan so permit. It is understood and agreed that no earthquake or other
additional insurance is to be required of any Mortgagor other than pursuant to
such applicable laws and regulations as shall at any time be in force and as
shall require such additional insurance. If the Mortgaged Property or REO
Property is at any time in an area identified in the Federal Register by the
Federal Emergency Management Agency as having special flood hazards, the
Servicer shall cause to be maintained a flood insurance policy in respect
thereof. Such flood insurance shall be in an amount equal to the lesser of (i)
the unpaid Stated Principal Balance of the related Mortgage Loan, (ii) the
maximum amount of such insurance available for the related Mortgaged Property
under the national flood insurance program (assuming that the area in which such
Mortgaged Property is located is participating in such program) and (iii) the
maximum insurable value of the improvements which are part of the related
Mortgaged Property.
SECTION 3.09. Maintenance of Mortgage Blanket Insurance.
In the event that the Servicer shall obtain and maintain a
blanket policy with an insurer having a General Policy Rating of ___ or better
in Best's Key Rating Guide (or such other rating that is comparable to such
rating) insuring against hazard losses on all of the Mortgage Loans, it shall
conclusively be deemed to have satisfied its obligations as set forth in the
first two sentences of Section 3.08, it being understood and agreed that such
policy may contain a deductible clause, in which case the Servicer shall, in the
event that there shall not have been maintained on the related Mortgaged
Property or REO Property a policy complying with the first two sentences of
Section 3.08, and there shall have been one or more losses which would have been
covered by such policy, deposit to the Collection Account from its own funds the
amount not otherwise payable under the blanket policy because of such deductible
clause. In connection with its activities as administrator and servicer of the
Mortgage Loans, the Servicer agrees to prepare and present, on behalf of itself,
the Trustee and the Certificateholders, claims under any such blanket policy in
a timely fashion in accordance with the terms of such policy.
SECTION 3.10. Fidelity Bond; Errors and Omissions Insurance.
The Servicer shall keep in force during the term of this
Agreement a policy or policies of insurance covering errors and omissions for
failure in the performance of the Servicer's obligations under this Agreement,
which policy or policies shall be in such form and amount that would meet the
requirements of ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac if it were the purchaser of the
Mortgage Loans. The Servicer shall also maintain a fidelity bond in the form and
amount that would meet the requirements of ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac. Upon
reasonable request, the Servicer shall provide the Trustee with copies of any
such insurance policies and fidelity bond. The Servicer shall be deemed to have
complied with this provision if an Affiliate of the Servicer has such errors and
omissions and fidelity bond coverage and, by the terms of such insurance policy
or fidelity bond, the coverage afforded thereunder extends to the Servicer. Any
such errors and omissions policy and fidelity bond shall by its terms not be
cancelable without thirty days' prior written notice to the Trustee. The
Servicer shall also cause each Sub-Servicer to maintain a policy of insurance
covering errors and omissions and a fidelity bond which would meet such
requirements.
SECTION 3.11. Enforcement of Due-On-Sale Clauses; Assumption Agreements.
The Servicer shall, to the extent it has knowledge of any
conveyance or prospective conveyance of any Mortgaged Property by any Mortgagor
(whether by absolute conveyance or by contract of sale, and whether or not the
Mortgagor remains or is to remain liable under the Mortgage Note and/or the
Mortgage), exercise its rights to accelerate the maturity of such Mortgage Loan
under the "due-on-sale" clause, if any, applicable thereto; provided, however,
that the Servicer shall not exercise any 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, or if any of the other conditions set
forth in the proviso to the preceding sentence apply, the Servicer is authorized
to enter into an assumption and modification agreement from or with the person
to whom such property has been conveyed or is proposed to be conveyed, pursuant
to which such person becomes liable under the Mortgage Note and, to the extent
permitted by applicable state law, the Mortgagor remains liable thereon. In
connection with any assumption or substitution, the Servicer shall follow such
practices and procedures as shall be normal and usual in its general mortgage
servicing activities and as it applies to other mortgage loans serviced solely
by it to minimize the potential loss associated with such Mortgage Loan. Any fee
collected by the Servicer in respect of an assumption or substitution of
liability agreement shall be retained by the Servicer as additional servicing
compensation. In connection with any such assumption, no material term of the
Mortgage Note (including but not limited to the related Mortgage Rate and the
amount of the Monthly Payment) may be amended or modified, except as otherwise
required pursuant to the terms thereof or otherwise permitted under Section
3.01. The Servicer shall notify the Trustee and any respective Custodian that
any such substitution or assumption agreement has been completed by forwarding
to the Trustee or to such Custodian, as the case may be, the executed original
of such substitution or assumption agreement, which document shall be added to
the related Mortgage File and shall, for all purposes, be considered a part of
such Mortgage File to the same extent as all other documents and instruments
constituting a part thereof. Except as described in this paragraph, the Servicer
is not authorized to substitute one borrower for another in connection with any
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 by the terms of the Mortgage Note or any
assumption which the Servicer may be restricted by law from preventing, for any
reason whatever. For purposes of this Section 3.11, the term "assumption" is
deemed to also include a sale (of the Mortgaged Property) subject to the
Mortgage that is not accompanied by an assumption or substitution of liability
agreement.
SECTION 3.12. Realization Upon Defaulted Mortgage Loans.
(a) The Servicer shall, consistent with the Servicing
Standard, foreclose upon or otherwise comparably convert the ownership of
properties securing the Mortgage Loans that come into and continue in default
and as to which no satisfactory arrangements can be made for collection of
delinquent payments pursuant to Section 3.02. The Servicer shall be responsible
for all costs and expenses incurred by it in any such proceedings; provided,
however, that such costs and expenses shall be recoverable as Servicing Advances
by the Servicer as contemplated in Section 3.05 and Section 3.13. The foregoing
is subject to the provision that: (i) in any case in which Mortgaged Property
shall have suffered damage from an Uninsured Cause, the Servicer shall not be
required to expend its own funds toward the restoration of such property unless
it shall determine in its discretion that such restoration will increase the
proceeds of liquidation of the related Mortgage Loan after reimbursement to
itself for such expenses and (ii) with respect to any second lien Mortgage Loan
for which the related first lien mortgage loan is not included in the Trust
Fund, if, after such Mortgage Loan becomes 180 days or more Delinquent and the
Servicer, after making a Final Recovery Determination, determines that a net
recovery that would eliminate or reduce a Realized Loss by more than an
immaterial amount is not possible through foreclosure, such Mortgage Loan may be
charged off and such Mortgage Loan shall be treated as a Liquidated Mortgage
Loan giving rise to a Realized Loss.
(b) Reserved.
(c) Certain of the Mortgage Loans may become Delinquent after
the Cut-off Date. The Servicer may, in accordance with the Servicing Standard,
either foreclose on any such Mortgage Loan or work out an agreement with the
Mortgagor, which may involve waiving or modifying certain terms of the Mortgage
Loan. In addition, the Servicer may write-off any second lien Mortgage Loan that
is Delinquent by 180 days or more.
SECTION 3.13. Title, Management and Disposition of REO Property.
(a) The deed or certificate of sale of any REO Property shall
be taken in the name of the Trustee, or its nominee, in trust for the benefit of
the Certificateholders. Pursuant to the power of attorney granted in Section
3.01, the Servicer is hereby authorized to transfer the title of any REO
Property taken in the name of the Trustee to a third party purchaser pursuant to
this Section 3.13 without further documentation of its authority as
attorney-in-fact for the Trustee on behalf of the Trust. The Servicer, on behalf
of the Trust Fund (and on behalf of the Trustee for the benefit of the
Certificateholders), shall seek to market and complete the sale of any REO
Property within a period not to exceed one year from the date after the Trust
Fund acquires ownership of such REO property. To the extent any REO Property
requires significant repair to ready that property for sale or should market
conditions temporarily prevent or delay the sale of any REO Property, the
Servicer shall continue to market the REO Property for sale beyond this one-year
period. Notwithstanding the foregoing requirements, the Servicer shall either
sell any REO Property before the close of the third taxable year after the year
the Trust Fund acquires ownership of such REO Property for purposes of Section
860G(a)(8) of the Code or request from the Internal Revenue Service, no later
than 60 days before the day on which the three-year grace period would otherwise
expire, an extension of the three-year grace period, unless the Servicer shall
have delivered to the Trustee and the Depositor an Opinion of Counsel, addressed
to the Trustee and the Depositor, to the effect that the holding by the Trust
Fund of such REO Property subsequent to three years after its acquisition shall
not result in the imposition on any Trust REMIC of taxes on "prohibited
transactions" thereof, as defined in Section 860F of the Code, or cause any
Trust REMIC to fail to qualify as a REMIC under Federal law at any time that any
Certificates are outstanding. The Servicer shall manage, conserve, protect and
operate each REO Property for the benefit of the Certificateholders and solely
for the purpose of its prompt disposition and sale in a manner which does not
cause such REO Property to fail to qualify as "foreclosure property" within the
meaning of Section 860G(a)(8) of the Code or result in the receipt by any Trust
REMIC of any "income from non-permitted assets" within the meaning of Section
860F(a)(2)(B) of the Code, or any "net income from foreclosure property" which
is subject to taxation under the REMIC Provisions.
(b) The Servicer shall segregate and hold all funds collected
and received in connection with the operation of any REO Property separate and
apart from its own funds and general assets and shall establish and maintain
with respect to REO Properties an account held in trust for the Trustee for the
benefit of the Certificateholders (the "REO ACCOUNT"), which shall be an
Eligible Account. The Servicer shall be permitted to allow the Collection
Account to serve as the REO Account, subject to separate ledgers for each REO
Property. The Servicer shall be entitled to retain or withdraw any interest
income paid on funds deposited in the REO Account.
(c) The Servicer shall have full power and authority, subject
only to the specific requirements and prohibitions of this Agreement, to do any
and all things in connection with any REO Property as are consistent with the
manner in which the Servicer manages and operates similar property owned by the
Servicer or any of its Affiliates, all on such terms and for such period as the
Servicer deems to be in the best interests of Certificateholders and appropriate
to effect the prompt disposition and sale of the REO Property. In connection
therewith, the Servicer shall deposit, or cause to be deposited in the clearing
account (which account must be an Eligible Account) in which it customarily
deposits payments and collections on mortgage loans in connection with its
mortgage loan servicing activities on a daily basis, and in no event more than
one Business Day after the Servicer's receipt thereof, and shall thereafter
deposit in the REO Account, in no event more than two Business Days after the
deposit of such funds into the clearing account, all revenues received by it
with respect to an REO Property and shall withdraw therefrom funds necessary for
the proper operation, management and maintenance of such REO Property including,
without limitation:
(i) all insurance premiums due and payable in respect of such
REO Property;
(ii) all real estate taxes and assessments in respect of such
REO Property that may result in the imposition of a lien thereon; and
(iii) all costs and expenses necessary to maintain such REO
Property.
To the extent that amounts on deposit in the REO Account with
respect to an REO Property are insufficient for the purposes set forth in
clauses (i) through (iii) above with respect to such REO Property, the Servicer
shall advance from its own funds such amount as is necessary for such purposes
if, but only if, the Servicer would make such advances if the Servicer owned the
REO Property and if in the Servicer's judgment, the payment of such amounts
shall be recoverable from the rental or sale of the REO Property.
Notwithstanding the Servicer's obligation to the
Certificateholders to manage and operate (including the collection of rents from
existing tenants and management of any leases acquired with the REO property to
the extent applicable) the REO Property from the date of acquisition until the
date of sale, neither the Servicer nor the Trustee shall knowingly:
(i) authorize the Trust Fund to enter into, renew or extend
any New Lease with respect to any REO Property, if the New Lease by its
terms shall give rise to any income that does not constitute Rents from
Real Property;
(ii) authorize any amount to be received or accrued under any
New Lease other than amounts that shall constitute Rents from Real
Property;
(iii) authorize any construction on any REO Property, other
than the completion of a building or other improvement thereon, and
then only if more than ten percent of the construction of such building
or other improvement was completed before default on the related
Mortgage Loan became imminent, all within the meaning of Section
856(e)(4)(B) of the Code; or
(iv) authorize any Person to Directly Operate any REO Property
on any date more than 90 days after its date of acquisition by the
Trust Fund;
unless, in any such case, the Servicer has obtained an Opinion of Counsel,
provided to the Trustee, to the effect that such action shall not cause such REO
Property to fail to qualify as "foreclosure property" within the meaning of
Section 860G(a)(8) of the Code at any time that it is held by the Trust Fund.
The Servicer may contract with any Independent Contractor for
the operation and management of any REO Property, provided that:
(i) the terms and conditions of any such contract shall not be
inconsistent herewith;
(ii) any such contract shall require, or shall be administered
to require, that the Independent Contractor pay all costs and expenses
incurred in connection with the operation and management of such REO
Property, including those listed above and remit all related revenues
(net of such costs and expenses) to the Servicer as soon as
practicable, but in no event later than thirty days following the
receipt thereof by such Independent Contractor;
(iii) none of the provisions of this Section 3.13(c) relating
to any such contract or to actions taken through any such Independent
Contractor shall be deemed to relieve the Servicer of any of its duties
and obligations to the Trustee on behalf of the Certificateholders with
respect to the operation and management of any such REO Property; and
(iv) the Servicer shall be obligated with respect thereto to
the same extent as if it alone were performing all duties and
obligations in connection with the operation and management of such REO
Property.
The Servicer shall be entitled to enter into any agreement
with any Independent Contractor performing services for it related to its duties
and obligations hereunder for indemnification of the Servicer by such
Independent Contractor, and nothing in this Agreement shall be deemed to limit
or modify such indemnification. The Servicer shall be solely liable for all fees
owed by it to any such Independent Contractor, irrespective of whether the
Servicer's compensation pursuant to Section 3.18 is sufficient to pay such fees.
The Servicer shall not engage an Independent Contractor to engage in any
activities that the Servicer would not be permitted to engage in itself in
accordance with the other provisions of this Agreement.
(d) In addition to the withdrawals permitted under Section 3.13(c), the Servicer
may from time to time make withdrawals from the REO Account for any REO
Property: (i) to pay itself or any Sub-Servicer unpaid Servicing Fees in respect
of the related Mortgage Loan; and (ii) to reimburse itself or any Sub-Servicer
for unreimbursed Servicing Advances and P&I Advances made in respect of such REO
Property or the related Mortgage Loan. On the Servicer Remittance Date, the
Servicer shall withdraw from each REO Account maintained by it and deposit into
the Distribution Account in accordance with Section 3.04(g)(ii), for
distribution on the related Distribution Date in accordance with Section 4.01,
the income from the related REO Property received during the prior calendar
month, net of any withdrawals made pursuant to Section 3.13(c) or this Section
3.13(d).
(e) Subject to the time constraints set forth in Section 3.13(a) (including the
constraint that the Servicer hold and manage each REO Property "solely for the
purpose of its prompt disposition"), each REO disposition shall be carried out
by the Servicer at such price and upon such terms and conditions as shall be
normal and usual in its general servicing activities for similar properties.
(f) The proceeds from the REO Disposition, net of any amount required by law to
be remitted to the Mortgagor under the related Mortgage Loan and net of any
payment or reimbursement to the Servicer or any Sub-Servicer as provided above,
shall be deposited in the Distribution Account in accordance with Section
3.04(g)(ii) on the Servicer Remittance Date in the month following the receipt
thereof for distribution on the related Distribution Date in accordance with
Section 4.01. Any REO Disposition shall be for cash only (unless changes in the
REMIC Provisions made subsequent to the Startup Day allow a sale for other
consideration).
SECTION 3.14. [Reserved].
SECTION 3.15. Reports of Foreclosure and Abandonment of Mortgaged
Properties.
The Servicer shall file information returns with respect to
the receipt of mortgage interest received in a trade or business, reports of
foreclosures and abandonments of any Mortgaged Property and cancellation of
indebtedness income with respect to any Mortgaged Property as required by
Sections 6050H, 6050J and 6050P of the Code, respectively. Such reports shall be
in form and substance sufficient to meet the reporting requirements imposed by
such Sections 6050H, 6050J and 6050P of the Code.
SECTION 3.16. Optional Purchase of Defaulted Mortgage Loans.
The Servicer may, at its option, purchase a Mortgage Loan
which has become 90 or more days Delinquent or for which the Servicer has
accepted a deed in lieu of foreclosure. Prior to purchase pursuant to this
Section 3.16, the Servicer shall be required to continue to make P&I Advances
pursuant to Section 4.03. The Servicer shall not use any procedure in selecting
Mortgage Loans to be repurchased which is materially adverse to the interests of
the Certificateholders. The Servicer, as applicable, shall purchase such
Delinquent Mortgage Loan at a price equal to the Purchase Price of such Mortgage
Loan. Any such purchase of a Mortgage Loan pursuant to this Section 3.16 shall
be accomplished by remittance to the Servicer for deposit in the Collection
Account of the amount of the Purchase Price. The Trustee (or the Custodian on
behalf of the Trustee) shall immediately effectuate the conveyance of such
Delinquent Mortgage Loan to the Servicer, as applicable, to the extent
necessary, as requested, and the Trustee (or the Custodian on behalf of the
Trustee) shall promptly deliver all documentation to the Servicer as applicable,
and as shall be necessary to vest in the Servicer title to any Mortgage Loan or
related REO Property released pursuant hereto.
The Servicer may, at its option, repurchase an REO Property.
Prior to repurchase pursuant to this Section 3.16, the Servicer shall be
required to continue to make monthly P&I Advances pursuant to Section 4.03. The
Servicer shall purchase such REO Property at its fair market value as determined
in good faith by the Servicer plus any unreimbursed Servicing Advances and P&I
Advances. Any such repurchase of an REO Property pursuant to this Section 3.16
shall be accomplished by delivery to the Trustee for deposit in the Distribution
Account of the amount of the purchase price. The Trustee shall immediately
effectuate the conveyance of such REO Property to the Servicer to the extent
necessary, including the prompt delivery of all documentation to the Servicer.
SECTION 3.17. Trustee to Cooperate; Release of Mortgage Files.
(a) Upon the payment in full of any Mortgage Loan, or the
receipt by the Servicer of a notification that payment in full shall be escrowed
in a manner customary for such purposes, the Servicer shall promptly notify the
Trustee and any related Custodian by a certification in the form of Exhibit E or
such other form supplied by the Servicer provided that it does not differ from
the substantive content of Exhibit E (which certification shall include a
statement to the effect that all amounts received or to be received in
connection with such payment which are required to be deposited in the
Collection Account pursuant to Section 3.04(b) have been or shall be so
deposited) of a Servicing Officer and shall request delivery to it of the
Mortgage File. Upon receipt of such certification and request, the Trustee or
such Custodian, as the case may be, shall promptly release (and in no event more
than ____ Business Days thereafter) the related Mortgage File to the Servicer.
No expenses incurred in connection with any instrument of satisfaction or deed
of reconveyance shall be chargeable to the Collection Account or the
Distribution Account.
(b) From time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan, including, for this purpose, collection under
any insurance policy relating to the Mortgage Loans, the Trustee and any related
Custodian shall, upon request of the Servicer and delivery to the Trustee or
such Custodian, as the case may be, of a Request for Release in the form of
Exhibit E or such other form supplied by the Servicer provided that it does not
differ from the substantive content of Exhibit E, release the related Mortgage
File to the Servicer, and the Trustee shall, at the direction of the Servicer,
execute such documents as shall be necessary to the prosecution of any such
proceedings and the Servicer shall retain such Mortgage File in trust for the
benefit of the Certificateholders. Such Request for Release shall obligate the
Servicer to return each and every document previously requested from the
Mortgage File to the Trustee or to such Custodian when the need therefor by the
Servicer no longer exists, unless the Mortgage Loan has been charged off or
liquidated and the Liquidation Proceeds relating to the Mortgage Loan have been
deposited in the Collection Account or the Mortgage File or such document has
been delivered to an attorney, or to a public trustee or other public official
as required by law, for purposes of initiating or pursuing legal action or other
proceedings for the foreclosure of the Mortgaged Property either judicially or
non-judicially, and the Servicer has delivered to the Trustee a certificate of a
Servicing Officer certifying as to the name and address of the Person to which
such Mortgage File or such document was delivered and the purpose or purposes of
such delivery. Upon receipt of a certificate of a Servicing Officer stating that
such Mortgage Loan was charged off or liquidated and that all amounts received
or to be received in connection with such liquidation that are required to be
deposited into the Collection Account have been so deposited, or that such
Mortgage Loan has become an REO Property, upon request, a copy of the Request
for Release shall be released by the Trustee or such Custodian to the Servicer.
(c) Upon written certification of a Servicing Officer, the
Trustee shall execute and deliver to the Servicer any court pleadings, requests
for trustee's sale or other documents reasonably necessary to the foreclosure or
trustee's sale in respect of a Mortgaged Property or to any legal action brought
to obtain judgment against any Mortgagor on the Mortgage Note or Mortgage or to
obtain a deficiency judgment, or to enforce any other remedies or rights
provided by the Mortgage Note or Mortgage or otherwise available at law or in
equity. Each such certification shall include a request that such pleadings or
documents be executed by the Trustee and a statement as to the reason such
documents or pleadings are required and that the execution and delivery thereof
by the Trustee shall not invalidate or otherwise affect the lien of the
Mortgage, except for the termination of such a lien upon completion of the
foreclosure or trustee's sale.
(d) The Trustee (or the Custodian on behalf of the Trustee)
and the Servicer may mutually agree on policies and procedures (commercially
reasonable in nature) to allow the submission of any and all requests for the
release of a Mortgage File electronically with a digital signature or other
identifier to designate the Servicing Officer of the Servicer requesting such
collateral.
SECTION 3.18. Servicing Compensation.
As compensation for the activities of the Servicer hereunder,
the Servicer shall be entitled to the Servicing Fee with respect to each
Mortgage Loan payable solely from payments of interest in respect of such
Mortgage Loan, subject to Section 4.03(e). In addition, the Servicer shall be
entitled to recover unpaid Servicing Fees out of Insurance Proceeds, Subsequent
Recoveries or Liquidation Proceeds to the extent permitted by Section
3.05(a)(ii), out of general funds in the Collection Account to the extent
permitted by Section 3.05(a) and out of amounts derived from the operation and
sale of an REO Property to the extent permitted by Section 3.13. The right to
receive the Servicing Fee may not be transferred in whole or in part except in
connection with the transfer of all of the Servicer's responsibilities and
obligations under this Agreement.
Additional servicing compensation in the form of Prepayment
Interest Excess, assumption fees, late payment charges, insufficient funds fees,
customary real estate referral fees, reconveyance fees and other similar fees
and charges (other than Prepayment Charges) shall be retained by the Servicer
only to the extent such amounts, fees or charges are received by the Servicer.
The Servicer shall also be entitled pursuant to Section 3.05(a)(vi) to withdraw
from the Collection Account, pursuant to Section 3.04(h) to withdraw from any
Escrow Account and pursuant to Section 3.13(b) to withdraw from any REO Account,
as additional servicing compensation, interest or other income earned on
deposits therein, subject to Section 3.06. The Servicer shall be required to pay
all expenses incurred by it in connection with its servicing activities
hereunder (including premiums for the insurance required by Section 3.08,
Section 3.09 and Section 3.10, to the extent such premiums are not paid by the
related Mortgagors or by a Sub-Servicer, servicing compensation of each
Sub-Servicer, and to the extent provided in Section 8.05, the fees and expenses
of the Trustee) and shall not be entitled to reimbursement therefor except as
specifically provided herein.
SECTION 3.19. Statement as to Compliance.
The Servicer shall deliver to the Trustee, the Depositor and
each Rating Agency on or before March 15th of each calendar year commencing in
____, an Officers' Certificate, in a form similar to Exhibit M attached hereto
agreeable to the parties hereto, stating, as to each signatory thereof, that (i)
a review of the activities of the Servicer during the preceding calendar year
and of performance under this Agreement has been made under such officers'
supervision and (ii) to the best of such officers' knowledge, based on such
review, the Servicer has fulfilled all of its obligations under this Agreement
throughout such year, or, if there has been a default in the fulfillment of any
such obligation, specifying each such default known to such officer and the
nature and status thereof. Copies of any such statement shall be provided by the
Trustee to any Certificateholder or Certificate Owner and to any Person
identified to the Trustee as a prospective transferee of a Certificate, upon the
request and at the expense of the requesting party, provided that such statement
is delivered by the Servicer to the Trustee.
SECTION 3.20. Independent Public Accountants' Servicing Report.
Not later than March 15th of each calendar year commencing in
_____, the Servicer, at its expense, shall cause a nationally recognized firm of
independent certified public accountants to furnish to the Servicer and the
Depositor a report stating that (i) it has obtained a letter of representation
regarding certain matters from the management of the Servicer which includes an
assertion that the Servicer has complied with either the servicing criteria as
set forth in Item 1122 of Regulation AB or certain minimum residential mortgage
loan servicing standards identified in the Uniform Single Attestation Program
for Mortgage Bankers established by the Mortgage Bankers Association of America,
with respect to the servicing of residential mortgage loans during the most
recently completed calendar year and (ii) on the basis of an examination
conducted by such firm in accordance with standards established by the American
Institute of Certified Public Accountants, such representation is fairly stated
in all material respects, subject to such exceptions and other qualifications
that may be appropriate. In rendering its report such firm may rely, as to
matters relating to the direct servicing of residential mortgage loans by
Sub-Servicers, upon comparable reports of firms of independent certified public
accountants rendered on the basis of examinations conducted in accordance with
the same standards (rendered within one year of such report) with respect to
those Sub-Servicers. Immediately upon receipt of such report, the Servicer shall
furnish a copy of such report to the Trustee, the Depositor and each Rating
Agency. Copies of such statement shall be provided by the Trustee to any
Certificateholder or Certificate Owner upon request at the expense of the
requesting party, provided that such statement is delivered by the Servicer to
the Trustee. In the event such firm of independent certified public accountants
requires the Trustee or the Depositor to agree to the procedures performed by
such firm, the Servicer shall direct the Trustee in writing to so agree; it
being understood and agreed that the Trustee shall deliver such letter of
agreement in conclusive reliance upon the direction of the Servicer, and the
Trustee has not made any independent inquiry or investigation as to, and shall
have no obligation or liability in respect of, the sufficiency, validity or
correctness of such procedures.
SECTION 3.21. Access to Certain Documentation.
The Servicer shall provide to the Office of Thrift
Supervision, the FDIC, and any other federal or state banking or insurance
regulatory authority that may exercise authority over any Certificateholder or
Certificate Owner, access to the documentation regarding the Mortgage Loans
required by applicable laws and regulations. Such access shall be afforded
without charge, but only upon reasonable request and during normal business
hours at the offices of the Servicer designated by it. In addition, access to
the documentation regarding the Mortgage Loans shall be provided to the Trustee
upon reasonable request during normal business hours at the offices of the
Servicer designated by it at the expense of the Person requesting such access.
In each case, access to any documentation regarding the Mortgage Loans may be
conditioned upon the requesting party's acknowledgment in writing of a
confidentiality agreement reasonably satisfactory to the Servicer regarding any
information that is required to remain confidential under the ▇▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Act of 1999. Nothing in this Section 3.21 shall limit the obligation of the
Servicer to observe any applicable law prohibiting disclosure of information
regarding the borrowers and the failure of the Servicer to provide access as
provided in this Section 3.21 as a result of such obligation shall not
constitute a breach of this Section 3.21.
ARTICLE IV
PAYMENTS TO CERTIFICATEHOLDERS
SECTION 4.01. Distributions.
(a) (1) On each Distribution Date, the following amounts, in
the following order of priority, shall be distributed by REMIC I to REMIC II on
account of the REMIC I Regular Interests and distributed to the holders of the
Class R Certificates (in respect of the Class R-I Interest), as the case may be:
(i) first, to the Holders of REMIC I Regular Interest AA,
REMIC I Regular Interest A, REMIC I Regular Interest M1, REMIC I
Regular Interest M2, REMIC I Regular Interest M3, REMIC I Regular
Interest B1, REMIC I Regular Interest B2, REMIC I Regular Interest B3,
REMIC I Regular Interest B4, REMIC I Regular Interest ZZ and REMIC I
Regular Interest P, PRO RATA, in an amount equal to (A) the
Uncertificated Interest for such Distribution Date, plus (B) any
amounts in respect thereof remaining unpaid from previous Distribution
Dates. Amounts payable as Uncertificated Interest in respect of REMIC I
Regular Interest ZZ shall be reduced and deferred when the REMIC I
Overcollateralized Amount is less than the REMIC I
Overcollateralization Target Amount, by the lesser of (x) the amount of
such difference and (y) the Maximum Uncertificated Interest Deferral
Amount and such amount shall be payable to the Holders of REMIC I
Regular Interest A, REMIC I Regular Interest M1, REMIC I Regular
Interest M2, REMIC I Regular Interest M3, REMIC I Regular Interest B1,
REMIC I Regular Interest B2, REMIC I Regular Interest B3 and REMIC I
Regular Interest B4 in the same proportion as the Overcollateralization
Increase Amount is allocated to the Corresponding Certificates and the
Uncertificated Principal Balance of the REMIC I Regular Interest ZZ
shall be increased by such amount;
(ii) to the Holders of REMIC I Regular Interests, in an amount
equal to the remainder of the REMIC Available Funds for such
Distribution Date after the distributions made pursuant to clause (i)
above, allocated as follows:
(a) 98.00% of such remainder, to the Holders of REMIC
I Regular Interest AA and REMIC I Regular Interest P, until
the Uncertificated Balance of such REMIC I Regular Interest is
reduced to zero, provided, however, that REMIC I Regular
Interest P shall not be reduced until the Distribution Date
immediately following the expiration of the latest Prepayment
Charge as identified on the Prepayment Charge Schedule or any
Distribution Date thereafter, at which point such amount shall
be distributed to REMIC I Regular Interest P, until $100 has
been distributed pursuant to this clause;
(b) 2.00% of such remainder, first, to the Holders of
REMIC I Regular Interest A, REMIC I Regular Interest M1, REMIC
I Regular Interest M2, REMIC I Regular Interest M3, REMIC I
Regular Interest B1, REMIC I Regular Interest B2, REMIC I
Regular Interest B3 and REMIC I Regular Interest B4, 1.00% and
in the same proportion as principal payments are allocated to
the Corresponding Certificates, until the Uncertificated
Balances of such REMIC I Regular Interests are reduced to
zero, and second, to the Holders of REMIC I Regular Interest
ZZ, until the Uncertificated Balance of such REMIC I Regular
Interest is reduced to zero; and
(c) any remaining amount to the Holders of the Class
R Certificates (in respect of the Class R-II Interest);
provided, however, that (i) 98.00% and (ii) 2.00% of any principal payments that
are attributable to an Overcollateralization Reduction Amount shall be allocated
to the Holders of (i) REMIC I Regular Interest AA and REMIC I Regular Interest
P, in that order and (ii) REMIC I Regular Interest ZZ, respectively; provided
that REMIC I Regular Interest P shall not be reduced until the Distribution Date
immediately following the expiration of the latest Prepayment Charge as
identified on the Prepayment Charge Schedule or any Distribution Date
thereafter, at which point such amount shall be distributed to REMIC I Regular
Interest P, until $100 has been distributed pursuant to this clause.
Notwithstanding the priorities and amounts of distribution of
funds pursuant to this Section 4.01(a)(1), actual distributions of the Available
Distribution Amount shall be made only in accordance with Section 4.01(a)(2),
(3) and (4).
(2) On each Distribution Date, the Trustee shall withdraw the
Interest Remittance Amount for such Distribution Date from the Distribution
Account and make the following distributions in respect of interest in the
following order of priority:
(I) to the Holders of the Class A Certificates the Class A
Interest Distribution Amount related to such Certificates
(II) sequentially, to the Holders of the Class M-1, Class M-2,
Class M-3, Class B-1, Class B-2, Class B-3 and Class B-4 Certificates, in that
order, an amount equal to the Interest Distribution Amount for each such Class.
(3) On each Distribution Date, the Trustee shall withdraw from
the Distribution Account the Available Distribution Amount for such Distribution
Date remaining after the distributions made pursuant to (2) above and make the
following distributions in respect of principal in the following order of
priority:
(I) On each Distribution Date (a) prior to the Stepdown Date
or (b) on which a Trigger Event is in effect:
(i) to the Holders of the Class A Certificates, the Principal
Distribution Amount for such Distribution Date until the Certificate
Principal Balance of such Class has been reduced to zero.
(ii) sequentially to the Class M-1, Class M-2, Class M-3,
Class B-1, Class B-2, Class B-3 and Class B-4 Certificates, the
Principal Distribution Amount remaining, in each case, until the
Certificate Principal Balance of such Class has been reduced to zero.
(II) On each Distribution Date (a) on or after the Stepdown
Date and (b) on which a Trigger Event is not in effect:
(i) to the Holders of the Class A Certificates, the Class A
Principal Distribution Amount, until the Certificate Principal Balances
of such Class has been reduced to zero;
(ii) to the Holders of the Class M-1 Certificates, the Class
M-1 Principal Distribution Amount, until the Certificate Principal
Balance thereof has been reduced to zero;
(iii) to the Holders of the Class M-2 Certificates, the Class
M-2 Principal Distribution Amount, until the Certificate Principal
Balance thereof has been reduced to zero;
(iv) to the Holders of the Class M-3 Certificates, the Class
M-3 Principal Distribution Amount, until the Certificate Principal
Balance thereof has been reduced to zero;
(v) to the Holders of the Class B-1 Certificates, the Class
B-1 Principal Distribution Amount, until the Certificate Principal
Balance thereof has been reduced to zero;
(vi) to the Holders of the Class B-2 Certificates, the Class
B-2 Principal Distribution Amount, until the Certificate Principal
Balance thereof has been reduced to zero;
(vii) to the Holders of the Class B-3 Certificates, the Class
B-3 Principal Distribution Amount, until the Certificate Principal
Balance thereof has been reduced to zero; and
(viii) to the Holders of the Class B-4 Certificates, the Class
B-4 Principal Distribution Amount, until the Certificate Principal
Balance thereof has been reduced to zero;
(4) On each Distribution Date, the Available Distribution
Amount remaining after the distributions pursuant to (2) and (3) above shall be
distributed by the Trustee as follows:
(i) sequentially, to the Holders of the Class M-1, Class M-2,
Class M-3, Class B-1, Class B-2, Class B-3 and Class B-4 Certificates,
in that order, the related Interest Carry Forward Amount allocable to
such Classes of Certificates;
(ii) sequentially, to the Holders of the Class M-1, Class M-2,
Class M-3, Class B-1, Class B-2, Class B-3 and Class B-4 Certificates,
in that order, the related Allocated Realized Loss Reimbursement Amount
allocable to such Classes of Certificates;
(iii) from amounts otherwise distributable to the Holders of
the Class C Certificates, (a) first, to the Net WAC Rate Carryover
Reserve Account, the amount required by Section 4.09(b) after taking
into account amounts, if any, received under the Cap Contract, and (b)
second, to maintain a balance in the Net WAC Rate Carryover Reserve
Account equal to the Net WAC Rate Carryover Reserve Account Deposit;
(iv) to the Holders of the Class C Certificates, (a) the
related Interest Distribution Amount and any Overcollateralization
Reduction Amount for such Distribution Date and (b) on any Distribution
Date on which the Certificate Principal Balances of the Class A
Certificates and the Subordinate Certificates have been reduced to
zero, any remaining amounts in reduction of the Certificate Principal
Balance of the Class C Certificates, until the Certificate Principal
Balance thereof has been reduced to zero, in each case, less amounts
distributed pursuant to Section 4.01(a)(4)(iii); and
(v) to the Holders of the Class R Certificates, any remaining
amounts; provided that if such Distribution Date is the Distribution
Date immediately following the expiration of the latest Prepayment
Charge term as identified on the Mortgage Loan Schedule or any
Distribution Date thereafter, then any such remaining amounts shall be
distributed first, to the Holders of the Class P Certificates, until
the Certificate Principal Balance thereof has been reduced to zero, and
second, to the Holders of the Class R Certificates.
(5) On each Distribution Date, following the foregoing
distributions, an amount equal to the amount of Subsequent Recoveries deposited
into the Collection Account pursuant to Section 3.05(a)(ii) and included in the
Available Distribution Amount for such Distribution Date shall be applied to
increase the Certificate Principal Balance of the Class of Certificates with the
Highest Priority up to the Allocated Realized Loss Reimbursement Amount for such
Class. An amount equal to the amount of any remaining Subsequent Recoveries
shall be applied to increase the Certificate Principal Balance of the Class of
Certificates with the next Highest Priority, up to the Allocated Realized Loss
Reimbursement Amount for such Class and so on. Holders of such Certificates
shall not be entitled to any distribution in respect of interest on the amount
of such increases for any Interest Accrual Period preceding the Distribution
Date on which such increase occurs. Any such increases shall be applied to the
Certificate Principal Balance of each Certificate of such Class in accordance
with its respective Percentage Interest.
(b) On each Distribution Date, after making the distributions
of the Available Distribution Amount as set forth above, the Trustee shall
FIRST, withdraw from the Net WAC Rate Carryover Reserve Account all net income
from the investment of funds in the Net WAC Rate Carryover Reserve Account and
distribute such amount to the Holders of the Class C Certificates, and SECOND,
withdraw from the Net WAC Rate Carryover Reserve Account, to the extent of
amounts remaining on deposit therein, the amount of any Net WAC Rate Carryover
Amount for such Distribution Date and distribute such amount as follows:
FIRST, to the Class A Certificates, the related Net WAC Rate
Carryover Amount, on a PRO RATA basis based on such respective Net WAC Rate
Carryover Amounts; and
SECOND, sequentially, to the Class M-1, Class M-2, Class M-3,
Class B-1, Class B-2, Class B-3 and Class B-4 Certificates, in that order, the
related Net WAC Rate Carryover Amount.
On each Distribution Date, the Trustee shall withdraw any
amounts then on deposit in the Distribution Account that represent Prepayment
Charges collected by the Servicer, Servicer Prepayment Charge Payment Amounts
payable by the Servicer pursuant to Section 2.03(b)(ii), to the extent not
related to Principal Prepayments occurring after the related Prepayment Period,
and the Trustee shall distribute such amounts to the Holders of the Class P
Certificates. Such distributions shall not be applied to reduce the Certificate
Principal Balance of the Class P Certificates.
(c) All distributions made with respect to each Class of
Certificates on each Distribution Date shall be allocated PRO RATA among the
outstanding Certificates in such Class based on their respective Percentage
Interests. Payments in respect of each Class of Certificates on each
Distribution Date shall be made to the Holders of the respective Class of record
on the related Record Date (except as otherwise provided in Section 4.01(e) or
Section 9.01 respecting the final distribution on such Class), based on the
aggregate Percentage Interest represented by their respective Certificates, and
shall be made by wire transfer of immediately available funds to the account of
any such Holder at a bank or other entity having appropriate facilities
therefor, if such Holder shall have so notified the Trustee in writing at least
five Business Days prior to the Record Date immediately prior to such
Distribution Date, or otherwise by check mailed by first class mail to the
address of such Holder appearing in the Certificate Register. The final
distribution on each Certificate shall be made in like manner, but only upon
presentment and surrender of such Certificate at the office of the Trustee
maintained for such purpose pursuant to Section 8.12 or such other location
specified in the notice to Certificateholders of such final distribution.
Each distribution with respect to a Book-Entry Certificate
shall be paid to the Depository, as Holder thereof, and the Depository shall be
responsible for crediting the amount of such distribution to the accounts of its
Depository Participants in accordance with its normal procedures. Each
Depository Participant shall be responsible for disbursing such distribution to
the Certificate Owners that it represents and to each indirect participating
brokerage firm (a "brokerage firm" or "indirect participating firm") for which
it acts as agent. Each brokerage firm shall be responsible for disbursing funds
to the Certificate Owners that it represents. None of the Trustee, the
Certificate Registrar, the Depositor or the Servicer shall have any
responsibility therefor except as otherwise provided by this Agreement or
applicable law.
(d) The rights of the Certificateholders to receive
distributions in respect of the Certificates, and all interests of the
Certificateholders in such distributions, shall be as set forth in this
Agreement. Neither the Holders of any Class of Certificates nor the Trustee nor
the Servicer shall in any way be responsible or liable to the Holders of any
other Class of Certificates in respect of amounts properly previously
distributed on the Certificates.
(e) Except as otherwise provided in Section 9.01, whenever the
Trustee expects that the final distribution with respect to any Class of
Certificates shall be made on the next Distribution Date, the Trustee shall, no
later than five (5) days after the related Determination Date, mail to each
Holder on such date of such Class of Certificates a notice to the effect that:
(i) the Trustee expects that the final distribution with
respect to such Class of Certificates shall be made on such
Distribution Date, but only upon presentation and surrender of such
Certificates at the office of the Trustee therein specified or its
agent; and
(ii) no interest shall accrue on such Certificates from and
after the end of the related Interest Accrual Period.
Any funds not distributed to any Holder or Holders of
Certificates of such Class on such Distribution Date because of the failure of
such Holder or Holders to tender their Certificates shall, on such date, be set
aside and held in trust by the Trustee and credited to the account of the
appropriate non-tendering Holder or Holders. If any Certificates as to which
notice has been given pursuant to this Section 4.01(e) shall not have been
surrendered for cancellation within six months after the time specified in such
notice, the Trustee shall mail a second notice to the remaining non-tendering
Certificateholders to surrender their Certificates for cancellation in order to
receive the final distribution with respect thereto. If within one year after
the second notice all such Certificates shall not have been surrendered for
cancellation, the Trustee shall, directly or through an agent, mail a final
notice to remaining non-tendering Certificateholders concerning surrender of
their Certificates but shall continue to hold any remaining funds for the
benefit of non-tendering Certificateholders. The costs and expenses of
maintaining the funds in trust and of contacting such Certificateholders shall
be paid out of the assets remaining in such trust fund. If within one year after
the final notice any such Certificates shall not have been surrendered for
cancellation, the Trustee shall pay to the Representative all remaining amounts,
and all rights of non-tendering Certificateholders in or to such amounts shall
thereupon cease. No interest shall accrue or be payable to any Certificateholder
on any amount held in trust by the Trustee as a result of such
Certificateholder's failure to surrender its Certificate(s) for final payment
thereof in accordance with this Section 4.01(e).
(f) Notwithstanding anything to the contrary herein, (i) in no
event shall the Certificate Principal Balance of a Class A Certificate or a
Subordinate Certificate be reduced more than once in respect of any particular
amount both (a) allocated to such Certificate in respect of Realized Losses
pursuant to Section 4.04 and (b) distributed to the Holder of such Certificate
in reduction of the Certificate Principal Balance thereof pursuant to this
Section 4.01 from Net Monthly Excess Cashflow and (ii) in no event shall the
Uncertificated Balance of a REMIC I Regular Interest to be reduced more than
once in respect of any particular amount both (a) allocated to such REMIC I
Regular Interest in respect of Realized Losses pursuant to Section 4.04 and (b)
distributed on such REMIC I Regular Interest in reduction of the Uncertificated
Balance thereof pursuant to this Section 4.01.
SECTION 4.02. Statements to Certificateholders.
On each Distribution Date, the Trustee shall prepare and make
available to each Holder of the Regular Certificates, the Depositor, the
Servicer and each Rating Agency, a statement as to the distributions made on
such Distribution Date setting forth:
(i) the amount of the distribution made on such Distribution
Date to the Holders of the Certificates of each Class allocable to
principal, and the amount of distribution made on such Distribution
Date to the Holders of the Class P Certificates allocable to Prepayment
Charges or Servicer Prepayment Charge Payment Amounts;
(ii) the amount of the distribution made on such Distribution
Date to the Holders of the Certificates of each Class allocable to
interest;
(iii) the aggregate Servicing Fee received by the Servicer
during the related Due Period and the aggregate Trustee Fee received by
the Trustee during the related Due Period;
(iv) the aggregate amount of P&I Advances for such
Distribution Date;
(v) the aggregate Stated Principal Balance of the Mortgage
Loans and any REO Properties as of the close of business on such
Distribution Date;
(vi) the number, aggregate Stated Principal Balance, weighted
average remaining term to maturity and weighted average Mortgage Rate
of the Mortgage Loans as of the related Due Date;
(vii) the number and aggregate unpaid Stated Principal Balance
of Mortgage Loans (a) delinquent 30-59 days, (b) delinquent 60-89 days,
(c) delinquent 90-119 days, (d) delinquent 120 or more days, in each
case, as of the last day of the preceding calendar month, (e) as to
which foreclosure proceedings have been commenced and (f) with respect
to which the related Mortgagor has filed for protection under
applicable bankruptcy laws, with respect to whom bankruptcy proceedings
are pending or with respect to whom bankruptcy protection is in force;
(viii) with respect to any Mortgage Loan that became an REO
Property during the preceding calendar month, the loan number of such
Mortgage Loan, the unpaid Stated Principal Balance and the Stated
Principal Balance of such Mortgage Loan as of the date it became an REO
Property;
(ix) the book value and the Stated Principal Balance of any
REO Property as of the close of business on the last Business Day of
the calendar month preceding the Distribution Date;
(x) the aggregate amount of Principal Prepayments made during
the related Prepayment Period;
(xi) the aggregate amount of Realized Losses incurred during
the related Prepayment Period (or, in the case of Bankruptcy Losses
allocable to interest, during the related Due Period), separately
identifying whether such Realized Losses constituted Bankruptcy Losses
and the aggregate amount of Realized Losses incurred since the Closing
Date, the aggregate amount of Subsequent Recoveries received during the
related Prepayment Period and the aggregate amount of Subsequent
Recoveries received since the Closing Date (to the extent reported to
the Trustee);
(xii) the aggregate amount of Extraordinary Trust Fund
Expenses withdrawn from the Collection Account or the Distribution
Account for such Distribution Date;
(xiii) the aggregate Certificate Principal Balance of each
Class of Certificates, after giving effect to the distributions, and
allocations of Realized Losses, made on such Distribution Date,
separately identifying any reduction thereof due to allocations of
Realized Losses (to the extent reported to the Trustee);
(xiv) the Certificate Factor for each such Class of
Certificates applicable to such Distribution Date;
(xv) the Interest Distribution Amount in respect of the Class
A Certificates, the Subordinate Certificates and the Class C
Certificates for such Distribution Date and the Interest Carry Forward
Amount, if any, with respect to the Class A Certificates and the
Subordinate Certificates on such Distribution Date, and in the case of
the Class A Certificates, the Subordinate Certificates and the Class C
Certificates, separately identifying any reduction thereof due to
allocations of Realized Losses, Prepayment Interest Shortfalls and
Relief Act Interest Shortfalls;
(xvi) the aggregate amount of any Prepayment Interest
Shortfall for such Distribution Date, to the extent not covered by
payments by the Servicer pursuant to Section 4.03(e) or allocated to
the Class C Certificates;
(xvii) the aggregate amount of Relief Act Interest Shortfalls
for such Distribution Date;
(xviii) the Overcollateralization Target Amount and the Senior
Enhancement Percentage for such Distribution Date;
(xix) the Overcollateralization Increase Amount, if any, for
such Distribution Date;
(xx) the Overcollateralization Reduction Amount, if any, for
such Distribution Date;
(xxi) with respect to any Mortgage Loan as to which
foreclosure proceedings have been concluded, the loan number and unpaid
Stated Principal Balance of such Mortgage Loan as of the date of such
conclusion of foreclosure proceedings;
(xxii) with respect to Mortgage Loans as to which a Final
Recovery Determination has been made, the number of Mortgage Loans, the
unpaid Stated Principal Balance of such Mortgage Loans as of the date
of such Final Recovery Determination and the amount of proceeds
(including Liquidation Proceeds and Insurance Proceeds) collected in
respect of such Mortgage Loans;
(xxiii) the respective Pass-Through Rates applicable to the
Class A Certificates, the Subordinate Certificates and the Class C
Certificates for such Distribution Date and the Pass-Through Rate
applicable to the Adjustable-Rate Certificates for the immediately
succeeding Distribution Date;
(xxiv) the amount on deposit in the Net WAC Rate Carryover
Reserve Account as of the Determination Date;
(xxv) whether a Trigger Event is in effect; and
(xxvi) the Net WAC Rate Carryover Amount for the Class A
Certificates and the Subordinate Certificates, if any, for such
Distribution Date and the amount remaining unpaid after reimbursements
therefor on such Distribution Date and any amounts due and amounts
received under the Cap Contract.
The Trustee may make such statement available and certain
other information, including, without limitation, information required to be
provided by the Trustee, to Certificateholders, the Servicer, the Depositor, the
Rating Agencies and to beneficial owners of the Certificates through the
Trustee's web site. Such web site is currently located at "www._____.com."
Assistance in using the web site can currently be obtained by calling the
Trustee's investor relations desk at __________. Parties unable to use this
distribution method may request that a paper copy be mailed to them via first
class mail by calling the investor relations desk. The location of such web page
and the procedures used therein are subject to change from time to time at the
Trustee's discretion upon notice to all affected parties. The Trustee shall have
the right to change the way monthly distribution statements are distributed in
order to make such distribution more convenient and/or more accessible to the
above parties. The Trustee shall be entitled to rely on but shall not be
responsible for the content or accuracy of any information provided by third
parties for purposes of preparing the monthly statement. As a condition to
access the Trustee's website, the Trustee may require registration and the
acceptance of a disclaimer. Notwithstanding anything to the contrary set forth
in this Agreement, the parties hereto acknowledge that in connection with the
Trustee's preparation of the foregoing reports, the Trustee shall rely solely
upon the information provided to it in the Remittance Reports.
In the case of information furnished pursuant to subclauses
(i) through (ii) above, the amounts shall be expressed as a dollar amount per
Single Certificate of the relevant Class.
Within a reasonable period of time after the end of each
calendar year, but in no event later than __ Business Days after the end of each
calendar year, the Trustee shall furnish to each Person who at any time during
the calendar year was a Holder of a Regular Certificate a statement containing
the information set forth in subclauses (i) through (iii) above, aggregated for
such calendar year or applicable portion thereof during which such person was a
Certificateholder. Such obligation of the Trustee shall be deemed to have been
satisfied to the extent that substantially comparable information shall be
provided by the Trustee pursuant to any requirements of the Code as from time to
time are in force.
Within a reasonable period of time after the end of each
calendar year, but in no event later than __ Business Days after the end of each
calendar year, the Trustee shall furnish to each Person who at any time during
the calendar year was a Holder of a Residual Certificate a statement setting
forth the amount, if any, actually distributed with respect to the Residual
Certificates, as appropriate, aggregated for such calendar year or applicable
portion thereof during which such Person was a Certificateholder. Such
obligation of the Trustee shall be deemed to have been satisfied to the extent
that substantially comparable information shall be prepared by the Trustee and
furnished to such Holders pursuant to the rules and regulations of the Code as
are in force from time to time.
The Trustee shall, upon written request, furnish to each
Certificateholder or Certificate Owner, during the term of this Agreement, such
periodic, special, or other reports or information, whether or not provided for
herein, as shall be reasonable with respect to the Certificateholder or
Certificate Owner, as applicable, or otherwise with respect to the purposes of
this Agreement, all such reports or information to be provided at the expense of
the Certificateholder or Certificate Owner, as applicable, in accordance with
such reasonable and explicit instructions and directions as such
Certificateholder or Certificate Owner may provide. For purposes of this Section
4.02, the Trustee's duties are limited to the extent that the Trustee receives
timely reports as required from the Servicer.
On each Distribution Date the Trustee shall provide Bloomberg
Financial Markets, L.P. ("BLOOMBERG") CUSIP level factors for each Class of
Certificates as of such Distribution Date, using a format and media mutually
acceptable to the Trustee and Bloomberg.
SECTION 4.03. Remittance Reports and Other Reports to the Trustee; P&I
Advances; Payments in Respect of Prepayment Interest
Shortfalls.
(a) On the Servicer Reporting Date, the Servicer shall deliver
to the Trustee and the Originator by telecopy (or by such other means as the
Servicer, the Trustee, the Originator may agree from time to time) a Remittance
Report with respect to the related Distribution Date. Such Remittance Report
shall include (i) the amount of P&I Advances to be made by the Servicer in
respect of the related Distribution Date, the aggregate amount of P&I Advances
outstanding after giving effect to such P&I Advances, and the aggregate amount
of Nonrecoverable Advances in respect of such Distribution Date and (ii) such
other information with respect to the Mortgage Loans as the Trustee may
reasonably require to perform the calculations necessary to make the
distributions contemplated by Section 4.01 and to prepare the statements to
Certificateholders contemplated by Section 4.02. The Trustee shall not be
responsible to recompute, recalculate or verify any information provided to it
by the Servicer. The Servicer, within fifteen days after a request from either
the Trustee, the Depositor or the Originator, shall forward a statement prepared
by the Servicer setting forth the status of the Collection Account as of the
close of business of any prior Distribution Date, showing, for the period
covered by such statement information regarding the Collection Account that is
mutually agreed upon by the Servicer and the Trustee, the Depositor or the
Originator, as applicable. Copies of such statement shall be provided by the
Trustee to any Certificateholder or the Certificate Owner and to any Person
identified to the Trustee as a prospective transferee of a Certificate, upon
request (and the Trustee shall promptly request such report from the Servicer
upon receipt of such request), at the expense of the requesting party, provided
such statement is delivered by the Servicer to the Trustee.
The Servicer shall furnish to the Trustee monthly information
reports on a loan level, as of the related Determination Date, to document
Mortgage Loan payment activity on an individual Mortgage Loan basis. With
respect to each month, the corresponding monthly information reports on a loan
level (in electronic format) shall be received by the Trustee no later than the
related Determination Date, which reports shall contain the following:
(i) with respect to each Monthly Payment, the amount of such
remittance allocable to principal (including a separate breakdown of any
Principal Prepayment, including the date of such prepayment, and any Prepayment
Charges);
(ii) with respect to each Monthly Payment, the amount of such
remittance allocable to interest;
(iii) the amount of servicing compensation received by the
Servicer during the prior distribution period;
(iv) the individual and aggregate Stated Principal Balance of
the Mortgage Loans;
(v) the aggregate expenses reimbursed to the Servicer during
the prior distribution period pursuant to Section 3.05; and
(vi) the number and aggregate outstanding principal balances
of Mortgage Loans (a) Delinquent (1) 31 to 59 days, (2) 60 to 89 days, (3)
90-119 days, (4) 120 or more days; (b) as to which foreclosure has commenced;
and (c) as to which REO Property has been acquired.
(b) The amount of P&I Advances to be made by the Servicer for
any Distribution Date shall equal, subject to Section 4.03(d), the sum of (i)
the aggregate amount of Monthly Payments (with each interest portion thereof net
of the related Servicing Fee), due on the related Due Date in respect of the
Mortgage Loans (other than with respect to any Balloon Loan with a delinquent
Balloon Payment as described in clause (iii) below), which Monthly Payments were
delinquent as of the close of business on the related Determination Date, (ii)
with respect to each second-lien Mortgage Loan and REO Property (other than with
respect to any REO Property relating to a Balloon Loan with a Delinquent Balloon
Payment as described in clause (iv) below), which REO Property was acquired
during or prior to the related Prepayment Period and as to which such REO
Property an REO Disposition did not occur during the related Prepayment Period,
an amount equal to the interest portion of the related Monthly Payment net of
the related Servicing Fee, (iii) with respect to each Balloon Loan with a
delinquent Balloon Payment, an amount equal to the assumed monthly principal and
interest payment (with each interest portion thereof net of the related
Servicing Fee) that would have been due on the related Due Date based on the
principal amortization schedule for such Balloon Loan assuming such Mortgage
Loan was not a Balloon Loan, and (iv) with respect to each REO Property relating
to a Balloon Loan with a delinquent Balloon Payment, which REO Property was
acquired during or prior to the related Prepayment Period and as to which REO
Property an REO Disposition did not occur during the related Prepayment Period,
an amount equal to the excess, if any, of the assumed monthly principal and
interest payment (with each interest portion thereof net of the related
Servicing Fee) that would have been due on the related Due Date based on the
principal amortization schedule for the related Balloon Loan assuming such
Mortgage Loan was not a Balloon Loan, over the net income from such REO Property
transferred to the Distribution Account pursuant to Section 3.13 for
distribution on such Distribution Date.
On or before ____ New York time on the Servicer Remittance
Date, the Servicer shall remit in immediately available funds to the Trustee for
deposit in the Distribution Account an amount equal to the aggregate amount of
P&I Advances, if any, to be made in respect of the Mortgage Loans and REO
Properties for the related Distribution Date either (i) from its own funds, (ii)
from the Collection Account, to the extent of funds held therein for future
distribution (in which case, it shall cause to be made an appropriate entry in
the records of the Collection Account that amounts held for future distribution
have been, as permitted by this Section 4.03, used by the Servicer in discharge
of any such P&I Advance) or (iii) in the form of any combination of (i) and (ii)
aggregating the total amount of P&I Advances to be made by the Servicer with
respect to the Mortgage Loans and REO Properties. Any amounts held for future
distribution used by the Servicer to make a P&I Advance as permitted in the
preceding sentence or withdrawn by the Servicer as permitted in Section
3.05(a)(vii) in reimbursement of P&I Advances previously made shall be
appropriately reflected in the Servicer's records and replaced by the Servicer
by deposit in the Collection Account on or before any future Servicer Remittance
Date to the extent that the Available Distribution Amount for the related
Distribution Date (determined without regard to P&I Advances to be made on the
Servicer Remittance Date) shall be less than the total amount that would be
distributed to the Classes of Certificateholders pursuant to Section 4.01 on
such Distribution Date if such amounts held for future distributions had not
been so used to make P&I Advances. The Trustee shall provide notice to the
Servicer, the Depositor and the Originator by telecopy by the close of business
on any Servicer Remittance Date in the event that the amount remitted by the
Servicer to the Trustee on such date is less than the P&I Advances required to
be made by the Servicer for the related Distribution Date.
(c) The obligation of the Servicer to make such P&I Advances
is mandatory, notwithstanding any other provision of this Agreement but subject
to (d) below, and, with respect to any Mortgage Loan or REO Property, shall
continue until a Final Recovery Determination in connection therewith or the
removal thereof from REMIC I pursuant to any applicable provision of this
Agreement, except as otherwise provided in this Section.
(d) Notwithstanding anything herein to the contrary, no P&I
Advance or Servicing Advance shall be required to be made hereunder by the
Servicer if such P&I Advance or Servicing Advance would, if made, constitute a
Nonrecoverable Advance or Nonrecoverable Servicing Advance. The determination by
the Servicer that it has made a Nonrecoverable Advance or a Nonrecoverable
Servicing Advance or that any proposed P&I Advance or Servicing Advance, if
made, would constitute a Nonrecoverable Advance or Nonrecoverable Servicing
Advance, respectively, shall be evidenced by an Officers' Certificate of the
Servicer delivered to the Depositor and the Trustee.
(e) The Servicer shall deliver to the Trustee for deposit into
the Distribution Account on or before 1:00 p.m. New York time on the Servicer
Remittance Date from its own funds an amount ("COMPENSATING INTEREST") equal to
the lesser of (i) the aggregate of the Prepayment Interest Shortfalls for the
related Distribution Date resulting solely from Principal Prepayments in full
during the related Prepayment Period and (ii) __% of the amount of its aggregate
Servicing Fee for the most recently ended calendar month. The Servicer shall not
have the right to reimbursement for any amounts remitted to the Trustee in
respect of Prepayment Interest Shortfalls. Such amounts so remitted shall be
included in the Available Distribution Amount and distributed therewith on the
next Distribution Date. The Servicer shall not be obligated to pay any amounts
with respect to Principal Prepayments in part and Relief Act Interest
Shortfalls.
SECTION 4.04. Allocation of Realized Losses.
(a) On or before each Determination Date, the Servicer shall
determine as to each Mortgage Loan and REO Property: (i) the total amount of
Realized Losses, if any, incurred in connection with any Final Recovery
Determinations made during the related Prepayment Period; (ii) whether and the
extent to which such Realized Losses constituted Bankruptcy Losses; and (iii)
the respective portions of such Realized Losses allocable to interest and
allocable to principal. On or before each Determination Date, the Servicer shall
also determine as to each Mortgage Loan: (A) the total amount of Realized
Losses, if any, incurred in connection with any Deficient Valuations made during
the related Prepayment Period; and (B) the total amount of Realized Losses, if
any, incurred in connection with Debt Service Reductions in respect of Monthly
Payments due during the related Due Period. The information described in the two
preceding sentences that is to be supplied by the Servicer shall be evidenced by
an Officers' Certificate delivered to the Trustee and the Depositor by the
Servicer on the Servicer Reporting Date immediately following the end of (x) in
the case of Bankruptcy Losses allocable to interest, the Due Period during which
any such Realized Loss was incurred, and (y) in the case of all other Realized
Losses, the Prepayment Period during which any such Realized Loss was incurred.
(b) All Realized Losses on the Mortgage Loans shall be
allocated by the Trustee on each Distribution Date as follows: FIRST, in
reduction of interest accrued on and otherwise distributable to the Class C
Certificates to the extent of Net Monthly Excess Cashflow used to pay principal
on the Class A Certificates and the Subordinate Certificates under clause (i)
under Section 4.01 hereof; SECOND, in reduction of interest accrued on and
otherwise distributable to the Class C Certificates to the extent of Net Monthly
Excess Cashflow available for distribution pursuant to clauses (ii) through (vi)
of Section 4.01(a)(4) hereof; and THIRD, in reduction of the Certificate
Principal Balance of the Class C Certificates (determined after taking into
account all distributions made on the Certificates on such Distribution Date),
until the Certificate Principal Balance thereof has been reduced to zero. If on
any Distribution Date, after all distributions are made by the Trustee pursuant
to Section 4.01 hereof, the aggregate Certificate Principal Balance of the Class
A Certificates, the Subordinate Certificates and the Class P Certificates
exceeds the sum of the Stated Principal Balance of the Mortgage Loans as of the
last day of the related Due Period (after taking into account prepayments during
the related Prepayment Period), the amount of such excess shall be allocated:
FIRST, to the Class B-4 Certificates, until the Certificate Principal Balance
thereof has been reduced to zero; SECOND, to the Class B-3 Certificates, until
the Certificate Principal Balance thereof has been reduced to zero; THIRD, to
the Class B-2 Certificates, until the Certificate Principal Balance thereof has
been reduced to zero; FOURTH, to the Class B-1 Certificates, until the
Certificate Principal Balance thereof has been reduced to zero; FIFTH, to the
Class M-3 Certificates, until the Certificate Principal Balance thereof has been
reduced to zero; SIXTH, to the Class M-2 Certificates, until the Certificate
Principal Balance thereof has been reduced to zero; and SEVENTH, to the Class
M-1 Certificates, until the Certificate Principal Balance thereof has been
reduced to zero.
Any such allocation to a Class of Subordinate Certificates on
any Distribution Date shall be made by reducing the Certificate Principal
Balance thereof (after the actual distributions to be made on such Distribution
Date pursuant to Section 4.01 hereof) by the amount so allocated; any allocation
of Realized Losses to a Class C Certificate shall be made by reducing the amount
otherwise payable in respect thereof pursuant to Section 4.01(a)(4)(iv). No
allocations of any Realized Losses shall be made to the Certificate Principal
Balances of the Class A Certificates or the Class P Certificates.
As used herein, an allocation of a Realized Loss on a "PRO
RATA basis" among two or more specified Classes of Certificates means an
allocation on a PRO RATA basis, among the various Classes so specified, to each
such Class of Certificates on the basis of their then outstanding Certificate
Principal Balances prior to giving effect to distributions to be made on such
Distribution Date. All Realized Losses and all other losses allocated to a Class
of Certificates hereunder shall be allocated among the Certificates of such
Class in proportion to the Percentage Interests evidenced thereby.
All Realized Losses on the Mortgage Loans shall be allocated
by the Trustee on each Distribution Date to the following REMIC I Regular
Interests in the specified percentages, as follows: first, to Uncertificated
Interest payable to the REMIC I Regular Interest AA and REMIC I Regular Interest
ZZ up to an aggregate amount equal to the REMIC I Interest Loss Allocation
Amount, 98% and 2%, respectively; second, to the Uncertificated Balances of the
REMIC I Regular Interest AA and REMIC I Regular Interest ZZ up to an aggregate
amount equal to the REMIC I Principal Loss Allocation Amount, 98% and 2%,
respectively; third, to the Uncertificated Balances of REMIC I Regular Interest
AA, REMIC I Regular Interest B4 and REMIC I Regular Interest ZZ, 98%, 1% and 1%,
respectively, until the Uncertificated Balance of REMIC I Regular Interest B4
has been reduced to zero; fourth, to the Uncertificated Balances of REMIC I
Regular Interest AA, REMIC I Regular Interest B3 and REMIC I Regular Interest
ZZ, 98%, 1% and 1%, respectively, until the Uncertificated Balance of REMIC I
Regular Interest B3 has been reduced to zero; fifth, to the Uncertificated
Balances of REMIC I Regular Interest AA, REMIC I Regular Interest B2 and REMIC I
Regular Interest ZZ, 98%, 1% and 1%, respectively, until the Uncertificated
Balance of REMIC I Regular Interest B2 has been reduced to zero; sixth, to the
Uncertificated Balances of REMIC I Regular Interest AA, REMIC I Regular Interest
B1 and REMIC I Regular Interest ZZ, 98%, 1% and 1%, respectively, until the
Uncertificated Balance of REMIC I Regular Interest B1 has been reduced to zero;
seventh, to the Uncertificated Balances of REMIC I Regular Interest AA, REMIC I
Regular Interest M3 and REMIC I Regular Interest ZZ, 98%, 1% and 1%,
respectively, until the Uncertificated Balance of REMIC I Regular Interest M3
has been reduced to zero; eighth, to the Uncertificated Balances of REMIC I
Regular Interest AA, REMIC I Regular Interest M2 and REMIC I Regular Interest
ZZ, 98%, 1% and 1%, respectively, until the Uncertificated Balance of REMIC I
Regular Interest M2 has been reduced to zero; and ninth, to the Uncertificated
Balances of REMIC I Regular Interest AA, REMIC I Regular Interest M1 and REMIC I
Regular Interest ZZ, 98%, 1% and 1%, respectively, until the Uncertificated
Balance of REMIC I Regular Interest M1 has been reduced to zero.
SECTION 4.05. Compliance with Withholding Requirements.
Notwithstanding any other provision of this Agreement, the
Trustee shall comply with all federal withholding requirements respecting
payments to Certificateholders of interest or original issue discount that the
Trustee reasonably believes are applicable under the Code. The consent of
Certificateholders shall not be required for such withholding. In the event the
Trustee does withhold any amount from interest or original issue discount
payments or advances thereof to any Certificateholder pursuant to federal
withholding requirements, the Trustee shall indicate the amount withheld to such
Certificateholders.
SECTION 4.06. Commission Reporting.
(a) The Trustee and the Servicer shall reasonably cooperate
with the Depositor in connection with the Trust's satisfying the reporting
requirements under the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT"). The Servicer or Trustee shall, if so requested by the
Depositor, prepare on behalf of the Trust Fund any Forms 10-D, 8-K and 10-K (or
other comparable required form containing the same or comparable information or
other information mutually agreed upon) customary for similar securities as
required by the Exchange Act and the Rules and Regulations of the Commission
thereunder, and the Depositor shall sign (or shall cause another entity
acceptable to the Commission to sign) and the Servicer and the Trustee shall, if
so requested by the Depositor, file (via the Commission's Electronic Data
Gathering and Retrieval System) such forms on behalf of the Depositor (or such
other entity). Notwithstanding anything herein to the contrary, the Depositor,
and not the Trustee, shall be responsible for executing each Form 10-D, 8-K
and10-K filed on behalf of the Trust.
(b) Each Form 8-K or 10-D shall, if so requested by the
Depositor, be filed by the Trustee or the Servicer within 15 days after each
Distribution Date, with a copy of the statement to the Certificateholders for
such Distribution Date as an exhibit thereto. Prior to March 30th of each year
(or such earlier date as may be required by the Exchange Act and the Rules and
Regulations of the Commission), if so requested by the Depositor, the Trustee or
the Servicer shall file a Form 10-K, in substance as required by applicable law
or applicable Commission staff's interpretations. Such Form 10-K shall include
as exhibits the Servicer's annual statement of compliance described under
Section 3.19 and the accountant's report described under Section 3.20, in each
case to the extent they have been timely delivered to the Trustee or the
Servicer, as applicable. If they are not so timely delivered, the Trustee or the
Servicer, as applicable, shall, if so requested by the Depositor, file an
amended Form 10-K including such documents as exhibits reasonably promptly after
they are delivered to the Trustee or the Servicer, as applicable. Neither the
Trustee nor the Servicer shall have any liability with respect to any failure to
properly prepare or file such periodic reports resulting from or relating to its
inability or failure to obtain any information not resulting from its own
negligence or willful misconduct. The Form 10-K shall also include a
certification in the form attached hereto as Exhibit J-1 (the "CERTIFICATION"),
which shall be signed by the senior officer of the Depositor in charge of
securitization.
(c) In addition, (x) the Trustee shall sign a certification
(in the form attached hereto as Exhibit J-2) for the benefit of the Depositor
and its officers, directors and Affiliates regarding certain aspects of items 1
through 3 of the Certification (the "TRUSTEE'S CERTIFICATION") (provided,
however, that the Trustee shall not undertake an analysis of the accountant's
report attached as an exhibit to the Form 10-K) and (y) the Servicer shall sign
a certification (in the form attached hereto as Exhibit J-3) for the benefit of
the Depositor, the Trustee and their officers, directors and Affiliates
regarding certain aspects of the Certification (the "SERVICER CERTIFICATION").
The Servicer Certification shall be delivered to the Depositor and the Trustee
no later than March 15th of each year (or if such day is not a Business Day, the
immediately preceding Business Day). The Trustee's Certification shall be
delivered to the Depositor by no later than March 18th of each year (or if such
day is not a Business Day, the immediately preceding Business Day). If the
Depositor chooses to have the Trustee file the Form 10-K with the Commission on
its behalf, it shall deliver the Certification to the Trustee for filing no
later than March 20th of each year (or if such day is not a Business Day, the
immediately preceding Business Day).
In addition, the Trustee shall indemnify and hold harmless the
Depositor and its officers, directors and Affiliates from and against any
losses, damages, penalties, fines, forfeitures, reasonable and necessary legal
fees and related costs, judgments and other costs and expenses arising out of or
based upon a breach of the Trustee's obligations under this Section 4.06 or the
Trustee's negligence, bad faith or willful misconduct in connection therewith.
The Depositor shall indemnify and hold harmless the Trustee 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 a breach of the
Depositor's obligations under this Section 4.06 or the Depositor's negligence,
bad faith or willful misconduct in connection therewith. If the indemnification
provided for herein is unavailable or insufficient to hold harmless the
Depositor or the Trustee, as applicable, then the other party, in connection
with a breach of its respective obligations under this Section 4.06 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 party
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 of the Depositor
on the one hand and the Trustee on the other.
In addition, the Servicer shall indemnify and hold harmless
the Depositor and its officers, directors and Affiliates from and against any
losses, damages, penalties, fines, forfeitures, reasonable and necessary legal
fees and related costs, judgments and other costs and expenses arising out of or
based upon a breach of the Servicer's obligations under this Section 4.06 or the
Servicer's negligence, bad faith or willful misconduct in connection therewith.
The Depositor shall indemnify and hold harmless 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 a breach of the
Depositor's obligations under this Section 4.06 or the Depositor's negligence,
bad faith or willful misconduct in connection therewith. If the indemnification
provided for herein is unavailable or insufficient to hold harmless the
Depositor or the Servicer, as applicable, then the other party, in connection
with a breach of its respective obligations under this Section 4.06 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 party
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 of the Depositor
on the one hand and the Servicer on the other.
(d) Upon any filing with the Commission, the Servicer or the
Trustee, as the case may be, shall promptly deliver to the Depositor a copy of
any executed report, statement or information.
(e) Prior to January 30th of the first year in which it is
able to do so under applicable law, if so requested by the Depositor, the
Servicer or the Trustee, as the case may be, shall file a Form 15 Suspension
Notification with respect to the Trust Fund.
(f) To the extent that, following the Closing Date, the
Depositor certifies that reports and certifications differing from those
required under this Section 4.06 comply with the reporting requirements under
the Exchange Act, the Servicer and the Trustee hereby agrees that they shall
reasonably cooperate to amend the provisions of this Section 4.06 (in accordance
with Section 11.01) in order to comply with such amended reporting requirements
and such amendment of this Section 4.06. Any such amendment may result in the
reduction of the reports filed by the Depositor under the Exchange Act.
Notwithstanding the foregoing, the Trustee shall not be obligated to enter into
any amendment pursuant to this Section that adversely affects its obligations
and immunities under this Agreement.
(g) Notwithstanding anything to the contrary in Section 4.06,
the Depositor reserves the right to execute and file with the Commission reports
required for the Trust Fund, provided that the Servicer and the Trustee shall
remain obligated to satisfy the other provisions of Section 4.06.
SECTION 4.07. Reserved.
SECTION 4.08. Reserved.
SECTION 4.09. Net WAC Rate Carryover Reserve Account.
(a) No later than the Closing Date, the Trustee shall
establish and maintain with itself, as agent for the Trustee, a separate,
segregated trust account titled, "Net WAC Rate Carryover Reserve Account, [NAME
OF TRUSTEE], as Trustee, in trust for the registered Holders of GE-WMC Mortgage
Securities, L.L.C., Mortgage Pass-Through Certificates, Series 200_-___." On the
Closing Date, the Depositor shall cause an amount equal to the Net WAC Rate
Carryover Reserve Account Deposit to be deposited into the Net WAC Rate
Carryover Reserve Account. The Trustee shall deposit into the Net WAC Rate
Carryover Reserve Account any payments received by it (i) under the Cap Contract
for the benefit of the Holders of the Adjustable-Rate Certificates and (ii)
pursuant to Section 4.01(a)(4)(iii).
(b) On each Distribution Date as to which there is a Net WAC
Rate Carryover Amount payable to the Class A Certificates or the Subordinate
Certificates, the Trustee has been directed by the Class C Certificateholders
to, and therefore shall, deposit into the Net WAC Rate Carryover Reserve Account
the amount of such Net WAC Rate Carryover Amount, after taking into account
amounts received under the Cap Contract, rather than distributing such amounts
to the Class C Certificateholders. On each such Distribution Date, the Trustee
shall hold all such amounts for the benefit of the Holders of the Class A
Certificates and the Subordinate Certificates, and shall distribute such amounts
to the Holders of the Class A Certificates and the Subordinate Certificates in
the amounts and priorities set forth in Section 4.01(b).
(c) For federal and state income tax purposes, the Class C
Certificateholders shall be deemed to be the owners of the Net WAC Rate
Carryover Reserve Account and all amounts deposited into the Net WAC Rate
Carryover Reserve Account shall be treated as amounts distributed by REMIC II to
the Holders of the Class C Certificates. Upon the termination of the Trust, or
the payment in full of the Class A Certificates and the Subordinate
Certificates, all amounts remaining on deposit in the Net WAC Rate Carryover
Reserve Account shall be released by the Trust Fund and distributed to the Class
C Certificateholders or their designees. The Net WAC Rate Carryover Reserve
Account shall be part of the Trust Fund but not part of any REMIC and any
payments to the Holders of the Class A Certificates or the Subordinate
Certificates of Net WAC Rate Carryover Amounts shall not be payments with
respect to a "regular interest" in a REMIC within the meaning of Code Section
860(G)(a)(1).
(d) By accepting a Class C Certificate, each Class C
Certificateholder hereby agrees to direct the Trustee, and the Trustee hereby is
directed, to deposit into the Net WAC Rate Carryover Reserve Account the amounts
described above on each Distribution Date as to which there is any Net WAC Rate
Carryover Amount rather than distributing such amounts to the Class C
Certificateholders. By accepting a Class C Certificate, each Class C
Certificateholder further agrees that such direction is given for good and
valuable consideration, the receipt and sufficiency of which is acknowledged by
such acceptance.
(e) At the written direction of the Holders of a majority in
Percentage Interest in the Class C Certificates, the Trustee shall direct any
depository institution maintaining the Net WAC Rate Carryover Reserve Account to
invest the funds in such account in one or more Permitted Investments bearing
interest or sold at a discount, and maturing, unless payable on demand, (i) no
later than the Business Day immediately preceding the date on which such funds
are required to be withdrawn from such account pursuant to this Agreement, if a
Person other than the Trustee or an Affiliate manages or advises such
investment, and (ii) no later than the date on which such funds are required to
be withdrawn from such account pursuant to this Agreement, if the Trustee or an
Affiliate manages or advises such investment. If no investment direction of the
Holders of a majority in Percentage Interest in the Class C Certificates with
respect to the Net WAC Rate Carryover Reserve Account is received by the
Trustee, the Trustee shall invest the funds pursuant to clause (vi) of the
definition of Permitted Investments. Interest earned on such investment shall be
deposited into the Net WAC Rate Carryover Reserve Account.
(f) For federal income tax return and information reporting,
the value assigned to the right of the Holders of the Class A and Subordinate
Certificates to receive payments from the Net WAC Rate Carryover Reserve Account
in respect of any Net WAC Rate Carryover Amount shall be [$ ].
ARTICLE V
THE CERTIFICATES
SECTION 5.01. The Certificates.
(a) The Certificates in the aggregate shall represent the
entire beneficial ownership interest in the Mortgage Loans and all other assets
included in REMIC I. At the Closing Date, the aggregate Certificate Principal
Balance of the Certificates shall equal the aggregate Stated Principal Balance
of the Mortgage Loans.
The Certificates shall be substantially in the forms annexed
hereto as Exhibits A-1 through A-5. The Certificates of each Class shall be
issuable in registered form only, in denominations of authorized Percentage
Interests as described in the definition thereof. Each Certificate shall share
ratably in all rights of the related Class.
Upon original issue, the Certificates shall be executed by the
Trustee, and delivered by the Trustee and the Trustee shall cause the
Certificates to be authenticated by the Certificate Registrar to or upon the
order of the Depositor. The Certificates shall be executed and attested by
manual or facsimile signature on behalf of the Trustee by an authorized
signatory. Certificates bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Trustee shall bind
the Trustee notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Certificates
or did not hold such offices at the date of such Certificates. No Certificate
shall be entitled to any benefit under this Agreement or be valid for any
purpose, unless there appears on such Certificate a certificate of
authentication substantially in the form provided herein executed by the
Certificate Registrar by manual signature, and such certificate of
authentication shall be conclusive evidence, and the only evidence, that such
Certificate has been duly authenticated and delivered hereunder. All
Certificates shall be dated the date of their authentication.
(b) The Class A Certificates and the Subordinate Certificates
shall initially be issued as one or more Certificates held by the Book-Entry
Custodian or, if appointed to hold such Certificates as provided below, the
Depository, and registered in the name of the Depository or its nominee and,
except as provided below, registration of such Certificates may not be
transferred by the Trustee except to another Depository that agrees to hold such
Certificates for the respective Certificate Owners with Ownership Interests
therein. The Certificate Owners shall hold their respective Ownership Interests
in and to such Certificates through the book-entry facilities of the Depository
and, except as provided below, shall not be entitled to definitive, fully
registered Certificates ("DEFINITIVE CERTIFICATES") in respect of such Ownership
Interests. All transfers by Certificate Owners of their respective Ownership
Interests in the Book-Entry Certificates shall be made in accordance with the
procedures established by the Depository Participant or brokerage firm
representing such Certificate Owner. Each Depository Participant shall only
transfer the Ownership Interests in the Book-Entry Certificates of Certificate
Owners it represents or of brokerage firms for which it acts as agent in
accordance with the Depository's normal procedures. The Trustee is hereby
initially appointed as the Book-Entry Custodian and hereby agrees to act as such
in accordance herewith and in accordance with the agreement that it has with the
Depository authorizing it to act as such. The Book-Entry Custodian may, and if
it is no longer qualified to act as such, the Book-Entry Custodian shall,
appoint, by a written instrument delivered to the Depositor, the Servicer, the
Trustee (if the Trustee is not the Book-Entry Custodian) and any other transfer
agent (including the Depository or any successor Depository), to act as
Book-Entry Custodian under such conditions as the predecessor Book-Entry
Custodian and the Depository or any successor Depository may prescribe, provided
that the predecessor Book-Entry Custodian shall not be relieved of any of its
duties or responsibilities by reason of any such appointment of other than the
Depository. If the Trustee resigns or is removed in accordance with the terms
hereof, if it so elects, the Depository shall immediately succeed to its
predecessor's duties as Book-Entry Custodian. The Depositor shall have the right
to inspect, and to obtain copies of, any Certificates held as Book-Entry
Certificates by the Book-Entry Custodian.
The Trustee, the Servicer and the Depositor may for all
purposes (including the making of payments due on the Book-Entry Certificates)
deal with the Depository as the authorized representative of the Certificate
Owners with respect to the Book-Entry Certificates for the purposes of
exercising the rights of Certificateholders hereunder. The rights of Certificate
Owners with respect to the Book-Entry Certificates shall be limited to those
established by law and agreements between such Certificate Owners and the
Depository Participants and brokerage firms representing such Certificate
Owners. Multiple requests and directions from, and votes of, the Depository as
Holder of the Book-Entry Certificates with respect to any particular matter
shall not be deemed inconsistent if they are made with respect to different
Certificate Owners. The Trustee may establish a reasonable record date in
connection with solicitations of consents from or voting by Certificateholders
and shall give notice to the Depository of such record date.
If (i)(A) the Depositor advises the Trustee in writing that
the Depository is no longer willing or able to properly discharge its
responsibilities as Depository, and (B) the Depositor is unable to locate a
qualified successor or (ii) after the occurrence of a Servicer Event of Default,
Certificate Owners representing in the aggregate not less than 51% of the
Ownership Interests of the Book-Entry Certificates advise the Trustee through
the Depository, in writing, that the continuation of a book-entry system through
the Depository is no longer in the best interests of the Certificate Owners, the
Trustee shall notify all Certificate Owners, through the Depository, of the
occurrence of any such event and of the availability of Definitive Certificates
to Certificate Owners requesting the same. Upon surrender to the Trustee of the
Book-Entry Certificates by the Book-Entry Custodian or the Depository, as
applicable, accompanied by registration instructions from the Depository for
registration of transfer, the Trustee shall issue the Definitive Certificates.
Such Definitive Certificates shall be issued in minimum denominations of $25,000
($50,000 in the case of the Class B-4 Certificates), except that any beneficial
ownership that was represented by a Book-Entry Certificate in an amount less
than $25,000 immediately prior to the issuance of a Definitive Certificate shall
be issued in a minimum denomination equal to the amount represented by such
Book-Entry Certificate. None of the Depositor, the Servicer, or the Trustee
shall be liable for any delay in the delivery of such instructions and may
conclusively rely on, and shall be protected in relying on, such instructions.
Upon the issuance of Definitive Certificates all references herein to
obligations imposed upon or to be performed by the Depository shall be deemed to
be imposed upon and performed by the Trustee, to the extent applicable with
respect to such Definitive Certificates, and the Trustee shall recognize the
Holders of the Definitive Certificates as Certificateholders hereunder.
SECTION 5.02. Registration of Transfer and Exchange of Certificates.
(a) The Trustee shall cause to be kept at one of the offices
or agencies to be appointed by the Trustee in accordance with the provisions of
Section 8.12 a Certificate Register for the Certificates in which, subject to
such reasonable regulations as it may prescribe, the Trustee shall provide for
the registration of Certificates and of transfers and exchanges of Certificates
as herein provided. The Trustee shall initially serve as Certificate Registrar
for the purpose of registering Certificates and transfers and exchanges of
Certificates as herein provided. The Certificate Registrar may appoint, by a
written instrument delivered to the Servicer and the Depositor, any other bank
or trust company to act as Certificate Registrar under such conditions as the
predecessor Certificate Registrar may prescribe, provided that the predecessor
Certificate Registrar shall not be relieved of any of its duties or
responsibilities hereunder by reason of such appointment. If the Trustee shall
at any time not be the Certificate Registrar, the Trustee shall have and
maintain the right to inspect the Certificate Register or to obtain a copy
thereof at all reasonable times, and to rely conclusively upon a certificate of
the Certificate Registrar as to the information set forth in the Certificate
Register.
(b) No transfer of any Class B-4, Class C, Class P or Residual
Certificate (the "PRIVATE CERTIFICATES") shall be made unless that transfer is
made pursuant to an effective registration statement under the Securities Act of
1933, as amended (the "1933 ACT"), and an effective registration or
qualification under applicable state securities laws, or is made in a
transaction that does not require such registration or qualification. In the
event that such a transfer of a Private Certificate is to be made without
registration or qualification (other than in connection with (i) the initial
transfer of any such Certificate by the Depositor to an affiliate of the
Depositor, (ii) the transfer of any such Class C, Class P or Residual
Certificate to the issuer under the Indenture or the indenture trustee under the
Indenture or (iii) a transfer of any such Class C, Class P or Residual
Certificate from the issuer under the Indenture or the indenture trustee under
the Indenture to the Depositor or an Affiliate of the Depositor), the Trustee
and the Certificate Registrar shall each require receipt of: (i) if such
transfer is purportedly being made in reliance upon Rule 144A under the 1933
Act, written certifications from the Certificateholder desiring to effect the
transfer and from such Certificateholder's prospective transferee, substantially
in the forms attached hereto as Exhibit F-1; and (ii) in all other cases, an
Opinion of Counsel satisfactory to it that such transfer may be made without
such registration (which Opinion of Counsel shall not be an expense of the
Depositor, the Trustee, the Servicer, or the Trust Fund), together with copies
of the written certification(s) of the Certificateholder desiring to effect the
transfer and/or such Certificateholder's prospective transferee upon which such
Opinion of Counsel is based, if any. None of the Depositor, the Certificate
Registrar or the Trustee is obligated to register or qualify the Private
Certificates under the 1933 Act or any other securities laws or to take any
action not otherwise required under this Agreement to permit the transfer of
such Certificates without registration or qualification. If a transfer of an
Ownership Interest in the Class B-4 Certificates is to be made without
registration under the 1933 Act (other than in connection with the initial
transfer of any such Certificate by the Depositor to an affiliate of the
Depositor), then the Certificate Registrar shall refuse to register such
transfer unless it receives (and upon receipt, may conclusively rely upon) a
certificate from the Certificateholder desiring to effect such transfer and a
certificate from such Certificateholder's prospective transferee (which in the
case of the Book-Entry Certificates, the Certificateholder and the
Certificateholder's prospective transferee shall be deemed to have represented
such certification), to the effect that, among other things, the transfer is
being made to a qualified institutional buyer as defined in Rule 144A under the
Securities Act in accordance with Rule 144A. Any Certificateholder desiring to
effect the transfer of a Private Certificate shall, and does hereby agree to,
indemnify the Trustee, the Depositor, the Certificate Registrar and the Servicer
against any liability that may result if the transfer is not so exempt or is not
made in accordance with such federal and state laws.
Notwithstanding the foregoing, no certification or Opinion of
Counsel described in this Section 5.02(b) shall be required in connection with
the transfer, on the Closing Date, of any Residual Certificate by the Depositor
to an "accredited investor" within the meaning of Rule 501(d) of the 1933 Act.
(c) No transfer of a Certificate or any interest therein shall
be made to any Plan subject to ERISA or Section 4975 of the Code, any Person
acting, directly or indirectly, on behalf of any such Plan or any Person
acquiring such Certificates with "Plan Assets" of a Plan within the meaning of
the Department of Labor regulation promulgated at 29 C.F.R. ss. 2510.3-101
("PLAN ASSETS"), as certified by such transferee in the form of Exhibit G,
unless the Trustee is provided with an Opinion of Counsel for the benefit of the
Trust Fund, the Depositor, the Trustee and the Servicer and on which they may
rely, which shall be to the effect that the purchase and holding of such
Certificates is permissible under applicable law, shall not constitute or result
in any non-exempt prohibited transaction under ERISA or Section 4975 of the Code
and shall not subject the Depositor, the Servicer, the Trustee or the Trust Fund
to any obligation or liability (including obligations or liabilities under ERISA
or Section 4975 of the Code) in addition to those undertaken in this Agreement,
which Opinion of Counsel shall not be an expense of the Depositor, the Servicer,
the Trustee or the Trust Fund. Neither an Opinion of Counsel nor any
certification shall be required in connection with (i) the initial transfer of
any such Certificate by the Depositor to an affiliate of the Depositor, (ii) the
transfer of any such Class C, Class P or Residual Certificate to the issuer
under the Indenture or the indenture trustee under the Indenture or (iii) a
transfer of any such Class C, Class P or Residual Certificate from the issuer
under the Indenture or the indenture trustee under the Indenture to the
Depositor or an Affiliate of the Depositor (in which case, the Depositor or any
affiliate thereof shall have deemed to have represented that it is not
purchasing with Plan Assets) and the Trustee shall be entitled to conclusively
rely upon a representation (which, upon the request of the Trustee, shall be a
written representation) from the Depositor of the status of such transferee as
an affiliate of the Depositor.
If any Certificate or any interest therein is acquired or held
in violation of the provisions of the preceding paragraphs, the next preceding
permitted beneficial owner shall be treated as the beneficial owner of that
Certificate retroactive to the date of transfer to the purported beneficial
owner. Any purported beneficial owner whose acquisition or holding of any such
Certificate or interest therein was effected in violation of the provisions of
the preceding paragraph shall indemnify and hold harmless the Depositor, the
Servicer, the Trustee and the Trust Fund from and against any and all
liabilities, claims, costs or expenses incurred by those parties as a result of
that acquisition or holding.
(d)(i) Each Person who has or who acquires any Ownership
Interest in a Residual Certificate shall be deemed by the acceptance or
acquisition of such Ownership Interest to have agreed to be bound by the
following provisions and to have irrevocably authorized the Certificate
Registrar or its designee under clause (iii)(A) below to deliver payments to a
Person other than such Person and to negotiate the terms of any mandatory sale
under clause (iii)(B) below and to execute all instruments of Transfer and to do
all other things necessary in connection with any such sale. The rights of each
Person acquiring any Ownership Interest in a Residual Certificate are expressly
subject to the following provisions:
(A) Each Person holding or acquiring any Ownership Interest in
a Residual Certificate shall be a Permitted Transferee and shall
promptly notify the Certificate Registrar of any change or impending
change in its status as a Permitted Transferee.
(B) In connection with any proposed Transfer of any Ownership
Interest in a Residual Certificate, the Certificate Registrar shall
require delivery to it and shall not register the Transfer of any
Residual Certificate until its receipt of an affidavit and agreement (a
"TRANSFER AFFIDAVIT AND AGREEMENT"), in the form attached hereto as
Exhibit F-2 from the proposed Transferee, in form and substance
satisfactory to the Certificate Registrar, representing and warranting,
among other things, that such Transferee is a Permitted Transferee,
that it is not acquiring its Ownership Interest in the Residual
Certificate that is the subject of the proposed Transfer as a nominee,
trustee or agent for any Person that is not a Permitted Transferee,
that for so long as it retains its Ownership Interest in a Residual
Certificate, it shall endeavor to remain a Permitted Transferee, and
that it has reviewed the provisions of this Section 5.02(d) and agrees
to be bound by them.
(C) Notwithstanding the delivery of a Transfer Affidavit and
Agreement by a proposed Transferee under clause (B) above, if a
Responsible Officer of the Certificate Registrar who is assigned to
this transaction has actual knowledge that the proposed Transferee is
not a Permitted Transferee, no Transfer of an Ownership Interest in a
Residual Certificate to such proposed Transferee shall be effected.
(D) Each Person holding or acquiring any Ownership Interest in
a Residual Certificate shall agree (x) to require a Transfer Affidavit
and Agreement from any other Person to whom such Person attempts to
transfer its Ownership Interest in a Residual Certificate and (y) not
to transfer its Ownership Interest unless it provides a Transferor
Affidavit (in the form attached hereto as Exhibit F-2), to the
Certificate Registrar stating that, among other things, it has no
actual knowledge that such other Person is not a Permitted Transferee.
(E) Each Person holding or acquiring an Ownership Interest in
a Residual Certificate, by purchasing an Ownership Interest in such
Certificate, agrees to give the Certificate Registrar written notice
that it is a "pass-through interest holder" within the meaning of
temporary Treasury regulation Section 1.67-3T(a)(2)(i)(A) immediately
upon acquiring an Ownership Interest in a Residual Certificate, if it
is, or is holding an Ownership Interest in a Residual Certificate on
behalf of, a "pass-through interest holder."
(ii) The Certificate Registrar shall register the Transfer of
any Residual Certificate only if it shall have received the Transfer Affidavit
and Agreement and all of such other documents as shall have been reasonably
required by the Certificate Registrar as a condition to such registration. In
addition, no Transfer of a Residual Certificate shall be made unless the
Certificate Registrar shall have received a representation letter from the
Transferee of such Certificate to the effect that such Transferee is a Permitted
Transferee.
(iii) (A) If any purported Transferee shall become a Holder of
a Residual Certificate in violation of the provisions of this Section 5.02(d),
then the last preceding Permitted Transferee shall be restored, to the extent
permitted by law, to all rights as Holder thereof retroactive to the date of
registration of such Transfer of such Residual Certificate. The Certificate
Registrar shall be under no liability to any Person for any registration of
Transfer of a Residual Certificate that is in fact not permitted by this Section
5.02(d) or for making any payments due on such Certificate to the Holder thereof
or for taking any other action with respect to such Holder under the provisions
of this Agreement.
(B) If any purported Transferee shall become a Holder of a
Residual Certificate in violation of the restrictions in this Section
5.02(d) and to the extent that the retroactive restoration of the
rights of the Holder of such Residual Certificate as described in
clause (iii)(A) above shall be invalid, illegal or unenforceable, then
the Certificate Registrar shall have the right, without notice to the
Holder or any prior Holder of such Residual Certificate, to sell such
Residual Certificate to a purchaser selected by the Certificate
Registrar on such terms as the Certificate Registrar may choose. Such
purported Transferee shall promptly endorse and deliver each Residual
Certificate in accordance with the instructions of the Certificate
Registrar. Such purchaser may be the Certificate Registrar itself or
any Affiliate of the Certificate Registrar. The proceeds of such sale,
net of the commissions (which may include commissions payable to the
Certificate Registrar or its Affiliates), expenses and taxes due, if
any, shall be remitted by the Certificate Registrar to such purported
Transferee. The terms and conditions of any sale under this clause
(iii)(B) shall be determined in the sole discretion of the Certificate
Registrar, and the Certificate Registrar shall not be liable to any
Person having an Ownership Interest in a Residual Certificate as a
result of its exercise of such discretion.
(iv) The Trustee shall make available to the Internal Revenue
Service and those Persons specified by the REMIC Provisions all information
necessary to compute any tax imposed (A) as a result of the Transfer of an
Ownership Interest in a Residual Certificate to any Person who is a Disqualified
Organization, including the information described in Treasury regulations
sections 1.860D-1(b)(5) and 1.860E-2(a)(5) with respect to the "excess
inclusions" of such Residual Certificate and (B) as a result of any regulated
investment company, real estate investment trust, common trust fund,
partnership, trust, estate or organization described in Section 1381 of the Code
that holds an Ownership Interest in a Residual Certificate having as among its
record Holders at any time any Person which is a Disqualified Organization.
Reasonable compensation for providing such information may be accepted by the
Trustee.
(v) The provisions of this Section 5.02(d) set forth prior to
this subsection (v) may be modified, added to or eliminated, provided that there
shall have been delivered to the Trustee at the expense of the party seeking to
modify, add to or eliminate any such provision the following:
(A) written notification from each Rating Agency to the effect
that the modification, addition to or elimination of such provisions
shall not cause such Rating Agency to downgrade its then-current
ratings of any Class of Certificates; and
(B) an Opinion of Counsel, in form and substance satisfactory
to the Trustee, to the effect that such modification of, addition to or
elimination of such provisions shall not cause any Trust REMIC to cease
to qualify as a REMIC and shall not cause any Trust REMIC, as the case
may be, to be subject to an entity-level tax caused by the Transfer of
any Residual Certificate to a Person that is not a Permitted Transferee
or (y) a Person other than the prospective transferee to be subject to
a REMIC-tax caused by the Transfer of a Residual Certificate to a
Person that is not a Permitted Transferee.
(e) Subject to the preceding subsections, upon surrender for
registration of transfer of any Certificate at any office or agency of the
Trustee maintained for such purpose pursuant to Section 8.12, the Trustee shall
execute and the Certificate Registrar shall authenticate and deliver, in the
name of the designated Transferee or Transferees, one or more new Certificates
of the same Class of a like aggregate Percentage Interest.
(f) At the option of the Holder thereof, any Certificate may
be exchanged for other Certificates of the same Class with authorized
denominations and a like aggregate Percentage Interest, upon surrender of such
Certificate to be exchanged at any office or agency of the Trustee maintained
for such purpose pursuant to Section 8.12. Whenever any Certificates are so
surrendered for exchange the Trustee shall execute and cause the Certificate
Registrar to authenticate and deliver the Certificates which the
Certificateholder making the exchange is entitled to receive. Every Certificate
presented or surrendered for transfer or exchange shall (if so required by the
Trustee) be duly endorsed by, or be accompanied by a written instrument of
transfer in the form satisfactory to the Trustee and the Certificate Registrar
duly executed by, the Holder thereof or his attorney duly authorized in writing.
In addition, with respect to each Residual Certificate, the Holder thereof may
exchange, in the manner described above, the Class R Certificate for two
separate Certificates, each representing such Holder's respective Percentage
Interest in the Class R-I Interest and the Class R-II Interest, in each case
that was evidenced by the Class R Certificate being exchanged.
(g) No service charge to the Certificateholders shall be made
for any transfer or exchange of Certificates, but the Trustee may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
(h) All Certificates surrendered for transfer and exchange
shall be canceled and destroyed by the Certificate Registrar in accordance with
its customary procedures.
(i) The Trustee shall cause the Certificate Registrar (unless
the Trustee is acting as Certificate Registrar) to provide notice to the Trustee
of each transfer of a Certificate and to provide the Trustee with an updated
copy of the Certificate Register on the first Business Day in March and August
of each year, commencing in _____.
(j) Any attempted or purported transfer of any Certificate in
violation of the provisions of Section 5.02(c) hereof shall be void AB INITIO
and such Certificate shall be considered to have been held continuously by the
prior permitted Holder.
SECTION 5.03. Mutilated, Destroyed, Lost or Stolen Certificates.
If (i) any mutilated Certificate is surrendered to the Trustee
or the Certificate Registrar, or the Trustee and the Certificate Registrar
receive evidence to their satisfaction of the destruction, loss or theft of any
Certificate, and (ii) there is delivered to the Trustee and the Certificate
Registrar such security or indemnity as may be required by them to save each of
them harmless, then, in the absence of actual knowledge by the Trustee or the
Certificate Registrar that such Certificate has been acquired by a bona fide
purchaser, the Trustee shall execute and deliver, in exchange for or in lieu of
any such mutilated, destroyed, lost or stolen Certificate, a new Certificate of
the same Class and of like denomination and Percentage Interest. Upon the
issuance of any new Certificate under this Section, the Trustee may require the
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other expenses (including the fees
and expenses of the Certificate Registrar) connected therewith. Any replacement
Certificate issued pursuant to this Section shall constitute complete and
indefeasible evidence of ownership in the applicable REMIC created hereunder, as
if originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time.
SECTION 5.04. Persons Deemed Owners.
The Depositor, the Servicer, the Trustee, the Certificate
Registrar and any agent of any of them may treat the Person in whose name any
Certificate is registered as the owner of such Certificate for the purpose of
receiving distributions pursuant to Section 4.01 and for all other purposes
whatsoever, and none of the Depositor, the Servicer, the Trustee, the
Certificate Registrar or any agent of any of them shall be affected by notice to
the contrary.
SECTION 5.05. Certain Available Information.
On or prior to the date of the first sale of any Private
Certificate to an Independent third party, the Depositor shall provide to the
Trustee ten copies of any private placement memorandum or other disclosure
document used by the Depositor in connection with the offer and sale of the
Private Certificates. In addition, if any such private placement memorandum or
disclosure document is revised, amended or supplemented at any time following
the delivery thereof to the Trustee, the Depositor promptly shall inform the
Trustee of such event and shall deliver to the Trustee ten copies of the private
placement memorandum or disclosure document, as revised, amended or
supplemented. The Trustee shall maintain at its Corporate Trust Office and shall
make available free of charge during normal business hours for review by any
Holder of a Certificate, Certificate Owner or any Person identified to the
Trustee as a prospective transferee of a Certificate, originals or copies of the
following items: (i) in the case of a Holder or prospective transferee of a
Private Certificate, the private placement memorandum or other disclosure
document relating to such Certificate, if any, in the form most recently
provided to the Trustee; and (ii) in all cases, (A) this Agreement and any
amendments hereof entered into pursuant to Section 11.01, (B) all monthly
statements required to be delivered to Certificateholders of the relevant Class
pursuant to Section 4.02 since the Closing Date, and all other notices, reports,
statements and written communications delivered to the Certificateholders of the
relevant Class pursuant to this Agreement since the Closing Date, (C) all
certifications delivered by a Responsible Officer of the Trustee since the
Closing Date pursuant to Section 10.01(h), (D) any and all Officers'
Certificates delivered to the Trustee by the Servicer since the Closing Date to
evidence the Servicer's determination that any P&I Advance or Servicing Advance
was, or if made, would be a Nonrecoverable Advance or Nonrecoverable Servicing
Advance, respectively, and (E) any and all Officers' Certificates delivered to
the Trustee by the Servicer since the Closing Date pursuant to Section 4.04(a).
Copies and mailing of any and all of the foregoing items shall be available from
the Trustee upon request at the expense of the person requesting the same.
SECTION 5.06 Access to List of Certificateholders.
If three or more Certificateholders (a) request such
information in writing from the Trustee, (b) state that such Certificateholders
desire to communicate with other Certificateholders or Certificate Owners with
respect to their rights under this Agreement or under the Certificates, and (c)
provide a copy of the communication which such Certificateholders or Certificate
Owners propose to transmit, or if the Depositor or Servicer request such
information in writing from the Trustee, then the Trustee shall, within ten
Business Days after the receipt of such request, provide the Depositor, the
Servicer or such Certificateholders or Certificate Owners at such recipients'
expense the most recent list of the Certificateholders of the Trust Fund held by
the Trustee, if any. The Depositor and every Certificateholder or Certificate
Owners, by receiving and holding a Certificate, agree that the Trustee shall not
be held accountable by reason of the disclosure of any such information as to
the list of the Certificateholders or Certificate Owners hereunder, regardless
of the source from which such information was derived.
ARTICLE VI
THE DEPOSITOR AND THE SERVICER
SECTION 6.01. Liability of the Depositor and the Servicer.
The Depositor and the Servicer each shall be liable in
accordance herewith only to the extent of the obligations specifically imposed
by this Agreement and undertaken hereunder by the Depositor and the Servicer
herein.
SECTION 6.02. Merger or Consolidation of the Depositor or the Servicer.
Subject to the following paragraph, the Depositor shall keep
in full effect its existence, rights and franchises as a corporation under the
laws of the jurisdiction of its incorporation. Subject to the following
paragraph, the Servicer shall keep in full effect its existence, rights and
franchises as a ________ under the laws of the jurisdiction of its formation and
its qualification as an approved conventional seller/servicer for ▇▇▇▇▇▇ ▇▇▇ or
▇▇▇▇▇▇▇ Mac in good standing. The Depositor and the Servicer each 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, the Certificates or any of the
Mortgage Loans and to perform its respective duties under this Agreement.
The Depositor or the Servicer may be merged or consolidated
with or into any Person, or transfer all or substantially all of its assets to
any Person, in which case any Person resulting from any merger or consolidation
to which the Depositor or the Servicer shall be a party, or any Person
succeeding to the business of the Depositor or the Servicer, shall be the
successor of the Depositor or the Servicer, as the case may be, hereunder,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding;
provided, however, that the successor or surviving Person to the Servicer shall
be qualified to service mortgage loans on behalf of ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac;
and provided further that the Rating Agencies' ratings of the Class A
Certificates and the Subordinate Certificates in effect immediately prior to
such merger or consolidation shall not be qualified, reduced or withdrawn as a
result thereof (as evidenced by a letter to such effect from the Rating
Agencies).
SECTION 6.03. Limitation on Liability of the Depositor, the Servicer and
Others.
None of the Depositor, the Servicer or any of the directors,
officers, employees or agents of the Depositor or the Servicer shall be under
any liability to the Trust Fund or the Certificateholders for any action taken
or for refraining from the taking of any action in good faith pursuant to this
Agreement, or for errors in judgment; provided, however, that this provision
shall not protect the Depositor, the Servicer or any such person against any
breach of warranties, representations or covenants made herein, or against any
specific liability imposed on the Servicer pursuant hereto, or against any
liability which would otherwise be imposed by reason of willful misfeasance, bad
faith or negligence in the performance of duties or by reason of reckless
disregard of obligations and duties hereunder. The Depositor, the Servicer or
the Trustee and any director, officer, employee or agent of the Depositor, the
Servicer or the Trustee 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 Depositor, the Servicer and any director, officer,
employee or agent of the Depositor or the Servicer shall be indemnified and held
harmless by the Trust Fund against any loss, liability or expense incurred in
connection with any legal action relating to this Agreement or the Certificates
and any breach of a representation or warranty regarding the Mortgage Loans,
other than in the case of the Depositor and the Servicer, any loss, liability or
expense incurred by reason of willful misfeasance, bad faith or negligence in
the performance of duties hereunder or by reason of reckless disregard of
obligations and duties hereunder. Neither the Depositor nor the Servicer shall
be under any obligation to appear in, prosecute or defend any legal action
unless such action is related to its respective duties under this Agreement and,
in its opinion, does not involve it in any expense or liability; provided,
however, that each of the Depositor and the Servicer may in its discretion
undertake any such action which 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 Certificateholders hereunder. In such event, unless the
Depositor or the Servicer acts without the consent of the Holders of
Certificates entitled to at least 51% of the Voting Rights (which consent shall
not be necessary in the case of litigation or other legal action by either to
enforce their respective rights or defend themselves hereunder), the legal
expenses and costs of such action and any liability resulting therefrom (except
any loss, liability or expense incurred by reason of willful misfeasance, bad
faith or negligence in the performance of duties hereunder or by reason of
reckless disregard of obligations and duties hereunder) shall be expenses, costs
and liabilities of the Trust Fund, and the Depositor and the Servicer shall be
entitled to be reimbursed therefor from the Collection Account as and to the
extent provided in Section 3.05, any such right of reimbursement being prior to
the rights of the Certificateholders to receive any amount in the Collection
Account.
SECTION 6.04. Limitation on Resignation of the Servicer.
The Servicer shall not resign from the obligations and duties
hereby imposed on it except (i) upon determination that its duties hereunder are
no longer permissible under applicable law or (ii) with the written consent of
the Trustee and written confirmation from each Rating Agency (which confirmation
shall be furnished to the Depositor and the Trustee) that such resignation shall
not cause such Rating Agency to reduce the then current rating of the Class A
Certificates or the Subordinate Certificates. Any such determination pursuant to
clause (i) of the preceding sentence, permitting the resignation of the
Servicer, shall be evidenced by an Opinion of Counsel to such effect obtained at
the expense of the Servicer and delivered to the Trustee. No resignation of the
Servicer shall become effective until the Trustee or a successor servicer shall
have assumed the Servicer's responsibilities, duties, liabilities (other than
those liabilities arising prior to the appointment of such successor) and
obligations under this Agreement.
Except as expressly provided herein, the Servicer shall not
assign or transfer any of its rights, benefits or privileges hereunder to any
other Person, nor delegate to or subcontract with, nor authorize or appoint any
other Person to perform any of the duties, covenants or obligations to be
performed by the Servicer hereunder. If, pursuant to any provision hereof, the
duties of the Servicer are transferred to a successor Servicer, the entire
amount of the Servicing Fee and other compensation payable to the Servicer
pursuant hereto shall thereafter be payable to such successor Servicer.
SECTION 6.05. Rights of the Depositor in Respect of the Servicer.
The Servicer shall afford (and any Sub-Servicing Agreement
shall provide that each Sub-Servicer shall afford) the Depositor and the
Trustee, upon reasonable advance notice in writing, during normal business hours
at the office designated by the Servicer, access to all records maintained by
the Servicer (and any such Sub-Servicer) in respect of the Servicer's rights and
obligations with respect to the Mortgage Loans hereunder and access to officers
of the Servicer (and those of any such Sub-Servicer) responsible for such
obligations. To the extent such information is not otherwise available to the
public, neither the Depositor nor the Trustee shall disseminate any information
obtained pursuant to the preceding sentence without the Servicer's (or any such
Sub-Servicer's) written consent, except as required pursuant to this Agreement
or to the extent that it is appropriate to do so (i) in working with legal
counsel, auditors, taxing authorities or other governmental agencies, rating
agencies or reinsurers or (ii) pursuant to any law, rule, regulation, order,
judgment, writ, injunction or decree of any court or governmental authority
having jurisdiction over the Depositor, the Trustee or the Trust Fund, and in
either case, the Depositor or the Trustee, as the case may be, shall use its
best efforts to assure the confidentiality of any such disseminated non-public
information. The Depositor may, but is not obligated to, enforce the obligations
of the Servicer under this Agreement and may, but is not obligated to, perform,
or cause a designee to perform, any defaulted obligation of the Servicer under
this Agreement or exercise the rights of the Servicer under this Agreement;
provided that the Servicer shall not be relieved of any of its obligations under
this Agreement by virtue of such performance by the Depositor or its designee.
The Depositor shall not have any responsibility or liability for any action or
failure to act by the Servicer and is not obligated to supervise the performance
of the Servicer under this Agreement or otherwise.
SECTION 6.06. Sub-Servicing Agreements Between the Servicer and
Sub-Servicers.
(a) The Servicer may enter into Sub-Servicing Agreements
(provided that such agreements would not result in a withdrawal or a downgrade
by any Rating Agency of the ratings on any Class of Certificates) with
Sub-Servicers, for the servicing and administration of the Mortgage Loans.
Each Sub-Servicer shall be (i) authorized to transact business
in the state or states in which the related Mortgaged Properties it is to
service are situated, if and to the extent required by applicable law to enable
the Sub-Servicer to perform its obligations hereunder and under the
Sub-Servicing Agreement, (ii) an institution approved as a mortgage loan
originator by the Federal Housing Administration or an institution the deposit
accounts in which are insured by the FDIC and (iii) a ▇▇▇▇▇▇▇ Mac or ▇▇▇▇▇▇ Mae
approved mortgage servicer. Each Sub-Servicing Agreement must impose on the
Sub-Servicer requirements conforming to the provisions set forth in Section 6.11
and provide for servicing of the Mortgage Loans consistent with the terms of
this Agreement. The Servicer shall examine each Sub-Servicing Agreement and
shall be familiar with the terms thereof. The terms of any Sub-Servicing
Agreement shall not be inconsistent with any of the provisions of this
Agreement. The Servicer and the Sub-Servicers may enter into and make amendments
to the Sub-Servicing Agreements or enter into different forms of Sub-Servicing
Agreements; provided, however, that any such amendments or different forms shall
be consistent with and not violate the provisions of this Agreement, and that no
such amendment or different form shall be made or entered into which could be
reasonably expected to be materially adverse to the interests of the
Certificateholders, without the consent of the Holders of Certificates entitled
to at least 66% of the Voting Rights. Any variation without the consent of the
Holders of Certificates entitled to at least 66% of the Voting Rights from the
provisions set forth in Section 6.11, provisions relating to insurance in
Section 3.10 or priority requirements of Sub-Servicing Accounts, or credits and
charges to the Sub-Servicing Accounts or the timing and amount of remittances by
the Sub-Servicers to the Servicer, are conclusively deemed to be inconsistent
with this Agreement and therefore prohibited. The Servicer shall deliver to the
Trustee and the Depositor copies of all Sub-Servicing Agreements, and any
amendments or modifications thereof, promptly upon the Servicer's execution and
delivery of such instruments.
(b) As part of its servicing activities hereunder, the
Servicer, for the benefit of the Trustee and the Certificateholders, shall
enforce the obligations of each Sub-Servicer under the related Sub-Servicing
Agreement, including, without limitation, any obligation to make advances in
respect of delinquent payments as required by a Sub-Servicing Agreement. Such
enforcement, including, without limitation, the legal prosecution of claims,
termination of Sub-Servicing Agreements, 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 Servicer, in its good faith business judgment, would require were it
the owner of the related Mortgage Loans. The Servicer shall pay the costs of
such enforcement at its own expense, and shall be reimbursed therefor only (i)
from a general recovery resulting from such enforcement, to the extent, if any,
that such recovery exceeds all amounts due in respect of the related Mortgage
Loans or (ii) from a specific recovery of costs, expenses or attorneys' fees
against the party against whom such enforcement is directed.
SECTION 6.07. Successor Sub-Servicers.
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. 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 which qualifies under Section 6.06.
Any Sub-Servicing Agreement shall include the provision that
such agreement may be immediately terminated by the Trustee without fee, 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).
SECTION 6.08. Liability of the Servicer.
Notwithstanding any Sub-Servicing Agreement, any of the
provisions of this Agreement relating to agreements or arrangements between the
Servicer and a Sub-Servicer or reference to actions taken through a Sub-Servicer
or otherwise, the Servicer shall remain obligated and primarily liable to the
Trustee, the Depositor and the Certificateholders for the servicing and
administering of the Mortgage Loans in accordance with the provisions of Section
3.01 without diminution of such obligation or liability by virtue of such
Sub-Servicing Agreements or arrangements or by virtue of indemnification from
the Sub-Servicer and to the same extent and under the same terms and conditions
as if the Servicer alone were servicing and administering the Mortgage Loans.
The Servicer shall be entitled to enter into any agreement with a Sub-Servicer
for indemnification of the Servicer by such Sub-Servicer and nothing contained
in this Agreement shall be deemed to limit or modify such indemnification.
SECTION 6.09. No Contractual Relationship Between Sub-Servicers and the
Trustee or Certificateholders.
Any Sub-Servicing Agreement that may be entered into and any
transactions or services relating to the Mortgage Loans involving a Sub-Servicer
in its capacity as such shall be deemed to be between the Sub-Servicer and the
Servicer alone, and the Trustee and Certificateholders shall not be deemed
parties thereto and shall have no claims, rights, obligations, duties or
liabilities with respect to the Sub-Servicer except as set forth in Section
6.10. The Servicer shall be solely liable for all fees owed by it to any
Sub-Servicer, irrespective of whether the Servicer's compensation pursuant to
this Agreement is sufficient to pay such fees.
SECTION 6.10. Assumption or Termination of Sub-Servicing Agreements by
Trustee.
In the event the Servicer shall for any reason no longer be
the Servicer (including termination due to a Servicer Event of Default), the
Trustee or its designee shall thereupon assume (or cause its designee or the
successor Servicer for the Trustee appointed pursuant to Section 7.02 to assume)
all of the rights and obligations of the Servicer under each Sub-Servicing
Agreement that the Servicer may have entered into, unless the Trustee elects to
terminate any Sub-Servicing Agreement in accordance with its terms as provided
in Section 6.07. Upon such assumption, the Trustee, its designee or the
successor servicer for the Trustee appointed pursuant to Section 7.02 shall be
deemed, subject to Section 6.07, to have assumed all of the Servicer's interest
therein and to have replaced the Servicer as a party to each Sub-Servicing
Agreement to the same extent as if each Sub-Servicing Agreement had been
assigned to the assuming party, except that (i) the Servicer shall not thereby
be relieved of any liability or obligations under any Sub-Servicing Agreement
and (ii) none of the Trustee, its designee or any successor Servicer shall be
deemed to have assumed any liability or obligation of the Servicer that arose
before it ceased to be the Servicer.
The Servicer at its expense shall, upon request of the
Trustee, deliver to the assuming party all documents and records relating to
each Sub-Servicing Agreement and the Mortgage Loans then being serviced and an
accounting of amounts collected and held by or on behalf of it, and otherwise
use its best efforts to effect the orderly and efficient transfer of the
Sub-Servicing Agreements to the assuming party.
SECTION 6.11. Sub-Servicing Accounts.
In those cases where a Sub-Servicer is servicing a Mortgage
Loan pursuant to a Sub-Servicing Agreement, the Sub-Servicer shall be required
to establish and maintain one or more accounts (collectively, the "SUB-SERVICING
ACCOUNT"). The Sub-Servicing Account shall be an Eligible Account. The
Sub-Servicer shall deposit in the clearing account (which account must be an
Eligible Account) in which it customarily deposits payments and collections on
mortgage loans in connection with its mortgage loan servicing activities on a
daily basis, and in no event more than one Business Day after the Sub-Servicer's
receipt thereof, all proceeds of Mortgage Loans received by the Sub-Servicer
less its servicing compensation to the extent permitted by the Sub-Servicing
Agreement, and shall thereafter deposit such amounts in the Sub-Servicing
Account, in no event more than two Business Days after the deposit of such funds
into the clearing account. The Sub-Servicer shall thereafter deposit such
proceeds in the Collection Account or remit such proceeds to the Servicer for
deposit in the Collection Account not later than two Business Days after the
deposit of such amounts in the Sub-Servicing Account. For purposes of this
Agreement, the Servicer shall be deemed to have received payments on the
Mortgage Loans when the Sub-Servicer receives such payments.
ARTICLE VII
DEFAULT
SECTION 7.01. Servicer Events of Default.
"SERVICER EVENT OF DEFAULT," wherever used herein, means any
one of the following events:
(i) any failure by the Servicer to remit to the Trustee for
distribution to the Certificateholders any payment (other than a P&I
Advance required to be made from its own funds on any Servicer
Remittance Date pursuant to Section 4.03) required to be made under the
terms of the Certificates and this Agreement which continues unremedied
for a period of one Business Day 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 Depositor or the Trustee (in which
case notice shall be provided by telecopy), or to the Servicer, the
Depositor and the Trustee by the Holders of Certificates entitled to at
least 25% of the Voting Rights; or
(ii) any failure on the part of the Servicer duly to observe
or perform in any material respect any of the covenants or agreements
on the part of the Servicer contained in this Agreement (or, if the
Servicer is the Originator, the failure of the Originator to repurchase
a Mortgage Loan as to which a breach has been established that requires
a repurchase pursuant to the terms of Section __ of the Mortgage Loan
Purchase Agreement) which continues unremedied for a period of 45 days
after the earlier of (i) the date on which written notice of such
failure, requiring the same to be remedied, shall have been given to
the Servicer by the Depositor or the Trustee, or to the Servicer, the
Depositor and the Trustee by the Holders of Certificates entitled to at
least 25% of the Voting Rights and (ii) actual knowledge of such
failure by a Servicing Officer of the Servicer; or
(iii) a decree or order of a court or agency or supervisory
authority having jurisdiction in the premises in an involuntary case
under any present or future federal or state bankruptcy, insolvency or
similar law or the appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt, marshaling of
assets and liabilities or similar proceeding, or for the winding-up or
liquidation of its affairs, shall have been entered against the
Servicer and if such proceeding is being contested by the Servicer in
good faith, such decree or order shall have remained in force
undischarged or unstayed for a period of 60 days or results in the
entry of an order for relief or any such adjudication or appointment;
or
(iv) the Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment
of debt, marshaling of assets and liabilities or similar proceedings of
or relating to the Servicer or of or relating to all or substantially
all of its property; or
(v) the Servicer shall admit in writing its inability to pay
its debts generally as they become due, file a petition to take
advantage of any applicable insolvency or reorganization statute, make
an assignment for the benefit of its creditors, or voluntarily suspend
payment of its obligations; or
(vi) [reserved]; or
(vii) any failure of the Servicer to make any P&I Advance on
any Servicer Remittance Date required to be made from its own funds
pursuant to Section 4.03 which continues unremedied until ___ New York
time on the Business Day immediately preceding the Distribution Date.
If a Servicer Event of Default described in clauses (i)
through (vi) of this Section shall occur, then, and in each and every such case,
so long as such Servicer Event of Default shall not have been remedied, the
Trustee may, and at the written direction of the Holders of Certificates
entitled to at least 51% of Voting Rights, the Trustee shall, by notice in
writing to the Servicer, terminate all of the rights and obligations of the
Servicer in its capacity as Servicer under this Agreement, to the extent
permitted by law, and in and to the Mortgage Loans and the proceeds thereof. If
a Servicer Event of Default described in clause (vii) hereof shall occur, the
Trustee shall, by notice in writing to the Servicer and the Depositor, terminate
all of the rights and obligations of the Servicer in its capacity as Servicer
under this Agreement and in and to the Mortgage Loans and the proceeds thereof
and the Trustee or a successor Servicer appointed in accordance with Section
7.02, shall immediately make such P&I Advance (subject to its own determination
as to recoverability, which P&I Advance shall be part of the Available
Distribution Amount for such Distribution Date) and assume, pursuant to Section
7.02, the duties of a successor Servicer. On or after the receipt by the
Servicer of such written notice, all authority and power of the Servicer under
this Agreement, whether with respect to the Certificates (other than as a Holder
of any Certificate) or the Mortgage Loans or otherwise, shall pass to and be
vested in the Trustee pursuant to and under this Section and, without
limitation, the Trustee is hereby authorized and empowered, as attorney-in-fact
or otherwise, to execute and deliver on behalf of and at the expense of the
Servicer, 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
Servicer agrees, at its sole cost and expense, promptly (and in any event no
later than ten Business Days subsequent to such notice) to provide the Trustee
with all documents and records requested by it to enable it to assume the
Servicer's functions under this Agreement, and to cooperate with the Trustee in
effecting the termination of the Servicer's responsibilities and rights under
this Agreement, including, without limitation, the transfer within one Business
Day to the Trustee for administration by it of all cash amounts which at the
time shall be or should have been credited by the Servicer to the Collection
Account held by or on behalf of the Servicer, the Distribution Account or any
REO Account or Escrow Account held by or on behalf of the Servicer or thereafter
be received with respect to the Mortgage Loans or any REO Property serviced by
the Servicer (provided, however, that the Servicer shall continue to be entitled
to receive all amounts accrued or owing to it under this Agreement on or prior
to the date of such termination, whether in respect of P&I Advances or
otherwise, and shall continue to be entitled to the benefits of Section 6.03,
notwithstanding any such termination, with respect to events occurring prior to
such termination). For purposes of this Section 7.01, the Trustee shall not be
deemed to have knowledge of a Servicer Event of Default unless a Responsible
Officer of the Trustee assigned to and working in the Trustee's Corporate Trust
Office has actual knowledge thereof or unless written notice is received by the
Trustee of any such event and such notice references the Certificates, REMIC I
or this Agreement.
The Trustee shall be entitled to be reimbursed by the Servicer
(or by the Trust Fund if the Servicer is unable to fulfill its obligations
hereunder) for all costs associated with the transfer of servicing from the
predecessor servicer, including without limitation, any costs or expenses
associated with the complete transfer of all servicing data and the completion,
correction or manipulation of such servicing data as may be required by the
Trustee to correct any errors or insufficiencies in the servicing data or
otherwise to enable the Trustee to service the Mortgage Loans properly and
effectively.
SECTION 7.02. Trustee to Act; Appointment of Successor.
(a) On and after the time the Servicer receives a notice of
termination, the Trustee shall be the successor in all respects to the Servicer
in its capacity as Servicer under this Agreement and the transactions set forth
or provided for herein and shall be subject to all the responsibilities, duties
and liabilities relating thereto and arising thereafter placed on the Servicer
(except for any representations or warranties of the Servicer under this
Agreement, the responsibilities, duties and liabilities contained in Section
2.03(c) and its obligation to deposit amounts in respect of losses pursuant to
Section 3.06) by the terms and provisions hereof including, without limitation,
the Servicer's obligations to make P&I Advances pursuant to Section 4.03;
provided, however, that if the Trustee is prohibited by law or regulation from
obligating itself to make advances regarding delinquent mortgage loans, then the
Trustee shall not be obligated to make P&I Advances pursuant to Section 4.03;
and provided further, that any failure to perform such duties or
responsibilities caused by the Servicer's failure to provide information
required by Section 7.01 shall not be considered a default by the Trustee, as
successor to the Servicer hereunder; provided, however, it is understood and
acknowledged by the parties that there shall be a period of transition (not to
exceed 90 days) before the servicing transfer is fully effected. As compensation
therefor, effective from and after the time the Servicer receives a notice of
termination or immediately upon assumption of the obligations to make P&I
Advances, the Trustee shall be entitled to the Servicing Fee and all funds
relating to the Mortgage Loans to which the Servicer would have been entitled if
it had continued to act hereunder (other than amounts which were due or would
become due to the Servicer prior to its termination or resignation).
Notwithstanding the above and subject to the next paragraph, the Trustee may, if
it shall be unwilling to so act, or shall, if it is unable to so act or if it is
prohibited by law from making advances regarding delinquent mortgage loans, or
if the Holders of Certificates entitled to at least 51% of the Voting Rights so
request in writing to the Trustee promptly appoint or petition a court of
competent jurisdiction to appoint, an established mortgage loan servicing
institution acceptable to each Rating Agency (with confirmation from the Rating
Agencies that such appointment shall not result in the reduction or withdrawal
of the rating of any outstanding Class of Certificates) and having a net worth
of not less than $______ as the successor to the Servicer under this Agreement
in the assumption of all or any part of the responsibilities, duties or
liabilities of the Servicer under this Agreement. No appointment of a successor
to the Servicer under this Agreement shall be effective until the assumption by
the successor of all of the Servicer's responsibilities, duties and liabilities
hereunder. In connection with such appointment and assumption described herein,
the Trustee may make such arrangements for the compensation of such successor
out of payments on Mortgage Loans as it and such successor shall agree;
provided, however, that no such compensation shall be in excess of that
permitted the Servicer as such hereunder. The Depositor, the Trustee and such
successor shall take such action, consistent with this Agreement, as shall be
necessary to effectuate any such succession. Pending appointment of a successor
to the Servicer under this Agreement, the Trustee shall act in such capacity as
hereinabove provided.
(b) [reserved]
(c) If the Servicer is terminated pursuant to Section 7.01,
then the successor Servicer shall not be permitted to reimburse itself directly
for P&I Advances or Servicing Advances under Section 3.05(a)(ii), Section
3.05(a)(iii), Section 3.05(a)(v) or Section 3.05(a)(vii) if the Servicer has not
been fully reimbursed for its P&I Advances and Servicing Advances, but instead
the successor Servicer shall include such amounts in the applicable remittance
to the Trustee made pursuant to Section 3.04(g) to the extent of amounts on
deposit in the Collection Account on the related Servicer Remittance Date. The
Trustee is hereby authorized to pay to the terminated Servicer and the successor
Servicer, as applicable, reimbursements for P&I Advances and Servicing Advances
from the Distribution Account to the same extent each such Servicer would have
been permitted to reimburse itself for such P&I Advances and/or Servicing
Advances in accordance with Section 3.05(a)(ii), Section 3.05(a)(iii) or Section
3.05(a)(v), as the case may be. All P&I 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. At such time as the Servicer
has been reimbursed for all P&I Advances and Servicing Advances made by it, the
successor Servicer shall no longer be required to remit in accordance with the
first sentence of this Section 7.02(c) and shall then be permitted to reimburse
itself directly for P&I Advances and Servicing Advances in accordance with
Section 3.05(a)(ii), Section 3.05(a)(iii), Section 3.05(a)(v) or Section
3.05(a)(vii).
SECTION 7.03. Notification to Certificateholders.
(a) Upon any termination of the Servicer pursuant to Section
7.01 above or any appointment of a successor to the Servicer pursuant to Section
7.02 above, the Trustee shall give prompt written notice thereof to
Certificateholders at their respective addresses appearing in the Certificate
Register.
(b) Not later than the later of 30 days after the occurrence
of any event, which constitutes or which, with notice or lapse of time or both,
would constitute a Servicer Event of Default or five days after a Responsible
Officer of the Trustee becomes aware of the occurrence of such an event, the
Trustee shall transmit by mail to all Holders of Certificates notice of each
such occurrence, unless such default or Servicer Event of Default shall have
been cured or waived.
SECTION 7.04. Waiver of Servicer Events of Default.
The Holders representing at least 66% of the Voting Rights
evidenced by all Classes of Certificates affected by any default or Servicer
Event of Default hereunder may waive such default or Servicer Event of Default;
PROVIDED, HOWEVER, that a default or Servicer Event of Default under clause (i)
or (vii) of Section 7.01 may be waived only by all of the Holders of the Regular
Certificates. Upon any such waiver of a default or Servicer Event of Default,
such default or Servicer Event of Default shall cease to exist and shall be
deemed to have been remedied for every purpose hereunder. No such waiver shall
extend to any subsequent or other default or Servicer Event of Default or impair
any right consequent thereon except to the extent expressly so waived.
ARTICLE VIII
CONCERNING THE TRUSTEE
SECTION 8.01. Duties of Trustee
The Trustee, prior to the occurrence of a Servicer Event of
Default and after the curing of all Servicer Events of Default which may have
occurred, undertakes to perform such duties and only such duties as are
specifically set forth in this Agreement. During a Servicer Event of Default,
the Trustee shall exercise such of the rights and powers vested in it by this
Agreement, and use the same degree of care and skill in their exercise as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs. Any permissive right of the Trustee enumerated in
this Agreement shall not be construed as a duty.
The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform on their face to the requirements of this Agreement. If any such
instrument is found not to conform on its face to the requirements of this
Agreement in a material manner, the Trustee shall take such action as it deems
appropriate to have the instrument corrected, and if the instrument is not
corrected to its respective satisfaction, such dissatisfied party shall provide
notice thereof to the Certificateholders.
No provision of this Agreement shall be construed to relieve
the Trustee from liability for its own negligent action, its own negligent
failure to act or its own misconduct; provided, however, that:
(i) Prior to the occurrence of a Servicer Event of Default,
and after the curing of all such Servicer Events of Default which may
have occurred, the duties and obligations of the Trustee shall be
determined solely by the express provisions of this Agreement, the
Trustee shall not be liable except for the performance of such duties
and obligations as are specifically set forth in this Agreement, no
implied covenants or obligations shall be read into this Agreement
against the Trustee and, in the absence of bad faith on the part of the
Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Trustee that conform to the
requirements of this Agreement;
(ii) The Trustee shall not be personally liable for an error
of judgment made in good faith by a Responsible Officer or Responsible
Officers of the Trustee unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(iii) The Trustee shall not be personally liable with respect
to any action taken, suffered or omitted to be taken by it in good
faith in accordance with the direction of the Holders of Certificates
entitled to at least 25% of the Voting Rights relating to the time,
method and place of conducting any proceeding for any remedy available
to the Trustee or exercising any trust or power conferred upon it,
under this Agreement.
The Trustee shall not be required to expend or risk its own
funds or otherwise incur financial liability in the performance of any of its
duties hereunder, or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it, and
none of the provisions contained in this Agreement shall in any event require it
to perform, or be responsible for the manner of performance of, any of the
obligations of the Servicer under this Agreement, except during such time, if
any, as the Trustee shall be the successor to, and be vested with the rights,
duties, powers and privileges of, the Servicer in accordance with the terms of
this Agreement.
SECTION 8.02. Certain Matters Affecting the Trustee
(a) Except as otherwise provided in Section 8.01:
(i) The Trustee may request and rely upon and shall be
protected in acting or refraining from acting upon any resolution,
Officers' Certificate, certificate of auditors or any other
certificate, statement, instrument, opinion, report, notice, request,
consent, order, appraisal, bond or other paper or document reasonably
believed by it to be genuine and to have been signed or presented by
the proper party or parties;
(ii) The Trustee may consult with counsel and any Opinion of
Counsel shall be full and complete authorization and protection in
respect of any action taken or suffered or omitted by it hereunder in
good faith and in accordance with such Opinion of Counsel;
(iii) The Trustee shall not be under any obligation to
exercise any of the trusts or powers vested in it by this Agreement or
to institute, conduct or defend any litigation hereunder or in relation
hereto at the request, order or direction of any of the
Certificateholders, pursuant to the provisions of this Agreement,
unless such Certificateholders shall have offered to the Trustee
security or indemnity reasonably satisfactory to it against the costs,
expenses and liabilities which may be incurred therein or thereby;
nothing contained herein shall, however, relieve the Trustee of the
obligation, upon the occurrence of a Servicer Event of Default (which
has not been cured or waived), to exercise such of the rights and
powers vested in it by this Agreement, and to use the same degree of
care and skill in their exercise as a prudent person would exercise or
use under the circumstances in the conduct of such person's own
affairs;
(iv) The Trustee shall not be personally liable for any action
taken, suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon
it by this Agreement;
(v) Prior to the occurrence of a Servicer Event of Default
hereunder and after the curing of all Servicer Events of Default which
may have occurred, the Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
consent, order, approval, bond or other paper or document, unless
requested in writing to do so by the Holders of Certificates entitled
to at least 25% of the Voting Rights; provided, however, that if the
payment within a reasonable time to the Trustee of the costs, expenses
or liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee, not reasonably assured
to the Trustee by such Certificateholders, the Trustee may require
reasonable indemnity against such expense, or liability from such
Certificateholders as a condition to taking any such action;
(vi) The Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys; and
(vii) The Trustee shall not be personally liable for any loss
resulting from the investment of funds held in the Collection Account,
the Escrow Account or the REO Account made at the direction of the
Servicer pursuant to Section 3.06.
(b) All rights of action under this Agreement or under any of
the Certificates, enforceable by the Trustee may be enforced by it without the
possession of any of the Certificates, or the production thereof at the trial or
other proceeding relating thereto, and any such suit, action or proceeding
instituted by the Trustee shall be brought in the name of the Trustee for the
benefit of all the Holders of such Certificates, subject to the provisions of
this Agreement.
SECTION 8.03. The Trustee Not Liable for Certificates or Mortgage Loans.
The recitals contained herein and in the Certificates (other
than the signature of the Trustee, the authentication of the Certificate
Registrar on the Certificates, the acknowledgments of the Trustee contained in
Article II and the representations and warranties of the Trustee in Section
8.13) shall be taken as the statements of the Depositor and the Trustee assumes
no responsibility for their correctness. The Trustee makes no representations or
warranties as to the validity or sufficiency of this Agreement (other than as
specifically set forth with respect to such party in Section 8.13) or of the
Certificates (other than the signature of the Trustee and authentication of the
Certificate Registrar on the Certificates) or of any Mortgage Loan or related
document. The Trustee shall not be accountable for the use or application by the
Depositor of any of the Certificates or of the proceeds of such Certificates, or
for the use or application of any funds paid to the Depositor or the Servicer in
respect of the Mortgage Loans or deposited in or withdrawn from the Collection
Account by the Servicer, other than, subject to Section 8.01, any funds held by
or on behalf of the Trustee in accordance with Section 3.04.
SECTION 8.04. Trustee May Own Certificates.
The Trustee in its individual capacity or any other capacity
may become the owner or pledgee of Certificates with the same rights it would
have if it were not Trustee.
SECTION 8.05. Trustee's Fees and Expenses.
(a) On each Distribution Date the Trustee Fee shall be paid to
the Trustee, as compensation for its duties and obligations under this Agreement
and the Trustee shall withdraw from the Distribution Account amounts required to
pay it such amounts and to pay the Custodian the Custodian Fee or to reimburse
the Custodian for expenses, costs and liabilities incurred or reimbursable to
it, as such Custodian Fee and expenses (listed separately) are set forth in
writing by the Custodian to the Trustee on or prior to the related Determination
Date pursuant to the Custodial Agreement. The Trustee or any director, officer,
employee or agent of the Trustee shall be indemnified by REMIC I and held
harmless against any loss, liability or expense (not including expenses,
disbursements and advances incurred or made by the Trustee (including the
compensation and the expenses and disbursements of its agents and counsel) in
the ordinary course of the Trustee's performance in accordance with the
provisions of this Agreement) incurred by the Trustee arising out of or in
connection with the acceptance or administration of its obligations and duties
under this Agreement, other than any loss, liability or expense (i) resulting
from a breach of the Servicer's obligations and duties under this Agreement and
the Mortgage Loans (for which the Servicer shall indemnify pursuant to Section
8.05(b)), (ii) that constitutes a specific liability of the Trustee pursuant to
Section 10.01(c) or (iii) any loss, liability or expense incurred by reason of
its willful misfeasance, bad faith or negligence in the performance of its
duties hereunder or by reason of reckless disregard of its obligations and
duties hereunder or as a result of a breach of its obligations under Article X
hereof. Any amounts payable to the Trustee or any director, officer, employee or
agent of the Trustee in respect of the indemnification provided by this
paragraph (a), or pursuant to any other right of reimbursement from the Trust
Fund that the Trustee or any director, officer, employee or agent of the Trustee
may have hereunder in its capacity as such, may be withdrawn by the Trustee from
the Distribution Account at any time.
(b) The Servicer agrees to indemnify the Trustee from, and
hold it harmless against, any loss, liability or expense resulting from a breach
of the Servicer's obligations and duties under this Agreement. Such indemnity
shall survive the termination or discharge of this Agreement and the resignation
or removal of the Trustee. Any payment hereunder made by the Servicer to the
Trustee shall be from the Servicer's own funds, without reimbursement from the
Trust Fund therefor.
(c) The Depositor shall cause the Originator to pay, from the
Originator's own funds without right of reimbursement, any annual rating agency
fees payable to the Rating Agencies for ongoing surveillance.
SECTION 8.06. Eligibility Requirements for Trustee
The Trustee hereunder shall at all times be a corporation or
an association (other than the Depositor, the Seller, the Originator, the
Servicer or any Affiliate of the foregoing) organized and doing business under
the laws of any state or the United States of America, authorized under such
laws to exercise corporate trust powers, having a combined capital and surplus
of at least $50,000,000 and subject to supervision or examination by federal or
state authority and has a credit rating which would not cause any Rating Agency
to reduce its current rating of the Certificates. If such corporation or
association publishes reports of conditions at least annually, pursuant to law
or to the requirements of the aforesaid supervising or examining authority, then
for the purposes of this Section the combined capital and surplus of such
corporation or association shall be deemed to be its combined capital and
surplus as set forth in its most recent report of conditions so published. In
case at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, the Trustee shall resign immediately in the manner
and with the effect specified in Section 8.07.
SECTION 8.07. Resignation and Removal of the Trustee
The Trustee may at any time resign and be discharged from the
trust hereby created by giving written notice thereof to the Depositor, the
Servicer and the Certificateholders not less than __ days before the date of
resignation specified in such notice. Upon receiving such notice of resignation
of the Trustee, the Depositor shall promptly appoint a successor trustee by
written instrument, in duplicate, which instrument shall be delivered to the
resigning Trustee and to the successor Trustee. A copy of such instrument shall
be delivered to the Certificateholders, the Trustee and the Servicer by the
Depositor.
If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 8.06 and shall fail to resign after
written request therefor by the Depositor, or if at any time the Trustee shall
become incapable of acting, or shall be adjudged bankrupt or insolvent, or a
receiver of the Trustee or of its respective property shall be appointed, or any
public officer shall take charge or control of the Trustee or of its respective
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Depositor may remove the Trustee and appoint a successor
Trustee, by written instrument, in duplicate, which instrument shall be
delivered to the Trustee so removed and to the successor trustee. A copy of such
instrument shall be delivered to the Certificateholders and the Servicer by the
Depositor.
If no successor Trustee shall have been so appointed and have
accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee.
The Holders of Certificates entitled to at least 51% of the
Voting Rights may at any time remove the Trustee and appoint a successor Trustee
by written instrument or instruments, in triplicate, signed by such Holders or
their attorneys-in-fact duly authorized, one complete set of which instruments
shall be delivered to the Depositor, one complete set to the Trustee so removed
and one complete set to the successor so appointed. A copy of such instrument
shall be delivered to the Certificateholders and the Servicer by the Depositor.
Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section shall not
become effective until acceptance of appointment by the successor trustee as
provided in Section 8.08.
SECTION 8.08. Successor Trustee.
Any successor trustee appointed as provided in Section 8.07
shall execute, acknowledge and deliver to the Depositor, the Servicer and to its
predecessor trustee an instrument accepting such appointment hereunder, and
thereupon the resignation or removal of the predecessor trustee shall become
effective and such successor trustee as applicable, without any further act,
deed or conveyance, shall become fully vested with all the rights, powers,
duties and obligations of its predecessor hereunder, with the like effect as if
originally named as Trustee herein. The predecessor trustee shall deliver to the
successor trustee all Mortgage Files and related documents and statements, as
well as all moneys, held by it hereunder (other than any Mortgage Files at the
time held by a Custodian, which Custodian shall become the agent of any
successor trustee hereunder), and the Depositor and the predecessor trustee
shall execute and deliver such instruments and do such other things as may
reasonably be required for more fully and certainly vesting and confirming in
the successor trustee all such rights, powers, duties and obligations.
No successor trustee shall accept appointment as provided in
this Section unless at the time of such acceptance such successor trustee shall
be eligible under the provisions of Section 8.06 and the appointment of such
successor trustee shall not result in a downgrading of any Class of Certificates
by each Rating Agency, as evidenced by a letter from each Rating Agency.
Upon acceptance of appointment by a successor trustee as
provided in this Section, the Depositor shall mail notice of the succession of
such trustee hereunder to all Holders of Certificates at their addresses as
shown in the Certificate Register. If the Depositor fails to mail such notice
within 10 days after acceptance of appointment by the successor trustee the
successor trustee shall cause such notice to be mailed at the expense of the
Depositor.
SECTION 8.09. Merger or Consolidation of Trustee
Any corporation or association into which the Trustee may be
merged or converted or with which it may be consolidated or any corporation or
association resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any corporation or association succeeding to the
business of the Trustee shall be the successor of the Trustee hereunder,
provided such corporation or association shall be eligible under the provisions
of Section 8.06, 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.
SECTION 8.10. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions hereof, at any time, for
the purpose of meeting any legal requirements of any jurisdiction in which any
part of REMIC I or property securing the same may at the time be located, the
Servicer and the Trustee acting jointly shall have the power and shall execute
and deliver all instruments to appoint one or more Persons approved by the
Trustee to act as co-trustee or co-trustees, jointly with the Trustee, or
separate trustee or separate trustees, of all or any part of REMIC I, and to
vest in such Person or Persons, in such capacity, such title to REMIC I, or any
part thereof, and, subject to the other provisions of this Section 8.10, such
powers, duties, obligations, rights and trusts as the Servicer and the Trustee
may consider necessary or desirable. Any such co-trustee or separate trustee
shall be subject to the written approval of the Servicer. If the Servicer shall
not have joined in such appointment within 15 days after the receipt by it of a
request from the Trustee so to do, or in case a Servicer Event of Default shall
have occurred and be continuing, the Trustee alone shall have the power to make
such appointment. No co-trustee or separate trustee hereunder shall be required
to meet the terms of eligibility as a successor trustee under Section 8.06
hereunder and no notice to the Holders of Certificates of the appointment of
co-trustee(s) or separate trustee(s) shall be required under Section 8.08
hereof.
In the case of any appointment of a co-trustee or separate
trustee pursuant to this Section 8.10, all rights, powers, duties and
obligations conferred or imposed upon the Trustee shall be conferred or imposed
upon and exercised or performed by the Trustee and such separate trustee or
co-trustee jointly, except to the extent that under any law of any jurisdiction
in which any particular act or acts are to be performed by the Trustee (whether
as Trustee hereunder or as successor to the Servicer hereunder), the Trustee
shall be incompetent or unqualified to perform such act or acts, in which event
such rights, powers, duties and obligations (including the holding of title to
REMIC I or any portion thereof in any such jurisdiction) shall be exercised and
performed by such separate trustee or co-trustee at the direction of the
Trustee.
Any notice, request or other writing given to the Trustee
shall be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article VIII. Each separate trustee and co-trustee, upon
its acceptance of the trust conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Trustee or separately, as may be provided therein, subject to all the provisions
of this Agreement, specifically including every provision of this Agreement
relating to the conduct of, affecting the liability of, or affording protection
to, the Trustee. Every such instrument shall be filed with the Trustee and a
copy thereof given to the Depositor and the Servicer.
Any separate trustee or co-trustee may, at any time,
constitute the Trustee, its agent or attorney-in-fact, with full power and
authority, to the extent not prohibited by law, to do any lawful act under or in
respect of this Agreement on its behalf and in its name. If any separate trustee
or co-trustee shall die, become incapable of acting, resign or be removed, all
of its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
SECTION 8.11. Appointment of Custodians.
The Trustee may, with the consent of the Depositor and the
Servicer appoint one or more Custodians to hold all or a portion of the Mortgage
Files as agent for the Trustee, by entering into a Custodial Agreement. The
appointment of any Custodian may at any time be terminated and a substitute
Custodian appointed therefor upon the reasonable request of the Servicer to the
Trustee, the consent to which shall not be unreasonably withheld. The Trustee,
on behalf of the Trust Fund, shall pay any and all fees and expenses of the
Custodian in accordance with Section 8.05 and the Custodial Agreement. The
Trustee initially appoints the Custodian as Custodian, and the Depositor and the
Servicer consent to such appointment. Subject to Article VIII hereof, the
Trustee agrees to comply with the terms of each Custodial Agreement and to
enforce the terms and provisions thereof against the Custodian for the benefit
of the Certificateholders having an interest in any Mortgage File held by such
Custodian. Each Custodian shall be a depository institution or trust company
subject to supervision by federal or state authority, shall have combined
capital and surplus of at least $10,000,000 and shall be qualified to do
business in the jurisdiction in which it holds any Mortgage File. Each Custodial
Agreement may be amended only as provided in Section 11.01. In no event shall
the appointment of any Custodian pursuant to a Custodial Agreement diminish the
obligations of the Trustee hereunder.
SECTION 8.12. Appointment of Office or Agency.
The Trustee shall designate an office or agency where the
Certificates may be surrendered for registration of transfer or exchange, and
presented for final distribution, and where notices and demands to or upon the
Trustee in respect of the Certificates and this Agreement may be delivered. As
of the Closing Date, the Trustee designates its Corporate Trust Office in
__________.
SECTION 8.13. Representations and Warranties of the Trustee
The Trustee hereby represents and warrants, to the Servicer
and the Depositor as of the Closing Date, that:
(i) It is a _____ association duly organized, validly existing
and in good standing under the laws of __________.
(ii) The execution and delivery of this Agreement by it, and
the performance and compliance with the terms of this Agreement by it,
shall not violate its charter or bylaws or 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 agreement or
other instrument to which it is a party or which is applicable to it or
any of its assets.
(iii) It has the full power and authority to enter into and
consummate all transactions contemplated by this Agreement, has duly
authorized the execution, delivery and performance of this Agreement,
and has duly executed and delivered this Agreement.
(iv) This Agreement, assuming due authorization, execution and
delivery by the other parties hereto, constitutes a valid, legal and
binding obligation of it, enforceable against it in accordance with the
terms hereof, subject to (A) applicable bankruptcy, insolvency,
receivership, reorganization, moratorium and other laws affecting the
enforcement of creditors' rights generally, and (B) general principles
of equity, regardless of whether such enforcement is considered in a
proceeding in equity or at law.
(v) It is not in violation of, and its execution and delivery
of this Agreement and its performance and compliance with the terms of
this Agreement shall not constitute a violation of, any law, any order
or decree of any court or arbiter, or any order, regulation or demand
of any federal, state or local governmental or regulatory authority,
which violation, in its good faith and reasonable judgment, is likely
to affect materially and adversely either the ability of it to perform
its obligations under this Agreement or its financial condition.
(vi) No litigation is pending or, to the best knowledge,
threatened against it which would prohibit it from entering into this
Agreement or, in its good faith reasonable judgment, is likely to
materially and adversely affect either its ability to perform its
obligations under this Agreement or its financial condition.
ARTICLE IX
TERMINATION
SECTION 9.01. Termination Upon Repurchase or Liquidation of All Mortgage
Loans.
(a) Subject to Section 9.02, the respective obligations and
responsibilities under this Agreement of the Depositor, the Servicer and the
Trustee (other than the obligation of the Trustee to make certain payments to
Certificateholders after the final Distribution Date and the obligation of the
Servicer to send certain notices as hereinafter set forth) shall terminate upon
payment to the Certificateholders and the deposit of all amounts held by or on
behalf of the Trustee and required hereunder to be so paid or deposited on the
Distribution Date coinciding with or following the earlier to occur of (i) the
purchase by the Terminator (as defined below) of all Mortgage Loans and each REO
Property remaining in REMIC I and (ii) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan or REO Property
remaining in REMIC I; provided, however, that in no event shall the trust
created hereby continue beyond the earlier of (a) the expiration of 21 years
from the death of the last survivor of the descendants of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the
late ambassador of the United States to the Court of St. ▇▇▇▇▇, living on the
date hereof and (b) the Latest Possible Maturity Date, as defined in the
Preliminary Statement. The purchase by the Terminator of all Mortgage Loans and
each REO Property remaining in REMIC I shall be at a price (the "TERMINATION
PRICE") equal to greater of (A) the aggregate fair market value of all of the
assets of REMIC I and (B) the sum of the Stated Principal Balance of the
Mortgage Loans (after giving effect to scheduled payments of principal due
during the related Due Period, to the extent received or advanced, and
unscheduled collections of principal received during the related Prepayment
Period) and the appraised fair market value of the REO Properties plus accrued
interest through the end of the calendar month preceding the month of the final
Distribution Date and any unreimbursed Servicing Fees, P&I Advances and
Servicing Advances (in the case of fair market values required to be determined
under (A) or (B) above, as determined by the Terminator and the Trustee);
provided, however, such option may only be exercised if the Termination Price is
sufficient to pay all interest accrued on, as well as amounts necessary to
retire the note balance of, each class of notes issued pursuant to the
Indenture.
(b) The Servicer or Holders of at least ___% of the Voting
Rights of the Class C Certificates, in the order described below, shall have the
right (the party exercising such right, the "TERMINATOR"), to purchase all of
the Mortgage Loans and each REO Property remaining in REMIC I pursuant to clause
(i) of the preceding paragraph no later than the Determination Date in the month
immediately preceding the Distribution Date on which the Certificates shall be
retired; provided, however, that the Terminator may elect to purchase all of the
Mortgage Loans and each REO Property remaining in REMIC I pursuant to clause (i)
above only (A) if the aggregate Stated Principal Balance of the Mortgage Loans
and each REO Property remaining in the Trust Fund at the time of such election
is less than ___% of the aggregate Stated Principal Balance of the Mortgage
Loans as of the Cut-off Date and (B) if the Terminator is the Servicer and is an
affiliate of the Originator or the Seller, the Servicer shall have delivered to
the Trustee a written certification that the burdens of servicing the Mortgage
Loans and REO Properties remaining in REMIC I exceed the benefits of the
Servicing Fees that would be realized by the Servicer if it continued to service
such assets on behalf of the Trust Fund. The Servicer shall first have the right
to exercise the purchase option described in the foregoing sentence. If the
Servicer does not exercise its right within 60 days of first becoming eligible
to do so, the Holders of at least ___% of the Voting Rights of the Class C
Certificates shall then have the right to exercise such purchase option for the
next 60 day period. Following the expiration of such second 60-day period,
either the Servicer or the Holders of at least ___% of the Voting Rights of the
Class C Certificates may exercise such purchase option upon written notice to
the Trustee. By acceptance of the Residual Certificates, the Holders of the
Residual Certificates agree, in connection with any termination hereunder, to
assign and transfer any amounts in excess of par, and to the extent received in
respect of such termination, to pay any such amounts to the Holders of the Class
C Certificates.
(c) Notice of the liquidation of the REMIC I Regular Interests
shall be given promptly by the Trustee by letter to Certificateholders mailed
(a) in the event such notice is given in connection with the purchase of the
Mortgage Loans and each REO Property by the Terminator, not earlier than the
15th day and not later than the 25th day of the month next preceding the month
of the final distribution on the Certificates or (b) otherwise during the month
of such final distribution on or before the Determination Date in such month, in
each case specifying (i) the Distribution Date upon which the Trust Fund shall
terminate and final payment in respect of the REMIC I Regular Interests and the
Certificates shall be made upon presentation and surrender of the related
Certificates at the office of the Trustee therein designated, (ii) the amount of
any such final payment, (iii) that no interest shall accrue in respect of the
REMIC I Regular Interests or the Certificates from and after the Interest
Accrual Period relating to the final Distribution Date therefor and (iv) that
the Record Date otherwise applicable to such Distribution Date is not
applicable, payments being made only upon presentation and surrender of the
Certificates at the office of the Trustee. The Trustee shall give such notice to
the Certificate Registrar at the time such notice is given to
Certificateholders. In the event such notice is given in connection with the
purchase of all of the Mortgage Loans and each REO Property remaining in REMIC I
by the Terminator, the Terminator shall deliver to the Trustee for deposit in
the Distribution Account not later than the last Business Day preceding the
final Distribution Date on the Certificates an amount in immediately available
funds equal to the above-described purchase price. Upon the making of such final
deposit, the Trustee (or the Custodian on behalf of the Trustee) shall promptly
release or cause to be released to the Terminator the Mortgage Files for the
remaining Mortgage Loans, and the Trustee (or the Custodian on behalf of the
Trustee) shall execute all assignments, endorsements and other instruments
necessary to effectuate such transfer.
(d) Upon presentation of the Certificates by the
Certificateholders on the final Distribution Date, the Trustee shall distribute
to each Certificateholder so presenting and surrendering its Certificates the
amount otherwise distributable on such Distribution Date in accordance with
Section 4.01 in respect of the Certificates so presented and surrendered. Any
funds not distributed to any Holder or Holders of Certificates being retired on
such Distribution Date because of the failure of such Holder or Holders to
tender their Certificates shall, on such date, be set aside and held in trust by
the Trustee and credited to the account of the appropriate non-tendering Holder
or Holders. If any Certificates as to which notice has been given pursuant to
this Section 9.01 shall not have been surrendered for cancellation within six
months after the time specified in such notice, the Trustee shall mail a second
notice to the remaining non-tendering Certificateholders to surrender their
Certificates for cancellation in order to receive the final distribution with
respect thereto. If within one year after the second notice all such
Certificates shall not have been surrendered for cancellation, the Trustee
shall, directly or through an agent, mail a final notice to remaining related
non-tendering Certificateholders concerning surrender of their Certificates. The
costs and expenses of maintaining the funds in trust and of contacting such
Certificateholders shall be paid out of the assets remaining in the trust funds.
If within one year after the final notice any such Certificates shall not have
been surrendered for cancellation, the Trustee shall pay to the Representative
all remaining amounts, and all rights of non-tendering Certificateholders in or
to such amounts shall thereupon cease. No interest shall accrue or be payable to
any Certificateholder on any amount held in trust by the Trustee as a result of
such Certificateholder's failure to surrender its Certificate(s) for final
payment thereof in accordance with this Section 9.01.
Immediately following the deposit of funds in trust hereunder
in respect of the Certificates, the Trust Fund shall terminate.
SECTION 9.02. Additional Termination Requirements.
(a) In the event that the Terminator purchases all the
Mortgage Loans and each REO Property or the final payment on or other
liquidation of the last Mortgage Loan or REO Property remaining in REMIC I
pursuant to Section 9.01, the Trust Fund shall be terminated in accordance with
the following additional requirements:
(i) The Trustee shall specify the first day in the 90-day
liquidation period in a statement attached to each Trust REMIC's final
Tax Return pursuant to Treasury regulation Section 1.860F-1 and shall
satisfy all requirements of a qualified liquidation under Section 860F
of the Code and any regulations thereunder, as evidenced by an Opinion
of Counsel obtained at the expense of the Terminator;
(ii) During such 90-day liquidation period, and at or prior to
the time of making of the final payment on the Certificates, the
Trustee shall sell all of the assets of REMIC I to the Terminator for
cash; and
(iii) At the time of the making of the final payment on the
Certificates, the Trustee shall distribute or credit, or cause to be
distributed or credited, to the Holders of the Residual Certificates
all cash on hand in the Trust Fund (other than cash retained to meet
claims), and the Trust Fund shall terminate at that time.
(b) At the expense of the applicable Terminator (or in the
event of termination under Section 9.01(a)(ii), at the expense of the Trustee),
the Trustee shall prepare or cause to be prepared the documentation required in
connection with the adoption of a plan of liquidation of each Trust REMIC
pursuant to this Section 9.02.
(c) By their acceptance of Certificates, the Holders thereof
hereby agree to authorize the Trustee to specify the 90-day liquidation period
for each Trust REMIC which authorization shall be binding upon all successor
Certificateholders.
ARTICLE X
REMIC PROVISIONS
SECTION 10.01. REMIC Administration.
(a) The Trustee shall elect to treat each Trust REMIC as a
REMIC under the Code and, if necessary, under applicable state law. Each such
election shall be made by the Trustee on Form 1066 or other appropriate federal
tax or information return or any appropriate state return for the taxable year
ending on the last day of the calendar year in which the Certificates are
issued. For the purposes of the REMIC election in respect of REMIC I, (i) the
REMIC I Regular Interests shall be designated as the Regular Interests in REMIC
I and the Class R-I Interest shall be designated as the Residual Interest in
REMIC I and (ii) the Class A Certificates and the Subordinate Certificates
(exclusive of the right to receive payments in respect of the Net WAC Rate
Carryover Amounts), the Class C Certificates (exclusive of the obligation to
make payments in respect of the Net WAC Rate Carryover Amounts) and the Class P
Certificates shall be designated as the Regular Interests in REMIC II and the
Class R-II Interest shall be designated as the Residual Interest in REMIC II.
The Trustee shall not permit the creation of any "interests" in any Trust REMIC
(within the meaning of Section 860G of the Code) other than the REMIC I Regular
Interests and the interests represented by the Certificates.
(b) The Closing Date is hereby designated as the "Startup Day"
of each Trust REMIC within the meaning of Section 860G(a)(9) of the Code.
(c) The Trustee shall pay out of its own funds, without any
right of reimbursement, any and all expenses relating to any tax audit of the
Trust Fund caused by the Trustee (including, but not limited to, any
professional fees or any administrative or judicial proceedings with respect to
any Trust REMIC that involve the Internal Revenue Service or state tax
authorities), other than the expense of obtaining any tax related Opinion of
Counsel except as specified herein. The Trustee, as agent for each Trust REMIC's
tax matters person, shall (i) act on behalf of the Trust Fund in relation to any
tax matter or controversy involving any Trust REMIC and (ii) represent the Trust
Fund in any administrative or judicial proceeding relating to an examination or
audit by any governmental taxing authority with respect thereto. The Holder of
the largest Percentage Interest of each Class of Residual Certificates shall be
designated, in the manner provided under Treasury regulations section
1.860F-4(d) and Treasury regulations Section 301.6231(a)(7)-1, as the tax
matters person of the related REMIC created hereunder. By their acceptance
thereof, the Holder of the largest Percentage Interest of the Residual
Certificates hereby agrees to irrevocably appoint the Trustee or an Affiliate as
its agent to perform all of the duties of the tax matters person for the Trust
Fund.
(d) The Trustee shall prepare, sign and file all of the Tax
Returns in respect of each REMIC created hereunder. The expenses of preparing
and filing such returns shall be borne by the Trustee without any right of
reimbursement therefor. The Servicer shall provide on a timely basis to the
Trustee or its designee such information with respect to the assets of the Trust
Fund as is in its possession and reasonably required by the Trustee to enable it
to perform its obligations under this Article.
(e) The Trustee shall perform on behalf of each Trust REMIC
all reporting and other tax compliance duties that are the responsibility of
such REMIC under the Code, the REMIC Provisions or other compliance guidance
issued by the Internal Revenue Service or any state or local taxing authority.
Among its other duties, as required by the Code, the REMIC Provisions or other
such compliance guidance, the Trustee shall provide (i) to any Transferor of a
Residual Certificate such information as is necessary for the application of any
tax relating to the transfer of a Residual Certificate to any Person who is not
a Permitted Transferee, (ii) to the Certificateholders such information or
reports as are required by the Code or the REMIC Provisions including reports
relating to interest, original issue discount and market discount or premium
(using the Prepayment Assumption as required) and (iii) to the Internal Revenue
Service the name, title, address and telephone number of the person who shall
serve as the representative of each Trust REMIC. The Servicer shall provide on a
timely basis to the Trustee such information with respect to the assets of the
Trust Fund, including, without limitation, the Mortgage Loans, as is in its
possession and reasonably required by the Trustee to enable each of them to
perform their respective obligations under this subsection. In addition, the
Depositor shall provide or cause to be provided to the Trustee within ten (10)
days after the Closing Date, all information or data that the Trustee reasonably
determines to be relevant for tax purposes as to the valuations and issue prices
of the Certificates, including, without limitation, the price, yield, prepayment
assumption and projected cash flow of the Certificates.
(f) The Trustee shall take such action and shall cause each
REMIC created hereunder to take such action as shall be necessary to create or
maintain the status thereof as a REMIC under the REMIC Provisions (and the
Servicer shall assist it, to the extent reasonably requested by it). The Trustee
shall not take any action, cause the Trust Fund to take any action or fail to
take (or fail to cause to be taken) any action that, under the REMIC Provisions,
if taken or not taken, as the case may be, could (i) endanger the status of any
Trust REMIC as a REMIC or (ii) result in the imposition of a tax upon the Trust
Fund (including but not limited to the tax on prohibited transactions as defined
in Section 860F(a)(2) of the Code and the tax on contributions to a REMIC set
forth in Section 860G(d) of the Code) (either such event, an "ADVERSE REMIC
EVENT") unless the Trustee has received an Opinion of Counsel, addressed to the
Trustee (at the expense of the party seeking to take such action but in no event
at the expense of the Trustee) to the effect that the contemplated action shall
not, with respect to any Trust REMIC, endanger such status or result in the
imposition of such a tax, nor shall the Servicer take or fail to take any action
(whether or not authorized hereunder) as to which the Trustee has advised it in
writing that it has received an Opinion of Counsel to the effect that an Adverse
REMIC Event could occur with respect to such action. In addition, prior to
taking any action with respect to any Trust REMIC or the respective assets of
each, or causing any Trust REMIC to take any action, which is not contemplated
under the terms of this Agreement, the Servicer shall consult with the Trustee,
or its designee, in writing, with respect to whether such action could cause an
Adverse REMIC Event to occur with respect to any Trust REMIC, and the Servicer
shall not take any such action or cause any Trust REMIC to take any such action
as to which the Trustee has advised it in writing that an Adverse REMIC Event
could occur. The Trustee may consult with counsel to make such written advice,
and the cost of same shall be borne by the party seeking to take the action not
permitted by this Agreement, but in no event shall such cost be an expense of
the Trustee. The Trustee, upon discovery that any of the Mortgage Loans is not a
"qualified mortgage" as defined in Section 860G(a)(3) of the Code, shall enforce
the Originator's obligation to repurchase or substitute such Mortgage Loan in
accordance with the terms and provisions of the Mortgage Loan Purchase
Agreement. The Trustee shall at all times ensure that all of the assets of any
Trust REMIC (other than the Mortgage Loans) are "permitted investments" as
defined in Section 860G(a)(5) of the Code, as applicable.
(g) In the event that any tax is imposed on "prohibited
transactions" of any REMIC created hereunder as defined in Section 860F(a)(2) of
the Code, on the "net income from foreclosure property" of such REMIC as defined
in Section 860G(c) of the Code, on any contributions to any such REMIC after the
Startup Day therefor pursuant to Section 860G(d) of the Code, or any other tax
is imposed by the Code or any applicable provisions of state or local tax laws,
such tax shall be charged (i) to the Trustee pursuant to Section 10.03 hereof,
if such tax arises out of or results from a breach by the Trustee of any of its
obligations under this Article X, (ii) to the Servicer pursuant to Section 10.03
hereof, if such tax arises out of or results from a breach by the Servicer of
any of its obligations under Article III or this Article X, or otherwise (iii)
against amounts on deposit in the Distribution Account and shall be paid by
withdrawal therefrom.
(h) On or before April 15th of each calendar year, commencing
April 15, _____, the Trustee shall deliver to the Servicer and each Rating
Agency a Certificate from a Responsible Officer of the Trustee stating, without
regard to any action taken by any party other than the Trustee, the Trustee's
compliance with this Article X.
(i) The Trustee shall, for federal income tax purposes,
maintain books and records with respect to each Trust REMIC on a calendar year
and on an accrual basis. The Trustee shall apply for an Employer Identification
Number for the Trust Fund from the Internal Revenue Service via a Form SS-4 or
such other form as is appropriate.
(j) Following the Startup Day, the Trustee shall not accept
any contributions of assets to any Trust REMIC other than in connection with any
Qualified Substitute Mortgage Loan delivered in accordance with Section 2.03
unless it shall have received an Opinion of Counsel to the effect that the
inclusion of such assets in the Trust Fund shall not cause the related REMIC to
fail to qualify as a REMIC at any time that any Certificates are outstanding or
subject such REMIC to any tax under the REMIC Provisions or other applicable
provisions of federal, state and local law or ordinances.
(k) Neither the Trustee nor the Servicer shall enter into any
arrangement by which any Trust REMIC shall receive a fee or other compensation
for services nor permit any such REMIC to receive any income from assets other
than the Mortgage Pool which are deemed to constitute "qualified mortgages" as
defined in Section 860G(a)(3) of the Code or "permitted investments" as defined
in Section 860G(a)(5) of the Code.
SECTION 10.02. Prohibited Transactions and Activities.
None of the Depositor, the Servicer or the Trustee shall sell,
dispose of or substitute for any of the Mortgage Loans (except in connection
with (i) the foreclosure of a Mortgage Loan, including but not limited to, the
acquisition or sale of a Mortgaged Property acquired by deed in lieu of
foreclosure, (ii) the bankruptcy of REMIC I, (iii) the termination of REMIC I
pursuant to Article IX of this Agreement, (iv) a substitution pursuant to
Article II of this Agreement or (v) a purchase of Mortgage Loans pursuant to
Article II or III of this Agreement), or acquire any assets for any Trust REMIC
(other than REO Property acquired in respect of a defaulted Mortgage Loan), or
sell or dispose of any investments in the Collection Account or the Distribution
Account for gain, or accept any contributions to any Trust REMIC after the
Closing Date (other than a Qualified Substitute Mortgage Loan delivered in
accordance with Section 2.03), unless it has received an Opinion of Counsel,
addressed to the Trustee (at the expense of the party seeking to cause such
sale, disposition, substitution, acquisition or contribution but in no event at
the expense of the Trustee) that such sale, disposition, substitution,
acquisition or contribution shall not (a) affect adversely the status of any
Trust REMIC as a REMIC or (b) cause any Trust REMIC to be subject to a tax on
"prohibited transactions" or "contributions" pursuant to the REMIC Provisions.
SECTION 10.03. Servicer and Trustee Indemnification.
(a) The Trustee agrees to indemnify the Trust Fund, the
Depositor and the Servicer for any taxes and costs including, without
limitation, any reasonable attorneys fees imposed on or incurred by the Trust
Fund, the Depositor or the Servicer, caused solely by the Trustee's failure to
act in accordance with its standard of care set forth in this Article X or any
state, local or franchise taxes imposed upon the Trust Fund as a result of the
location of the Trustee.
(b) The Servicer agrees to indemnify the Trust Fund, the
Depositor and the Trustee for any taxes and costs including, without limitation,
any reasonable attorneys' fees imposed on or incurred by the Trust Fund, the
Depositor or the Trustee, as a result of a breach of the Servicer's covenants
set forth in Article III or this Article X or any state, local or franchise
taxes imposed upon the Trust Fund as a result of the location of the Servicer or
any subservicer.
ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.01. Amendment.
Subject to the following paragraph, this Agreement may be
amended from time to time by the Depositor, the Servicer, the Trustee and, if
applicable, the Custodian, without the consent of any of the Certificateholders,
in order to (i) cure any ambiguity, omission or defect, (ii) to correct,
clarify, modify or supplement any provisions herein (including to give effect to
the expectations of Certificateholders), (iii) to make any other provisions with
respect to matters or questions arising hereunder which shall not be
inconsistent with the provisions hereof, or (iv) if such amendment, as evidenced
by an Opinion of Counsel delivered to the Trustee, is reasonably necessary to
comply with any requirements imposed by the Code or any successor or amendatory
statute or any temporary or final regulation, revenue ruling, revenue procedure
or other written official announcement or interpretation relating to federal
income tax laws or any proposed action which, if made effective, would apply
retroactively to the Trust Fund at least from the effective date of such
amendment, or would be necessary to avoid the occurrence of a prohibited
transaction or to reduce the incidence of any tax that would arise from any
actions taken with respect to the operation of the Trust Fund; provided that
(except any amendment described in clause (iv) above) (a) such amendment does
not add any significant provisions to change in any manner or eliminate any of
the provisions of this Agreement in a manner the requires the consent of the
Holders of Certificates as described below, (b) such action shall not adversely
affect in any material respect the interests of any Certificateholder, as
evidenced by either (i) an Opinion of Counsel delivered to the Servicer and the
Trustee to such effect or (ii) confirmation from the Rating Agencies that such
amendment shall not result in the reduction or withdrawal of the rating of any
outstanding Class of Certificates. No amendment shall be deemed to adversely
affect in any material respect the interests of any Certificateholder who shall
have consented thereto, and no Opinion of Counsel shall be required to address
the effect of any such amendment on any such consenting Certificateholder.
This Agreement may be amended from time to time by the
Depositor, the Servicer, the Trustee and, if applicable, the Custodian, with the
consent of the Holders of Certificates entitled to at least 51% of the Voting
Rights for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement or of modifying in any
manner the rights of the Holders of Certificates; provided, however, that no
such amendment shall (i) reduce in any manner the amount of, or delay the timing
of, payments received on Mortgage Loans which are required to be distributed on
any Certificate without the consent of the Holder of such Certificate, (ii)
adversely affect in any material respect the interests of the Holders of any
Class of Certificates (as evidenced by either (i) an Opinion of Counsel
delivered to the Trustee or (ii) written notice to the Depositor, the Servicer
and the Trustee from the Rating Agencies that such action shall not result in
the reduction or withdrawal of the rating of any outstanding Class of
Certificates with respect to which it is a Rating Agency) in a manner other than
as described in (i), or (iii) modify the consents required by the immediately
preceding clauses (i) and (ii) without the consent of the Holders of all
Certificates then outstanding; provided, further, that, notwithstanding any
other provision of this Agreement regarding Voting Rights, no amendment which
affects one or more Classes held by the Depositor or Seller or any of their
Affiliates shall be effective without the consent of the Depositor or Seller or
any of their Affiliates, as applicable, to such amendment.
Notwithstanding any contrary provision of this Agreement, the
Trustee shall not consent to any amendment to this Agreement unless it shall
have first received an Opinion of Counsel to the effect that such amendment
shall not result in the imposition of any tax on any Trust REMIC pursuant to the
REMIC Provisions or cause any Trust REMIC to fail to qualify as a REMIC at any
time that any Certificates are outstanding.
Notwithstanding any of the other provisions of this Section
11.01, none of the Depositor, the Servicer or the Trustee shall enter into any
amendment of this Agreement that would significantly change the permitted
activities of the Trust Fund without the consent of the Holders of Certificates
that represent more than 50% of the aggregate Certificate Principal Balance of
all Certificates.
Promptly after the execution of any such amendment the Trustee
shall furnish a copy of such amendment to each Certificateholder.
It shall not be necessary for the consent of
Certificateholders under this Section 11.01 to approve the particular form of
any proposed amendment, but it shall be sufficient if such consent shall approve
the substance thereof. The manner of obtaining such consents and of evidencing
the authorization of the execution thereof by Certificateholders shall be
subject to such reasonable regulations as the Trustee may prescribe.
The cost of any Opinion of Counsel to be delivered pursuant to
this Section 11.01 shall be borne by the Person seeking the related amendment,
but in no event shall such Opinion of Counsel be an expense of the Trustee.
The Trustee may, but shall not be obligated to enter into any
amendment pursuant to this Section that affects its respective rights, duties
and immunities under this Agreement or otherwise.
SECTION 11.02. Recordation of Agreement; Counterparts.
To the extent permitted by applicable law, this Agreement is
subject to recordation in all appropriate public offices for real property
records in all the counties or other comparable jurisdictions in which any or
all of the properties subject to the Mortgages are situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected by the Servicer at the expense of the Certificateholders, but only upon
direction of the Trustee accompanied by an Opinion of Counsel to the effect that
such recordation materially and beneficially affects the interests of the
Certificateholders.
For the purpose of facilitating the recordation 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 but one and the same instrument.
SECTION 11.03. Limitation on Rights of Certificateholders.
The death or incapacity of any Certificateholder shall not
operate to terminate this Agreement or the Trust Fund, nor entitle such
Certificateholder's legal representatives or heirs to claim an accounting or to
take any action or proceeding in any court for a partition or winding up of the
Trust Fund, nor otherwise affect the rights, obligations and liabilities of the
parties hereto or any of them.
No Certificateholder shall have any right to vote (except as
expressly provided for herein) or in any manner otherwise control the operation
and management of the Trust Fund, or the obligations of the parties hereto, nor
shall anything herein set forth, or contained in the terms of any of the
Certificates, be construed so as to constitute the Certificateholders from time
to time as partners or members of an association; nor shall any
Certificateholder be under any liability to any third person by reason of any
action taken by the parties to this Agreement pursuant to any provision hereof.
No Certificateholder shall have any right by virtue of any
provision of this Agreement to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Agreement, unless (i)
such Holder previously shall have given to the Trustee a written notice of
default and of the continuance thereof, as hereinbefore provided, and (ii) the
Holders of Certificates entitled to at least 25% of the Voting Rights shall have
made written request upon the Trustee to institute such action, suit or
proceeding in the name of the Trustee hereunder and shall have offered to the
Trustee such reasonable indemnity as it may require against the costs, expenses
and liabilities to be incurred therein or thereby, and the Trustee for 15 days
after its receipt of such notice, request and offer of indemnity, shall have
neglected or refused to institute any such action, suit or proceeding. It is
understood and intended, and expressly covenanted by each Certificateholder with
every other Certificateholder and the Trustee that no one or more Holders of
Certificates shall have any right in any manner whatsoever by virtue of any
provision of this Agreement to affect, disturb or prejudice the rights of the
Holders of any other of such Certificates, or to obtain or seek to obtain
priority over or preference to any other such Holder, or to enforce any right
under this Agreement, except in the manner herein provided and for the equal,
ratable and common benefit of all Certificateholders. For the protection and
enforcement of the provisions of this Section, each and every Certificateholder
and the Trustee shall be entitled to such relief as can be given either at law
or in equity.
SECTION 11.04. Governing Law.
This Agreement shall be construed in accordance with the laws
of the State of New York and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws excluding the choice
of laws provisions therein.
SECTION 11.05. Notices.
All directions, demands, requests, authorizations and notices
hereunder shall be in writing and shall be deemed to have been duly given when
received if personally delivered at or mailed by first class mail, postage
prepaid, or by express delivery service, facsimile, electronic mail or delivered
in any other manner specified herein, to (a) in the case of the Depositor
______________, or such other address or telecopy number as may hereafter be
furnished to the Servicer, and the Trustee in writing by the Depositor, (b) in
the case of the Servicer, __________________, or such other address or telecopy
number as may hereafter be furnished to the Trustee and the Depositor in writing
by the Servicer, (c) in the case of the Trustee, ___________________, or such
other address or telecopy number as may hereafter be furnished in writing by the
Trustee. Any notice required or permitted to be given to a Certificateholder
shall be given by first class mail, postage prepaid, at the address of such
Holder as shown in the Certificate Register. Any notice so mailed within the
time prescribed in this Agreement shall be conclusively presumed to have been
duly given when mailed, whether or not the Certificateholder receives such
notice. A copy of any notice required to be telecopied hereunder also shall be
mailed to the appropriate party in the manner set forth above.
SECTION 11.06. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or
terms of this Agreement shall be for any reason whatsoever held invalid, then
such covenants, agreements, provisions or terms shall be deemed severable from
the remaining covenants, agreements, provisions or terms of this Agreement and
shall in no way affect the validity or enforceability of the other provisions of
this Agreement or of the Certificates or the rights of the Holders thereof.
SECTION 11.07. Notice to Rating Agencies.
The Trustee shall use its best efforts promptly to provide
notice to the Rating Agencies with respect to each of the following of which it
has actual knowledge:
1. Any material change or amendment to this Agreement;
2. The occurrence of any Servicer Event of Default that has
not been cured or waived;
3. The resignation or termination of the Servicer;
4. The repurchase or substitution of Mortgage Loans pursuant
to or as contemplated by Section 2.03;
5. The final payment to the Holders of any Class of
Certificates;
6. Any change in the location of the Collection Account or the
Distribution Account;
7. Any event that would result in the inability of the
Trustee, were it to succeed as Servicer, to make advances regarding
delinquent Mortgage Loans; and
8. The filing of any claim under the Servicer's blanket bond
and errors and omissions insurance policy required by Section 3.09 or
the cancellation or material modification of coverage under any such
instrument.
In addition, the Trustee shall promptly furnish to each Rating
Agency copies of each report to Certificateholders described in Section 4.02 and
the Servicer, as required pursuant to Section 3.19 and Section 3.20, shall
promptly furnish to each Rating Agency copies of the following:
1. Each annual statement as to compliance described in Section
3.19; and
2. Each annual independent public accountants' servicing
report described in Section 3.20.
Any such notice pursuant to this Section 11.07 shall be in
writing and shall be deemed to have been duly given if personally delivered at
or mailed by first class mail, postage prepaid, or by express delivery service
to ▇▇▇▇▇'▇ Investors Service, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, to
Fitch Ratings, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ and to Standard
& Poor's, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or such other addresses as the Rating Agencies may
designate in writing to the parties hereto.
SECTION 11.08. Article and Section References.
All article and section references used in this Agreement,
unless otherwise provided, are to articles and sections in this Agreement.
SECTION 11.09. Grant of Security Interest.
It is the express intent of the parties hereto that the
conveyance of the Mortgage Loans by the Depositor to the Trustee be, and be
construed as, a sale of the Mortgage Loans by the Depositor and not a pledge of
the Mortgage Loans by the Depositor to secure a debt or other obligation of the
Depositor, the Seller or the Originator. However, in the event that,
notwithstanding the aforementioned intent of the parties, the Mortgage Loans are
held to be property of the Depositor, the Seller or the Originator, then, (a) it
is the express intent of the parties that such conveyance be deemed a pledge of
the Mortgage Loans by the Depositor to the Trustee to secure a debt or other
obligation of the Depositor, the Seller or the Originator, and (b)(1) this
Agreement shall also be deemed to be a security agreement within the meaning of
Articles 8 and 9 of the Uniform Commercial Code as in effect from time to time
in the State of New York; (2) the conveyance provided for in Section 2.01 hereof
shall be deemed to be a grant by the Originator, the Seller and the Depositor to
the Trustee of a security interest in all of the Originator's, the Seller's and
the Depositor's right, title and interest in and to the Mortgage Loans and all
amounts payable to the holders of the Mortgage Loans in accordance with the
terms thereof and all proceeds of the conversion, voluntary or involuntary, of
the foregoing into cash, instruments, securities or other property, including
without limitation all amounts, other than investment earnings, from time to
time held or invested in the Collection Account and the Distribution Account,
whether in the form of cash, instruments, securities or other property; (3) the
obligations secured by such security agreement shall be deemed to be all of the
Depositor's obligations under this Agreement, including the obligation to
provide to the Certificateholders the benefits of this Agreement relating to the
Mortgage Loans and the Trust Fund; and (4) 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 Trustee for the purpose of perfecting such security interest under
applicable law. Accordingly, the Depositor hereby grants to the Trustee a
security interest in the Mortgage Loans and all other property described in
clause (2) of the preceding sentence, for the purpose of securing to the Trustee
the performance by the Depositor of the obligations described in clause (3) of
the preceding sentence. Notwithstanding the foregoing, the parties hereto intend
the conveyance pursuant to Section 2.01 and the transfer pursuant to the
Mortgage Loan Purchase Agreement to be a true, absolute and unconditional sale
of the Mortgage Loans and assets constituting the Trust Fund by the Depositor to
the Trustee.
IN WITNESS WHEREOF, the Depositor, the Servicer the Trustee
have caused their names to be signed hereto by their respective officers
thereunto duly authorized, in each case as of the day and year first above
written.
GE-WMC MORTGAGE SECURITIES, L.L.C.,
as Depositor
By:
Name:
Title:
_______________, as Servicer
By:
Name:
Title:
_______________, as Trustee
By:
Name:
Title:
STATE OF )
) ss.:
COUNTY OF )
On the _____ day of ___, before me, a notary public in and for
said State, personally appeared ____, known to me to be a Chief Financial
Officer of _________, 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 _______, before me, a notary public in and
for said State, personally appeared _______________ known to me to be
____________________ of ________, 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 ___, before me, a notary public in and for
said State, personally appeared ____, known to me to be a Chief Financial
Officer of _________, 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]