EXHIBIT 4.1
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
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................................................
SECTION 2.09. Puposes and Powers of the Trust.................................................
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. Assessments of Compliance and Attestation Reports...............................
SECTION 3.21. Access to Certain Documentation.................................................
SECTION 3.22. Commission Reporting............................................................
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
Exhibit L.........Form of Back-Up Certification to Form 10-K Certificate
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 benefiting 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-days
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 Servicer'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.
SECTION 2.09. Purposes and Powers of the Trust.
The purpose of the common law trust, as created hereunder, is to engage
in the following activities:
(a) to acquire and hold the Mortgage Loans and the other assets of the
Trust Fund and the proceeds therefrom;
(b) to issue the Certificates sold to the Depositor in exchange for the
Mortgage Loans;
(c) to make payments on the Certificates;
(d) to engage in those activities that are necessary, suitable or
convenient to accomplish the foregoing or are incidental thereto or connected
therewith; and
(e) subject to compliance with this Agreement, to engage in such other
activities as may be required in connection with conservation of the Trust Fund
and the making of distributions to the Certificateholders.
The Trust is hereby authorized to engage in the foregoing activities.
The Trustee shall not cause the Trust to engage in any activity other than in
connection with the foregoing or other than as required or authorized by the
terms of this Agreement while any Certificate is outstanding, and this Section
2.09 may not be amended, without the consent of the Certificateholders
evidencing [__]% or more of the aggregate Voting Rights of the Certificates.
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 unpaid 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. Assessments of Compliance and Attestation Reports.
On and after January 1, 2006, each of the Servicer and the Trustee
shall service and administer the Mortgage Loans in accordance with all
applicable requirements of the Servicing Criteria (as set forth in Exhibit L).
Each of the Servicer and the Trustee shall deliver to the Depositor (and, in the
case of delivery by the Servicer to the Depositor, a copy to the Trustee) on or
before March 15th of each calendar year beginning in 2007, a report (an
"Assessment of Compliance") reasonably satisfactory to the Depositor regarding
the Servicer's and Trustee's assessment of compliance with the applicable
Servicing Criteria during the preceding calendar year as required by Rules
13a-18 and 15d-18 of the Exchange Act and Item 1122 of Regulation AB, which as
of the date hereof, require a report by an authorized officer of the Servicer or
the Trustee that contains the following:
(a) A statement by such officer of its responsibility for assessing
compliance with the Servicing Criteria applicable to the Servicer or the
Trustee;
(b) A statement by such officer that such officer used the Servicing
Criteria to assess compliance with the Servicing Criteria applicable to the
Servicer or the Trustee;
(c) An assessment by such officer of the Servicer's or Trustee's
compliance with the applicable Servicing Criteria for the period consisting of
the preceding calendar year, including disclosure of any material instance of
noncompliance with respect thereto during such period, which assessment shall be
based on the activities it performs with respect to asset-backed securities
transactions taken as a whole involving the Servicer or the Trustee, as
applicable, that are backed by the same asset type as the Mortgage Loans;
(d) A statement that a registered public accounting firm has issued an
attestation report on the Servicer's or Trustee's Assessment of Compliance for
the period consisting of the preceding calendar year; and
(e) A statement as to which of the Servicing Criteria, if any, are not
applicable to the Servicer or Trustee, which statement shall be based on the
activities it performs with respect to asset-backed securities transactions
taken as a whole involving the Servicer or Trustee, that are backed by the same
asset type as the Mortgage Loans.
Such report at a minimum shall address each of the Servicing Criteria
specified on a certification substantially in the form of Exhibit L hereto
delivered to the Depositor (and, in the case of the Servicer, the Trustee)
concurrently with the execution of this Agreement.
On or before March 15th of each calendar year beginning in 2007, each
of the Servicer and the Trustee shall furnish to the Depositor (and, in the case
of the Servicer, the Trustee) a report (an "Attestation Report") by a registered
public accounting firm that attests to, and reports on, the Assessment of
Compliance made by the Servicer or the Trustee, as applicable, as required by
Rules 13a-18 and 15d-18 of the Exchange Act and Item 1122(b) of Regulation AB,
which Attestation Report must be made in accordance with standards for
attestation reports issued or adopted by the Public Company Accounting Oversight
Board.
Each of the Servicer and the Trustee shall cause any servicer, and each
subcontractor determined by the Servicer or the Trustee, as applicable, to be
"participating in the servicing function" within the meaning of Item 1122 of
Regulation AB, to deliver to the Depositor (and, in the case of the Servicer,
the Trustee) an assessment of compliance and accountants' attestation.
If the Servicer or the Trustee cannot deliver the related Assessment of
Compliance or Attestation Report by March 15th of such year, the Depositor, at
its sole option, may permit a cure period for the Servicer or the Trustee, as
applicable, to deliver such Assessment of Compliance or Attestation Report, but
in no event later than March 30th of such year.
Failure of the Servicer to timely comply with this Section 3.21 shall
be deemed a Servicer Event of Default, automatically, without notice and
without any cure period, and the Trustee may, in addition to whatever rights the
Trustee may have under this Agreement and at law or equity or to damages,
including injunctive relief and specific performance, terminate all the rights
and obligations of the Servicer under this Agreement and in and to the Mortgage
Loans and the proceeds thereof without compensating the Servicer for the same.
This paragraph shall supersede any other provision in this Agreement or any
other agreement to the contrary.
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. Payments on the Mortgage Loans, including any
Principal Prepayments in full, made in accordance with the related Mortgage File
will be entered into the Servicer's set of records no more than two Business
Days after receipt, and allocated to principal or interest as specified in the
related Mortgage File. 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.
SECTION 3.22. Commission Reporting.
(a) (i) Within 15 days after each Distribution Date, the Trustee shall,
in accordance with industry standards, file with the Commission via the
Electronic Data Gathering and Retrieval System ("▇▇▇▇▇"), a Distribution Report
on Form 10-D (the "Distribution Report") (which shall, if applicable, provide
the information required by each of the items set forth in Part II thereof) with
a copy of the monthly statement to be furnished by the Trustee to the
Certificateholders for such Distribution Date and detailing all data elements
specified in Item 1121(a) of Regulation AB as an exhibit thereto; provided that
the Trustee shall have received no later than 10 days prior to the date such
Distribution Report on Form 10-D is required to be filed, the following
information:
(I) Notice of any material modifications, extensions or
waivers to Mortgage Loan terms, fees, penalties or payments during the
distribution period or that have cumulatively become material over time
from the Servicer;
(II) Notice of any new issuance of asset-backed securities
backed by the same asset pool, any pool asset changes, such as Mortgage
Loan substitutions and repurchases, and cash flows available for future
purchases, if applicable, from the Depositor, the Seller or Servicer;
(III) A brief description of any legal proceedings pending,
including proceedings known to be contemplated by governmental
authorities, against the Depositor, the Seller and the Servicer or of
which any property of the foregoing is the subject, that is material to
Certificateholders from each of the Depositor, the Seller and the
Servicer if applicable;
(IV) The information required by Item 2 of Part II of Form
10-Q regarding any sale of securities that are either backed by the
same asset pool or are otherwise issued by the issuer, regardless of
whether the transaction was registered under the Securities Act of 1933
during the period covered by the report from the Depositor;
(V) The information required by Item 3 of Part II of Form 10-Q
with respect to defaults upon the senior securities during the period
covered by the report, from the Depositor;
(VI) Any information required to be disclosed in a report on
Form 8-K during the period covered by the report on the Form 10-D, but
not reported, whether or not otherwise required by the Form 10-D from
the Depositor and the Servicer; and
(VII) Any exhibits to the Form 10-D from the Depositor.
(ii) The Trustee will prepare and file Current Reports on Form 8-K in
respect of the Trust at the direction and expense of the Depositor, provided,
that, the Depositor, the Seller or the Servicer shall have timely notified the
Trustee of an item reportable on a Current Report on Form 8-K and shall have
delivered to the Trustee no later than two Business Days prior to the filing
deadline for such Current Report, all information, data, and exhibits required
to be provided or filed with such Current Report with respect to:
(I) Any entry into a material definitive agreement, any
termination of a material definitive agreement and any bankruptcy or
receivership of the Depositor, the Seller or the Servicer (including
any servicer that does not sign this Agreement and any Sub-Servicer
that signs a Sub-Servicing agreement) from the Depositor, the Seller or
the Servicers as applicable;
(II) Any material modification to the rights of
Certificateholders, amendments of the articles of incorporation or
bylaws or a change of the fiscal year of any transaction party from
each of the Depositor, the Seller or the Servicer as applicable; and
(III) Any Securities Act update provided by the Depositor.
(iii) Prior to January 30th in each year commencing in 2007, the
Trustee shall, in accordance with industry standards, file a Form 15 Suspension
Notice with respect to the Trust Fund, if applicable. Prior to (x) March 15,
2007 and (y) unless and until a Form 15 Suspension Notice shall have been filed,
prior to March 15th of each year thereafter, the Servicer shall provide the
Trustee with an Annual Compliance Statement, together with a copy of the
Assessment of Compliance and Attestation Report to be delivered by the Servicer
pursuant to Sections 3.19 and 3.20. Prior to (x) March 31, [___] and (y) unless
and until a Form 15 Suspension Notice shall have been filed, March 31st of each
year thereafter, the Trustee shall, subject to subsection (d) below, file a Form
10-K, in substance conforming to industry standards, with respect to the Trust
Fund. Such Form 10-K shall include the Assessment of Compliance, Attestation
Report, Annual Compliance Statements and other documentation provided by the
Servicer pursuant to Sections 3.19 and 3.20 and a certification in the form
attached hereto as Exhibit J-1 (the "Depositor Certification"), which shall be
signed by the senior officer of the Depositor in charge of securitization. The
Depositor, the Seller and the Servicers shall provide the Trustee with the
following information, as applicable, no later than March 15th of each calendar
year prior to the filing deadline for the Form 10-K:
(I) Any exhibits or financial statement schedules required by
Item 15 of Form 10-K from each of the Depositor, the Seller and the
Master Servicer;
(II) A description of any legal proceedings pending, including
proceedings known to be contemplated by governmental authorities,
against the Depositor, the Seller and the Servicer or of which any
property of the foregoing is the subject, that is material to
Certificateholders from each of the Depositor, the Seller and the
Servicer, if applicable;
(III) A description of any affiliations between the
transaction parties pursuant to Item 1119 of Regulation AB from the
Depositor; and
(IV) The Assessment of Compliance, Attestation Report, Annual
Compliance Statements and other documentation provided by the Servicer
pursuant to Sections 3.19 and 3.20.
(b) The Depositor hereby grants to the Trustee a limited power of
attorney to execute any Form 8-K and file each such document on behalf of the
Depositor. Such power of attorney shall continue until the earlier of (i)
receipt by the Trustee from the Depositor of written termination of such power
of attorney and (ii) the termination of the Trust. The Depositor agrees to
promptly furnish to the Trustee, from time to time upon request, such further
information, reports and financial statements within its control related to this
Agreement, the Mortgage Loans as the Trustee reasonably deems appropriate to
prepare and file all necessary reports with the Commission. The Trustee shall
have no responsibility to file any items other than those specified in this
Section 3.25; provided, however, the Trustee will cooperate with the Depositor
in connection with any additional filings with respect to the Trust Fund as the
Depositor deems necessary under the Exchange Act. Copies of all reports filed by
the Trustee under the Exchange Act shall be sent to the Depositor electronically
or at the addressed set forth in Section 11.05. Fees and expenses incurred by
the Trustee in connection with this Section 3.25 shall not be reimbursable from
the Trust Fund.
(c) The Trustee shall sign a certification (in the form attached hereto
as Exhibit R-2) for the benefit of the Depositor and its officers, directors and
Affiliates regarding certain aspects of items 1 through 3 of the Depositor
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).
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) and the Depositor shall deliver the Depositor
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).
The Trustee shall subject to the provisions of Sections 8.01 and 8.02
hereof, 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 third party claims
relating to information included in any Form 10-K provided by the Trustee other
than any losses, damages, penalties, fines, forfeitures, reasonable and
necessary legal fees and related costs arising out of third party claims
relating to information contained in the Depositor Certification, the Assessment
of Compliance, Attestation Report, Annual Compliance Statements and other
documentation provided by the Servicer pursuant to Sections 3.19 and 3.20. 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 3.22 or the Trustee'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, then the Trustee, in connection with a breach of the
Trustee's obligations under this Section 3.22 or the Trustee's negligence, bad
faith or willful misconduct in connection therewith, agrees that it shall
contribute to the amount paid or payable by the Depositor as a result of the
losses, claims, damages or liabilities of the Depositor in such proportion as is
appropriate to reflect the relative fault of the Depositor on the one hand and
the Trustee on the other.
(d) Nothing shall be construed from the foregoing subsections (a), (b)
and (c) to require the Trustee or any officer, director or Affiliate thereof to
sign any Form 10-K or any certification contained therein. Furthermore, the
inability of the Trustee to file a Form 10-K as a result of the lack of required
information as set forth in Section 3.22(a) or required signatures on such Form
10-K or any certification contained therein shall not be regarded as a breach by
the Trustee of any obligation under this Agreement.
(e) Upon any filing with the Securities and Exchange Commission, the
Trustee shall promptly deliver to the Depositor a copy of any executed report,
statement or information.
(f) Prior to January 30 of the first year in which the Trustee is able
to do so under applicable law, the Trustee shall file a Form 15 Suspension
Notification with respect to the Trust.
(g) To the extent that, following the Closing Date, the Depositor
certifies that reports and certifications differing from those required under
this Section 3.22(b) comply with the reporting requirements under the Exchange
Act, the Trustee hereby agrees that it will reasonably cooperate to amend the
provisions of this Section 3.22(b) in order to comply with such amended
reporting requirements and such amendment of this Section 3.22(b). 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.
Each of the parties acknowledges and agrees that the purpose of
Sections 3.19, 3.20 and this Section 3.22 of this Agreement is to facilitate
compliance by the Depositor with the provisions of Regulation AB promulgated by
the Commission under the 1934 Act (17 C.F.R. ▇▇.▇▇. 229.1100 - 229.1123), as
such may be amended from time to time and subject to clarification and
interpretive advice as may be issued by the staff of the Commission from time to
time. Therefore, each of the parties agrees that (a) the obligations of the
parties hereunder shall be interpreted in such a manner as to accomplish that
purpose, (b) the parties' obligations hereunder will be supplemented and
modified as necessary to be consistent with any such amendments, interpretive
advice or guidance, convention or consensus among active participants in the
asset-backed securities markets, advice of counsel, or otherwise in respect of
the requirements of Regulation AB, (c) the parties shall comply with requests
made by the Depositor for delivery of additional or different information as the
Depositor may determine in good faith is necessary to comply with the provisions
of Regulation AB, and (d) no amendment of this Agreement shall be required to
effect any such changes in the parties' obligations as are necessary to
accommodate evolving interpretations of the provisions of Regulation AB.
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 in respect of which (1) one Monthly Payment is
Delinquent, (2) two Monthly Payments are Delinquent, (3) three Monthly
Payments are Delinquent and (4) foreclosure proceedings have begun;
(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;
(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;
(xxvii) if applicable, material modifications, extensions or
waivers to Mortgage Loan terms, fees, penalties or payments during the
preceding calendar month or that have become material over time;
(xxviii) the applicable Record Dates, Accrual Periods and
Determination Dates for calculating distributions for such Distribution
Date;
(xxix) the fees and expenses accrued and paid on such
Distribution Date and to whom such fees and expenses were paid; and
(xxx) material breaches of representations and warranties
regarding the Mortgage Loans.
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]