Exhibit 4.1
EXECUTION COPY
▇▇▇▇▇▇▇ ▇▇▇▇▇ MORTGAGE INVESTORS, INC.
Depositor
▇▇▇▇▇▇ LOAN SERVICING LP,
Servicer
UNIVERSAL MASTER SERVICING, LLC
Master Servicer
and
WACHOVIA BANK, N.A.,
Trustee
--------------------------------------
POOLING AND SERVICING AGREEMENT
Dated as of July 1, 2003
--------------------------------------
TERWIN MORTGAGE TRUST
ASSET-BACKED CERTIFICATES, SERIES TMTS 2003-2HE
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS.............................................................................. 1
ARTICLE II CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND WARRANTIES............................. 33
SECTION 2.01. Conveyance of Mortgage Loans............................................... 33
SECTION 2.02. Acceptance by Trustee of the Mortgage Loans................................ 35
SECTION 2.03. Representations, Warranties and Covenants of the Depositor................. 36
SECTION 2.04. Representations and Warranties of the Master Servicer;
Representations and Warranties of the Servicer............................. 40
SECTION 2.05. Substitutions and Repurchases of Mortgage Loans which are not
"Qualified Mortgages"...................................................... 42
SECTION 2.06. Authentication and Delivery of Certificates................................ 42
SECTION 2.07. REMIC Elections............................................................ 43
SECTION 2.08. Covenants of the Master Servicer........................................... 45
SECTION 2.09. Covenants of the Servicer.................................................. 46
SECTION 2.10. Cap Contract............................................................... 46
SECTION 2.11. Permitted Activities of the Trust.......................................... 46
SECTION 2.12. Qualifying Special Purpose Entity.......................................... 46
ARTICLE III ADMINISTRATION AND SERVICING OF MORTGAGE LOANS.......................................... 46
SECTION 3.01. Servicer to Service Mortgage Loans......................................... 46
SECTION 3.02. Servicing and Subservicing; Enforcement of the Obligations of Servicer..... 47
SECTION 3.03. Rights of the Depositor and the Trustee in Respect of the Servicer......... 48
SECTION 3.04. Trustee to Act as Servicer................................................. 48
SECTION 3.05. Collection of Mortgage Loan Payments; Collection Account; Master
Servicer Account; Certificate Account...................................... 49
SECTION 3.06. Collection of Taxes, Assessments and Similar Items; Escrow Accounts........ 53
SECTION 3.07. Access to Certain Documentation and Information Regarding the
Mortgage Loans............................................................. 53
SECTION 3.08. Permitted Withdrawals from the Collection Account, Master Servicer
Account and Certificate Account............................................ 53
SECTION 3.09. Servicing Transfer Dates................................................... 56
SECTION 3.10. Maintenance of Hazard Insurance............................................ 56
SECTION 3.11. Enforcement of Due-On-Sale Clauses; Assumption Agreements.................. 57
SECTION 3.12. Realization Upon Defaulted Mortgage Loans; Determination of Excess
Proceeds................................................................... 58
SECTION 3.13. Trustee to Cooperate; Release of Mortgage Files............................ 60
SECTION 3.14. Documents, Records and Funds in Possession of Servicer to be Held for
the Trustee................................................................ 61
SECTION 3.15. Servicing Compensation..................................................... 61
SECTION 3.16. Access to Certain Documentation............................................ 62
SECTION 3.17. Annual Statement as to Compliance.......................................... 62
SECTION 3.18. Annual Independent Public Accountants' Servicing Statement; Financial
Statements................................................................. 62
SECTION 3.19. Rights of the NIMs Insurer................................................. 63
SECTION 3.20. Periodic Filings........................................................... 63
i
TABLE OF CONTENTS
(continued)
PAGE
SECTION 3.21. Annual Certificate by Trustee.............................................. 63
SECTION 3.22. Annual Certificate by Servicer............................................. 64
SECTION 3.23. Prepayment Penalty Reporting Requirements.................................. 65
SECTION 3.24. Statements to Trustee...................................................... 65
SECTION 3.25. Indemnification............................................................ 65
SECTION 3.26. Nonsolicitation............................................................ 66
SECTION 3.27. Maintenance of LPMI Policy................................................. 66
ARTICLE IV DISTRIBUTIONS............................................................................ 67
SECTION 4.01. Advances................................................................... 67
SECTION 4.02. Reduction of Servicing Compensation in Connection with Prepayment
Interest Shortfalls........................................................ 67
SECTION 4.03. Distributions on the REMIC Interests....................................... 68
SECTION 4.04. Distributions.............................................................. 68
SECTION 4.05. Monthly Statements to Certificateholders................................... 72
ARTICLE V THE CERTIFICATES......................................................................... 74
SECTION 5.01. The Certificates........................................................... 74
SECTION 5.02. Certificate Register; Registration of Transfer and Exchange of
Certificates............................................................... 75
SECTION 5.03. Mutilated, Destroyed, Lost or Stolen Certificates.......................... 79
SECTION 5.04. Persons Deemed Owners...................................................... 79
SECTION 5.05. Access to List of Certificateholders' Names and Addresses.................. 79
SECTION 5.06. Book-Entry Certificates.................................................... 80
SECTION 5.07. Notices to Depository...................................................... 81
SECTION 5.08. Definitive Certificates.................................................... 81
SECTION 5.09. Maintenance of Office or Agency............................................ 81
ARTICLE VI THE DEPOSITOR, THE MASTER SERVICER AND THE SERVICER...................................... 81
SECTION 6.01. Respective Liabilities of the Depositor, the Master Servicer and the
Servicer................................................................... 81
SECTION 6.02. Merger or Consolidation of the Depositor, the Master Servicer or the
Servicer................................................................... 82
SECTION 6.03. Limitation on Liability of the Depositor, the Master Servicer, the
Servicer and Others........................................................ 82
SECTION 6.04. Limitation on Resignation of Servicer...................................... 83
SECTION 6.05. Errors and Omissions Insurance; Fidelity Bonds............................. 83
SECTION 6.06. Limitation on Resignation of the Master Servicer........................... 83
SECTION 6.07. Assignment of Master Servicing............................................. 84
ARTICLE VII DEFAULT; TERMINATION OF SERVICER......................................................... 84
SECTION 7.01. Events of Default.......................................................... 84
SECTION 7.02. Trustee to Act; Appointment of Successor................................... 85
SECTION 7.03. Notification to Certificateholders......................................... 86
ARTICLE VIII CONCERNING THE TRUSTEE................................................................... 87
SECTION 8.01. Duties of Trustee.......................................................... 87
SECTION 8.02. Certain Matters Affecting the Trustee...................................... 88
SECTION 8.03. Trustee Not Liable for Mortgage Loans...................................... 89
SECTION 8.04. Trustee May Own Certificates............................................... 89
SECTION 8.05. Trustee's Fees............................................................. 90
SECTION 8.06. Indemnification of Trustee................................................. 90
ii
TABLE OF CONTENTS
(continued)
PAGE
SECTION 8.07. Eligibility Requirements for Trustee....................................... 91
SECTION 8.08. Resignation and Removal of Trustee......................................... 91
SECTION 8.09. Successor Trustee.......................................................... 92
SECTION 8.10. Merger or Consolidation of Trustee......................................... 92
SECTION 8.11. Appointment of Co-Trustee or Separate Trustee.............................. 92
SECTION 8.12. Tax Matters................................................................ 93
ARTICLE IX TERMINATION.............................................................................. 96
SECTION 9.01. Termination upon Liquidation or Repurchase of all Mortgage Loans........... 96
SECTION 9.02. Final Distribution on the Certificates..................................... 97
SECTION 9.03. Additional Termination Requirements........................................ 98
ARTICLE X MISCELLANEOUS PROVISIONS................................................................. 99
SECTION 10.01. Amendment.................................................................. 99
SECTION 10.02. Counterparts............................................................... 100
SECTION 10.03. Governing Law.............................................................. 100
SECTION 10.04. Intention of Parties....................................................... 101
SECTION 10.05. Notices.................................................................... 101
SECTION 10.06. Severability of Provisions................................................. 102
SECTION 10.07. Assignment................................................................. 102
SECTION 10.08. Limitation on Rights of Certificateholders................................. 102
SECTION 10.09. Inspection and Audit Rights................................................ 103
SECTION 10.10. Certificates Nonassessable and Fully Paid.................................. 103
SECTION 10.11. Third Party Rights......................................................... 103
SECTION 10.12. Additional Rights of the NIMs Insurer...................................... 103
SECTION 10.13. [Reserved]................................................................. 104
SECTION 10.14. Assignment; Sales; Advance Facilities...................................... 104
ARTICLE XI MASTER SERVICING OF THE MORTGAGE LOANS BY THE MASTER SERVICER............................ 106
SECTION 11.01. Master Servicer............................................................ 106
SECTION 11.02. Monitoring of Interim Servicers............................................ 107
SECTION 11.03. Fidelity Bond.............................................................. 108
SECTION 11.04. Powers to Act; Procedures.................................................. 108
SECTION 11.05. Due-on-Sale Clauses; Assumption Agreements................................. 109
SECTION 11.06. Master Servicing of Mortgage Loans Prior to Servicing Transfer Dates....... 109
SECTION 11.07. Documents, Records and Funds in Possession of Master Servicer to be
Held for Trustee........................................................... 109
SECTION 11.08. Standard Hazard Insurance and Flood Insurance Policies..................... 110
SECTION 11.09. Presentment of Claims and Collection of Proceeds........................... 110
SECTION 11.10. Trustee to Retain Possession of Certain Insurance Policies and
Documents.................................................................. 110
SECTION 11.11. Realization Upon Defaulted Mortgage Loans.................................. 110
SECTION 11.12. REO Property............................................................... 110
SECTION 11.13. Annual Statement as to Compliance.......................................... 111
SECTION 11.14. Annual Independent Public Accountants' Servicing Statement; Financial
Statements................................................................. 111
iii
TABLE OF CONTENTS
(continued)
PAGE
SECTION 11.15. Obligation of the Master Servicer in Respect of Certain Prepayment
Interest Shortfalls........................................................ 111
SECTION 11.16. Collection Account......................................................... 112
SECTION 11.17. Obligation of the Master Servicer in Respect of Certain Advances........... 112
SECTION 11.18. Termination of the Master Servicer......................................... 112
EXHIBIT A FORMS OF OFFERED CERTIFICATES
EXHIBIT B MORTGAGE LOAN SCHEDULE
EXHIBIT C SCHEDULE OF MORTGAGE LOANS WITH NO PREPAYMENT
ENFORCEMENT
EXHIBIT D FORM OF TRUSTEE CERTIFICATION
EXHIBIT E-1 FORM OF TRANSFEREE'S LETTER AND AFFIDAVIT
EXHIBIT E-2 FORM OF TRANSFEROR'S AFFIDAVIT
EXHIBIT F FORM OF TRANSFEROR CERTIFICATE
EXHIBIT G FORM OF INVESTMENT LETTER
EXHIBIT H FORM OF RULE 144A LETTER
EXHIBIT I REQUEST FOR RELEASE
EXHIBIT J LIST OF INTERIM SERVICING AGREEMENTS
EXHIBIT K FORM OF OFFICER'S CERTIFICATE OF TRUSTEE
EXHIBIT L FORM OF OFFICER'S CERTIFICATE OF SERVICER
EXHIBIT M CUSTODIAL AGREEMENT
EXHIBIT N FORM OF CAP CONTRACT
iv
POOLING AND SERVICING AGREEMENT, dated as of July 1, 2003, among
▇▇▇▇▇▇▇ ▇▇▇▇▇ MORTGAGE INVESTORS, INC., a Delaware corporation, as depositor
(the "Depositor"), UNIVERSAL MASTER SERVICING, LLC, a Delaware limited liability
company, as master servicer (the "Master Servicer"), ▇▇▇▇▇▇ LOAN SERVICING LP, a
Delaware limited partnership, as servicer (the "Servicer") and WACHOVIA BANK,
N.A., a national banking association, as trustee (the "Trustee").
The Depositor is the owner of the Trust Fund that is hereby conveyed to
the Trustee in return for the Certificates. It is intended that for federal
income tax purposes the Trust Fund will include (i) two real estate mortgage
investment conduits (the "Lower Tier REMIC" and the "Upper Tier REMIC"), (ii)
the Cap Contract and the Cap Contract Account, (iii) the regular interests in
the Lower Tier REMIC and the Upper Tier REMIC and (iv) the grantor trusts
described in Section 2.07 hereof. The Lower Tier REMIC will consist of all of
the assets constituting the Trust Fund (other than the assets described in
clauses (ii), (iii) and (iv) above) and will be evidenced by the Lower Tier
REMIC Regular Interests (which will be uncertificated and will represent the
"regular interests" in the Lower Tier REMIC) and the Class LTR Interest as the
single "residual interest" in the Lower Tier REMIC. The Trustee will hold the
Lower Tier REMIC Regular Interests. The Upper Tier REMIC will consist of the
Lower Tier REMIC Regular Interests and will be evidenced by the Upper Tier REMIC
Regular Interests (which will represent the "regular interests" in the Upper
Tier REMIC) and the Residual Interest as the single "residual interest" in the
Upper Tier REMIC. The Class R Certificate will represent beneficial ownership of
the Class LTR Interest and the Residual Interest. The "latest possible maturity
date" for federal income tax purposes of all interests created hereby will be
the Latest Possible Maturity Date.
All covenants and agreements made by the Seller in the Sale Agreement
and by the Depositor and the Trustee herein with respect to the Mortgage Loans
and the other property constituting the Trust Fund are for the benefit of the
Holders from time to time of the Certificates and, to the extent provided
herein, the NIMs Insurer.
In consideration of the mutual agreements herein contained, the
Depositor, the Master Servicer, the Servicer and the Trustee hereby agree as
follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
Accepted Master Servicing Practices: With respect to any Mortgage Loan,
as applicable, either (x) those customary mortgage master servicing practices of
prudent mortgage servicing institutions that master service mortgage loans of
the same type and quality as such Mortgage Loan in the jurisdiction where the
related Mortgaged Property is located, to the extent applicable to the Master
Servicer (except in its capacity as successor to the Servicer), or (y) as
provided in Section 11.01 hereof, but in no event below the standard set forth
in clause (x).
Accepted Servicing Practices: The Servicer's normal servicing
practices, which will conform to the mortgage servicing practices of prudent
mortgage lending institutions which service for their own account mortgage loans
of the same type as the Mortgages Loans in the jurisdictions in which the
related Mortgaged Properties are located.
Accrual Period: With respect to the Certificates (other than the Class
B Certificates) and any Distribution Date, the period commencing on the
immediately preceding Distribution Date (or, in the case of the first
Distribution Date, the Closing Date) and ending on the day immediately preceding
such
Distribution Date. With respect to the Class B Certificates and any Distribution
Date, the calendar month immediately preceding the month in which such
Distribution Date occurs. All calculations of interest on the Certificates will
be made on the basis of the actual number of days elapsed in the related Accrual
Period and a 360 day year.
Adjustable Rate Mortgage Loan: A Mortgage Loan identified in the
Mortgage Loan Schedule as having a Mortgage Rate which is adjustable.
Adjustment Date: As to each Adjustable Rate Mortgage Loan, each date on
which the related Mortgage Rate is subject to adjustment, as provided in the
related Mortgage Note.
Advance: The aggregate of the advances required to be made by the
Servicer with respect to any Distribution Date pursuant to Section 4.01, the
amount of any such advances being equal to the sum of the aggregate of payments
of principal and interest (net of the Servicing Fee Rate) on the Mortgage Loans
that were due during the applicable Due Period and not received as of the close
of business on the related Determination Date, less the aggregate amount of any
such Delinquent payments that the Servicer has determined would constitute a
Non-Recoverable Advance were an advance to be made with respect thereto;
provided, however, that with respect to any Mortgage Loan that has been
converted to an REO Property, the obligation to make Advances shall only be to
payments of interest.
Advance Facility: A financing or other facility as described in Section
10.14(a).
Advance Facility Notice: As defined in Section 10.14(b).
Advance Financing Person: As defined in Section 10.14(a).
Advance Reimbursement Amounts: As defined in Section 10.14(b).
Affiliate: With respect to any specified Person, any other Person
controlling, controlled by or under common control with such Person. For the
purposes of this definition, "control" means the power to direct the management
and policies of a Person, directly or indirectly, whether through ownership of
voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
Aggregate Certificate Principal Balance: For any date of determination,
the sum of the Class A Certificate Principal Balance, the Class R Certificate
Principal Balance, the Class M-1 Certificate Principal Balance, the Class M-2
Certificate Principal Balance and the Class B Certificate Principal Balance, in
each case as of such date of determination.
Agreement: This Pooling and Servicing Agreement and any and all
amendments or supplements hereto made in accordance with the terms herein.
Applied Realized Loss Amount: With respect to any Distribution Date,
the amount, if any, by which, the Aggregate Certificate Principal Balance after
distributions of principal on such Distribution Date exceeds the aggregate
Stated Principal Balance of the Mortgage Loans as of such Distribution Date.
Appraised Value: With respect to a Mortgage Loan the proceeds of which
were used to purchase the related Mortgaged Property, the "Appraised Value" of a
Mortgaged Property is the lesser of (1) the appraised value based on an
appraisal made for the Seller by an independent fee appraiser at the time of the
origination of the related Mortgage Loan, and (2) the sales price of such
Mortgaged Property at such time of origination. With respect to a Mortgage Loan
the proceeds of which were used to refinance an
-2-
existing mortgage loan, the "Appraised Value" is the appraised value of the
Mortgaged Property based upon the appraisal obtained at the time of refinancing.
Assignment of Mortgage: An assignment of the Mortgage, notice of
transfer or equivalent instrument, in recordable form, sufficient under the laws
of the jurisdiction where the related Mortgaged Property is located to reflect
of record the sale and assignment of the Mortgage Loan to the Trustee, which
assignment, notice of transfer or equivalent instrument may, if permitted by
law, be in the form of one or more blanket assignments covering Mortgages
secured by Mortgaged Properties located in the same county.
Available Funds Cap: As of any Distribution Date with respect to the
Certificates, a per annum rate equal to 12 times the quotient of (i) the total
scheduled interest on the Mortgage Loans based on the Net Mortgage Rates as of
the related Due Date , less the amount of any servicing expenses, other than
those arising as a result of a default or delinquency, but including fees
charged by the Interim Servicers, that reduce the scheduled amount of interest
available for distribution but were not taken into account in determining the
Net Mortgage Rate, divided by (ii) the Aggregate Certificate Principal Balance
as of the first day of the applicable Accrual Period multiplied by 30 and
divided by the actual number of days in the related Accrual Period.
Balloon Loan: A Mortgage Loan having an original term to stated
maturity of approximately 15 years which provides for level monthly payments of
principal and interest based on a 30-year amortization schedule, with a balloon
payment of the remaining outstanding principal balance due on such Mortgage Loan
at its stated maturity.
Book-Entry Certificates: Any of the Certificates that shall be
registered in the name of the Depository or its nominee, the ownership of which
is reflected on the books of the Depository or on the books of a Person
maintaining an account with the Depository (directly, as a "Depository
Participant", or indirectly, as an indirect participant in accordance with the
rules of the Depository and as described in Section 5.06). As of the Closing
Date, each of the Class A, Class M-1, Class M-2 and Class B Certificates
constitutes a Class of Book-Entry Certificates.
Business Day: Any day other than (1) a Saturday or a Sunday, or (2) a
day on which banking institutions in the State of Texas, State of North Carolina
and in the City of New York, New York are authorized or obligated by law or
executive order to be closed.
Cap Contract: The amended confirmation and agreement and any related
confirmation thereto, between the Trust and Bear ▇▇▇▇▇▇▇ Financial Products,
Inc. (in the form of Exhibit N hereto).
Cap Contract Account: The separate Eligible Account created and
maintained by the Trustee pursuant to Section 4.04(k) in the name of the Trustee
for the benefit of the Trust Fund and designated "Wachovia Bank, N.A., as
trustee, in trust for registered holders of Terwin Mortgage Trust, Asset-Backed
Certificates, Series TMTS 2003-2HE." Funds in the Cap Contract Account shall be
held in trust for the Trust Fund for the uses and purposes set forth in this
Agreement.
Cap Contract Notional Balance: With respect to any Distribution Date,
the Cap Contract Notional Balance set forth below for such Distribution Date:
1ML LOWER 1ML UPPER
BEGINNING ACCRUAL ENDING ACCRUAL 1ML SET DATE COLLAR(%)(1) COLLAR(%)
----------------- -------------- ------------ ------------ ---------
July 31, 2003 August 25, 2003 July 29, 2003 8.066 9.550
August 25, 2003 September 25, 2003 August 23, 2003 6.425 9.550
-3-
September 25, 2003 October 25, 2003 September 23, 2003 6.668 9.550
October 25, 2003 November 25, 2003 October 23, 2003 6.441 9.550
November 25, 2003 December 25, 2003 November 23, 2003 6.674 9.550
December 25, 2003 January 25, 2004 December 23, 2003 6.447 9.550
January 25, 2004 February 25, 2004 January 23, 2004 6.450 9.550
February 25, 2004 March 25, 2004 February 23, 2004 6.934 9.550
March 25, 2004 April 25, 2004 March 23, 2004 6.471 9.550
April 25, 2004 May 25, 2004 April 23, 2004 6.706 9.550
May 25, 2004 June 25, 2004 May 23, 2004 6.479 9.550
June 25, 2004 July 25, 2004 June 23, 2004 6.713 9.550
July 25, 2004 August 25, 2004 July 23, 2004 6.486 9.550
August 25, 2004 September 25, 2004 August 23, 2004 6.494 9.550
September 25, 2004 October 25, 2004 September 23, 2004 6.740 9.550
October 25, 2004 November 25, 2004 October 23, 2004 6.512 9.550
November 25, 2004 December 25, 2004 November 23, 2004 6.748 9.550
December 25, 2004 January 25, 2005 December 23, 2004 6.520 9.550
January 25, 2005 February 25, 2005 January 23, 2005 6.524 9.550
February 25, 2005 March 25, 2005 February 23, 2005 7.281 9.550
March 25, 2005 April 25, 2005 March 23, 2005 6.547 9.550
April 25, 2005 May 25, 2005 April 23, 2005 7.705 9.550
May 25, 2005 June 25, 2005 May 23, 2005 7.448 9.550
June 25, 2005 July 25, 2005 June 23, 2005 7.712 9.550
July 25, 2005 August 25, 2005 July 23, 2005 7.450 9.550
August 25, 2005 September 25, 2005 August 23, 2005 7.454 9.550
September 25, 2005 October 25, 2005 September 23, 2005 7.729 9.550
October 25, 2005 November 25, 2005 October 23, 2005 7.755 9.550
November 25, 2005 December 25, 2005 November 23, 2005 8.031 9.550
December 25, 2005 January 25, 2006 December 23, 2005 7.758 9.550
January 25, 2006 February 25, 2006 January 23, 2006 7.758 9.550
February 25, 2006 March 25, 2006 February 23, 2006 8.642 9.550
March 25, 2006 April 25, 2006 March 23, 2006 7.772 9.550
April 25, 2006 May 25, 2006 April 23, 2006 8.374 9.550
May 25, 2006 June 25, 2006 May 23, 2006 8.166 9.550
June 25, 2006 July 25, 2006 June 23, 2006 8.453 9.550
July 25, 2006 August 25, 2006 July 23, 2006 8.166 9.550
August 25, 2006 September 25, 2006 August 23, 2006 8.123 9.550
September 25, 2006 October 25, 2006 September 23, 2006 8.400 9.550
October 25, 2006 November 25, 2006 October 23, 2006 8.318 9.550
November 25, 2006 December 25, 2006 November 23, 2006 8.628 9.550
December 25, 2006 January 25, 2007 December 23, 2006 8.327 9.550
January 25, 2007 February 25, 2007 January 23, 2007 8.318 9.550
February 25, 2007 March 25, 2007 February 23, 2007 9.247 9.550
March 25, 2007 April 25, 2007 March 23, 2007 8.300 9.550
April 25, 2007 May 25, 2007 April 23, 2007 8.593 9.550
May 25, 2007 June 25, 2007 May 23, 2007 8.316 9.550
June 25, 2007 July 25, 2007 June 23, 2007 8.599 9.550
July 25, 2007 August 25, 2007 July 23, 2007 8.298 9.550
August 25, 2007 September 25, 2007 August 23, 2007 8.289 9.550
September 25, 2007 October 25, 2007 September 23, 2007 8.571 9.550
October 25, 2007 November 25, 2007 October 23, 2007 8.281 9.550
November 25, 2007 December 25, 2007 November 23, 2007 8.577 9.550
December 25, 2007 January 25, 2008 December 23, 2007 8.277 9.550
January 25, 2008 February 25, 2008 January 23, 2008 8.268 9.550
February 25, 2008 March 25, 2008 February 23, 2008 8.860 9.550
March 25, 2008 April 25, 2008 March 23, 2008 8.250 9.550
April 25, 2008 May 25, 2008 April 23, 2008 8.642 9.550
May 25, 2008 June 25, 2008 May 23, 2008 8.339 9.550
June 25, 2008 July 25, 2008 June 23, 2008 8.623 9.550
July 25, 2008 August 25, 2008 July 23, 2008 8.321 9.550
August 25, 2008 September 25, 2008 August 23, 2008 8.311 9.550
September 25, 2008 October 25, 2008 September 23, 2008 8.594 9.550
October 25, 2008 November 25, 2008 October 23, 2008 8.295 9.550
November 25, 2008 December 25, 2008 November 23, 2008 8.577 9.550
December 25, 2008 January 25, 2009 December 23, 2008 8.277 9.550
January 25, 2009 February 25, 2009 January 23, 2009 8.268 9.550
February 25, 2009 March 25, 2009 February 23, 2009 9.192 9.550
March 25, 2009 April 25, 2009 March 23, 2009 8.249 9.550
April 25, 2009 May 25, 2009 April 23, 2009 8.530 9.550
May 25, 2009 June 25, 2009 May 23, 2009 8.231 9.550
-4-
June 25, 2009 July 25, 2009 June 23, 2009 8.511 9.550
July 25, 2009 August 25, 2009 July 23, 2009 8.213 9.550
August 25, 2009 September 25, 2009 August 23, 2009 8.205 9.550
September 25, 2009 October 25, 2009 September 23, 2009 8.484 9.550
October 25, 2009 November 25, 2009 October 23, 2009 8.187 9.550
November 25, 2009 December 25, 2009 November 23, 2009 8.466 9.550
December 25, 2009 January 25, 2010 December 23, 2009 8.169 9.550
January 25, 2010 February 25, 2010 January 23, 2010 8.160 9.550
February 25, 2010 March 25, 2010 February 23, 2010 9.073 9.550
March 25, 2010 April 25, 2010 March 23, 2010 8.143 9.550
April 25, 2010 May 25, 2010 April 23, 2010 8.421 9.550
May 25, 2010 June 25, 2010 May 23, 2010 8.126 9.550
June 25, 2010 July 25, 2010 June 23, 2010 8.403 9.550
July 25, 2010 August 25, 2010 July 23, 2010 8.109 9.550
August 25, 2010 September 25, 2010 August 23, 2010 8.100 9.550
September 25, 2010 October 25, 2010 September 23, 2010 8.377 9.550
October 25, 2010 November 25, 2010 October 23, 2010 8.084 9.550
November 25, 2010 December 25, 2010 November 23, 2010 8.364 9.550
December 25, 2010 January 25, 2011 December 23, 2010 8.079 9.550
January 25, 2011 February 25, 2011 January 23, 2011 8.078 9.550
February 25, 2011 March 25, 2011 February 23, 2011 8.991 9.550
March 25, 2011 April 25, 2011 March 23, 2011 8.076 9.550
April 25, 2011 May 25, 2011 April 23, 2011 8.360 9.550
May 25, 2011 June 25, 2011 May 23, 2011 8.076 9.550
June 25, 2011 July 25, 2011 June 23, 2011 8.360 9.550
July 25, 2011 August 25, 2011 July 23, 2011 8.076 9.550
August 25, 2011 September 25, 2011 August 23, 2011 8.076 9.550
September 25, 2011 October 25, 2011 September 23, 2011 8.361 9.550
October 25, 2011 November 25, 2011 October 23, 2011 8.078 9.550
November 25, 2011 December 25, 2011 November 23, 2011 8.363 9.550
December 25, 2011 January 25, 2012 December 23, 2011 8.080 9.550
January 25, 2012 February 25, 2012 January 23, 2012 8.082 9.550
February 25, 2012 March 25, 2012 February 23, 2012 8.672 9.550
(1) With respect to any Distribution Date, if One-Month LIBOR exceeds the lower
collar, the Trust Fund will receive payments pursuant to the Cap Contract.
Cap Contract Termination Date: The Distribution Date in March 2012.
Certificate: Any one of the certificates of any Class executed by the
Trustee and authenticated by the Trustee in substantially the forms attached
hereto as Exhibits A.
Certificate Account: The separate Eligible Account created and
maintained by the Trustee pursuant to Section 3.05(f) in the name of the Trustee
for the benefit of the Certificateholders and designated "Wachovia Bank, N.A.,
as trustee, in trust for registered holders of Terwin Mortgage Trust,
Asset-Backed Certificates, Series TMTS 2003-2HE." Funds in the Certificate
Account shall be held in trust for the Certificateholders for the uses and
purposes set forth in this Agreement.
Certificate Notional Balance: As to the Class N Certificates and as of
any Distribution Date, the Initial Certificate Notional Balance of such
Certificate less the sum of all amounts distributed with respect to such
Certificate in reduction of the Certificate Notional Balance thereof on previous
Distribution Dates.
Certificate Owner: With respect to a Book-Entry Certificate, the Person
that is the beneficial owner of such Book-Entry Certificate.
Certificate Principal Balance: As to any Certificate (other than the
Class N and Class X Certificates) and as of any Distribution Date, the Initial
Certificate Principal Balance of such Certificate less the sum of (1) all
amounts distributed with respect to such Certificate in reduction of the
Certificate Principal Balance thereof on previous Distribution Dates pursuant to
Section 4.04, and (2) any Applied
-5-
Realized Loss Amounts allocated to such Certificate on previous Distribution
Dates pursuant to Section 4.04(i).
Certificate Register: The register maintained pursuant to Section 5.02
hereof.
Certificateholder or Holder: The Person in whose name a Certificate is
registered in the Certificate Register (initially, Cede & Co., as nominee for
the Depository) in the case of any Class of Regular Certificates or the Class R
Certificate, except that solely for the purpose of giving any consent pursuant
to this Agreement, any Certificate registered in the name of the Depositor or
any Affiliate of the Depositor shall be deemed not to be Outstanding and the
Percentage Interest evidenced thereby shall not be taken into account in
determining whether the requisite amount of Percentage Interests necessary to
effect such consent has been obtained; provided, however, that if any such
Person (including the Depositor) owns 100% of the Percentage Interests evidenced
by a Class of Certificates, such Certificates shall be deemed to be Outstanding
for purposes of any provision hereof that requires the consent of the Holders of
Certificates of a particular Class as a condition to the taking of any action
hereunder. The Trustee and the NIMs Insurer are entitled to rely conclusively on
a certification of the Depositor or any Affiliate of the Depositor in
determining which Certificates are registered in the name of an Affiliate of the
Depositor.
Class: All Certificates bearing the same Class designation as set forth
in Section 5.01 hereof.
Class A Certificate Principal Balance: For any date of determination,
the sum of the Class A Certificate Principal Balance and the Class R Certificate
Principal Balance.
Class A Certificate: Any Certificate designated as a "Class A
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class A Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class A Certificates.
Class A Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class A Pass-Through Rate on
the Class A Certificate Principal Balance as of the first day of such Accrual
Period (after giving effect to all distributions of principal made or deemed to
be made as of such first day) plus the Current Interest and Interest
Carryforward Amount portions of any previous distributions on such Class that
are recovered as a voidable preference by a trustee in bankruptcy, less any
Non-Supported Interest Shortfall allocated on such Distribution Date to the
Class A Certificates. For purposes of calculating interest, principal
distributions on a Distribution Date will be deemed to have been made on the
first day of the Accrual Period in which such Distribution Date occurs.
Class A Interest Carryforward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class A Current Interest with respect to prior
Distribution Dates (excluding any Class A Interest Carryover Amount) over (B)
the amount actually distributed to the Class A Certificates with respect to
Class A Current Interest and Class A Current Interest Carryforward Amounts on
such prior Distribution Dates and (2) interest on such excess (to the extent
permitted by applicable law) at the Class A Pass-Through Rate for the related
Accrual Period.
Class A Interest Carryover Amount: As of any Distribution Date, the sum
of (1) if on such Distribution Date the Pass-Through Rate for the Class A
Certificates is based upon the Available Funds Cap, the excess of (A) the amount
of interest the Class A Certificates would otherwise be entitled to receive on
such Distribution Date had such rate been calculated as the sum of One-Month
LIBOR and the applicable Class A Margin for such Distribution Date, up to the
Weighted Maximum Rate Cap, over (B)
-6-
the amount of interest payable on the Class A Certificates at the Available
Funds Cap, up to but not exceeding the Weighted Maximum Rate Cap for such
Distribution Date and (2) the Class A Interest Carryover Amount for all previous
Distribution Dates not previously paid pursuant to Section 4.04(f)(v), together
with interest thereon at a rate equal to the sum of One-Month LIBOR and the
applicable Class A Margin for such Distribution Date.
Class A Margin: As of any Distribution Date up to and including the
Optional Termination Date for the Certificates, 0.45% per annum and, as of any
Distribution Date after the Optional Termination Date, 0.90% per annum.
Class A Pass-Through Rate: For the first Distribution Date, 1.55% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class A Margin, (2) the Weighted Maximum Rate Cap and (3) the Available
Funds Cap for such Distribution Date.
Class A Principal Distribution Amount: With respect to any Distribution
Date (1) prior to the Stepdown Date or any Distribution Date on which a Trigger
Event exists, 100% of the Principal Distribution Amount for such Distribution
Date and (2) on or after the Stepdown Date where a Trigger Event does not exist,
the excess of (A) the Class A Certificate Principal Balance immediately prior to
such Distribution Date over (B) the lesser of (i) 73.00% of the Stated Principal
Balance of the Mortgage Loans as of the end of the immediately preceding Due
Period and (ii) the excess of the Stated Principal Balance of the Mortgage Loans
as of the end of the immediately preceding Due Period over $863,864; provided,
however, that in no event will the Class A Principal Distribution Amount with
respect to any Distribution Date exceed the aggregate Certificate Principal
Balance of the Class A and Class R Certificates.
Class B Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class B Certificates.
Class B Certificate: Any Certificate designated as a "Class B
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class B Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class B Certificates.
Class B Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class B Pass-Through Rate on
the Class B Certificate Principal Balance as of the first day of such Accrual
Period (after giving effect to all distributions of principal made or deemed to
be made as of such first day) plus the Current Interest and Interest
Carryforward Amount portions of any previous distributions on such Class that
are recovered as a voidable preference by a trustee in bankruptcy, less any
Non-Supported Interest Shortfall allocated on such Distribution Date to the
Class B Certificates. For purposes of calculating interest, principal
distributions on a Distribution Date will be deemed to have been made on the
first day of the Accrual Period in which such Distribution Date occurs.
Class B Interest Carryforward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class B Current Interest with respect to prior
Distribution Dates over (B) the amount actually distributed to the Class B
Certificates with respect to Class B Current Interest and Class B Current
Interest Carryforward Amounts on such prior Distribution Dates and (2) interest
on such excess (to the extent permitted by applicable law) at the Class B
Pass-Through Rate for the related Accrual Period.
-7-
Class B Pass-Through Rate: As of any Distribution Date, the least of
(1) 6.00% per annum, (2) the Weighted Maximum Rate Cap and (3) the Available
Funds Cap for such Distribution Date.
Class B Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount
for such Distribution Date if the Class A Certificate Principal Balance, the
Class M-1 Certificate Principal Balance and the Class M-2 Certificate Principal
Balance have been reduced to zero and a Trigger Event exists, or as long as a
Trigger Event does not exist, the excess of (1) the sum of (A) the Class A
Certificate Principal Balance (after taking into account distributions of the
Class A Principal Distribution Amount on such Distribution Date), (B) the Class
M-1 Certificate Principal Balance (after taking into account distributions of
the Class M-1 Principal Distribution Amount on such Distribution Date), (C) the
Class M-2 Certificate Principal Balance (after taking into account distributions
of the Class M-2 Principal Distribution Amount on such Distribution Date) and
(D) the Class B Certificate Principal Balance immediately prior to such
Distribution Date over (2) the lesser of (A) 96.50% of the Stated Principal
Balances of the Mortgage Loans as of the end of the immediately preceding Due
Period and (B) the excess of the Stated Principal Balances of the Mortgage Loans
as of the end of the immediately preceding Due Period over $863,864; provided,
however, that on any Distribution Date prior to the Stepdown Date on which the
Class A Certificate Principal Balance, the Class M-1 Certificate Principal
Balance and the Class M-2 Certificate Principal Balance have been reduced to
zero, the Class B Principal Distribution Amount for such Distribution Date will
equal 100% of the Principal Distribution Amount remaining after any
distributions on such Class A, Class M-1 and Class M-2 Certificates; and
provided further, however, that in no event will the Class B Principal
Distribution Amount with respect to any Distribution Date exceed the Certificate
Principal Balance of the Class B Certificates.
Class B Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class B Applied Realized Loss Amount over (2) the sum of all
distributions in reduction of the Class B Applied Realized Loss Amounts on all
previous Distribution Dates.
Class LTA Interest: An uncertificated regular interest in the Lower
Tier REMIC with an initial principal balance equal to 1/2 of the initial
principal balance of its Corresponding Upper Tier REMIC Interests and an
interest rate equal to the Net Rate.
Class LTB Interest: An uncertificated regular interest in the Lower
Tier REMIC with an initial principal balance equal to 1/2 of the initial
principal balance of its Corresponding Upper Tier REMIC Interest and an interest
rate equal to the Net Rate.
Class LTM-1 Interest: An uncertificated regular interest in the Lower
Tier REMIC with an initial principal balance equal to 1/2 of the initial
principal balance of its Corresponding Upper Tier REMIC Interest and an interest
rate equal to the Net Rate.
Class LTM-2 Interest: An uncertificated regular interest in the Lower
Tier REMIC with an initial principal balance equal to 1/2 of the initial
principal balance of its Corresponding Upper Tier REMIC Interest and an interest
rate equal to the Net Rate.
Class LTR Interest: The sole class of "residual interest" in the Lower
Tier REMIC.
Class LTX Interest: An uncertificated regular interest in the Lower
Tier REMIC with an initial principal balance equal to the excess of (i) the
aggregate principal balances of the Mortgage Loans over (ii) the aggregate
principal balances of the Lower Tier REMIC Marker Classes and an interest rate
equal to the Net Rate. The Class LTX Interest shall also be entitled to all
payments received in respect of
-8-
Prepayment Penalties on the Mortgage Loans and all amounts payable by the
Servicer in respect of Prepayment Penalties under the Agreement.
Class M-1 Applied Realized Loss Amount: As of any Distribution Date,
the sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class M-1 Certificates.
Class M-1 Certificate: Any Certificate designated as a "Class M-1
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class M-1 Certificate Principal Balance: As of any date of
determination, the aggregate Certificate Principal Balance of the Class M-1
Certificates.
Class M-1 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class M-1 Pass-Through Rate on
the Class M-1 Certificate Principal Balance as of the first day of such Accrual
Period (after giving effect to all distributions of principal made or deemed to
be made as of such first day) plus the Current Interest and Interest
Carryforward Amount portions of any previous distributions on such Class that
are recovered as a voidable preference by a trustee in bankruptcy, less any
Non-Supported Interest Shortfall allocated on such Distribution Date to the
Class M-1 Certificates. For purposes of calculating interest, principal
distributions on a Distribution Date will be deemed to have been made on the
first day of the Accrual Period in which such Distribution Date occurs.
Class M-1 Interest Carryforward Amount: As of any Distribution Date,
the sum of (1) the excess of (A) the Class M-1 Current Interest with respect to
prior Distribution Dates (excluding any Class M-1 Interest Carryover Amount)
over (B) the amount actually distributed to the Class M-1 Certificates with
respect to Class M-1 Current Interest and Class M-1 Current Interest
Carryforward Amounts on such prior Distribution Dates and (2) interest on such
excess (to the extent permitted by applicable law) at the Class M-1 Pass-Through
Rate for the related Accrual Period.
Class M-1 Margin: As of any Distribution Date up to and including the
Optional Termination Date for the Certificates, 1.00% per annum and, as of any
Distribution Date after the Optional Termination Date, 1.50% per annum.
Class M-1 Pass-Through Rate: For the first Distribution Date, 2.10% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class M-1 Margin, (2) the Weighted Maximum Rate Cap and (3) the
Available Funds Cap for such Distribution Date.
Class M-1 Principal Distribution Amount: With respect to any
Distribution Date on or after the Stepdown Date, 100% of the Principal
Distribution Amount for such Distribution Date if the Class A Certificate
Principal Balance has been reduced to zero and a Trigger Event exists, or as
long as a Trigger Event does not exist, the excess of (1) the sum of (A) the
Class A Certificate Principal Balance (after taking into account distributions
of the Class A Principal Distribution Amount on such Distribution Date) and (B)
the Class M-1 Certificate Principal Balance immediately prior to such
Distribution Date over (2) the lesser of (A) 84.50% of the Stated Principal
Balances of the Mortgage Loans as of the end of the immediately preceding Due
Period and (B) the excess of the Stated Principal Balances for the Mortgage
Loans as of the end of the immediately preceding Due Period over $863,864.
Notwithstanding the foregoing, (I) on any Distribution Date prior to the
Stepdown Date on which the Certificate Principal Balance of each Class of Class
A Certificates has been reduced to zero, the Class M-1 Principal Distribution
Amount will equal the lesser of (x) the outstanding Certificate Principal
Balance of the Class M-1 Certificates and (y) 100% of the Principal Distribution
Amount remaining after any distributions on
-9-
such Class A Certificates and (II) in no event will the Class M-1 Principal
Distribution Amount with respect to any Distribution Date exceed the Class M-1
Certificate Principal Balance.
Class M-1 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class M-1 Applied Realized Loss Amount over (2) the sum of all
distributions in reduction of the Class M-1 Applied Realized Loss Amounts on all
previous Distribution Dates.
Class M-2 Applied Realized Loss Amount: As of any Distribution Date,
the sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class M-2 Certificates.
Class M-2 Certificate: Any Certificate designated as a "Class M-2
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class M-2 Certificate Principal Balance: As of any date of
determination, the aggregate Certificate Principal Balance of the Class M-2
Certificates.
Class M-2 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class M-2 Pass-Through Rate on
the Class M-2 Certificate Principal Balance as of the first day of such Accrual
Period (after giving effect to all distributions of principal made or deemed to
be made as of such first day) plus the Current Interest and Interest
Carryforward Amount portions of any previous distributions on such Class that
are recovered as a voidable preference by a trustee in bankruptcy, less any
Non-Supported Interest Shortfall allocated on such Distribution Date to the
Class M-2 Certificates. For purposes of calculating interest, principal
distributions on a Distribution Date will be deemed to have been made on the
first day of the Accrual Period in which such Distribution Date occurs.
Class M-2 Interest Carryforward Amount: As of any Distribution Date,
the sum of (1) the excess of (A) the Class M-2 Current Interest with respect to
prior Distribution Dates (excluding any Class M-2 Interest Carryover Amount)
over (B) the amount actually distributed to the Class M-2 Certificates with
respect to Class M-2 Current Interest and Class M-2 Current Interest
Carryforward Amounts on such prior Distribution Dates and (2) interest on such
excess (to the extent permitted by applicable law) at the Class M-2 Pass-Through
Rate for the related Accrual Period.
Class M-2 Margin: As of any Distribution Date up to and including the
Optional Termination Date for the Certificates, 2.15% per annum and, as of any
Distribution Date after the Optional Termination Date, 3.225% per annum.
Class M-2 Pass-Through Rate: For the first Distribution Date, 3.25% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class M-2 Margin, (2) the Weighted Maximum Rate Cap and (3) the
Available Funds Cap for such Distribution Date.
Class M-2 Principal Distribution Amount: With respect to any
Distribution Date on or after the Stepdown Date, 100% of the Principal
Distribution Amount for such Distribution Date if the Class A Certificate
Principal Balance and the Class M-1 Certificate Principal Balance have been
reduced to zero and a Trigger Event exists, or as long as a Trigger Event does
not exist, the excess of (1) the sum of (A) the Class A Certificate Principal
Balance (after taking into account distributions of the Class A Principal
Distribution Amount on such Distribution Date), (B) the Class M-1 Certificate
Principal Balance (after taking into account distributions of the Class M-1
Principal Distribution Amount on such Distribution Date) and (C) the Class M-2
Certificate Principal Balance immediately prior to such Distribution Date over
(2) the lesser of (A) 90.50% of the Stated Principal Balances of the Mortgage
Loans as of the end of the immediately preceding Due Period and (B) the excess
of the Stated Principal Balances of the
-10-
Mortgage Loans as of the end of the immediately preceding Due Period over
$863,864. Notwithstanding the foregoing, (I) on any Distribution Date prior to
the Stepdown Date on which the Certificate Principal Balance of each Class of
Class A Certificates and the Class M-1 Certificates has been reduced to zero,
the Class M-2 Principal Distribution Amount will equal the lesser of (x) the
outstanding Certificate Principal Balance of the Class M-2 Certificates and (y)
100% of the Principal Distribution Amount remaining after any distributions on
such Class A and Class M-1 Certificates and (II) in no event will the Class M-2
Principal Distribution Amount with respect to any Distribution Date exceed the
Class M-2 Certificate Principal Balance.
Class M-2 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class M-2 Applied Realized Loss Amount over (2) the sum of all
distributions in reduction of the Class M-2 Applied Realized Loss Amounts on all
previous Distribution Dates.
Class N Certificate: Any Certificate designated as a "Class N
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class N Certificate Notional Balance: As of any date of determination,
the aggregate Certificate Notional Balance of the Class N Certificates.
Class N Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class N Distributable Interest
Rate on the Class N Certificate Notional Balance, plus the interest portion of
any previous distributions on such Class that is recovered as a voidable
preference by a trustee in bankruptcy.
Class N Distributable Interest Rate: For any Distribution Date, 8.50%
per annum.
Class N Interest Carryforward Amount: As of any Distribution Date, the
excess of (A) the Class N Current Interest with respect to prior Distribution
Dates over (B) the amount actually distributed to the Class N Certificates with
respect to interest on such prior Distribution Dates.
Class R Certificate: The Class R Certificate executed by the Trustee
and authenticated by the Trustee in substantially the form set forth in Exhibit
A.
Class R Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class R Certificate.
Class R Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class R Pass-Through Rate on
the Class R Certificate Principal Balance as of the first day of such Accrual
Period (after giving effect to all distributions of principal made or deemed to
be made as of such first day) plus the Current Interest and Interest
Carryforward Amount portions of any previous distributions on such Class that
are recovered as a voidable preference by a trustee in bankruptcy, less any
Non-Supported Interest Shortfall allocated on such Distribution Date to the
Class R Certificate. For purposes of calculating interest, principal
distributions on a Distribution Date will be deemed to have been made on the
first day of the Accrual Period in which such Distribution Date occurs.
Class R Interest Carryforward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class R Current Interest with respect to prior
Distribution Dates (excluding any Class R Interest Carryover Amount) over (B)
the amount actually distributed to the Class R Certificate with respect to Class
R Current Interest and Class R Interest Carryforward Amounts on such prior
Distribution Dates and (2) interest on such excess (to the extent permitted by
applicable law) at the Class R Pass-Through Rate for the related Accrual Period.
-11-
Class R Margin: As of any Distribution Date up to and including the
Optional Termination Date for the Certificates, 0.45% per annum and, as of any
Distribution Date after the Optional Termination Date, 0.90% per annum.
Class R Pass-Through Rate: For the first Distribution Date, 1.55% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class R Margin, (2) the Weighted Maximum Rate Cap and (3) the Available
Funds Cap for such Distribution Date.
Class UTA Interest: An uncertificated regular interest in the Upper
Tier REMIC with an initial principal balance equal to the initial principal
balance of the Related Certificates and bearing interest at the lesser of (i)
One-Month LIBOR plus the Class A Margin and (ii) the Net Rate. For the first
Distribution Date, the percentage described in clause (i) of the preceding
sentence will equal 1.55%.
Class UTB Interest: An uncertificated regular interest in the Upper
Tier REMIC with an initial principal balance equal to the initial principal
balance of the Related Certificates and bearing interest at the lesser of (i)
6.00% and (ii) the Net Rate.
Class UTM-1 Interest: An uncertificated regular interest in the Upper
Tier REMIC with an initial principal balance equal to the initial principal
balance of the Related Certificates and bearing interest at the lesser of (i)
One-Month LIBOR plus the Class M-1 Margin and (ii) the Net Rate. For the first
Distribution Date, the percentage described in clause (i) of the preceding
sentence will equal 2.10%.
Class UTM-2 Interest: An uncertificated regular interest in the Upper
Tier REMIC with an initial principal balance equal to the initial principal
balance of the Related Certificates and bearing interest at the lesser of (i)
One-Month LIBOR plus the Class M-2 Margin and (ii) the Net Rate. For the first
Distribution Date, the percentage described in clause (i) of the preceding
sentence will equal 3.25%.
Class UTXN Interest: An uncertificated regular interest in the Upper
Tier REMIC with an initial principal balance equal to the excess of the
principal balance of the Mortgage Loans over the aggregate Certificate Principal
Balance of the Class A Certificates, Class B Certificates, Class M-1
Certificates, Class M-2 Certificates and Class R Certificates and bearing
interest on a notional amount equal to the aggregate of the Stated Principal
Balances of the Mortgage Loans outstanding as of the beginning of the related
Accrual Period at a rate equal to the Class UTXN Interest Rate. The Class UTXN
Interest will also be treated as entitled to all payments received on the Class
LTX Interest in respect of Prepayment Penalties on the Mortgage Loans and all
amounts payable by the Servicer in respect of Prepayment Penalties pursuant to
this Agreement. The Class UTXN Interest will not include any obligation to make
any payments in respect of the interest rate cap contracts described in Section
2.07.
Class UTXN Interest Rate: The excess, if any, of (a) the weighted
average of the interest rates on the Lower Tier REMIC Regular Interests over (b)
two times the weighted average of the interest rates on the Lower Tier REMIC
Regular Interests (treating for purposes of this clause (b) the interest rate on
each of the Lower Tier REMIC Marker Classes as being capped at the interest rate
on the Corresponding Upper Tier REMIC Interest and treating the Class LTX
Interest as being capped at zero). The averages described in the preceding
sentence shall be weighted on the basis of the respective principal balances of
the Lower Tier REMIC Regular Interests immediately prior to any date of
determination.
Class X Certificates: The Class X Certificates executed by the Trustee
and authenticated by the Trustee in substantially the form set forth in Exhibit
A.
Class X Distributable Amount: The excess of (x) the sum of (i) the
initial Overcollateralization Amount, (ii) all payments accrued on the Class
UTXN Interest, including all prepayment charges in
-12-
respect of the Mortgage Loans and all amounts payable by the Servicer in respect
of prepayment charges pursuant to the Agreement, and (iii) all payments received
on the Cap Contract over (y) the sum of (i) all prior distributions to the Class
X and Class N Certificates and (ii) all payments treated as distributed by the
Upper Tier REMIC to the Class UTXN Interest and then paid to the holders of
Offered Certificates pursuant to an interest rate cap contract as described in
Section 2.07(d).
Closing Date: July 31, 2003.
Code: The Internal Revenue Code of 1986, including any successor or
amendatory provisions.
Collection Account: The separate Eligible Account created and initially
maintained by the Servicer pursuant to Section 3.05(d) in the name of the
Trustee for the benefit of the Certificateholders and designated "▇▇▇▇▇▇ Loan
Servicing LP, in trust for registered holders of Terwin Mortgage Trust,
Asset-Backed Certificates, Series TMTS 2003-2HE". Funds in the Collection
Account shall be held in trust for the Certificateholders for the uses and
purposes set forth in this Agreement.
Combined Loan-to-Value Ratio: For any Mortgage Loan in a second lien
position, the fraction, expressed as a percentage, the numerator of which is the
sum of (1) the original principal balance of the related Mortgage Loan and (2)
any outstanding principal balances of Mortgage Loans the liens on which are
senior to the lien on such related Mortgage Loan (such sum calculated at the
date of origination of such related Mortgage Loan) and the denominator of which
is the lesser of (A) the Appraised Value of the related Mortgaged Property and
(B) the sales price of the related Mortgaged Property at time of origination.
Compensating Interest: With respect to any Mortgage Loan and any
Distribution Date, an amount equal to the portion of any Prepayment Interest
Shortfalls required to be deposited in the Collection Account by the Servicer
pursuant to Section 4.02 hereof.
Corresponding Upper Tier REMIC Interests: With respect to the Class LTA
Interest, the Class UTA Interest and the Residual Interest. With respect to the
Class LTM-1 Interest, the Class UTM-1 Interest. With respect to the Class LTM-2
Interest, the Class UTM-2 Interest. With respect to the Class LTB Interest, the
Class UTB Interest.
Current Interest: Any of the Class A Current Interest, the Class R
Current Interest, the Class M-1 Current Interest, the Class M-2 Current
Interest, Class B Current Interest and the Class N Current Interest.
Cut-off Date: July 1, 2003.
Cut-off Date Principal Balance: As to any Mortgage Loan, the unpaid
principal balance thereof as of the close of business on the calendar day
immediately preceding the Cut-off Date after application of all payments of
principal due on or prior to the Cut-off Date, whether or not received, and all
Principal Prepayments received prior to the Cut-off Date, but without giving
effect to any installments of principal received in respect of Due Dates on and
after the Cut-off Date.
Definitive Certificates: As defined in Section 5.06.
Deleted Mortgage Loan: A Mortgage Loan replaced or to be replaced by a
Replacement 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 day such payment is scheduled to be due. A Mortgage Loan is "30 days
delinquent" if such payment has not been received by the close of
-13-
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. With respect to any Mortgage Loan due on any day other than the first day
of the month, such Mortgage Loan shall be deemed to be due on the first day of
the immediately succeeding month. Similarly for "60 days delinquent," "90 days
delinquent" and so on.
Denomination: With respect to each Certificate, the amount set forth on
the face thereof as the "Initial Principal Balance of this Certificate."
Depositor: ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors, Inc., a Delaware
corporation, or its successor in interest.
Depository: The initial Depository shall be The Depository Trust
Company ("DTC"), the nominee of which is Cede & Co., or any other organization
registered as a "clearing agency" pursuant to Section 17A of the Securities
Exchange Act of 1934, as amended. The Depository shall initially be the
registered Holder of the Book-Entry Certificates. 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.
Depository Agreement: With respect to Classes of Book-Entry
Certificates, the agreement between the Trustee and the initial Depository.
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.
Designated Transaction: For Certificates transferred on or after August
23, 2000, a transaction in which the assets underlying the Certificates consist
of single-family residential, multi-family residential, home equity,
manufactured housing and/or commercial mortgage obligations that are secured by
single-family residential, multi-family residential, commercial real property or
leasehold interests therein.
Determination Date: With respect to any Distribution Date, the 15th day
of the month of such Distribution Date or, if such 15th day is not a Business
Day, the immediately preceding Business Day.
Disqualified Organization: (1) the United States, any state or
political subdivision thereof, any foreign government, any international
organization, or any agency or instrumentality of any of the foregoing, (2) any
organization (other than a cooperative described in Section 521 of the Code)
which is exempt from tax under Chapter 1 of Subtitle A of the Code unless such
organization is subject to the tax imposed by Section 511 of the Code and (3)
any organization described in Section 1381(a)(2)(C) of the Code.
Distribution Date: The 25th day of each calendar month after the
initial issuance of the Certificates, or if such 25th day is not a Business Day,
the next succeeding Business Day, commencing in August 2003.
Due Date: With respect to any Distribution Date and any Mortgage Loan,
the day during the related Due Period on which a Scheduled Payment is due.
Due Period: With respect to any Distribution Date, the period beginning
on the second day of the calendar month preceding the calendar month in which
such Distribution Date occurs (or, in the case of the first Distribution Date,
beginning on the Cut-off Date) and ending on the first day of the month in which
such Distribution Date occurs.
-14-
Eligible Account: An account that is (1) maintained with a depository
institution the long-term unsecured debt obligations of which are rated by each
Rating Agency in one of its two highest rating categories, or (2) maintained
with the corporate trust department of a bank which (A) has a rating of at least
Baa3 or P-3 by Moody's and (B) is either the Depositor or the corporate trust
department of a national bank or banking corporation which has a rating of at
least A-1 by S&P or F1 by Fitch, or (iii) an account or accounts the deposits in
which are fully insured by the FDIC, or (iv) an account or accounts, acceptable
to each Rating Agency without reduction or withdrawal of the rating of any Class
of Certificates, as evidenced in writing, by a depository institution in which
such accounts are insured by the FDIC (to the limit established by the FDIC),
the uninsured deposits in which accounts are otherwise secured such that, as
evidenced by an Opinion of Counsel delivered to and acceptable to the Trustee,
the NIMs Insurer and each Rating Agency, the Certificateholders have a claim
with respect to the funds in such account and a perfected first security
interest against any collateral (which shall be limited to Permitted
Investments) securing such funds that is superior to claims of any other
depositors or creditors of the depository institution with which such account is
maintained, or (v) maintained at an eligible institution whose commercial paper,
short-term debt or other short-term deposits are rated at least A-1+ by S&P and
F-1+ by Fitch, or (vi) maintained with a federal or state chartered depository
institution the deposits in which are insured by the FDIC to the applicable
limits and the short-term unsecured debt obligations of which (or, in the case
of a depository institution that is a subsidiary of a holding company, the
short-term unsecured debt obligations of such holding company) are rated A-1 by
S&P or Prime-1 by Moody's at the time any deposits are held on deposit therein,
or (vii) otherwise acceptable to each Rating Agency, as evidenced by a letter
from each Rating Agency to the Trustee and the NIMs Insurer.
ERISA: The Employee Retirement Income Security Act of 1974, including
any successor or amendatory provisions.
ERISA Restricted Certificates: The Class N Certificates, Class X
Certificates and Class R Certificate and any other Certificate, unless such
other Certificate shall have received a rating from a Rating Agency at the time
of a transfer of such other Certificate that is in one of the three (or in the
case of Designated Transactions, four) highest generic rating categories.
Event of Default: As defined in Section 7.01 hereof.
Excess Interest: On any Distribution Date, all amounts received by any
of the Class A Certificates, Class R Certificate, Class M-1 Certificates, Class
M-2 Certificates and Class B Certificates attributable to Pass-Through Rates on
such Certificates to the extent that such Pass-Through Rates are in excess of
the Net Rate.
Excess Proceeds: With respect to any Liquidated Loan, any Liquidation
Proceeds that are in excess of the sum of (1) the unpaid principal balance of
such Liquidated Loan as of the date of such liquidation plus (2) interest at the
Mortgage Rate from the Due Date as to which interest was last paid or advanced
to Certificateholders (and not reimbursed to the Servicer) up to the Due Date in
the month in which such Liquidation Proceeds are required to be distributed on
the unpaid principal balance of such Liquidated Loan outstanding during each Due
Period as to which such interest was not paid or advanced.
Exchange Act: The Securities Exchange Act of 1934, as amended.
provisions.
Extra Principal Distribution Amount: With respect to any Distribution
Date, (1) prior to the Stepdown Date, the excess of (A) the sum of (i) the
Aggregate Certificate Principal Balance immediately preceding such Distribution
Date reduced by the Principal Funds with respect to such Distribution Date and
(ii) $3,023,523 over (B) the Pool Stated Principal Balance of the Mortgage Loans
as of such Distribution Date and (2) on and after the Stepdown Date, (A) the sum
of (i) the Aggregate Certificate
-15-
Principal Balance immediately preceding such Distribution Date, reduced by the
Principal Funds with respect to such Distribution Date and (ii) the greater of
(a) 3.50% of the Pool Stated Principal Balance of the Mortgage Loans and (b)
$863,864 less (B) the Pool Stated Principal Balance of the Mortgage Loans as of
such Distribution Date; provided, however, that if on any Distribution Date a
Trigger Event is in effect, the Extra Principal Distribution Amount will not be
reduced to the applicable percentage of the then-current Pool Stated Principal
Balance of the Mortgage Loans (and will remain fixed at the applicable
percentage of the aggregate Stated Principal Balance of the Mortgage Loans as of
the Due Date immediately prior to the Trigger Event) until the next Distribution
Date on which the Trigger Event is not in effect.
▇▇▇▇▇▇ ▇▇▇: A federally chartered and privately owned corporation
organized and existing under the Federal National Mortgage Association Charter
Act, or any successor thereto.
FDIC: The Federal Deposit Insurance Corporation, or any successor
thereto.
Final Servicing Transfer Date: The date on which the servicing rights
with respect to all of the Mortgage Loans have been transferred to the Servicer,
which is expected to be on or about September 1, 2003.
Fitch: Fitch, Inc., or its successor in interest.
Fixed Rate Mortgage Loan: A Mortgage Loan identified in the Mortgage
Loan Schedule as having a Mortgage Rate which is fixed.
Floating Rate Certificate Carryover: For each of the Class A, Class
M-1, Class M-2, Class B and Class R Certificates, as of any Distribution Date,
the sum of (1) if on such Distribution Date the Pass-Through Rate for the such
Class is based upon the Available Funds Cap, the excess of (x) the amount of
interest such Class would otherwise be entitled to receive on such Distribution
Date had such rate been calculated as (I) in the case of the Class A, Class M-1
and Class M-2 Certificates, the sum of One-Month LIBOR and the applicable Margin
for such Distribution Date, up to the Weighted Maximum Rate Cap and (II) in the
case of the Class B Certificates, the lesser or 6.00% or the Weighted Maximum
Rate Cap, over (y) the amount of interest payable on the Class at the Available
Funds Cap, up to but not exceeding the Weighted Maximum Rate Cap for such
Distribution Date and (2) the Floating Rate Certificate Carryover for all
previous Distribution Dates not previously paid pursuant to Section 4.04(f)(v),
together with (X) interest thereon at a rate equal to (I) in the case of the
Class A, Class M-1 and Class M-2 Certificates, One-Month LIBOR and the
applicable Margin for such Distribution Date, and (II) in the case of the Class
B Certificates, 6.00% and (Y) any amount previously distributed with respect to
Floating Rate Certificate Carryover for such Class that is recovered as a
voidable preference by a trustee in bankruptcy which has not previously been
reversed by a distribution pursuant to Section 4.04(f)(v).
▇▇▇▇▇▇▇ Mac: A corporate instrumentality of the United States created
and existing under Title III of the Emergency Home Finance Act of 1970, as
amended, or any successor thereto.
Grantor Trusts: The grantor trusts described in Section 2.07 hereof.
Gross Margin: The percentage set forth in the related Mortgage Note for
each of the Adjustable Rate Mortgage Loans which is to be added to the
applicable index for use in determining the Mortgage Rate on each Adjustment
Date, and which is set forth in the Mortgage Loan Schedule for each Adjustable
Rate Mortgage Loan.
Indenture: An indenture relating to the issuance of NIM Notes.
-16-
Initial Adjustment Date: As to any Adjustable Rate Mortgage Loan, the
first Adjustment Date following the origination of such Mortgage Loan.
Initial Certificate Notional Balance: With respect to the Class N
Certificates, the Certificate Notional Balance of such Certificates on the
Closing Date as set forth in Section 5.01 hereof.
Initial Certificate Principal Balance: With respect to any Certificate,
the Certificate Principal Balance of such Certificate or any predecessor
Certificate on the Closing Date as set forth in Section 5.01 hereof.
Initial Mortgage Rate: As to each Mortgage Loan, the Mortgage Rate in
effect prior to the Initial Adjustment Date.
Insurance Policy: With respect to any Mortgage Loan included in the
Trust Fund, any insurance policy, including all riders and endorsements thereto
in effect with respect to such Mortgage Loan, including any replacement policy
or policies for any insurance policies.
Insurance Proceeds: Proceeds paid in respect of the Mortgage Loans
pursuant to any Insurance Policy or any other insurance policy covering a
Mortgage Loan, to the extent such proceeds are payable to the mortgagee under
the Mortgage, the Servicer or the trustee under the deed of trust and are not
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, in each case other than any
amount included in such Insurance Proceeds in respect of Insured Expenses.
Insured Expenses: Expenses covered by an Insurance Policy or any other
insurance policy with respect to the Mortgage Loans.
Interest Carryforward Amount: Any of the Class A Interest Carryforward
Amount, the Class R Interest Carryforward Amount, the Class M-1 Interest
Carryforward Amount, the Class M-2 Interest Carryforward Amount, the Class B
Interest Carryforward Amount, as the case may be.
Interest Determination Date: With respect to the Certificates (other
than the Class B Certificates), (i) for any Accrual Period other than the first
Accrual Period, the second LIBOR Business Day preceding the commencement of such
Accrual Period and (ii) for the first Accrual Period, July 29, 2003.
Interest Funds: With respect to any Distribution Date, the sum, without
duplication, of (1) all scheduled interest due during the related Due Period and
received before the related Servicer Remittance Date or advanced on or before
the related Servicer Remittance Date less the Servicing Fee and the Trustee Fee,
(2) all Advances relating to interest with respect to the Mortgage Loans, (3)
all Compensating Interest with respect to the Mortgage Loans, (4) Liquidation
Proceeds with respect to the Mortgage Loans (to the extent such Liquidation
Proceeds relate to interest) collected during the related Prepayment Period and
(5) proceeds of any purchase pursuant to Sections 2.02, 2.03 or 9.01 (to the
extent such proceeds relate to interest) less (A) all Non-Recoverable Advances
relating to interest and (B) other amounts reimbursable to the Servicer and the
Trustee pursuant to this Agreement and allocable to interest.
Interim Servicers: BayRock Mortgage Corporation, Chapel Mortgage
Corporation, Greenpoint Mortgage Funding Inc., Finance America, LLC, US
Mortgage, and Wilshire Credit Corporation.
Interim Servicing Agreements: The agreements pursuant to which the
Interim Servicers will service the Mortgage Loans prior to the transfer of
servicing to the Servicer on the related Servicing Transfer Date, a list of
which is included as Exhibit J.
-17-
Interim Servicing Period: With respect to any Mortgage Loan, the period
beginning on the Closing Date and ending on the related Servicing Transfer Date.
Latest Possible Maturity Date: The first Distribution Date following
the third anniversary of the scheduled maturity date of the Mortgage Loan in the
Trust Fund having the latest scheduled maturity date as of the Cut-off Date.
Lender: As defined in Section 10.14(a).
LIBOR Business Day: Any day on which banks in the City of London,
England and New York City, U.S.A. are open and conducting transactions in
foreign currency and exchange.
Liquidated Loan: With respect to any Distribution Date, a defaulted
Mortgage Loan that has been liquidated through deed-in-lieu of foreclosure,
foreclosure sale, trustee's sale or other realization as provided by applicable
law governing the real property subject to the related Mortgage and any security
agreements and as to which the Servicer has certified (in accordance with
Section 3.12) in the related Prepayment Period that it has received all amounts
it expects to receive in connection with such liquidation.
Liquidation Proceeds: Amounts, including Insurance Proceeds, received
in connection with the partial or complete liquidation of Mortgage Loans,
whether through trustee's sale, foreclosure sale, sale by the Servicer pursuant
to this Agreement or otherwise or amounts received in connection with any
condemnation or partial release of a Mortgaged Property and any other proceeds
received in connection with an REO Property, less the sum of related
unreimbursed Advances, Servicing Fees, Servicing Advances and any other expenses
related to such Mortgage Loan.
▇▇▇▇▇▇: ▇▇▇▇▇▇ Loan Servicing LP, a Delaware limited partnership, or
its successor in interest.
Loan-to-Value Ratio: With respect to any Mortgage Loan, the fraction,
expressed as a percentage, the numerator of which is the original principal
balance of the related Mortgage Loan and the denominator of which is the lesser
of (X) the Appraised Value of the related Mortgaged Property and (Y) the sales
price of the related Mortgaged Property at the time of origination.
Losses: Any losses, claims, damages, liabilities or expenses
collectively.
Lower Tier REMIC: As described in the Preliminary Statement and Section
2.07.
Lower Tier REMIC Interests: Each of the Class LTA Interest, the Class
LTM-1 Interest, the Class LTM-2 Interest, the Class LTB Interest, the Class LTX
Interest and the Class LTR Interest.
Lower Tier REMIC Marker Classes: Each of the classes of Lower Tier
REMIC Regular Interests other than the Class LTX Interests.
Lower Tier REMIC Regular Interests: Each of the Lower Tier REMIC
Interests other than the Class LTR Interest.
LPMI: Lender Paid Mortgage Insurance.
LPMI Loan: A Mortgage Loan covered by an LPMI Policy, as set forth in
the Mortgage Loan Schedule or otherwise identified to the Servicer in writing.
-18-
LPMI Policy: A policy of primary mortgage insurance issued by a LPMI
insurer pursuant to which the related premium is to be paid from payments of
interest made by the Mortgagor.
Margin: Any of the Class A Margin, the Class M-1 Margin, the Class M-2
Margin and the Class R Margin.
Master Servicer: Universal Master Servicing, LLC, a Delaware limited
liability company, or its successor in interest.
Master Servicer Account: The separate Eligible Account created and
initially maintained by the Master Servicer pursuant to Section 3.05(e) in the
name of the Trustee for the benefit of the Certificateholders and designated
"Universal Master Servicing, LLC, in trust for registered holders of Terwin
Mortgage Trust, Asset-Backed Certificates, Series TMTS 2003-2HE". Funds in the
Master Servicer Account shall be held in trust for the Certificateholders for
the uses and purposes set forth in this Agreement.
Master Servicing Fee: As to each Mortgage Loan and any Distribution
Date prior to the Final Servicing Transfer Date, an amount equal to one month's
interest at the Master Servicing Fee Rate on the Stated Principal Balance of
such Mortgage Loan as of the preceding Distribution Date or, in the event of any
payment of interest that accompanies a Principal Prepayment in full made by the
Mortgagor, interest at the Master Servicing Fee Rate on the Stated Principal
Balance of such Mortgage Loan as of the preceding Distribution Date for the
period covered by such payment of interest.
Master Servicing Fee Rate: As to each Mortgage Loan, 0.0050% per annum
until the Servicing Transfer Date for such Mortgage Loan; 0.00% on or after the
Servicing Transfer Date.
Maximum Mortgage Rate: With respect to each Adjustable Rate Mortgage
Loan, the maximum rate of interest set forth as such in the related Mortgage
Note and with respect to each Fixed Rate Mortgage Loan, the rate of interest set
forth in the related Mortgage Note.
MERS: Mortgage Electronic Registration Systems, Inc., a corporation
organized and existing under the laws of the State of Delaware, or any successor
thereto.
MERS Loan: Any Mortgage Loan registered with MERS on the MERS System.
MERS System: The system of recording transfers of mortgage
electronically maintained by MERS.
MIN: The loan number for any MERS Loan.
Minimum Mortgage Rate: With respect to each Adjustable Rate Mortgage
Loan, the minimum rate of interest set forth as such in the related Mortgage
Note.
Monthly Statement: The statement delivered to the Certificateholders
pursuant to Section 4.05.
Moody's: ▇▇▇▇▇'▇ Investors Service, Inc. or its successor in interest.
MOM Loan: Any Mortgage Loan as to which MERS is acting as mortgagee,
solely as nominee for the originator of such Mortgage Loan and its successors
and assigns.
-19-
Mortgage: With respect to a Mortgage Loan, the mortgage, deed of trust
or other instrument creating a first or second lien or a first or second
priority ownership interest in an estate in fee simple in real property securing
a Mortgage Note.
Mortgage File: The mortgage documents listed in Section 2.01 hereof
pertaining to a particular Mortgage Loan and any additional documents delivered
to the Trustee to be added to the Mortgage File pursuant to this Agreement.
Mortgage Loans: Such of the mortgage loans transferred and assigned to
the Trustee pursuant to the provisions hereof as from time to time are held as a
part of the Trust Fund (including any REO Property), the mortgage loans so held
being identified in the Mortgage Loan Schedule, notwithstanding foreclosure or
other acquisition of title of the related Mortgaged Property. Any mortgage loan
that was intended by the parties hereto to be transferred to the Trust Fund as
indicated by such Mortgage Loan Schedule which is in fact not so transferred for
any reason shall continue to be a Mortgage Loan hereunder until the Purchase
Price with respect thereto has been paid to the Trust Fund; provided that the
Servicer shall have no obligation to service any Mortgage Loan unless it is
transferred to the Servicer on a Servicing Transfer Date.
Mortgage Loan Schedule: The list of Mortgage Loans (as from time to
time amended by the Seller to reflect the deletion of Deleted Mortgage Loans and
the addition of Replacement Mortgage Loans pursuant to the provisions of this
Agreement) transferred to the Trustee as part of the Trust Fund and from time to
time subject to this Agreement, attached hereto as Exhibit B, setting forth the
following information with respect to each Mortgage Loan:
(i) the loan number;
(ii) borrower name and/or address;
(iii) the unpaid principal balance of the Mortgage Loans;
(iv) the Initial Mortgage Rate;
(v) the maturity date and the months remaining before maturity
date;
(vi) the original principal balance;
(vii) the Cut-off Date Principal Balance;
(viii) the first payment date of the Mortgage Loan;
(ix) the Loan-to-Value Ratio at origination with respect to a first
lien Mortgage Loan, or the Combined Loan-to-Value Ratio with
respect to a second lien Mortgage Loan;
(x) a code indicating whether the residential dwelling at the time
of origination was represented to be owner-occupied;
(xi) a code indicating the property type;
(xii) with respect to each Adjustable Rate Mortgage Loan;
(a) the frequency of each Adjustment Date;
-20-
(b) the next Adjustment Date;
(c) the Maximum Mortgage Rate;
(d) the Minimum Mortgage Rate;
(e) the Mortgage Rate as of the Cut-off Date;
(f) the related Periodic Rate Cap;
(g) the Gross Margin;
(xiii) location of the related Mortgaged Property;
(xiv) a code indicating whether a prepayment penalty is applicable
and, if so, the term of such prepayment penalty; and
(xv) the Credit Score and date obtained.
Mortgage Note: The original executed note or other evidence of
indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan
and all amendments, modifications and attachments thereto.
Mortgage Pool: The aggregate of the Mortgage Loans identified in the
Mortgage Loan Schedule.
Mortgage Rate: The annual rate of interest borne by a Mortgage Note
from time to time.
Mortgaged Property: The underlying property securing a Mortgage Loan.
Mortgagor: The obligor on a Mortgage Note.
Net Mortgage Rate: As to each Mortgage Loan, and at any time, the per
annum rate equal to the then current Mortgage Rate less the Master Serving Fee
Rate, the Trustee Fee Rate, the premium rate on any related LPMI Policy and the
Servicing Fee Rate.
Net Rate: With respect to any Distribution Date, a per annum rate equal
to 12 times the quotient of (i) the total scheduled interest on the Mortgage
Loans based on the Net Mortgage Rates as of the related Due Date, less the
amount of any servicing expenses, other than those arising as a result of a
default or delinquency, but including fees charged by the Interim Servicers,
that reduce the scheduled amount of interest available for distribution but were
not taken into account in determining the Net Mortgage Rate, divided by (ii) the
Stated Principal Balance of the Mortgage Loans as of the related Due Period.
NIM Notes: Any notes issued under an Indenture.
NIMs Insurer: Any insurer that is guaranteeing certain payments under a
series of guaranteed NIM Notes.
NIMs Insurer Default: A default by a NIMs Insurer as such default is
defined in the Indenture.
Non-Recoverable Advance: Any portion of an Advance previously made or
proposed to be made by the Servicer that, in the good faith judgment of the
Servicer, will not or, in the case of a current
-21-
delinquency, would not, be ultimately recoverable by the Servicer from the
related Mortgagor, related Liquidation Proceeds or otherwise related to the
Mortgage Loans.
Non-Recoverable Servicing Advance: Any portion of a Servicing Advance
previously made or proposed to be made by the Servicer that, in the good faith
judgment of the Servicer, will not or, in the case of a current Servicing
Advance, would not, be ultimately recoverable by the Servicer from the related
Mortgagor, related Liquidation Proceeds or otherwise related to the Mortgage
Loans.
Non-Supported Interest Shortfall: As defined in Section 4.02.
Offered Certificates: The Class A, Class M-1, Class M-2, Class B and
Class R Certificate.
Officer's Certificate: A certificate (1) signed by the Chairman of the
Board, the Vice Chairman of the Board, the President, a vice president (however
denominated), an Assistant Vice President, the Treasurer, the Secretary, or one
of the assistant treasurers or assistant secretaries of the Depositor, the
Master Servicer or the Servicer (or any other officer customarily performing
functions similar to those performed by any of the above designated officers and
also to whom, with respect to a particular matter, such matter is referred
because of such officer's knowledge of and familiarity with a particular
subject) or (2), if provided for in this Agreement, signed by a Servicing
Officer, as the case may be, and delivered to the Depositor, the Master
Servicer, the Servicer or the Trustee, as the case may be, as required by this
Agreement.
One-Month LIBOR: With respect to any Accrual Period, the rate
determined by the Trustee on the related Interest Determination Date on the
basis of (a) the offered rates for one-month United States dollar deposits, as
such rates appear on Telerate page 3750, as of 11:00 a.m. (London time) on such
Interest Determination Date or (b) if such rate does not appear on Telerate Page
3750 as of 11:00 a.m. (London time), the offered rates of the Reference Banks
for one-month United States dollar deposits, as such rates appear on the Reuters
Screen LIBO Page, as of 11:00 a.m. (London time) on such Interest Determination
Date. If One-Month LIBOR is determined pursuant to clause (b) above, on each
Interest Determination Date, One-Month LIBOR for the related Accrual Period will
be established by the Trustee as follows:
(i) If on such Interest Determination Date two or more
Reference Banks provide such offered quotations,
One-Month LIBOR for the related Accrual Period shall
be the arithmetic mean of such offered quotations
(rounded upwards if necessary to the nearest whole
multiple of 0.03125%).
(ii) If on such Interest Determination Date fewer than two
Reference Banks provide such offered quotations,
One-Month LIBOR for the related Accrual Period shall
be the higher of (i) One-Month LIBOR as determined on
the previous Interest Determination Date and (ii) the
Reserve Interest Rate.
Opinion of Counsel: A written opinion of counsel, who may be counsel
for the Depositor, the Master Servicer or the Servicer, reasonably acceptable to
each addressee of such opinion; provided, however, that with respect to Section
6.04 or 10.01, or the interpretation or application of the REMIC Provisions,
such counsel must (1) in fact be independent of the Depositor, the Master
Servicer and the Servicer, (2) not have any direct financial interest in the
Depositor or the Servicer or in any affiliate of either, and (3) not be
connected with the Depositor, the Master Servicer or the Servicer as an officer,
employee, promoter, underwriter, trustee, partner, director or person performing
similar functions.
-22-
Optional Termination: The termination of the trust hereunder pursuant
to clause (a) of Section 9.01 hereof.
Optional Termination Amount: The repurchase price received by the
Trustee in connection with any repurchase of all of the Mortgage Loans pursuant
to Section 9.01.
Optional Termination Date: The Distribution Date on which the aggregate
Stated Principal Balance of the Mortgage Loans is equal to or less than 10% of
the aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off
Date.
Optional Termination Price: (1) in the case of an Optional Termination
effected by the Servicer, as of any Distribution Date on or after the Optional
Termination Date, an amount equal to the sum of (A) aggregate Outstanding
Principal Balance of the Certificates, plus accrued interest thereon and (B) any
unreimbursed out-of-pocket costs and expenses owed to the Trustee or the
Servicer and any unreimbursed Servicing Fees, Advances, Servicing Advances and
Trustee Fees (including any costs and expenses incurred in connection with the
Optional Terminations), (2) in the case of an Optional Termination effected by
the NIMs Insurer, an amount equal to the greater of (A) aggregate Outstanding
Principal Balance of the Offered Certificates, plus accrued interest thereon,
any unreimbursed out-of-pocket costs and expenses owed to the Trustee (including
any costs and expenses incurred in connection with the Optional Termination) or
the Servicer and any unreimbursed Servicing Fees, Advances, Servicing Advances
and Trustee Fees and (B) 100% of the Stated Principal Balance of each Mortgage
Loan (other than in respect of REO Property), accrued interest thereon at the
applicable Mortgage Rate, the appraised value of any REO Property (up to the
Stated Principal Balance of the related Mortgage Loan), such appraisal to be
conducted by an appraiser mutually agreed upon by the Depositor and the NIMs
Insurer and any unreimbursed out-of-pocket costs and expenses owed to the
Servicer and the Trustee and any unreimbursed Servicing Fees, Advances,
Servicing Advances and Trustee Fees.
OTS: The Office of Thrift Supervision.
Outstanding: With respect to the Certificates as of any date of
determination, all Certificates theretofore executed and authenticated under
this Agreement except: (1) Certificates theretofore canceled by the Trustee or
delivered to the Trustee for cancellation; and (2) Certificates in exchange for
which or in lieu of which other Certificates have been executed by the Trustee
and delivered by the Trustee pursuant to this Agreement.
Outstanding Mortgage Loan: As of any Distribution Date, a Mortgage Loan
with a Stated Principal Balance greater than zero that was not the subject of a
Principal Prepayment in full, and that did not become a Liquidated Loan, prior
to the end of the related Due Period.
Overcollateralization Amount: As of any date of determination, the
excess of (1) the Stated Principal Balance of the Mortgage Loans over (2) the
Certificate Principal Balance of the Certificates (other than the Class N
Certificates and the Class X Certificates).
Ownership Interest: As to any Certificate, any ownership 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.
Pass-Through Rate: With respect to the Class A Certificates, the Class
A Pass-Through Rate; with respect to the Class M-1 Certificates, the Class M-1
Pass-Through Rate; with respect to the Class M-2 Certificates, the Class M-2
Pass-Through Rate, with respect to the Class B Certificates, the Class B
Pass-Through Rate and with respect to the Class R Certificate, the Class R
Pass-Through Rate.
-23-
Percentage Interest: With respect to:
(i) any Class, the percentage interest in the undivided
beneficial ownership interest evidenced by such Class
which shall be equal to the Class Certificate
Principal Balance of such Class divided by the Class
Principal Balance of all Classes; and
(ii) any Certificate, the Percentage Interest evidenced
thereby of the related Class shall equal the
percentage obtained by dividing the Denomination of
such Certificate by the aggregate of the
Denominations of all Certificates of such Class;
except that in the case of any Class P Certificates,
the Percentage Interest with respect to such
Certificate shown on the face of such Certificate.
Periodic Rate Cap: As to each Adjustable Rate Mortgage Loan and the
related Mortgage Note, the provision therein that limits permissible increases
and decreases in the Mortgage Rate on any Adjustment Date.
Permitted Activities: The primary activities of the trust created
pursuant to this Agreement which shall be:
(i) holding Mortgage Loans transferred from the Depositor
and other assets of the Trust Fund, including the Cap
Contract and any credit enhancement and passive
derivative financial instruments that pertain to
beneficial interests issued or sold to parties other
than the Depositor, its Affiliates, or its agents;
(ii) issuing Certificates and other interests in the
assets of the Trust Fund;
(iii) receiving collections on the Mortgage Loans and the
Cap Contract and making payments on such Certificates
and interests in accordance with the terms of this
Agreement; and
(iv) engaging in other activities that are necessary or
incidental to accomplish these limited purposes,
which activities cannot be contrary to the status of
the Trust Fund as a qualified special purpose entity
under existing accounting literature.
Permitted Investments: At any time, any one or more of the following
obligations and securities:
(i) obligations of the United States or any agency
thereof, provided such obligations are backed by the
full faith and credit of the United States;
(ii) general obligations of or obligations guaranteed by
any state of the United States or the District of
Columbia receiving the highest long-term debt rating
of each Rating Agency rating the Certificates;
(iii) commercial or finance company paper, other than
commercial or finance company paper issued by the
Depositor, the Trustee or any of its Affiliates,
which is then receiving the highest commercial or
finance company paper rating of each such Rating
Agency;
-24-
(iv) certificates of deposit, demand or time deposits, or
bankers' acceptances (other than banker's acceptances
issued by the Trustee or any of its Affiliates)
issued by any depository institution or trust company
incorporated under the laws of the United States or
of any state thereof and subject to supervision and
examination by federal and/or state banking
authorities, provided that the commercial paper
and/or long term unsecured debt obligations of such
depository institution or trust company are then
rated one of the two highest long-term and the
highest short-term ratings of each such Rating Agency
for such securities;
(v) demand or time deposits or certificates of deposit
issued by any bank or trust company or savings
institution to the extent that such deposits are
fully insured by the FDIC;
(vi) guaranteed reinvestment agreements issued by any
bank, insurance company or other corporation rated in
the two highest long-term or the highest short-term
ratings of each Rating Agency containing, at the time
of the issuance of such agreements, such terms and
conditions as will not result in the downgrading or
withdrawal of the rating then assigned to the
Certificates by any such Rating Agency as evidenced
by a letter from each Rating Agency;
(vii) repurchase obligations with respect to any security
described in clauses (i) and (ii) above, in either
case entered into with a depository institution or
trust company (acting as principal) described in
clause (v) above;
(viii) securities (other than stripped bonds, stripped
coupons or instruments sold at a purchase price in
excess of 115% of the face amount thereof) bearing
interest or sold at a discount issued by any
corporation, other than the Trustee or any of its
Affiliates, incorporated under the laws of the United
States or any state thereof which, at the time of
such investment, have one of the two highest long
term ratings of each Rating Agency;
(ix) interests in any money market fund (including those
managed or advised by the Trustee or its affiliates)
which at the date of acquisition of the interests in
such fund and throughout the time such interests are
held in such fund has the highest applicable long
term rating by each such Rating Agency; and
(x) short term investment funds sponsored by any trust
company or national banking association incorporated
under the laws of the United States or any state
thereof, other than the Trustee or any of its
Affiliates, which on the date of acquisition has been
rated by each such Rating Agency in their respective
highest applicable rating category;
provided, that no such instrument shall be a Permitted Investment if such
instrument (i) evidences the right to receive interest only payments with
respect to the obligations underlying such instrument, (ii) is purchased at a
premium or above par or (iii) is purchased at a deep discount; provided,
further, that no such instrument shall be a Permitted Investment (A) if such
instrument evidences principal and interest payments derived from obligations
underlying such instrument and the interest payments with respect to
-25-
such instrument provide a yield to maturity of greater than 120% of the yield to
maturity at par of such underlying obligations, or (B) if it may be redeemed at
a price below the purchase price (the foregoing clause (B) not to apply to
investments in units of money market funds pursuant to clause (ix) above); and
provided, further, (I) that no amount beneficially owned by any REMIC
(including, without limitation, any amounts collected by the Servicer but not
yet deposited in the Collection Account) may be invested in investments (other
than money market funds) treated as equity interests for Federal income tax
purposes, unless the Servicer shall receive an Opinion of Counsel, at the
expense of the party requesting that such investment be made, to the effect that
such investment will not adversely affect the status of the any REMIC provided
for herein as a REMIC under the Code or result in imposition of a tax on the
Trust Fund or any REMIC provided for herein and (II) each such investment must
be a "permitted investment" within the meaning of Section 860G(a)(5) of the
Code. Permitted Investments that are subject to prepayment or call may not be
purchased at a price in excess of par.
Permitted Transferee: Any Person other than (i) the United States, any
State or political subdivision thereof, or any agency or instrumentality of any
of the foregoing, (ii) a foreign government, International Organization or any
agency or instrumentality of either of the foregoing, (iii) an organization
(except certain farmers' cooperatives described in section 521 of the Code) that
is exempt from tax imposed by Chapter 1 of the Code (including the tax imposed
by section 511 of the Code on unrelated business taxable income) on any excess
inclusions (as defined in section 860E(c)(1) of the Code) with respect to a
Certificate, (iv) rural electric and telephone cooperatives described in section
1381(a)(2)(C) of the Code, and (v) a Person that is not a citizen or resident of
the United States, a corporation or partnership (or other entity treated as a
corporation or partnership for United States federal income tax purposes)
created or organized in or under the laws of the United States or any State
thereof or the District of Columbia or an estate whose income from sources
without the United States is includable in gross income for United States
federal income tax purposes regardless of its connection with the conduct of a
trade or business within the United States, 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 authority to control all
substantial decisions of the trust, unless, in the case of this clause (v), such
Person has furnished the transferor, the Trustee with a duly completed Internal
Revenue Service Form W-8ECI or applicable successor form. The terms "United
States," "State" and "International Organization" shall have the meanings set
forth in section 7701 of the Code. A corporation will not be treated as an
instrumentality of the United States or of any State thereof for these purposes
if all of its activities are subject to tax and, with the exception of the
Federal Home Loan Mortgage Corporation, a majority of its board of directors is
not selected by such government unit.
Person: Any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization or government, or any agency or political subdivision thereof.
Pool Stated Principal Balance: As to any Distribution Date, the
aggregate of the Stated Principal Balances, as of such Distribution Date, of the
Mortgage Loans that were Outstanding Mortgage Loans as of such date.
Prepayment Assumption: A rate of prepayment, as described in the
Prospectus Supplement in the definition of "Modeling Assumptions," relating to
the Certificates.
Prepayment Interest Shortfall: With respect to any Distribution Date,
for each Mortgage Loan that was the subject of a partial Principal Prepayment or
a Principal Prepayment in full (other than a Principal Prepayment in full
resulting from the purchase of a Mortgage Loan pursuant to Section 2.02, 2.03 or
9.01 hereof), the amount, if any, by which (i) one month's interest at the
applicable Net Mortgage Rate on the Stated Principal Balance of such Mortgage
Loan as of the preceding Distribution Date or in
-26-
the case of a partial Principal Prepayment on the amount of such prepayment
exceeds (ii) the amount of interest paid or collected in connection with such
Principal Prepayment.
Prepayment Penalties: Any prepayment premium, penalty or charge payable
by a Mortgagor in connection with any Principal Prepayment on a Mortgage Loan
pursuant to the terms of the related Mortgage Note or Mortgage, as applicable.
Prepayment Period: As to any Distribution Date, the period beginning
with the opening of business on the first day of the calendar month preceding
the month in which such Distribution Date occurs and ending on the close of
business on the last day of such month.
Principal Distribution Amount: With respect to each Distribution Date,
the sum of (i) the Principal Funds for such Distribution Date and (ii) any Extra
Principal Distribution Amount for such Distribution Date.
Principal Funds: With respect to the Mortgage Loans and any
Distribution Date, the sum, without duplication, of (1) the scheduled principal
due during the related Due Period and received before the related Servicer
Remittance Date or advanced on or before the related Servicer Remittance Date,
(2) prepayments collected in the related Prepayment Period, (3) the Stated
Principal Balance of each Mortgage Loan that was purchased by the Depositor or
the Servicer during the related Prepayment Period or, in the case of a purchase
pursuant to Section 9.01, on the Business Day prior to such Distribution Date,
(4) the amount, if any, by which the aggregate unpaid principal balance of any
Replacement Mortgage Loan is less than the aggregate unpaid principal of the
related Deleted Mortgage Loans delivered by the Seller in connection with a
substitution of a Mortgage Loan pursuant to Section 2.03(c), (5) all Liquidation
Proceeds collected during the related Prepayment Period (to the extent such
Liquidation Proceeds related to principal) and (6) all other collections and
recoveries in respect of principal during the related Prepayment Period less (A)
all Non-Recoverable Advances relating to principal with respect to the Mortgage
Loans and (B) other amounts reimbursable to the Servicer and the Trustee
pursuant to this Agreement and allocable to principal.
Principal Prepayment: Any Mortgagor payment or other recovery of (or
proceeds with respect to) principal on a Mortgage Loan (including Mortgage Loans
purchased or repurchased under Sections 2.02, 2.03, 3.12 and 9.01 hereof) that
is received in advance of its scheduled Due Date and is not accompanied by an
amount as to interest representing scheduled interest due on any date or dates
in any month or months subsequent to the month of prepayment. Partial Principal
Prepayments shall be applied by the Servicer in accordance with the terms of the
related Mortgage Note.
Proportionate Holder: A Person that beneficially owns pro rata shares
of the Class N and Class X Certificates.
Prospectus Supplement: The Prospectus Supplement dated July 29, 2003
relating to the public offering of the Class A, Class R, Class M-1, Class M-2
and Class B Certificates.
PUD: A Planned Unit Development.
Purchase Price: With respect to any Mortgage Loan required to be
repurchased by the Seller or the applicable Transferor, pursuant to Section 2.02
or 2.03 hereof or purchased by the Servicer pursuant to Section 3.12(c) hereof,
an amount equal to the sum of (i) 100% of the unpaid principal balance of the
Mortgage Loan as of the date of such purchase together with any unreimbursed
Servicing Advances, (ii) accrued interest thereon at the applicable Mortgage
Rate from (a) the date through which interest was last paid by the Mortgagor to
(b) the Due Date in the month in which the Purchase Price is to be distributed
to
-27-
Certificateholders and (iii) any unreimbursed costs, penalties and/or damages
incurred by the Trust Fund in connection with any violation relating to such
Mortgage Loan of any predatory or abusive lending law.
Rating Agency: Either of S&P or Fitch. If any such organization or its
successor is no longer in existence, "Rating Agency" shall be a nationally
recognized statistical rating organization, or other comparable Person,
designated by the Depositor, notice of which designation shall be given to the
Trustee. References herein to a given rating category of a Rating Agency shall
mean such rating category without giving effect to any modifiers.
Realized Loss: With respect to (1) a Liquidated Loan, the amount, if
any, by which the Stated Principal Balance and accrued interest thereon at the
Net Mortgage Rate exceeds the amount actually recovered by the Servicer with
respect thereto (net of reimbursement of Advances and Servicing Advances) at the
time such Mortgage Loan became a Liquidated Loan or (2) with respect to a
Mortgage Loan which is not a Liquidated Loan, any amount of principal that the
Mortgagor is no longer legally required to pay (except for the extinguishment of
debt that results from the exercise of remedies due to default by the
Mortgagor).
Record Date: With respect to any Distribution Date, the close of
business on the last Business Day of the month preceding the month in which the
applicable Distribution Date occurs .
Reference Banks: Barclays Bank PLC, JPMorgan Chase Bank, Citibank,
N.A., ▇▇▇▇▇ Fargo Bank Minnesota, National Association and NatWest, N.A.;
provided that if any of the foregoing banks are not suitable to serve as a
Reference Bank, then any leading banks selected by the Trustee with the consent
of the NIMs Insurer which are engaged in transactions in Eurodollar deposits in
the international Eurocurrency market (i) with an established place of business
in London, England and (ii) whose quotations appear on the Reuters Screen LIBO
Page on the relevant Interest Determination Date.
Regular Certificate: Any one of the Class A, Class M-1, Class M-2 and
Class B Certificates.
Related Certificates: With respect to the Class UTA Interest, the Class
A Certificates. With respect to the Class UTB Interest, the Class B
Certificates. With respect to the Class UTM-1 Interest, the Class M-1
Certificates. With respect to the Class UTM-2 Interest, the Class M-2
Certificates.
REMIC: A "real estate mortgage investment conduit" within the meaning
of section 860D of the Code. References herein to "the REMICs" or "a REMIC"
shall mean any of or, as the context requires, all of) the Lower Tier REMIC and
the Upper Tier REMIC.
REMIC Pass-Through Rate: The Pass-Through Rate for a Class of Related
Certificates calculated by replacing "Available Funds Cap" in such definition
with "Net Rate."
REMIC Regular Interests: (i) the rights under each of the Certificates
(other than the Class N Certificates, the Class X Certificates and the Class R
Certificate) other than the rights in interest rate cap contracts described in
Section 2.07, and (ii) the uncertificated Class UTXN Interest.
REMIC Provisions: Provisions of the federal income tax law relating to
real estate mortgage investment conduits, which appear at sections 860A through
860G of Subchapter M of Chapter 1 of the Code, and related provisions, and
proposed, temporary and final regulations and published rulings, notices and
announcements promulgated thereunder, as the foregoing may be in effect from
time to time as well as provisions of applicable state laws.
REO Property: A Mortgaged Property acquired by the Servicer through
foreclosure or deed-in-lieu of foreclosure in connection with a defaulted
Mortgage Loan.
-28-
Replacement Mortgage Loan: A Mortgage Loan substituted by the Depositor
for a Deleted Mortgage Loan, which must, on the date of such substitution, as
confirmed in a Request for Release, substantially in the form of Exhibit I (1)
have a Stated Principal Balance, after deduction of the principal portion of the
Scheduled Payment due in the month of substitution, not in excess of, and not
less than 90% of the Stated Principal Balance of the Deleted Mortgage Loan; (2)
with respect to any Fixed Rate Mortgage Loan, have a Mortgage Rate not less than
or no more than 1% per annum higher than the Mortgage Rate of the Deleted
Mortgage Loan and, with respect to any Adjustable Rate Mortgage Loan: (A) have a
Maximum Mortgage Rate no more than 1% per annum higher or lower than the Maximum
Mortgage Rate of the Deleted Mortgage Loan; (B) have a Minimum Mortgage Rate no
more than 1% per annum higher or lower than the Minimum Mortgage Rate of the
Deleted Mortgage Loan; (C) have the same index and Periodic Rate Cap as that of
the Deleted Mortgage Loan and a Gross Margin not more than 1% per annum higher
or lower than that of the Deleted Mortgage Loan; (D) not permit conversion of
the related Mortgage Rate to a fixed Mortgage Rate and (F) currently be accruing
interest at a rate not more than 1% per annum higher or lower than that of the
Deleted Mortgage Loan; (3) have a similar or higher FICO score or credit grade
than that of the Deleted Mortgage Loan; (4) have a Loan-to-Value Ratio (or
Combined Loan-to-Value Ratio, in the case of the Mortgage Loans in a second lien
position) no higher than that of the Deleted Mortgage Loan; (5) have a remaining
term to maturity no greater than (and not more than one year less than) that of
the Deleted Mortgage Loan; (6) provide for a prepayment charge on terms
substantially similar to those of the prepayment charge, if any, of the Deleted
Mortgage Loan; (7) have the same lien priority as the Deleted Mortgage Loan; (8)
constitute the same occupancy type as the Deleted Mortgage Loan; and (9) comply
with each representation and warranty set forth in Section 2.03 hereof.
Request for Release: The Request for Release of Documents submitted by
the Servicer to the Trustee, substantially in the form of Exhibit I hereto.
Required Insurance Policy: With respect to any Mortgage Loan, any
insurance policy that is required to be maintained from time to time under this
Agreement.
Required Loss Percentage: For any Distribution Date, the applicable
percentage for such Distribution Date set forth in the following table:
DISTRIBUTION DATE OCCURRING IN REQUIRED LOSS PERCENTAGE
------------------------------ ------------------------
August 2006 - July 2007 2.50% with respect to August 2006,
plus an additional 1/12th of
0.75% for each month thereafter
August 2007 - July 2008 3.25% with respect to August 2007,
plus an additional 1/12th of
0.75% for each month thereafter
August 2008 - July 2009 4.00% with respect to August 2008,
plus an additional 1/12th of
1.25% for each month thereafter
August 2009 and thereafter 5.25%
Required Percentage: As of any Distribution Date following a Stepdown
Date, the quotient of (1) the excess of (A) the Stated Principal Balances of the
Mortgage Loans as of such Distribution Date, over (B) the Certificate Principal
Balance of the most senior Class of Certificates outstanding, prior to giving
-29-
effect to distributions to be made on such Distribution Date and (2) the Stated
Principal Balance of the Mortgage Loans as of such Distribution Date.
Reserve Interest Rate: With respect to any Interest Determination Date,
the rate per annum that the Trustee determines to be (1) the arithmetic mean
(rounded upwards if necessary to the nearest whole multiple of 0.03125%) of the
one-month United States dollar lending rates which New York City banks selected
by the Trustee are quoting on the relevant Interest Determination Date to the
principal London offices of leading banks in the London interbank market or (2)
in the event that the Trustee can determine no such arithmetic mean, the lowest
one-month United States dollar lending rate which New York City banks selected
by the Trustee are quoting on such Interest Determination Date to leading
European banks.
Residual Interest: An interest in the Upper Tier REMIC that is entitled
to all distributions on the Class R Certificate other than (i) distributions in
respect of the Class LTR Interest and (ii) all interest distributions on the
Class R Certificate attributable to an interest rate on the Class R Certificate
that exceeds the Net Rate.
Responsible Officer: When used with respect to the Trustee or Servicer,
any officer of the Trustee or Servicer with direct responsibility for the
administration of this Agreement and also means any other officer to whom, with
respect to a particular matter, such matter is referred because of such
officer's knowledge of and familiarity with the particular subject.
Reuters Screen LIBO Page: The display designated as page "LIBO" on the
Reuters Monitor Money Rates Service (or such other page as may replace such LIBO
page on that service for the purpose of displaying London interbank offered
rates of major banks.
S&P: Standard & Poor's, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.,
or its successor in interest.
Sale Agreement: The Mortgage Loan Sale and Assignment Agreement dated
as of July 1, 2003 between the Depositor and the Seller.
Scheduled Payment: The scheduled monthly payment on a Mortgage Loan due
on any Due Date allocable to principal and/or interest on such Mortgage Loan.
Section 302 Requirements: Any rules or regulations promulgated pursuant
to the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 (as such may be amended from time to time).
Securities Act: The Securities Act of 1933, as amended.
Seller: Terwin Advisors LLC, a Delaware limited liability company, or
its successor in interest.
Servicer: ▇▇▇▇▇▇ Loan Servicing LP, a Delaware limited partnership, or
its successor in interest.
Servicer Advance Date: As to any Distribution Date, the related
Servicer Remittance Date.
Servicer's Assignee: As defined in Section 10.14(a).
Servicer Remittance Date: With respect to any Distribution Date, the
second Business Day immediately preceding such Distribution Date.
-30-
Servicing Rights Pledgee: One or more lenders, selected by the
Servicer, to which the Servicer may pledge and assign all of its right, title
and interest in, to and under this Agreement, including Wachovia Bank, N.A. as
the representative of certain lenders.
Servicing Advances: All customary, reasonable and necessary "out of
pocket" costs and expenses incurred in the performance by the Servicer of its
servicing obligations hereunder, including, but not limited to, the cost of (1)
the preservation, restoration and protection of a Mortgaged Property, including
without limitation advances in respect of real estate taxes and assessments, (2)
any collection, enforcement or judicial proceedings, including without
limitation foreclosures, collections and liquidations, (3) the conservation,
management, sale and liquidation of any REO Property and (4) compliance with the
obligations under Section 3.10.
Servicing Fee: As to each Mortgage Loan and any Distribution Date, an
amount equal to one month's interest at the Servicing Fee Rate on the Stated
Principal Balance of such Mortgage Loan as of the preceding Distribution Date
or, in the event of any payment of interest that accompanies a Principal
Prepayment in full made by the Mortgagor, interest at the Servicing Fee Rate on
the Stated Principal Balance of such Mortgage Loan as of the preceding
Distribution Date for the period covered by such payment of interest.
Servicing Fee Rate: As to any Mortgage Loan, 0.00% per annum prior to
the Servicing Transfer Date for such Mortgage Loan and 0.5000% per annum
following the Servicing Transfer Date for such Mortgage Loan.
Servicing Officer: Any officer of the Servicer involved in, or
responsible for, the administration and servicing of the Mortgage Loans whose
name and facsimile signature appear on a list of servicing officers furnished to
the Trustee by the Servicer on the Closing Date pursuant to this Agreement, as
such lists may from time to time be amended.
Servicing Transfer Costs: In the event that the Servicer does not
reimburse the Trustee under the this Agreement, all costs associated with the
transfer of servicing from the predecessor Servicer, including, without
limitation, any costs or expenses associated with the termination of the
predecessor Servicer, the appointment of a successor servicer, the complete
transfer of all servicing data and the completion, correction or manipulation of
such servicing data as may be required by the Trustee or any successor servicer
to correct any errors or insufficiencies in the servicing data or otherwise to
enable the Trustee or successor servicer to service the Mortgage Loans properly
and effectively.
Servicing Transfer Date: With respect to each Mortgage Loan, the date
on which the servicing rights are transferred to the Servicer.
SFAS 140: Statement of Financial Accounting Standard No. 140,
Accounting for Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities dated September 2000, published by the Financial Accounting
Standards Board of the Financial Accounting Foundation.
SPV: As defined in Section 10.14(a).
Startup Date: As defined in Section 2.07 hereof.
Stated Principal Balance: With respect to any Mortgage Loan or related
REO Property (1) as of the Cut-off Date, the Cut-off Date Principal Balance
thereof, and (2) as of any Distribution Date, such Cut-off Date Principal
Balance, minus the sum of (A) the principal portion of the Scheduled Payments
(x) due with respect to such Mortgage Loan during each Due Period ending prior
to such Distribution Date
-31-
and (y) that were received by the Servicer as of the close of business on the
Determination Date related to such Distribution Date or with respect to which
Advances were made on the Servicer Advance Date prior to such Distribution Date
and (B) all Principal Prepayments with respect to such Mortgage Loan received on
or prior to the last day of the related Prepayment Period, and all Liquidation
Proceeds to the extent applied by the Servicer as recoveries of principal in
accordance with Section 3.12 with respect to such Mortgage Loan, that were
received by the Servicer as of the close of business on the last day of the
related Due Period. Notwithstanding the foregoing, the Stated Principal Balance
of a Liquidated Loan shall be deemed to be zero.
Stepdown Date: The later to occur of (1) the Distribution Date in
August 2006 or (2) the first Distribution Date on which (A) the Class A
Certificate Principal Balance (reduced by the Principal Funds with respect to
such Distribution Date) is less than or equal to (B) 73.00% of the Stated
Principal Balances of the Mortgage Loans as of such Distribution Date.
Subordinated Certificates: The Class M-1, Class M-2 and Class B
Certificates.
Subservicing Agreement: As defined in Section 3.02(a).
Substitution Adjustment Amount: The meaning ascribed to such term
pursuant to Section 2.03(c).
Tax Matters Person: The Person designated as "tax matters person" in
the manner provided under Treasury regulation Section 1.860F-4(d) and Treasury
regulation Section 301.6231(a)(7)-1.
Transfer: Any direct or indirect transfer or sale of any Ownership
Interest in a Certificate.
Transfer Agreement: Any document pursuant to which the Seller acquired
any Mortgage Loan from the originator of such Mortgage Loan.
Transferor: Any originator of a Mortgage Loan.
Trigger Event: With respect to the Certificates after the Stepdown
Date, a Distribution Date on which (1) the quotient of (A) the aggregate Stated
Principal Balance of all Mortgage Loans which are 60 or more days Delinquent
(including, for the purposes of this calculation, Mortgage Loans in foreclosure
and REO Properties) measured on a rolling three month basis and (B) the Stated
Principal Balance of the Mortgage Loans as of the last day of the preceding
calendar month, equals or exceeds the product of (i) 37.00% and (ii) Required
Percentage or (2) the quotient (expressed as a percentage) of (A) the aggregate
Realized Losses incurred from the Cut-off Date through the last day of the
calendar month preceding such Distribution Date and (B) the aggregate principal
balance of the Mortgage Loans as of the Cut-off Date exceeds the Required Loss
Percentage.
Trust Fund: The corpus of the trust (the "Terwin Mortgage Trust, Series
TMTS 2003-2HE") created hereunder consisting of (i) the Mortgage Loans and all
interest and principal received on or with respect thereto on and after the
Cut-off Date to the extent not applied in computing the Cut-off Date Principal
Balance thereof, exclusive of interest not required to be deposited in the
Collection Account; (ii) the Collection Account and the Certificate Account and
all amounts deposited therein pursuant to the applicable provisions of this
Agreement; (iii) property that secured a Mortgage Loan and has been acquired by
foreclosure, deed in lieu of foreclosure or otherwise; (iv) the mortgagee's
rights under the Insurance Policies with respect to the Mortgage Loans; (v) all
proceeds of the conversion, voluntary or involuntary, of any of the foregoing
into cash or other liquid property; and (vi) the Cap Contract and Cap Contract
Account.
-32-
Trustee: Wachovia Bank, N.A., a national banking association, not in
its individual capacity, but solely in its capacity as trustee for the benefit
of the Certificateholders under this Agreement, and any successor thereto, and
any corporation or national banking association resulting from or surviving any
consolidation or merger to which it or its successors may be a party and any
successor trustee as may from time to time be serving as successor trustee
hereunder.
Trustee Fee: As to each Mortgage Loan and any Distribution Date, an
amount equal to the product of one-twelfth of the Trustee Fee Rate and the
Stated Principal Balance of such Mortgage Loan.
Trustee Fee Rate: 0.0095% per annum.
United States Person: (i) A citizen or resident of the United States,
(ii) a corporation, partnership or other entity treated as a corporation or
partnership for federal income tax purposes organized in or under the laws of
the United States or any state thereof or the District of Columbia (unless, in
the case of a partnership, Treasury regulations provide otherwise), (iii) an
estate the income of which is includible in gross income for United States tax
purposes regardless of its source or (iv) a trust if a court within the United
States is able to exercise primary supervision over the administration of the
trust and one or more United States persons have authority to control all
substantial decisions of the trust. Notwithstanding the preceding sentence, to
the extent provided in Treasury regulations, certain trusts in existence on
August 20, 1996, and treated as United States persons prior to such date, that
elect to continue to be treated as United States persons will also be United
States Persons.
Upper Tier REMIC: As described in the Preliminary Statement and Section
2.07.
Upper Tier REMIC Interests: Each of the Class UTA Interest, the Class
UTM-1 Interest, the Class UTM-2 Interest, the Class UTB Interest, the Class UTXN
Interest and the Residual Interest.
Upper Tier REMIC Regular Interests: Each of the Upper Tier REMIC
Interests other than the Residual Interest.
USAP Report: A report in compliance with the Uniform Single Attestation
Program for Mortgage Bankers delivered in accordance with Section 3.18.
Voting Rights: The portion of the voting rights of all the Certificates
that is allocated to any of the Certificates for purposes of the voting
provisions hereunder. Voting Rights allocated to each Class of Certificates
shall be allocated 95% to the Offered Certificates, 5% to the Class N and Class
X Certificates, with the allocation among the Offered Certificates to be in
proportion to the Class Certificate Principal Balance of each Class relative to
the Class Certificate Principal Balance of all other Classes. Voting Rights will
be allocated among the Certificates of each such Class in accordance with their
respective Percentage Interests.
Weighted Maximum Rate Cap: As of any Distribution Date, a rate equal to
(i) the weighted average of the Maximum Mortgage Rates on the Mortgage Loans
(calculated based upon the Stated Principal Balance of such Mortgage Loans as of
the preceding Distribution Date) on such Distribution Date minus and (ii) the
Servicing Fee Rate.
-33-
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
REPRESENTATIONS AND WARRANTIES
SECTION 2.01. Conveyance of Mortgage Loans
The Depositor, concurrently with the execution and delivery hereof,
does hereby sell, transfer, assign, set over and convey to the Trustee without
recourse all the right, title and interest of the Depositor in and to the assets
of the Trust Fund. Such assignment includes all interest and principal received
on or with respect to the Mortgage Loans on or after the Cut-off Date (other
than Scheduled Payments due on the Mortgage Loans on or before the Cut-off
Date).
In connection with such assignment, the Depositor does hereby deliver
to, and deposit with, the Trustee the following documents or instruments with
respect to each Mortgage Loan:
(A) The Original Mortgage Note endorsed, "Pay to the order of
Wachovia Bank, N.A., as trustee, without recourse" together with all
riders thereto. The Mortgage Note shall include all intervening
endorsements showing a complete chain of the title from the originator
to the Transferor.
(B) Except as provided below and for each Mortgage Loan that
is not a MERS Loan, the original recorded Mortgage together with all
riders thereto, with evidence of recording thereon, or, if the original
Mortgage has not yet been returned from the recording office, a copy of
the original Mortgage together with all riders thereto certified by the
Transferor to be true copy of the original of the Mortgage that has
been delivered for recording in the appropriate recording office of the
jurisdiction in which the Mortgaged Property is located and in the case
of each MERS Loan, the original Mortgage together with all riders
thereto, noting the presence of the MIN of the Loan and either language
indicating that the Mortgage Loan is a MOM Loan or if the Mortgage Loan
was not a MOM Loan at origination, the original Mortgage and the
assignment thereof to MERS, with evidence of recording indicated
thereon, or a copy of the Mortgage certified by the public recording
office in which such Mortgage has been recorded.
(C) In the case of each Mortgage Loan that is not a MERS Loan,
the original Assignment of each Mortgage, to "Wachovia Bank, N.A., as
trustee."
(D) The original policy of title insurance (or a preliminary
title report, commitment or binder if the original title insurance
policy has not been received from the title insurance company).
(E) Originals of any intervening assignments of the Mortgage,
with evidence of recording thereon or, if the original intervening
assignment has not yet been returned from the recording office, a copy
of such assignment certified to be a true copy of the original of the
assignment which has been sent for recording in the appropriate
jurisdiction in which the Mortgaged Property is located.
(F) Originals of all assumption and modification agreements,
if any.
If in connection with any Mortgage Loan, the Depositor cannot deliver
the Mortgage, Assignments of Mortgage or assumption, consolidation or
modification, as the case may be, with evidence of recording thereon, if
applicable, concurrently with the execution and delivery of this Agreement
solely because of a delay caused by the public recording office where such
Mortgage,
-34-
Assignments of Mortgage or assumption, consolidation or modification, as the
case may be, has been delivered for recordation, the Depositor shall deliver or
cause to be delivered to the Trustee written notice stating that such Mortgage
or assumption, consolidation or modification, as the case may be, has been
delivered to the appropriate public recording office for recordation.
Thereafter, the Depositor shall deliver or cause to be delivered to the Trustee
such Mortgage, Assignments of Mortgage or assumption, consolidation or
modification, as the case may be, with evidence of recording indicated thereon,
if applicable, upon receipt thereof from the public recording office. To the
extent any required endorsement is not contained on a Mortgage Note or an
Assignment of Mortgage, the Depositor shall make or cause such endorsement to be
made.
With respect to any Mortgage Loan, none of the Depositor, the Master
Servicer, the Servicer or the Trustee shall be obligated to cause to be recorded
the Assignment of Mortgage referred to in this Section 2.01. In the event an
Assignment of Mortgage is not recorded, the Master Servicer or the Servicer, as
applicable, shall have no liability for its failure to receive and act on
notices related to such Assignment of Mortgage.
The ownership of each Mortgage Note, the Mortgage and the contents of
the related Mortgage File is vested in the Trustee. Neither the Depositor, the
Master Servicer nor the Servicer shall take any action inconsistent with such
ownership and shall not claim any ownership interest therein. The Depositor, the
Master Servicer and the Servicer shall respond to any third party inquiries with
respect to ownership of the Mortgage Loans by stating that such ownership is
held by the Trustee on behalf of the Certificateholders. Mortgage documents
relating to the Mortgage Loans not delivered to the Trustee are and shall be
held in trust by the Master Servicer prior to the related Servicing Transfer
Date and thereafter by the Servicer, for the benefit of the Trustee as the owner
thereof, and the Master Servicer's or Servicer's, as applicable, possession of
the contents of each Mortgage File so retained is for the sole purpose of
servicing the related Mortgage Loan, and such retention and possession by the
Master Servicer or Servicer, as applicable, is in a custodial capacity only. The
Depositor agrees to take no action inconsistent with the Trustee's ownership of
the Mortgage Loans, to promptly indicate to all inquiring parties that the
Mortgage Loans have been sold and to claim no ownership interest in the Mortgage
Loans.
It is the intention of this Agreement that the conveyance of the
Depositor's right, title and interest in and to the Trust Fund pursuant to this
Agreement shall constitute a purchase and sale and not a loan. If a conveyance
of Mortgage Loans from the Seller to the Depositor is characterized as a pledge
and not a sale, then the Depositor shall be deemed to have transferred to the
Trustee all of the Depositor's right, title and interest in, to and under the
obligations of the Seller deemed to be secured by said pledge; and it is the
intention of this Agreement that the Depositor shall also be deemed to have
granted to the Trustee a first priority security interest in all of the
Depositor's right, title, and interest in, to and under the obligations of the
Seller to the Depositor deemed to be secured by said pledge and that the Trustee
shall be deemed to be an independent custodian for purposes of perfection of the
security interest granted to the Depositor. If the conveyance of the Mortgage
Loans from the Depositor to the Trustee is characterized as a pledge, it is the
intention of this Agreement that this Agreement shall constitute a security
agreement under applicable law, and that the Depositor shall be deemed to have
granted to the Trustee a first priority security interest in all of the
Depositor's right, title and interest in, to and under the Mortgage Loans, all
payments of principal of or interest on such Mortgage Loans, all other rights
relating to and payments made in respect of the Trust Fund, and all proceeds of
any thereof. If the trust created by this Agreement terminates prior to the
satisfaction of the claims of any Person in any Certificates, the security
interest created hereby shall continue in full force and effect and the Trustee
shall be deemed to be the collateral agent for the benefit of such Person.
In addition to the conveyance made in the first paragraph of this
Section 2.01, the Depositor does hereby convey, assign and set over to the
Trustee for the benefit of the Certificateholders its rights and
-35-
interests under the Sale Agreement, including the Depositor's right, title and
interest in the representations and warranties contained in the Sale Agreement
and the benefit of the repurchase obligations and the obligation of the Seller
contained in the Sale Agreement to take, at the request of the Depositor or the
Trustee, all action on its part which is reasonably necessary to ensure the
enforceability of a Mortgage Loan. The Trustee hereby accepts such assignment,
and shall be entitled to exercise all rights of the Depositor under the Sale
Agreement as if, for such purpose, it were the Depositor. The foregoing sale,
transfer, assignment, set-over, deposit and conveyance does not and is not
intended to result in creation or assumption by the Trustee of any obligation of
the Depositor, the Seller, or any other Person in connection with the Mortgage
Loans or any other agreement or instrument relating thereto.
SECTION 2.02. Acceptance by Trustee of the Mortgage Loans.
Except as set forth in the Exception Report delivered contemporaneously
herewith (the "Exception Report"), the Trustee acknowledges receipt of the
Mortgage Note for each Mortgage Loan and delivery of a Mortgage File (but does
not acknowledge receipt of all documents required to be included in such
Mortgage File) with respect to each Mortgage Loan and declares that it holds and
will hold such documents and any other documents constituting a part of the
Mortgage Files delivered to it in trust for the use and benefit of all present
and future Certificateholders. The Depositor will cause the Seller to repurchase
any Mortgage Loan to which a material exception was taken in the Exception
Report unless such exception is cured to the satisfaction of the Trustee within
45 Business Days of the Closing Date.
The Trustee agrees, for the benefit of Certificateholders and the NIMs
Insurer, to review each Mortgage File delivered to it within 60 days after the
Closing Date to ascertain and to certify, within 70 days of the Closing Date, to
the NIMs Insurer, the Depositor and the Servicer that all documents required by
Section 2.01 have been executed and received, and that such documents relate to
the Mortgage Loans identified in Exhibit B-1 that have been conveyed to it. If
the Trustee finds any document or documents constituting a part of a Mortgage
File to be missing or defective (that is, mutilated, damaged, defaced or
unexecuted) in any material respect, the Trustee shall promptly (and in any
event within no more than five Business Days) after such finding so notify the
Master Servicer, the Servicer, the Seller, the Depositor and the NIMs Insurer.
In addition, the Trustee shall also notify the Master Servicer, the Servicer,
the Seller, the Depositor and the NIMs Insurer, if the original Mortgage with
evidence of recording thereon with respect to a Mortgage Loan is not received
within 70 days of the Closing Date; if it has not been received because of a
delay caused by the public recording office where such Mortgage has been
delivered for recordation, the Depositor shall deliver or cause to be delivered
to the Trustee written notice stating that such Mortgage has been delivered to
the appropriate public recording office for recordation and thereafter the
Depositor shall deliver or cause to be delivered such Mortgage with evidence of
recording thereon upon receipt thereof from the public recording office. The
Trustee shall request that the Seller correct or cure such omission, defect or
other irregularity, or substitute a Mortgage Loan pursuant to the provisions of
Section 2.03(c), within 90 days from the date the Seller was notified of such
omission or defect and, if the Seller does not correct or cure such omission or
defect within such period, that the Seller purchase such Mortgage Loan from the
Trust Fund within 90 days from the date the Trustee notified the Seller of such
omission, defect or other irregularity at the Purchase Price of such Mortgage
Loan. The Purchase Price for any Mortgage Loan purchased pursuant to this
Section 2.02 shall be paid to the Master Servicer prior to the related Servicing
Transfer Date, and thereafter to the Servicer and deposited by the Master
Servicer or the Servicer, as applicable, in the Collection Account promptly upon
receipt, and, upon receipt by the Trustee of written notification of such
deposit signed by a Servicing Officer, the Trustee, upon receipt of a Request
for Release, shall promptly release to the Seller the related Mortgage File and
the Trustee shall execute and deliver such instruments of transfer or
assignment, without recourse, as shall be necessary to vest in the Seller or its
designee, as the case may be, any Mortgage Loan released pursuant hereto, and
the Trustee shall have no further responsibility with regard
-36-
to such Mortgage Loan. It is understood and agreed that the obligation of the
Seller to purchase, cure or substitute any Mortgage Loan as to which a material
defect in or omission of a constituent document exists shall constitute the sole
remedy respecting such defect or omission available to the Trustee on behalf of
Certificateholders and the NIMs Insurer. The preceding sentence shall not,
however, limit any remedies available to the Certificateholders, the Depositor,
the Trustee or the NIMs Insurer pursuant to the Sale Agreement and any Transfer
Agreement. The Trustee shall be under no duty or obligation to inspect, review
and examine such documents, instruments, certificates or other papers to
determine that they are genuine, enforceable, recordable or appropriate to the
represented purpose, or that they have actually been recorded, or that they are
other than what they purport to be on their face. The Trustee shall keep
confidential the name of each Mortgagor and the Trustee shall not solicit any
such Mortgagor for the purpose of refinancing the related Mortgage Loan. It is
understood and agreed that all rights and benefits relating to the solicitation
of any Mortgagors and the attendant rights, title and interest in and to the
list of Mortgagors and data relating to their Mortgages shall be retained by the
Servicer.
Within 70 days of the Closing Date, the Trustee shall deliver to the
Depositor, the Master Servicer, the Servicer and the NIMs Insurer the Trustee's
Certification, substantially in the form of Exhibit D attached hereto,
evidencing the completeness of the Mortgage Files, with any exceptions noted
thereto.
SECTION 2.03. Representations, Warranties and Covenants of the
Depositor.
(a) The Depositor hereby represents and warrants to the Servicer, the
Master Servicer, the Trustee and the NIMs Insurer as follows, as of the date
hereof:
(i) The Depositor is duly organized and is validly existing as
a corporation in good standing under the laws of the State of Delaware
and has full power and authority (corporate and other) necessary to own
or hold its properties and to conduct its business as now conducted by
it and to enter into and perform its obligations under this Agreement
and the Sale Agreement.
(ii) The Depositor has the full corporate power and authority
to execute, deliver and perform, and to enter into and consummate the
transactions contemplated by, this Agreement and the Sale Agreement and
has duly authorized, by all necessary corporate action on its part, the
execution, delivery and performance of this Agreement and the Sale
Agreement; and this Agreement and the Sale Agreement, assuming the due
authorization, execution and delivery hereof by the other parties
hereto, constitutes a legal, valid and binding obligation of the
Depositor, enforceable against the Depositor in accordance with its
terms, subject, as to enforceability, to (i) bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting creditors'
rights generally and (ii) general principles of equity, regardless of
whether enforcement is sought in a proceeding in equity or at law.
(iii) The execution and delivery of this Agreement and the
Sale Agreement by the Depositor, the consummation of the transactions
contemplated by this Agreement and the Sale Agreement, and the
fulfillment of or compliance with the terms hereof are in the ordinary
course of business of the Depositor and will not (A) result in a
material breach of any term or provision of the charter or by-laws of
the Depositor or (B) materially conflict with, result in a violation or
acceleration of, or result in a material default under, the terms of
any other material agreement or instrument to which the Depositor is a
party or by which it may be bound or (C) constitute a material
violation of any statute, order or regulation applicable to the
Depositor of any court, regulatory body, administrative agency or
governmental body having jurisdiction over the Depositor; and the
Depositor is not in breach or violation of any material indenture or
other material agreement or instrument, or in violation of any statute,
order or regulation of any court,
-37-
regulatory body, administrative agency or governmental body having
jurisdiction over it which breach or violation may materially impair
the Depositor's ability to perform or meet any of its obligations under
this Agreement.
(iv) No litigation is pending, or, to the best of the
Depositor's knowledge, threatened, against the Depositor that would
materially and adversely affect the execution, delivery or
enforceability of this Agreement and the Sale Agreement or the ability
of the Depositor to perform its obligations under this Agreement and
the Sale Agreement in accordance with the terms hereof.
(v) No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution, delivery
and performance by the Depositor of, or compliance by the Depositor
with, this Agreement and the Sale Agreement or the consummation of the
transactions contemplated hereby, or if any such consent, approval,
authorization or order is required, the Depositor has obtained the
same. The Depositor hereby represents and warrants to the Trustee with
respect to each Mortgage Loan as of the Closing Date, and following the
transfer of the Mortgage Loans to it by the Seller, the Depositor had
good title to the Mortgage Loans and the Mortgage Notes were subject to
no offsets, claims, liens, mortgage, pledge, charge, security interest,
defenses or counterclaims.
(b) The representations and warranties of each Transferor with respect
to the related Mortgage Loans in the applicable Transfer Agreement, which have
been assigned to the Trustee hereunder, were made as of the date specified in
the applicable Transfer Agreement (or underlying agreement, if such Transfer
Agreement is in the form of an assignment of a prior agreement). To the extent
that any fact, condition or event with respect to a Mortgage Loan constitutes a
breach of both (i) a representation or warranty of the applicable Transferor
under the applicable Transfer Agreement and (ii) a representation or warranty of
the Seller under the Sale Agreement, the Trustee shall enforce the obligations
of the Seller under the Sale Agreement and to the extent the Seller does not
fulfill its contracted obligations then the Trustee shall enforce the
obligations of the applicable Transferor under any applicable representation or
warranty made by it. The Trustee further acknowledges that the Depositor shall
have no obligation or liability with respect to any breach of any representation
or warranty with respect to the Mortgage Loans (except as set forth in Section
2.03(a)(v)) under any circumstances.
(c) Upon discovery by any of the Depositor, the Master Servicer, the
Servicer, the NIMs Insurer, or the Trustee of a breach of any of such
representations and warranties that adversely and materially affects the value
of the related Mortgage Loan, prepayment charges or the interests of the
Certificateholders, the party discovering such breach shall give prompt written
notice to the other parties. Within 90 days of the discovery of a breach of any
representation or warranty given to the Trustee by the Depositor, any
Transferor, the Seller and assigned to the Trustee, the Depositor, such
Transferor or the Seller, as applicable, shall either (a) cure such breach in
all material respects, (b) repurchase such Mortgage Loan or any property
acquired in respect thereof from the Trustee at the Purchase Price or (c) within
the two year period following the Closing Date, substitute a Replacement
Mortgage Loan for the affected Mortgage Loan. In the event of discovery of a
breach of any representation and warranty of any Transferor or the Depositor,
the Trustee shall enforce its rights under the applicable Transfer Agreement and
the Sale Agreement for the benefit of Certificateholders and the NIMs Insurer.
If a breach of the representations and warranties set forth in the Transfer
Agreement hereof exists solely due to the unenforceability of a prepayment
charge, the Trustee shall notify the NIMs Insurer and the Servicer thereof and
not seek to enforce the repurchase remedy provided for herein unless directed in
writing to do so by the NIMs Insurer or the Servicer. In the event of a breach
of the representations and warranties with respect to the Mortgage Loans set
forth in a Transfer Agreement, the Trustee shall at the request of the NIMs
Insurer enforce the right of the Trust Fund and the NIMs Insurer to be
indemnified for such
-38-
breach of representation and warranty. In the event that such breach relates
solely to the unenforceability of a prepayment charge, amounts received in
respect of such indemnity up to the amount of such prepayment charge shall be
distributed pursuant to Section 4.04(g). As provided in the Sale Agreement, if
the Transferor substitutes for a Mortgage Loan for which there is a breach of
any representations and warranties in the related Transfer Agreement which
adversely and materially affects the value of such Mortgage Loan and such
substitute mortgage loan is not a Replacement Mortgage Loan, under the terms of
the Sale Agreement, the Seller will, in exchange for such substitute Mortgage
Loan, (i) provide the applicable Purchase Price for the affected Mortgage Loan
or (ii) within two years of the Closing Date, substitute such affected Mortgage
Loan with a Replacement Mortgage Loan. Any such substitution shall not be
effected prior to the additional delivery to the Trustee of a Request for
Release substantially in the form of Exhibit I and shall not be effected unless
it is within two years of the Startup Date. The Seller indemnifies and holds the
Trust Fund, the Trustee, the Depositor, the Servicer, the NIMs Insurer and each
Certificateholder harmless against any and all taxes, claims, losses, penalties,
fines, forfeitures, reasonable legal fees and related costs, judgments, and any
other costs, fees and expenses that the Trust Fund, the Trustee, the Depositor,
the Servicer, the NIMs Insurer and any Certificateholder may sustain in
connection with any actions of the Seller relating to a repurchase of a Mortgage
Loan other than in compliance with the terms of this Section 2.03 and the Sale
Agreement, to the extent that any such action causes (i) any federal or state
tax to be imposed on the Trust Fund or any REMIC provided for herein, 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 860(d)(1) of the Code, or (ii) any REMIC created hereunder to fail
to qualify as a REMIC at any time that any Certificate is outstanding. In
furtherance of the foregoing, if the Transferor or the Seller, as applicable, is
not a member of MERS and repurchases a Mortgage Loan which is registered on the
MERS System, the Transferor or the Seller, as applicable, at its own expense and
without any right of reimbursement, shall cause MERS to execute and deliver an
assignment of the Mortgage in recordable form to transfer the Mortgage from MERS
to the Transferor or the Seller, as applicable, and shall cause such Mortgage to
be removed from registration on the MERS System in accordance with MERS' rules
and regulations.
With respect to any Mortgage Loan repurchased by the Depositor pursuant
to this Agreement, by the Seller pursuant to the Sale Agreement or by any
Transferor pursuant to the applicable Transfer Agreement, the principal portion
of the funds received by the Master Servicer or Servicer, as applicable, in
respect of such repurchase of a Mortgage Loan will be considered a Principal
Prepayment and shall be deposited by the Master Servicer or Servicer, as
applicable, in the Collection Account pursuant to Section 3.05. The Trustee,
upon receipt of the full amount of the Purchase Price for a Deleted Mortgage
Loan, or upon receipt of the Mortgage File for a Replacement Mortgage Loan
substituted for a Deleted Mortgage Loan, shall release or cause to be released
and reassign to the Depositor, the Seller or the applicable Transferor, as
applicable, the related Mortgage File for the Deleted Mortgage Loan and shall
execute and deliver such instruments of transfer or assignment, in each case
without recourse, representation or warranty, as shall be necessary to vest in
such party or its designee or assignee title to any Deleted Mortgage Loan
released pursuant hereto, free and clear of all security interests, liens and
other encumbrances created by this Agreement, which instruments shall be
prepared by the Trustee, and the Trustee shall not have any further
responsibility with respect to the Mortgage File relating to such Deleted
Mortgage Loan.
With respect to each Replacement Mortgage Loan to be delivered to the
Trustee pursuant to the terms of this Article II in exchange for a Deleted
Mortgage Loan: (i) the Depositor, the applicable Transferor or the Seller, as
applicable, must deliver to the Trustee the Mortgage File for the Replacement
Mortgage Loan containing the documents set forth in Section 2.01 along with a
written certification certifying as to the delivery of such Mortgage File and
containing the granting language set forth in Section 2.01; and (ii) the
Depositor will be deemed to have made, with respect to such Replacement Mortgage
Loan, each of the representations and warranties made by it with respect to the
related Deleted
-39-
Mortgage Loan. The Trustee shall review the Mortgage File with respect to each
Replacement Mortgage Loan and certify to the NIMs Insurer and the Depositor that
all documents required by Section 2.01 have been executed and received.
For any month in which the Seller substitutes one or more Replacement
Mortgage Loans for one or more Deleted Mortgage Loans, the Seller will determine
the amount (if any) by which the aggregate principal balance of all such
Replacement Mortgage Loans as of the date of substitution and the aggregate
prepayment penalties with respect to such Replacement Mortgage Loans is less
than the aggregate Stated Principal Balance (after application of the principal
portion of the Scheduled Payment due in the month of substitution) and aggregate
prepayment penalties of all such Deleted Mortgage Loans. An amount equal to the
aggregate of the deficiencies described in the preceding sentence (such amount,
the "Substitution Adjustment Amount") shall be delivered by the Seller to the
Master Servicer or Servicer, as applicable, for deposit into the Collection
Account on the Determination Date for the Distribution Date relating to the
Prepayment Period during which the related Mortgage Loan became required to be
purchased or replaced hereunder.
Notwithstanding any other provision of this Agreement, the right to
substitute Mortgage Loans pursuant to this Article II shall be subject to the
additional limitations that no substitution of a Replacement Mortgage Loan for a
Deleted Mortgage Loan shall be made unless the Trustee and the NIMs Insurer have
received an Opinion of Counsel (at the expense of the party seeking to make the
substitution) that, under current law, such substitution will not (A) affect
adversely the status of any REMIC established hereunder as a REMIC, or of the
related "regular interests" as "regular interests" in any such REMIC, or (B)
cause any such REMIC to engage in a "prohibited transaction" or prohibited
contribution pursuant to the REMIC Provisions.
The Seller shall give or cause to be given written notice to the
Certificateholders and the NIMs Insurer that such substitution has taken place,
shall amend the Mortgage Loan Schedule to reflect the removal of such Deleted
Mortgage Loan from the terms of this Agreement and the substitution of the
Replacement Mortgage Loan or Replacement Mortgage Loans and shall deliver a copy
of such amended Mortgage Loan Schedule to the NIMs Insurer and the Trustee. Upon
such substitution by the Seller, such Replacement Mortgage Loan or Replacement
Mortgage Loans shall constitute part of the Mortgage Pool and shall be subject
in all respects to the terms of this Agreement and the Sale Agreement, including
all applicable representations and warranties thereof included in the Sale
Agreement as of the date of substitution.
(d) It is understood and agreed that the representations, warranties
and indemnification (i) set forth in Section 2.03, (ii) of the Seller and the
Depositor set forth in the Sale Agreement and assigned to the Trustee by the
Depositor hereunder and (iii) of each Transferor, assigned by the Seller to the
Depositor pursuant to the Sale Agreement and assigned to the Trustee by the
Depositor hereunder shall each survive delivery of the Mortgage Files and the
Assignment of Mortgage of each Mortgage Loan to the Trustee and shall continue
throughout the term of this Agreement.
(e) The Depositor shall deliver a copy of the Mortgage Loan Schedule to
the Servicer on the Closing Date.
SECTION 2.04. Representations and Warranties of the Master Servicer;
Representations and Warranties of the Servicer.
(a) The Master Servicer hereby represents and warrants to the
Depositor, the Servicer and the Trustee as follows, as of the date hereof:
-40-
(i) The Master Servicer is a duly organized limited liability
company and is validly existing and in good standing under the laws of the
state of its incorporation and is duly authorized and qualified to
transact any and all business contemplated by this Agreement to be
conducted by the Master 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, to service the Mortgage Loans
in accordance with the terms of this Agreement and to perform any of its
other obligations under this Agreement in accordance with the terms
hereof.
(ii) The Master Servicer has the corporate power and authority and
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 Master Servicer the execution, delivery and performance of this
Agreement; and this Agreement, assuming the due authorization, execution
and delivery hereof by the other parties hereto, constitutes a legal,
valid and binding obligation of the Master Servicer, enforceable against
the Master Servicer in accordance with its terms, except 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 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 Master
Servicer, the servicing of the Mortgage Loans under this Agreement, the
consummation of any other of the transactions contemplated by this
Agreement, and the fulfillment of or compliance with the terms hereof are
in the ordinary course of business of the Master Servicer and will not (A)
result in a material breach of any term or provision of the charter or
by-laws of the Master Servicer or (B) materially conflict with, result in
a material breach, violation or acceleration of, or result in a material
default under, the terms of any other material agreement or instrument to
which the Master Servicer is a party or by which it may be bound, or (C)
constitute a material violation of any statute, order or regulation
applicable to the Master Servicer of any court, regulatory body,
administrative agency or governmental body having jurisdiction over the
Master Servicer; and the Master Servicer is not in breach or violation of
any material indenture or other material agreement or instrument, or in
violation of any statute, order or regulation of any court, regulatory
body, administrative agency or governmental body having jurisdiction over
it which breach or violation may materially impair the Master Servicer's
ability to perform or meet any of its obligations under this Agreement.
(iv) The Master Servicer is an approved servicer of mortgage loans
for ▇▇▇▇▇▇ ▇▇▇ and for ▇▇▇▇▇▇▇ Mac.
(v) No litigation is pending or, to the best of the Master
Servicer's knowledge, threatened, against the Master Servicer that would
materially and adversely affect the execution, delivery or enforceability
of this Agreement or the ability of the Master Servicer to service the
Mortgage Loans or to perform any of its other obligations under this
Agreement in accordance with the terms hereof.
(vi) 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 Master Servicer with,
this Agreement or the consummation of the transactions
-41-
contemplated hereby, or if any such consent, approval, authorization or
order is required, the Master Servicer has obtained the same.
(b) The Servicer hereby represents and warrants to the Depositor, the
Master Servicer and the Trustee as follows, as of the date hereof:
(i) The Servicer is a duly organized limited partnership and is
validly existing and in good standing under the laws of the state of its
incorporation 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,
to service the Mortgage Loans in accordance with the terms of this
Agreement and to perform any of its other obligations under this Agreement
in accordance with the terms hereof.
(ii) The Servicer has the corporate power and authority and 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 other parties hereto, constitutes a legal, valid and binding
obligation of the Servicer, enforceable against the Servicer in accordance
with its terms, except 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 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 under this Agreement, the consummation
of any other of the transactions contemplated by this Agreement, and the
fulfillment of or compliance with the terms hereof are in the ordinary
course of business of the Servicer and will not (A) result in a material
breach of any term or provision of the charter or by-laws of the Servicer
or (B) materially conflict with, result in a material breach, violation or
acceleration of, or result in a material default under, the terms of any
other material agreement or instrument to which the Servicer is a party or
by which it may be bound, or (C) constitute a material violation of 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 in breach or
violation of any material indenture or other material agreement or
instrument, or in violation of any statute, order or regulation of any
court, regulatory body, administrative agency or governmental body having
jurisdiction over it which breach or violation may materially impair the
Servicer's ability to perform or meet any of its obligations under this
Agreement.
(iv) The Servicer is an approved servicer of mortgage loans for
▇▇▇▇▇▇ ▇▇▇ and is an approved seller of seasoned mortgage loans and
servicer of all types of mortgage loans for ▇▇▇▇▇▇▇ Mac.
(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 under this Agreement in accordance
with the terms hereof.
-42-
(vi) 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 hereby, or
if any such consent, approval, authorization or order is required, the
Servicer has obtained the same.
(vii) The Servicer has fully furnished and will fully furnish (for
the period it serviced the Mortgage Loans), 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 on a monthly basis.
SECTION 2.05. Substitutions and Repurchases of Mortgage Loans which are
not "Qualified Mortgages".
Upon discovery by the Depositor, the Master Servicer, 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 promptly (and in any event within 5 Business Days of discovery) give
written notice thereof to the other parties. In connection therewith, the
Depositor shall, at the Depositor's option, either (i) substitute, if the
conditions in Section 2.03(c) with respect to substitutions are satisfied, a
Replacement Mortgage Loan for the affected Mortgage Loan, or (ii) repurchase the
affected Mortgage Loan within 90 days of such discovery in the same manner as it
would a Mortgage Loan for a breach of representation or warranty contained in
Section 2.03. The Trustee shall reconvey to the Depositor 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 contained in Section 2.03.
SECTION 2.06. Authentication and Delivery of Certificates.
The Trustee accepts the transfer and assignment to it of the Trust Fund
and, concurrently with such transfer and assignment, the Trustee has caused to
be authenticated and delivered to or upon the order of the Depositor, in
exchange for the Mortgage Loans, Certificates duly authenticated by the Trustee
in authorized denominations evidencing ownership of the entire Trust Fund. The
Trustee agrees to hold the Trust Fund and exercise the rights referred to above
for the benefit of all present and future Holders of the Certificates and to
perform its duties set forth in this Agreement in accordance with the provisions
hereof.
SECTION 2.07. REMIC Elections.
(a) The Depositor hereby instructs and authorizes the Trustee to make an
appropriate election to treat each of the Upper Tier REMIC and the Lower Tier
REMIC as a REMIC. The Trustee shall sign the returns providing for such
elections and such other tax or information returns which are required to be
signed by the Trustee under applicable law. This Agreement shall be construed so
as to carry out the intention of the parties that each of the Upper Tier REMIC
and the Lower Tier REMIC be treated as a REMIC at all times prior to the date on
which the Trust Fund is terminated.
(b) The Preliminary Statement sets forth the designations and "latest
possible maturity date" for federal income tax purposes of all interests created
hereby. The "Startup Date" for purposes of the REMIC Provisions shall be the
Closing Date. Each REMIC's fiscal year shall be the calendar year.
-43-
The Lower Tier REMIC shall consist of all of the assets of the Trust Fund
other than (i) the interests issued by the Lower Tier REMIC and the interests
issued by the Upper Tier REMIC, (ii) the Cap Contract and Cap Contract Account
and (iii) the grantor trusts described in Section 2.07 hereof. The Lower Tier
REMIC shall issue the Class LTA Interest, Class LTB Interest, Class LTM-1
Interest, Class LTM-2 Interest and Class LTX Interest which shall be designated
as regular interests of such REMIC and shall issue the Class LTR Interest that
shall be designated as the sole class of residual interest in the Lower Tier
REMIC. Each of the Lower Tier REMIC Regular Interests shall have the
characteristics set forth in its definition.
The assets of the Upper Tier REMIC shall be the Lower Tier REMIC Regular
Interests. The Upper Tier REMIC Regular Interests shall be designated as the
regular interests in the Upper Tier REMIC and the Residual Interest shall be
designated as the sole class of residual interest in the Upper Tier REMIC. For
federal income tax purposes, the Pass-Through Rate on each Upper Tier REMIC
Regular Interest and on the sole class of Residual Interest shall be subject to
a cap equal to the Net Rate.
The beneficial ownership of the Class LTR Interest and the Residual
Interest shall be represented by the Class R Certificate. The Class LTR Interest
shall not have a principal balance or bear interest.
(c) The "tax matters person" with respect to each REMIC for purposes of
the REMIC Provisions shall be the beneficial owner of the Class R Certificate;
provided, however, that the Holder of a Class R Certificate, by its acceptance
thereof, irrevocably appoints the Trustee as its agent and attorney-in-fact to
act as "tax matters person" with respect to each REMIC for purposes of the REMIC
Provisions. If there is more than one beneficial owner of the Class R
Certificate, the "tax matters person" shall be the Person with the greatest
percentage interest in the Class R Certificate and, if there is more than one
such Person, shall be determined under Treasury regulation Section 1.860F-4(d)
and Treasury regulation Section 301.6231(a)(7)-1.
(d) It is intended that the rights of the Class A Certificates, Class R
Certificate, Class M-1 Certificates, Class M-2 Certificates and Class B
Certificates to receive payments in respect of Excess Interest, including all
payments in respect of Floating Rate Certificate Carryovers, shall be treated as
a right in interest rate cap contracts written in favor of the holders of the
Class A Certificates, Class R Certificate, Class M-1 Certificates, Class M-2
Certificates and Class B Certificates by the grantor trust described below, and
such shall be accounted for as property held separate and apart from the regular
interests in the Upper Tier REMIC held by the holders of the Class A
Certificates, M-1 Certificates, Class M-2 Certificates and Class B Certificates
and the residual interest in the Upper Tier REMIC held by the holder of the
Class R Certificate. This provision is intended to satisfy the requirements of
Treasury Regulations Section 1.860G-2(i) for the treatment of property rights
coupled with REMIC interests to be separately respected and shall be interpreted
consistently with such regulation. On each Distribution Date, to the extent that
any of the Class A Certificates, Class R Certificate, M-1 Certificates, Class
M-2 Certificates and Class B Certificates receive payments of Excess Interest,
such amounts to the extent not derived from payments received on the Cap
Contract, will be treated as distributed by the Upper-Tier REMIC on the
uncertificated Class UTXN Interest and then paid to the relevant Class of
Certificates pursuant to the related interest rate cap contract.
(e) For federal income tax purposes, the Class N and Class X Certificates
shall represent beneficial ownership of a grantor trust under subpart E, Part I
of subchapter J of the Code that holds the uncertificated Class UTXN Interest,
the Cap Contract and the Cap Contract Account and is treated as obligated to
make payments in respect of the interest rate cap contracts described in this
Section 2.07. If the Class N and Class X Certificates are beneficially owned by
more than one Person, and such Persons do not hold both the Class N and Class X
Certificates proportionately, then each such Person shall be treated as owning
an interest in a partnership that owns the interests in such grantor trust. For
federal
-44-
income tax purposes the Trustee shall treat the grantor trust as beneficially
owned by the holder of the Class N and Class X Certificates (or by a
partnership, the beneficial owners of which are the beneficial owners of the
Class N and Class X Certificates, as the case may be) and shall treat such
portion of the Trust Fund as a grantor trust under subpart E, Part I of
subchapter J of the Code. The Trustee shall (i) file all required tax and
information returns with respect to the ownership of the Class UTXN Interest,
the Cap Contract and the Cap Contract Account (including partnership returns if
the Class N and Class X Certificates are beneficially owned by more than one
Person and such Persons do not hold both the Class N and Class X Certificates
proportionately), (ii) furnish or cause to be furnished to the holders of the
Class N and Class X Certificates information regarding their allocable share, if
any, of the income with respect to the Class UTXN Interest, the Cap Contract and
the Cap Contract Account, (iii) file or cause to be filed with the Internal
Revenue Service Form 1041 (together with any necessary attachments) and such
other forms as may be applicable with respect to the grantor trust described
herein and (iv) comply with such information reporting obligations as may apply
with respect to payments deemed to be in respect of the interest rate cap
contracts described in this Section 2.07.
(f) All payments of principal and interest at the Net Mortgage Rate on
each of the Mortgage Loans received from the Mortgage Loans shall be paid to the
Lower Tier REMIC Regular Interests until the principal balance of all such
interests have been reduced to zero and any losses allocated to such interests
have been reimbursed. Any excess amounts shall be distributed to the Class LTR
Interest. On each Distribution Date, an amount equal to 50% of the increase in
the Overcollateralization Amount shall be payable as a reduction of the
principal amounts of the Lower Tier REMIC Marker Classes (with such amount
allocated among the Lower Tier REMIC Marker Classes so that each Lower Tier
REMIC Marker Class will have its principal reduced by an amount equal to 50% of
any increase in the Overcollateralization Amount that results in a reduction in
the principal balance of its Corresponding Upper Tier REMIC Interests) and will
be accrued and added to the principal balance of the Class LTX Interest. All
payments of scheduled principal and prepayments of principal on the Mortgage
Loans shall be allocated 50% to the Class LTX Interest and 50% to the Lower Tier
REMIC Marker Classes (with principal payments allocated to each of the Lower
Tier REMIC Marker Classes in an amount equal to 50% of the principal amounts
distributed to the Corresponding Upper Tier REMIC Interests in reduction of
their principal amounts). Notwithstanding the preceding sentence, an amount
equal to the principal payments that result in a reduction in the
Overcollateralization Amount shall be treated as payable entirely to the Class
LTX Interest. Realized Losses shall be applied to the Lower Tier REMIC Marker
Classes and the Class LTX Interest so that after all distributions have been
made on each Distribution Date (i) the principal balance of each of the Lower
Tier REMIC Marker Classes is equal to 50% of the principal balance of the
Corresponding Upper Tier REMIC Interests and (ii) the principal balance of the
Class LTX Interest is equal to the sum of (x) 50% of the aggregate Stated
Principal Balance of the Mortgage Loans and (y) 50% of the Overcollateralization
Amount. Each Lower Tier REMIC Marker Class shall be entitled to receive an
amount equal to 50% of all amounts distributed to the Corresponding Upper Tier
REMIC Interest in respect of unreimbursed amounts of Realized Losses. The Class
LTX Interest shall be entitled to receive all other amounts distributed to the
Certificates in respect of unreimbursed amounts of Realized Losses.
All payments of scheduled principal and prepayments on the Mortgage Loans,
and Realized Losses on the Mortgage Loans, shall be allocated among the Upper
Tier REMIC Regular Interests in the same manner as such payments or Realized
Losses are allocated to the Related Certificates (treating the Class N
Certificates and Class X Certificates as Related Certificates with respect to
the Class UTXN Interest). Each Upper Tier REMIC Regular Interest shall be
entitled to receive all amounts distributed to the Related Certificates in
respect of unreimbursed amounts of Realized Losses (treating the Class N
Certificates and the Class X Certificates as Related Certificates with respect
to the Class UTXN Interest).
-45-
In the event that any REMIC provided for herein fails to qualify as a
REMIC, loses its status as a REMIC, or incurs federal, state or local taxes as a
result of a prohibited transaction or prohibited contribution under the REMIC
Provisions due to the negligent performance by the Servicer of its duties and
obligations set forth herein, the Servicer shall indemnify the NIMs Insurer, the
Trustee and the Trust Fund against any and all Losses resulting from such
negligence; provided, however, that the Servicer shall not be liable for any
such Losses attributable to the action or inaction of the Trustee, the Depositor
or the Holder of such Class R Certificate, as applicable, nor for any such
Losses resulting from misinformation provided by the Holder of such Class R
Certificate on which the Servicer has relied. The foregoing shall not be deemed
to limit or restrict the rights and remedies of the Holder of such Class R
Certificate now or hereafter existing at law or in equity. Notwithstanding the
foregoing, however, in no event shall the Servicer have any liability (1) for
any action or omission that is taken in accordance with and in compliance with
the express terms of, or which is expressly permitted by the terms of, this
Agreement, (2) for any Losses other than arising out of a negligent performance
by the Servicer of its duties and obligations set forth herein, and (3) for any
special or consequential damages to Certificateholders (in addition to payment
of principal and interest on the Certificates).
In the event that any REMIC provided for herein fails to qualify as a
REMIC, loses its status as a REMIC, or incurs federal, state or local taxes as a
result of a prohibited transaction or prohibited contribution under the REMIC
Provisions due to the negligent performance by the Trustee of its duties and
obligations set forth herein, the Trustee shall indemnify the NIMs Insurer and
the Trust Fund against any and all Losses resulting from such negligence;
provided, however, that the Trustee shall not be liable for any such Losses
attributable to the action or inaction of the Servicer, the Depositor or the
Holder of such Class R Certificate, as applicable, nor for any such Losses
resulting from misinformation provided by the Holder of such Class R Certificate
on which the Trustee has relied. The foregoing shall not be deemed to limit or
restrict the rights and remedies of the Holder of such Class R Certificate now
or hereafter existing at law or in equity. Notwithstanding the foregoing,
however, in no event shall the Trustee have any liability (1) for any action or
omission that is taken in accordance with and in compliance with the express
terms of, or which is expressly permitted by the terms of, this Agreement, (2)
for any Losses other than arising out of a negligent performance by the Trustee
of its duties and obligations set forth herein, and (3) for any special or
consequential damages to Certificateholders (in addition to payment of principal
and interest on the Certificates).
SECTION 2.08. Covenants of the Master Servicer.
The Master Servicer hereby covenants to each of the other parties to this
Agreement as follows:
(a) the Master Servicer shall comply in the performance of its obligations
under this Agreement with all reasonable rules and requirements of the insurer
under each Required Insurance Policy;
(b) no written information, certificate of an officer, statement furnished
in writing or written report delivered to the Depositor, the Servicer, the
Trustee or the NIMs Insurer, any affiliate of the Depositor, the Servicer, the
Trustee or the NIMs Insurer and prepared by the Master Servicer pursuant to this
Agreement will be inaccurate in any material respect, provided, however, that
the Master Servicer shall not be responsible for inaccurate information provided
to it by third parties.
SECTION 2.09. Covenants of the Servicer.
The Servicer hereby covenants to each of the other parties to this
Agreement as follows:
-46-
(a) the Servicer shall comply in the performance of its obligations under
this Agreement with all reasonable rules and requirements of the insurer under
each Required Insurance Policy;
(b) no written information, certificate of an officer, statement furnished
in writing or written report delivered to the Depositor, the Master Servicer,
the Trustee or the NIMs Insurer, any affiliate of the Depositor, the Master
Servicer, the Trustee or the NIMs Insurer and prepared by the Servicer pursuant
to this Agreement will be inaccurate in any material respect, provided, however,
that the Servicer shall not be responsible for inaccurate information provided
to it by third parties.
SECTION 2.10. Cap Contract. The Trustee acknowledges receipt of the Cap
Contract (a form of which is attached hereto), the Sale Agreement and each
Transfer Agreement.
SECTION 2.11. Permitted Activities of the Trust. The Trust is created for
the object and purpose of engaging in the Permitted Activities. In furtherance
of the foregoing, the Trustee is hereby authorized and directed to execute and
deliver on behalf of the Trust, and to perform the duties and obligations of the
Trustee under, the Cap Contract, an insurance and indemnity agreement with a
NIMs Insurer and any other agreement or instrument related thereto, in each case
in such form as the Depositor shall direct or shall approve, the execution and
delivery of any such agreement by the Depositor to be conclusive evidence of its
approval thereof.
SECTION 2.12. Qualifying Special Purpose Entity. For purposes of SFAS 140,
the parties hereto intend that the Trust Fund shall be treated as a "qualifying
special purpose entity" as such term is used in SFAS 140 and any successor rule
thereto and its power and authority as stated in Section 2.11 of this Agreement
shall be limited in accordance with paragraph 35 or SFAS 140.
ARTICLE III
ADMINISTRATION AND SERVICING
OF MORTGAGE LOANS
SECTION 3.01. Servicer to Service Mortgage Loans.
For and on behalf of the Certificateholders, the Servicer shall service
and administer the Mortgage Loans in accordance with Accepted Servicing
Practices. In connection with such servicing and administration, the Servicer
shall have full power and authority, acting alone and/or through subservicers as
provided in Section 3.02 hereof, to do or cause to be done any and all things
that it may deem necessary or desirable in connection with such servicing and
administration, including but not limited to, the power and authority, subject
to the terms hereof (i) to execute and deliver, on behalf of the
Certificateholders and the Trustee, customary consents or waivers and other
instruments and documents, (ii) to consent to transfers of any Mortgaged
Property and assumptions of the Mortgage Notes and related Mortgages (but only
in the manner provided in this Agreement), (iii) to collect any Insurance
Proceeds and other Liquidation Proceeds and (iv) subject to Section 3.12(a), to
effectuate foreclosure or other conversion of the ownership of the Mortgaged
Property securing any Mortgage Loan; provided that, subject to Section 6.03, the
Servicer shall not take any action that is inconsistent with or prejudices the
interests of the Trust Fund or the Certificateholders in any Mortgage Loan
serviced by it under this Agreement or the rights and interests of the other
parties to this Agreement except as otherwise required by this Agreement or by
law. The Servicer shall represent and protect the interest of the Trust Fund in
the same manner as it currently protects its own interest in mortgage loans in
its own portfolio in any claim, proceeding or litigation regarding a Mortgage
Loan and shall not make or permit any modification, waiver or amendment of any
term of any Mortgage Loan which would cause any of the REMICs provided for
herein to fail to qualify as a REMIC or result in the imposition of any tax
under Section
-47-
860G(a) or 860G(d) of the Code, but in any case not in any manner that is a
lesser standard than that provided in the first sentence of this Section 3.01.
Without limiting the generality of the foregoing, the Servicer, in its own name
or in the name of the Depositor and the Trustee, is hereby authorized and
empowered by the Depositor and the Trustee, when the Servicer believes it
appropriate in its reasonable judgment, to execute and deliver, on behalf of the
Trustee, the Depositor, the Certificateholders or any of them, any and all
instruments of satisfaction or cancellation, or of partial or full release or
discharge and all other comparable instruments, with respect to the Mortgage
Loans, and with respect to the Mortgaged Properties held for the benefit of the
Certificateholders. The Servicer shall prepare and deliver to the Depositor
and/or the Trustee such documents requiring execution and delivery by any or all
of them as are necessary or appropriate to enable the Servicer to service and
administer the Mortgage Loans, including without limitation, any powers of
attorney. Upon receipt of such documents, the Depositor and/or the Trustee shall
execute such documents and deliver them to the Servicer.
In accordance with the standards of the preceding paragraph, the Servicer
shall advance or cause to be advanced funds as necessary for the purpose of
effecting the payment of taxes and assessments on the Mortgaged Properties,
which advances shall be reimbursable in the first instance from related
collections from the Mortgagors pursuant to Section 3.06, and further as
provided in Section 3.08. To the extent that a Mortgage does not provide for
escrow payments (i) the Servicer 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) 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. All
costs incurred by the Servicer, if any, in effecting the timely payments of
taxes and assessments on the Mortgaged Properties and related insurance premiums
shall not, for the purposes of calculating monthly distributions to the
Certificateholders, be added to the Stated Principal Balance under the related
Mortgage Loans, notwithstanding that the terms of such Mortgage Loans so permit.
The Servicer shall deliver a list of Servicing Officers to the Trustee by
the Closing Date.
The Servicer will transmit full-file credit reporting data for each
Mortgage Loan pursuant to ▇▇▇▇▇▇ ▇▇▇ Guide Announcement 97-02 and that for each
Mortgage Loan, the Servicer agrees that it shall report one of the following
statuses each month as follows: current, delinquent (30-, 60-, 90-days, etc.),
foreclosed or charged-off.
The Servicer further is authorized and empowered by the Trustee, on behalf
of the Certificateholders and the Trustee, in its own name or in the name of the
Sub-Servicer, when the Servicer or the Sub-Servicer, as the case may be,
believes it is appropriate in its best judgment to register any Mortgage Loan on
the MERS System, or cause the removal from the registration of any Mortgage Loan
on the MERS System, to execute and deliver, on behalf of the Trustee and the
Certificateholders or any of them, any and all instruments of assignment and
other comparable instruments with respect to such assignment or re-recording of
a Mortgage in the name of MERS, solely as nominee for the Trustee and its
successors and assigns. Any reasonable expenses incurred in connection with the
actions described in the preceding sentence or as a result of MERS discontinuing
or becoming unable to continue operations in connection with the MERS System,
shall be subject to withdrawal by the Servicer from the Collection Account.
-48-
SECTION 3.02. Servicing and Subservicing; Enforcement of the Obligations
of Servicer.
(a) The Servicer may arrange for the subservicing of any Mortgage Loan by
a subservicer, which may be an affiliate (each, a "subservicer") pursuant to a
subservicing agreement (each, a "Subservicing Agreement"); provided, however,
that (i) such subservicing arrangement and the terms of the related subservicing
agreement must provide for the servicing of such Mortgage Loans in a manner
consistent with the servicing arrangements contemplated hereunder, (ii) that
such agreement would not result in a withdrawal or downgrading by any Rating
Agency of the ratings of any Certificates or any of the NIM Notes evidenced by a
letter to that effect delivered by each Rating Agency to the Depositor and the
NIMs Insurer and (iii) the NIMs Insurer shall have consented to such
subservicing agreement. Notwithstanding the provisions of any subservicing
agreement, any of the provisions of this Agreement relating to agreements or
arrangements between the Servicer and a subservicer or reference to actions
taken through a subservicer or otherwise, the Servicer shall remain obligated
and liable to the Depositor, the Trustee and the Certificateholders for the
servicing and administration of the Mortgage Loans in accordance with the
provisions of this Agreement without diminution of such obligation or liability
by virtue of such subservicing agreements or arrangements or by virtue of
indemnification from the subservicer and to the same extent and under the same
terms and conditions as if the Servicer alone were servicing and administering
the Mortgage Loans. Every subservicing agreement entered into by the Servicer
shall contain a provision giving any successor servicer the option to terminate
such agreement with the consent of the NIMs Insurer in the event a successor
servicer is appointed. All actions of the each subservicer performed pursuant to
the related subservicing agreement shall be performed as an agent of the
Servicer with the same force and effect as if performed directly by the
Servicer. The Servicer shall deliver to the NIMs Insurer and the Trustee copies
of all subservicing agreements.
(b) For purposes of this Agreement, the Servicer shall be deemed to have
received any collections, recoveries or payments with respect to the Mortgage
Loans that are received by a subservicer regardless of whether such payments are
remitted by the subservicer to the Servicer.
SECTION 3.03. Rights of the Depositor and the Trustee in Respect of the
Servicer.
Neither the Trustee nor the Depositor shall have any responsibility or
liability for any action or failure to act by the Servicer, and neither of them
is obligated to supervise the performance of the Servicer hereunder or
otherwise.
SECTION 3.04. Trustee to Act as Servicer.
Subject to Sections 6.04 and 7.02, in the event that the Servicer shall
for any reason no longer be the Servicer hereunder (including by reason of an
Event of Default), the Trustee or its designee shall, within a period of time
not to exceed ninety (90) days from the date of notice of termination or
resignation, thereupon assume all of the rights and obligations of the Servicer
hereunder arising thereafter (except that the Trustee shall not be (i) liable
for losses of the Servicer pursuant to Section 3.10 hereof or any acts or
omissions of such predecessor Servicer hereunder, (ii) obligated to make
Advances or Servicing Advance if it is prohibited from doing so by applicable
law, (iii) obligated to effectuate repurchases or substitutions of Mortgage
Loans hereunder, including pursuant to Section 2.02 or 2.03 hereof, (iv)
responsible for any expenses of the Servicer pursuant to Section 2.03 or (v)
deemed to have made any representations and warranties hereunder, including
pursuant to Section 2.04 or the first paragraph of Section 6.02 hereof;
provided, however that the Trustee (subject to clause (ii) above) or its
designee, in its capacity as the successor servicer, shall immediately assume
the terminated or resigning Servicer's obligation to make Advances and Servicing
Advances. No such termination shall affect any obligation of the Servicer to pay
amounts owed under this Agreement and to perform its duties under this Agreement
until its successor assumes all of its rights and obligations hereunder. If the
Servicer shall for
-49-
any reason no longer be the Servicer (including by reason of any Event of
Default), the Trustee (or any other successor servicer) may, at its option,
succeed to any rights and obligations of the Servicer under any subservicing
agreement in accordance with the terms thereof; provided, however, that the
Trustee (or any other successor servicer) shall not incur any liability or have
any obligations in its capacity as servicer under a subservicing agreement
arising prior to the date of such succession unless it expressly elects to
succeed to the rights and obligations of the Servicer thereunder; and the
Servicer shall not thereby be relieved of any liability or obligations under the
subservicing agreement arising prior to the date of such succession. To the
extent any costs or expenses, including without limitation Servicing Transfer
Costs incurred by the Trustee in connection with this Section 3.04, are not paid
by the Servicer pursuant to this Agreement within 30 days of the date of the
Trustee's invoice thereof, such amounts shall be payable out of the Certificate
Account; provided that the terminated Servicer shall reimburse the Trust Fund
for any such expense incurred by the Trust Fund upon receipt of a reasonably
detailed invoice evidencing such expenses. If the Trustee is unwilling or unable
to act as servicer, or if the NIMs Insurer so directs the Trustee, the Trustee
shall seek to appoint a successor servicer that is eligible in accordance with
the criteria specified this Agreement and reasonably acceptable to the NIMs
Insurer.
The Servicer shall, upon request of the Trustee, but at the expense of the
Servicer, deliver to the assuming party all documents and records relating to
each subservicing agreement and the Mortgage Loans then being serviced and
otherwise use its best efforts to effect the orderly and efficient transfer of
the subservicing agreement to the assuming party.
In the event that the Servicer shall for any reason no longer be able to
be the Servicer hereunder, notwithstanding anything to the contrary above, the
Trustee and the Depositor hereby agree that within 10 Business Days of delivery
to the Trustee by the Servicing Rights Pledgee of a letter signed by the
Servicer whereby the Servicer shall resign as Servicer under this Agreement, the
Servicing Rights Pledgee or its designee shall be appointed as successor
Servicer (provided that at the time of such appointment the Servicing Rights
Pledgee or such designee meets the requirements of a successor Servicer set
forth above) and the Servicing Rights Pledgee agrees to be subject to the terms
of this Agreement.
SECTION 3.05. Collection of Mortgage Loan Payments; Collection Account;
Master Servicer Account; Certificate Account.
(a) The Servicer shall make reasonable efforts in accordance with Accepted
Servicing Practices to collect all payments called for under the terms and
provisions of the Mortgage Loans to the extent such procedures shall be
consistent with this Agreement and the terms and provisions of any related
Required Insurance Policy. Consistent with the foregoing, the Servicer may in
its discretion (i) waive any late payment charge or, if applicable, any penalty
interest, or (ii) extend the due dates for payments due on a Mortgage Note for a
period not greater than 180 days; provided, however, that any extension pursuant
to clause (ii) above shall not affect the amortization schedule of any Mortgage
Loan for purposes of any computation hereunder, except as provided below;
provided, further, that the NIMs Insurer's prior written consent shall be
required for any modification, waiver or amendment since the Cut-off Date if the
aggregate number of outstanding Mortgage Loans which have been modified, waived
or amended exceeds 5% of the number of Mortgage Loans as of the Cut-Off Date. In
the event of any such arrangement pursuant to clause (ii) above, subject to
Section 4.01, the Servicer shall make any Advances on the related Mortgage Loan
during the scheduled period in accordance with the 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 in default
or, in the judgment of the Servicer, such default is reasonably foreseeable, the
Servicer, consistent with the standards set forth in Section 3.01, 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
-50-
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"), provided, however, that in determining
which course of action permitted by this sentence it shall pursue, the Servicer
shall adhere to the standards of Section 3.01. 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.
(b) The Servicer will not waive any Prepayment Penalty or portion thereof
unless, (i) the enforceability thereof shall have been limited by bankruptcy,
insolvency, moratorium, receivership and other similar laws relating to
creditors' rights generally or is otherwise prohibited by law, or (ii) the
collectability thereof shall have been limited due to acceleration in connection
with a foreclosure or other involuntary payment, or (iii) the Servicer has not
been provided with information sufficient to enable it to collect the Prepayment
Penalty, or (iv) in the Servicer's reasonable judgment as described in Section
3.01 hereof, (x) such waiver relates to a default or a reasonably foreseeable
default, (y) such waiver would maximize recovery of total proceeds taking into
account the value of such Prepayment Penalty and related Mortgage Loan and (z)
doing so is standard and customary in servicing similar Mortgage Loans
(including any waiver of a Prepayment Penalty in connection with a refinancing
of a Mortgage Loan that is related to a default or a reasonably foreseeable
default). Except as provided in the preceding sentence, in no event will the
Servicer waive a Prepayment Penalty in connection with a refinancing of a
Mortgage Loan that is not related to a default or a reasonably foreseeable
default. If the Servicer waives or does not collect all or a portion of a
Prepayment Penalty relating to a Principal Prepayment in full or in part due to
any action or omission of the Servicer, other than as provided above, the
Servicer shall deposit the amount of such Prepayment Penalty (or such portion
thereof as had been waived for deposit) into the Collection Account for
distribution in accordance with the terms of this Agreement.
(c) The Servicer shall not be required to institute or join in litigation
with respect to collection of any payment (whether under a Mortgage, Mortgage
Note or otherwise or against any public or governmental authority with respect
to a taking or condemnation) if it reasonably believes that enforcing the
provision of the Mortgage or other instrument pursuant to which such payment is
required is prohibited by applicable law.
(d) The Servicer shall establish and initially maintain, on behalf of the
Certificateholders, the Collection Account. The Servicer shall deposit into the
Collection Account daily, within two Business Days of receipt thereof, in
immediately available funds, the following payments and collections received or
made by it on and after the Cut-Off Date with respect to the Mortgage Loans:
(i) all payments on account of principal, including Principal
Prepayments, on the Mortgage Loans, other than principal due on the
Mortgage Loans on or prior to the Cut-off Date;
(ii) all payments on account of interest on the Mortgage Loans net
of the related Servicing Fee permitted under Section 3.15, other than
interest due on the Mortgage Loans on or prior to the Cut-off Date;
(iii) all Liquidation Proceeds, other than proceeds to be applied to
the restoration or repair of the Mortgaged Property or released to the
Mortgagor in accordance with the Servicer's normal servicing procedures;
(iv) all Compensating Interest;
-51-
(v) any amount required to be deposited by the Servicer pursuant to
Section 3.05(g) in connection with any losses on Permitted Investments;
(vi) any amounts required to be deposited by the Servicer pursuant
to Section 3.10 hereof;
(vii) the Purchase Price and any Substitution Adjustment Amount;
(viii) all Advances made by the Servicer pursuant to Section 4.01;
(ix) all Prepayment Penalties; and
(x) any other amounts required to be deposited hereunder.
The foregoing requirements for remittance by the Servicer into the
Collection Account shall be exclusive, it being understood and agreed that,
without limiting the generality of the foregoing, late payment charges,
insufficient funds charges and payments in the nature of assumption fees (i.e.
fees related to the assumption of a Mortgage Loan upon the purchase of the
related Mortgaged Property and other similar ancillary fees (other than
Prepayment Penalties) if collected, need not be remitted by the Servicer. In the
event that the Servicer shall remit any amount not required to be remitted and
not otherwise subject to withdrawal pursuant to Section 3.08 hereof, it may at
any time withdraw or direct the Trustee, or such other institution maintaining
the Collection Account, to withdraw such amount from the Collection Account, any
provision herein to the contrary notwithstanding. The Servicer shall maintain
adequate records with respect to all withdrawals made pursuant to this Section.
All funds deposited in the Collection Account shall be held in trust for the
Certificateholders until withdrawn in accordance with Section 3.08. In no event
shall the Trustee incur liability for withdrawals from the Collection Account at
the direction of the Servicer.
The Servicer shall give notice to the NIMs Insurer and the Trustee of the
location of the Collection Account maintained by it when established and prior
to any change thereof. Not later than twenty days after each Distribution Date,
the Servicer shall forward to the NIMs Insurer and, upon request, to the Trustee
and the Depositor the most current available bank statement for the Collection
Account. Copies of such statement shall be provided by the Trustee to any
Certificateholder and to any Person identified to the Trustee as a prospective
transferee of a Certificate, upon request at the expense of the requesting
party, provided such statement is delivered by the Servicer to the Trustee.
(e) The Master Servicer shall establish and maintain, on behalf of the
Certificateholders, the Master Servicer Account. The Master Servicer shall,
promptly upon receipt, deposit or cause to be deposited in the Master Servicer
Account and retain therein the aggregate amount withdrawn by the Interim
Servicers from their respective collection accounts and required to be deposited
in the Master Servicer Account;
Any amounts received by the Master Servicer prior to 3:00 p.m. New York
City time (or such earlier deadline for investment in the Permitted Investments
designated by the Master Servicer) which are required to be deposited in the
Master Servicer Account by the Interim Servicers shall be invested in Permitted
Investments on the Business Day on which they were received. The foregoing
requirement for remittance by the Interim Servicers and deposit by the Interim
Servicers into the Master Servicer Account shall be exclusive. In the event that
the Interim Servicers shall remit any amount not required to be remitted and not
otherwise subject to withdrawal pursuant to Section 3.08 hereof, it may at any
time withdraw such amount from the Master Servicer Account, any provision herein
to the contrary notwithstanding. All funds deposited in the Master Servicer
Account shall be held by the Master Servicer
-52-
in trust for the Certificateholders until disbursed in accordance with this
Agreement or withdrawn in accordance with Section 3.08. In no event shall the
Master Servicer incur liability for withdrawals from the Master Servicer Account
at the direction of the Interim Servicers. The Master Servicer shall give notice
to the NIMs Insurer and the Interim Servicers of the location of the Master
Servicer Account maintained by it when established and prior to any change
thereof.
(f) The Trustee shall establish and maintain, on behalf of the
Certificateholders, the Certificate Account. The Trustee shall, promptly upon
receipt, deposit or cause to be deposited in the Certificate Account and retain
therein the following:
(i) the aggregate amount withdrawn by the Servicer from the
Collection Account and required to be deposited in the Certificate
Account;
(ii) the aggregate amount withdrawn by the Master Servicer from the
Master Servicer Account and required to be deposited in the Certificate
Account;
(iii) any amount required to be deposited by the Trustee pursuant to
Section 3.05(g) in connection with any losses on Permitted Investments;
and
(iv) the Optional Termination Amount paid by the Servicer or the
NIMs Insurer pursuant to Section 9.01.
Any amounts received by the Trustee prior to 3:00 p.m. New York City time
(or such earlier deadline for investment in the Permitted Investments designated
by the Trustee) which are required to be deposited in the Certificate Account by
the Servicer or Master Servicer shall be invested in Permitted Investments on
the Business Day on which they were received. The foregoing requirements for
remittance by the Servicer and Master Servicer and deposit by the Servicer and
Master Servicer into the Certificate Account shall be exclusive. In the event
that the Servicer or the Master Servicer shall remit any amount not required to
be remitted and not otherwise subject to withdrawal pursuant to Section 3.08
hereof, it may at any time withdraw such amount from the Certificate Account,
any provision herein to the contrary notwithstanding. All funds deposited in the
Certificate Account shall be held by the Trustee in trust for the
Certificateholders until disbursed in accordance with this Agreement or
withdrawn in accordance with Section 3.08. In no event shall the Trustee incur
liability for withdrawals from the Certificate Account at the direction of the
Servicer or the Master Servicer. The Trustee shall give notice to the NIMs
Insurer, the Master Servicer and the Servicer of the location of the Certificate
Account maintained by it when established and prior to any change thereof.
(g) Each institution that maintains the Collection Account, Master
Servicer Account or the Certificate Account shall invest the funds in each such
account, as directed by the Servicer, Master Servicer or the Trustee, as
applicable, in writing, in Permitted Investments, which shall mature not later
than (i) in the case of the Collection Account the Business Day preceding the
related Servicer Remittance Date (except that if such Permitted Investment is an
obligation of the institution that maintains such Collection Account or is
otherwise immediately available, then such Permitted Investment shall mature not
later than the Servicer Remittance Date), (ii) in the case of the Master
Servicer Account, the second Business Day immediately preceding the first
Distribution Date that follows the date of such investment (except that if such
Permitted Investment is an obligation of the institution that maintains such
Master Servicer Account or is otherwise immediately available, then such
Permitted Investment shall mature not later than such Distribution Date) and
(iii) in the case of the Certificate Account, the Business Day immediately
preceding the first Distribution Date that follows the date of such investment
(except that if such Permitted Investment is an obligation of the institution
that maintains such Certificate Account or is otherwise immediately available,
then such Permitted Investment shall mature not later than such
-53-
Distribution Date) and, in each case, shall not be sold or disposed of prior to
its maturity. All such Permitted Investments shall be made in the name of the
Servicer or the Trustee, as applicable, for the benefit of the
Certificateholders. All income and gain net of any losses realized from amounts
on deposit in the Collection Account shall be for the benefit of the Servicer as
servicing compensation and shall be remitted to it monthly as provided herein.
The amount of any losses incurred in the Collection Account in respect of any
such investments shall be deposited by the Servicer in the Collection Account
out of the Servicer's own funds immediately as realized. All income and gain net
of any losses realized from amounts on deposit in the Master Servicer Account
shall be for the benefit of the Master Servicer and shall be remitted to or
withdrawn by it monthly as provided herein. The amount of any losses incurred in
the Master Servicer Account in respect of any such investments shall be
deposited by the Master Servicer in the Master Servicer Account out of the
Master Servicer's own funds immediately as realized. All income and gain net of
any losses realized from amounts on deposit in the Certificate Account shall be
for the benefit of the Trustee and shall be remitted to or withdrawn by it
monthly as provided herein. The amount of any losses incurred in the Certificate
Account in respect of any such investments shall be deposited by the Trustee, in
the Certificate Account out of the Trustee's own funds immediately as realized.
SECTION 3.06. Collection of Taxes, Assessments and Similar Items; Escrow
Accounts.
To the extent required by the related Mortgage Note, the Servicer shall
establish and maintain one or more accounts (each, an "Escrow Account") and
deposit and retain therein all collections from the Mortgagors (or advances by
the Servicer) for the payment of taxes, assessments, hazard insurance premiums
or comparable items for the account of the Mortgagors. Nothing herein shall
require the Servicer to compel a Mortgagor to establish an Escrow Account in
violation of applicable law.
Withdrawals of amounts so collected from the Escrow Accounts may be made
only to effect timely payment of taxes, assessments, hazard insurance premiums,
condominium or PUD association dues, or comparable items, to reimburse the
Servicer out of related collections for any payments made pursuant to Sections
3.01 hereof (with respect to taxes and assessments and insurance premiums) and
3.10 hereof (with respect to hazard insurance), to refund to any Mortgagors any
sums as may be determined to be overages, to pay interest, if required by law or
the terms of the related Mortgage or Mortgage Note, to Mortgagors on balances in
the Escrow Account or to clear and terminate the Escrow Account at the
termination of this Agreement in accordance with Section 9.01 hereof. The Escrow
Accounts shall not be a part of the Trust Fund.
SECTION 3.07. Access to Certain Documentation and Information Regarding
the Mortgage Loans.
Upon reasonable advance notice in writing if required by federal
regulation, the Servicer will provide to each Certificateholder that is a
savings and loan association, bank or insurance company certain reports and
reasonable access to information and documentation regarding the Mortgage Loans
sufficient to permit such Certificateholder to comply with applicable
regulations of the OTS or other regulatory authorities with respect to
investment in the Certificates; provided, that the Servicer shall be entitled to
be reimbursed by each such Certificateholder for actual expenses incurred by the
Servicer in providing such reports and access.
SECTION 3.08. Permitted Withdrawals from the Collection Account, Master
Servicer Account and Certificate Account.
(a) The Servicer may from time to time, make withdrawals from the
Collection Account for the following purposes:
-54-
(i) to pay to the Servicer (to the extent not previously paid to or
withheld by the Servicer), as servicing compensation in accordance with
Section 3.15, that portion of any payment of interest that equals the
Servicing Fee for the period with respect to which such interest payment
was made, and, as additional servicing compensation, those other amounts
set forth in Section 3.15;
(ii) to reimburse the Servicer for Advances made by it (or to
reimburse the Advance Financing Person for Advances made by it) with
respect to the Mortgage Loans, such right of reimbursement pursuant to
this subclause (ii) being limited to amounts received on particular
Mortgage Loan(s) (including, for this purpose, Liquidation Proceeds) that
represent late recoveries of payments of principal and/or interest on such
particular Mortgage Loan(s) in respect of which any such Advance was made;
(iii) to reimburse the Servicer for any Non-Recoverable Advance
previously made and, to the extent that such Non-Recoverable Servicing
Advances would constitute "unanticipated expenses" within the meaning of
Treasury Regulation Section 1.860G-1(b)(3)(ii) if paid by one of the
REMICs provided for herein, any Non-Recoverable Servicing Advance;
(iv) to pay to the Servicer earnings on or investment income with
respect to funds in or credited to the Collection Account;
(v) to reimburse the Servicer from Insurance Proceeds for Insured
Expenses covered by the related Insurance Policy;
(vi) to pay the Servicer any unpaid Servicing Fees and to reimburse
it for any unreimbursed Servicing Advances, the Servicer's right to
reimbursement of Servicing Advances pursuant to this subclause (vi) with
respect to any Mortgage Loan being limited to amounts received on
particular Mortgage Loan(s)(including, for this purpose, Liquidation
Proceeds and purchase and repurchase proceeds) that represent late
recoveries of the payments for which such advances were made pursuant to
Section 3.01 or Section 3.06;
(vii) to pay to the Depositor or the Servicer, as applicable, with
respect to each Mortgage Loan or property acquired in respect thereof that
has been purchased pursuant to Section 2.02, 2.03 or 3.12, all amounts
received thereon and not taken into account in determining the related
Stated Principal Balance of such repurchased Mortgage Loan;
(viii) to reimburse the Servicer or the Depositor for expenses
incurred by any of them in connection with the Mortgage Loans or
Certificates and reimbursable pursuant to Section 3.25 or Section 6.03
hereof;
(ix) to reimburse the Trustee for enforcement expenses reasonably
incurred in respect of a breach of defect giving rise to the purchase
obligation in Section 2.03 that were incurred in the Purchase Price of the
Mortgage Loans including any expenses arising out of the enforcement of
the purchase obligation; provided that any such expenses will be
reimbursable under this subclause (ix) only to the that such expenses
would constitute "unanticipated expenses" within the meaning of Treasury
Regulation Section 1.860G-1(b)(3)(ii) if paid by one of the REMICs
provided for herein;
(x) to make payments with respect to premiums for LPMI Policies;
(xi) to withdraw pursuant to Section 3.05 any amount deposited in
the Collection Account and not required to be deposited therein; and
-55-
(xii) to clear and terminate the Collection Account upon termination
of this Agreement pursuant to Section 9.01 hereof.
In addition, no later than 1:00 p.m. Eastern Time on the Servicer
Remittance Date, the Servicer shall cause to be withdrawn from the Collection
Account the Interest Funds and the Principal Funds, to the extent on deposit,
and such amount shall be deposited in the Certificate Account; provided,
however, if the Trustee does not receive such Interest Funds and Principal Funds
by 4:00 p.m. Eastern Time, such Interest Funds and Principal Funds shall be
deposited in the Certificate Account by 1:00 p.m. Eastern Time on the next
Business Day.
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.
The Servicer shall provide written notification to the Trustee and the
NIMs Insurer on or prior to the next succeeding Servicer Remittance Date upon
making any withdrawals from the Collection Account pursuant to subclauses (iii)
and (vii) above.
Unless otherwise specified, any amounts reimbursable to the Servicer or
the Trustee from amounts on deposit in the Collection Account or the Certificate
Accounts shall be deemed to come from first, Interest Funds, and thereafter,
Principal Funds for the related Distribution Date.
(b) The Master Servicer may from time to time make withdrawals from the
Master Servicer Account for the following purposes:
(i) to withdraw pursuant to Section 3.05 any amount deposited in the
Master Servicer Account and not required to be deposited therein;
(ii) to clear and terminate the Master Servicer Account upon
termination of the Agreement pursuant to Section 9.01 hereof;
(iii) to clear and terminate the Master Servicer Account upon
termination of the rights and obligations of the Master Servicer hereunder
pursuant to Section 11.18 hereof; and
(iv) to pay to the Master Servicer earnings on or investment income
with respect to funds in or credited to the Master Servicer Account.
In addition, no later than 1:00 p.m. Eastern Time on the second Business
Day preceding each Distribution Date, the Master Servicer shall cause to be
withdrawn from the Master Servicer Account the Interest Funds and the Principal
Funds, to the extent on deposit, and such amount shall be deposited in the
Certificate Account; provided, however, if the Trustee does not receive such
Interest Funds and Principal Funds by 4:00 p.m. Eastern Time, such Interest
Funds and Principal Funds shall be deposited in the Certificate Account by 1:00
p.m. Eastern Time on the next Business Day.
(c) The Trustee shall withdraw funds from the Certificate Account for
distribution to the Certificateholders in the manner specified in this Agreement
(and to withhold from the amounts so withdrawn, the amount of any taxes that it
is authorized to retain pursuant to this Agreement). In addition, the Trustee
may from time to time make withdrawals from the Certificate Account for the
following purposes:
(i) to withdraw pursuant to Section 3.05 any amount deposited in the
Certificate Account and not required to be deposited therein;
-56-
(ii) to clear and terminate the Certificate Account upon termination
of the Agreement pursuant to Section 9.01 hereof;
(iii) to reimburse the Trustee for fees pursuant to Section 8.05
hereof, and expenses and indemnification reimbursable pursuant to Section
8.06 hereof; and
(iv) to pay to the Trustee earnings on or investment income with
respect to funds in or credited to the Certificate Account.
SECTION 3.09. Servicing Transfer Dates.
The Interim Servicers will service the Mortgage Loans pursuant to the
terms of the Interim Servicing Agreements during the related Interim Servicing
Period. The Servicer shall not be obligated to perform any duties or
responsibilities under this Agreement with respect to any Mortgage Loan until
the servicing rights to such Mortgage Loan have been transferred to the Servicer
on the related Servicing Transfer Date. The Servicer shall not be liable for any
actions or inactions of any prior servicer of a Mortgage Loan prior to the
related Servicing Transfer Date nor shall any action or inaction by a prior
servicer be deemed an Event of Default with respect to the Servicer. The
Servicer shall provide notice to each other party hereto confirming that the
Final Servicing Transfer Date has occurred.
SECTION 3.10. Maintenance of Hazard Insurance.
The Servicer shall cause to be maintained, for each Mortgage Loan, hazard
insurance with extended coverage in an amount that is at least equal to the
lesser of (i) the replacement value of the improvements that are part of such
Mortgaged Property and (ii) the greater of (a) the outstanding principal balance
of the Mortgage Loan and (b) an amount such that the proceeds of such policy
shall be sufficient to prevent the related Mortgagor and/or mortgagee from
becoming a co-insurer. Each such policy of standard hazard insurance shall
contain, or have an accompanying endorsement that contains, a standard mortgagee
clause. The Servicer shall also cause flood insurance to be maintained on
property acquired upon foreclosure or deed in lieu of foreclosure of any
Mortgage Loan, to the extent required under the standards described below.
Pursuant to Section 3.05 hereof, any amounts collected by the Servicer under any
such policies (other than the amounts to be applied to the restoration or repair
of the related Mortgaged Property or property thus acquired or amounts released
to the Mortgagor in accordance with the Servicer's normal servicing procedures)
shall be deposited in the Collection Account. Any cost incurred by the Servicer
in maintaining any such insurance shall not, for the purpose of calculating
monthly distributions to the Certificateholders or remittances to the Trustee
for their benefit, be added to the principal balance of the Mortgage Loan,
notwithstanding that the terms of the Mortgage Loan so permit. Such costs shall
be recoverable by the Servicer out of late payments by the related Mortgagor or
out of Liquidation Proceeds to the extent and as otherwise permitted by Section
3.08 hereof. It is understood and agreed that no earthquake or other additional
insurance is to be required of any Mortgagor or maintained on property acquired
in respect of a Mortgage 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 is located at the time of
origination of the Mortgage Loan in a federally designated special flood hazard
area and such area is participating in the national flood insurance program, the
Servicer shall cause flood insurance to be maintained with respect to such
Mortgage Loan. Such flood insurance shall be in an amount equal to the lesser of
(i) the original principal balance of the related Mortgage Loan, (ii) the
replacement value of the improvements that are part of such Mortgaged Property,
or (iii) the maximum amount of such insurance available for the related
Mortgaged Property under the Flood Disaster Protection Act of 1973, as amended.
-57-
In the event that the Servicer shall obtain and maintain a blanket policy
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 sentence of this Section 3.10, it being understood and agreed that such
policy may contain a deductible clause on terms substantially equivalent to
those commercially available and maintained by comparable servicers. If such
policy contains a deductible clause, the Servicer shall, in the event that there
shall not have been maintained on the related Mortgaged Property a policy
complying with the first sentence of this Section 3.10, and there shall have
been a loss that would have been covered by such policy, deposit in the
Collection Account the amount not otherwise payable under the blanket policy
because of such deductible clause. In connection with its activities as servicer
of the Mortgage Loans, the Servicer agrees to present, on behalf of itself, the
Depositor and the Trustee for the benefit of the Certificateholders, claims
under any such blanket policy.
SECTION 3.11. Enforcement of Due-On-Sale Clauses; Assumption Agreements.
When a Mortgaged Property has been or is about to be conveyed by the
Mortgagor, the Servicer shall, except as set forth below, to the extent it has
knowledge of such conveyance or prospective conveyance, exercise its rights to
accelerate the maturity of the related Mortgage Loan under any "due-on-sale"
clause contained in the related Mortgage or Mortgage Note; provided, however,
that the Servicer shall not exercise any such right if the "due-on-sale" clause,
in the reasonable belief of the Servicer, is not enforceable under applicable
law; provided, further, that the Servicer shall not take any action in relation
to the enforcement of any "due-on-sale" clause which would adversely affect or
jeopardize coverage under any Required Insurance Policy. An Opinion of Counsel
at the expense of the Servicer (which expense shall constitute a Servicing
Advance) delivered to the Trustee and the Depositor shall conclusively establish
the reasonableness of the Servicer's belief that any "due-on-sale" clause is not
enforceable under applicable law. In such event, the Servicer shall make
reasonable efforts to enter into an assumption and modification agreement with
the Person to whom such property has been or is about to be conveyed, pursuant
to which such Person becomes liable under the Mortgage Note and, unless
prohibited by applicable law or the Mortgage, the Mortgagor remains liable
thereon. If the foregoing is not permitted under applicable law, the Servicer is
authorized to enter into a substitution of liability agreement with such Person,
pursuant to which the original Mortgagor is released from liability and such
Person is substituted as Mortgagor and becomes liable under the Note. In
addition to the foregoing, the Servicer shall not be required to enforce any
"due-on-sale" clause if in the reasonable judgment of the Servicer, entering
into an assumption and modification agreement with a Person to whom such
property shall be conveyed and releasing the original Mortgagor from liability
would be in the best interests of the Certificateholders. The Mortgage Loan, as
assumed, shall conform in all respects to the requirements, representations and
warranties of this Agreement. The Servicer shall notify the Trustee that any
such assumption or substitution agreement has been completed by forwarding to
the Trustee the original copy of such assumption or substitution agreement
(indicating the Mortgage File to which it relates) which copy shall be added by
the Trustee to the related Mortgage File and which 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. The Servicer shall be
responsible for recording any such assumption or substitution agreements. In
connection with any such assumption or substitution agreement, the Monthly
Payment on the related Mortgage Loan shall not be changed but shall remain as in
effect immediately prior to the assumption or substitution, the stated maturity
or outstanding principal amount of such Mortgage Loan shall not be changed nor
shall any required monthly payments of principal or interest be deferred or
forgiven. Any fee collected by the Servicer for consenting to any such
conveyance or entering into an assumption or substitution agreement shall be
retained by or paid to the Servicer as additional servicing compensation.
-58-
Notwithstanding the foregoing paragraph or any other provision of
this Agreement, the Servicer shall not be deemed to be in default, breach or any
other violation of its obligations hereunder by reason of any assumption of a
Mortgage Loan by operation of law or any assumption which the Servicer may be
restricted by law from preventing, for any reason whatsoever.
SECTION 3.12. Realization Upon Defaulted Mortgage Loans; Determination of
Excess Proceeds.
(a) The Servicer shall use reasonable efforts consistent with the
servicing standard set forth in Section 3.01 to foreclose upon or otherwise
comparably convert the ownership of properties securing such of the Mortgage
Loans as come into and continue in default and as to which no satisfactory
arrangements can be made for collection of Delinquent payments. In connection
with such foreclosure or other conversion, the Servicer shall follow such
practices and procedures as it shall deem necessary or advisable and as shall be
normal and usual in its general mortgage servicing activities and the
requirements of the insurer under any Required Insurance Policy; provided,
however, that the Servicer shall not be required to expend its own funds in
connection with the restoration of any property that shall have suffered damage
due to an uninsured cause unless it shall determine (i) that such restoration
increase the proceeds of liquidation of the Mortgage Loan after reimbursement to
itself of such expenses and (ii) that such expenses will be recoverable to it
through Liquidation Proceeds (respecting which it shall have priority for
purposes of withdrawals from the Collection Account pursuant to Section 3.08
hereof). The Servicer shall be responsible for all other costs and expenses
incurred by it in any such proceedings; provided, however, that it shall be
entitled to reimbursement thereof from the proceeds of liquidation of the
related Mortgaged Property, as contemplated in Section 3.08 hereof. If the
Servicer has knowledge that a Mortgaged Property that the Servicer is
contemplating acquiring in foreclosure or by deed-in-lieu of foreclosure is
located within a one-mile radius of any site with environmental or hazardous
waste risks known to the Servicer, the Servicer will, prior to acquiring the
Mortgaged Property, consider such risks and only take action in accordance with
Accepted Servicing Practices.
With respect to any REO Property, the deed or certificate of sale shall be
taken in the name of the Trustee or its nominee. Pursuant to its efforts to sell
such REO Property, the Servicer shall either itself or through an agent selected
by the Servicer protect and conserve such REO Property in the same manner and to
such extent as is customary in the locality where such REO Property is located
and may, incident to its conservation and protection of the interests of the
Certificateholders, rent the same, or any part thereof, as the Servicer deems to
be in the best interest of the Servicer and the Certificateholders for the
period prior to the sale of such REO Property. The Servicer or an affiliate may
receive usual and customary real estate referral fees for real estate brokers in
connection with the listing and disposition of REO Property. The Servicer shall
prepare a statement with respect to each REO Property that has been rented
showing the aggregate rental income received and all expenses incurred in
connection with the management and maintenance of such REO Property at such
times as is necessary to enable the Servicer to comply with the reporting
requirements of the REMIC Provisions. The net monthly rental income, if any,
from such REO Property shall be deposited in the Collection Account no later
than the close of business on each Determination Date. The Servicer shall
perform the tax reporting and withholding related to foreclosures, abandonments
and cancellation of indebtedness income as specified by Sections 1445, 6050J and
6050P of the Code by preparing and filing such tax and information returns, as
may be required.
In the event that the Trust Fund acquires any Mortgaged Property as
aforesaid or otherwise in connection with a default or imminent default on a
Mortgage Loan, the Servicer shall dispose of such
-59-
Mortgaged Property prior to the expiration of three years from the end of the
year of its acquisition by the Trust Fund or, at the expense of the Trust Fund,
request, in accordance with applicable procedures for obtaining an automatic
extension of the grace period, more than 60 days prior to the day on which such
three-year period would otherwise expire, an extension of the three-year grace
period, in which case such property must be disposed of prior to the end of such
extension, unless the Trustee and the NIMs Insurer shall have been supplied with
an Opinion of Counsel (such Opinion of Counsel not to be an expense of the
Trustee or the NIMs Insurer) to the effect that the holding by the Trust Fund of
such Mortgaged Property subsequent to such three-year period or extension will
not result in the imposition of taxes on "prohibited transactions" of the Trust
Fund or any of the REMICs provided for herein as defined in section 860F of the
Code or cause any of the REMICs provided for herein to fail to qualify as a
REMIC at any time that any Certificates are outstanding, in which case the Trust
Fund may continue to hold such Mortgaged Property (subject to any conditions
contained in such Opinion of Counsel). Notwithstanding any other provision of
this Agreement, no Mortgaged Property acquired by the Trust Fund shall be rented
(or allowed to continue to be rented) or otherwise used for the production of
income by or on behalf of the Trust Fund in such a manner or pursuant to any
terms that would (i) cause such Mortgaged Property to fail to qualify as
"foreclosure property" within the meaning of section 860G(a)(8) of the Code or
(ii) subject the Trust Fund or any REMIC provided for herein to the imposition
of any federal, state or local income taxes on the income earned from such
Mortgaged under section 860G(c) of the Code or otherwise, unless the Servicer or
the Depositor has agreed to indemnify and hold harmless the Trust Fund with
respect to the imposition of any such taxes.
The decision of the Servicer to foreclose on a defaulted Mortgage Loan
shall be subject to a determination by the Servicer that the proceeds of such
foreclosure would exceed the costs and expenses of bringing such a proceeding.
The income earned from the management of any Mortgaged Properties acquired
through foreclosure or other judicial proceeding, net of reimbursement to the
Servicer for expenses incurred (including any property or other taxes) in
connection with such management and net of unreimbursed Servicing Fees,
Advances, Servicing Advances and any management fee paid or to be paid with
respect to the management of such Mortgaged Property, shall be applied to the
payment of principal of, and interest on, the related defaulted Mortgage Loans
(with interest accruing as though such Mortgage Loans were still current) and
all such income shall be deemed, for all purposes in this Agreement, to be
payments on account of principal and interest on the related Mortgage Notes and
shall be deposited into the Collection Account. To the extent the income
received during a Prepayment Period is in excess of the amount attributable to
amortizing principal and accrued interest at the related Mortgage Rate on the
related Mortgage Loan, such excess shall be considered to be a partial Principal
Prepayment for all purposes hereof.
The Liquidation Proceeds from any liquidation of a Mortgage Loan, net of
any payment to the Servicer as provided above, shall be deposited in the
Collection Account on the next succeeding Determination Date following receipt
thereof for distribution on the related Distribution Date.
The proceeds of any Liquidated Loan, as well as any recovery resulting
from a partial collection of Liquidation Proceeds or any income from an REO
Property, will be applied in the following order of priority: first, to
reimburse the Servicer for any related unreimbursed Servicing Advances and
Servicing Fees, pursuant to Section 3.08(a)(vi) or this Section 3.12; second, to
reimburse the Servicer for any unreimbursed Advances, pursuant to Section
3.08(a)(ii) or this Section 3.12; third, to any prepayment penalties and then to
accrued and unpaid interest (to the extent no Advance has been made for such
amount) on the Mortgage Loan or related REO Property, at the Net Mortgage Rate
to the Due Date occurring in the month in which such amounts are required to be
distributed; and fourth, as a recovery of principal of the Mortgage Loan.
-60-
(b) On each Determination Date, the Servicer shall determine the
respective aggregate amounts of Excess Proceeds, if any, that occurred in the
related Prepayment Period.
(c) The Servicer, in its sole discretion, shall have the right to elect
(by written notice sent to the Trustee) to purchase for its own account from the
Trust Fund any Mortgage Loan that is 91 days or more Delinquent at a price equal
to the Purchase Price. The Purchase Price for any Mortgage Loan purchased
hereunder shall be delivered to the Trustee for deposit to the Certificate
Account and the Trustee, upon receipt of such confirmation of deposit and a
Request for Release from the Servicer in the form of Exhibit I hereto, shall
release or cause to be released to the Servicer the related Mortgage File and
shall execute and deliver such instruments of transfer or assignment prepared by
the Servicer, in each case without recourse, as shall be necessary to vest in
the Servicer any Mortgage Loan released pursuant hereto and the Servicer shall
succeed to all the Trustee's right, title and interest in and to such Mortgage
Loan and all security and documents related thereto. Such assignment shall be an
assignment outright and not for security. The Servicer shall thereupon own such
Mortgage Loan, and all security and documents, free of any further obligation to
the Trustee or the Certificateholders with respect thereto.
SECTION 3.13. Trustee to Cooperate; Release of Mortgage Files.
Upon the payment in full of any Mortgage Loan, or the receipt by the
Servicer of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Servicer will promptly notify the Trustee or
its designee by delivering a Request for Release substantially in the form of
Exhibit I. Upon receipt of a copy of such request, the Trustee or its designee
shall promptly release the related Mortgage File to the Servicer, and the
Servicer is authorized to cause the removal from the registration on the MERS
System of any such Mortgage if applicable, and the Trustee or its designee shall
at the Servicer's written direction execute and deliver to the Servicer the
request for reconveyance, deed of reconveyance or release or satisfaction of
mortgage or such instrument releasing the lien of the Mortgage in each case
provided by the Servicer, together with the Mortgage Note with written evidence
of cancellation thereon. No expenses incurred in connection with any instrument
of satisfaction or deed of reconveyance shall be chargeable to the Collection
Account, the Certificate Account or the related subservicing account. From time
to time and as shall be appropriate for the servicing or foreclosure of any
Mortgage Loan, including for such purpose, collection under any policy of flood
insurance, any fidelity bond or errors or omissions policy, or for the purposes
of effecting a partial release of any Mortgaged Property from the lien of the
Mortgage or the making of any corrections to the Mortgage Note or the Mortgage
or any of the other documents included in the Mortgage File, the Trustee or its
designee shall, upon delivery to the Trustee or its designee of a Request for
Release in the form of Exhibit I signed by a Servicing Officer, release the
Mortgage File to the Servicer. Subject to the further limitations set forth
below, the Servicer shall cause the Mortgage File or documents so released to be
returned to the Trustee or its designee when the need therefor by the Servicer
no longer exists, unless the Mortgage Loan is liquidated and the proceeds
thereof are deposited in the Collection Account, in which case the Trustee or
its designee shall deliver the Request for Release to the Servicer.
Each Request for Release may be delivered to the Trustee or its designee
(i) via mail or courier, (ii) via facsimile or (iii) by such other means,
including, without limitation, electronic or computer readable medium, as the
Servicer and the Trustee or its designee shall mutually agree. The Trustee or
its designee shall promptly release the related Mortgage File(s) within five (5)
Business Days of receipt of a properly completed Request for Release pursuant to
clauses (i), (ii) or (iii) above. Receipt of a properly completed Request for
Release shall be authorization to the Trustee or its designee to release such
Mortgage Files, provided the Trustee or its designee has determined that such
Request for Release has been executed, with respect to clauses (i) or (ii)
above, or approved, with respect to clause (iii) above, by an authorized
Servicing Officer of the Servicer, and so long as the Trustee or its designee
complies with its duties and obligations under the agreement. If the Trustee or
its designee is unable to release the
-61-
Mortgage Files within the period previously specified, the Trustee or its
designee shall immediately notify the Servicer indicating the reason for such
delay. If the Servicer is required to pay penalties or damages due to the
Trustee or its designee's negligent failure to release the related Mortgage File
or the Trustee or its designee's negligent failure to execute and release
documents in a timely manner, the Trustee or its designee, shall be liable for
such penalties or damages respectively caused by it.
If the Servicer at any time seeks to initiate a foreclosure proceeding in
respect of any Mortgaged Property as authorized by this Agreement, the Servicer
shall deliver or cause to be delivered to the Trustee or its designee, for
signature, as appropriate, any court pleadings, requests for trustee's sale or
other documents necessary to effectuate such foreclosure or any legal action
brought to obtain judgment against the Mortgagor on the Mortgage Note or the
Mortgage or to obtain a deficiency judgment or to enforce any other remedies or
rights provided by the Mortgage Note or the Mortgage or otherwise available at
law or in equity. Notwithstanding the foregoing, the Servicer shall cause
possession of any Mortgage File or of the documents therein that shall have been
released by the Trustee or its designee to be returned to the Trustee promptly
after possession thereof shall have been released by the Trustee or its designee
unless (i) the Mortgage Loan has been liquidated and the Liquidation Proceeds
relating to the Mortgage Loan have been deposited in the Collection Account, and
the Servicer shall have delivered to the Trustee or its designee a Request for
Release in the form of Exhibit I or (ii) the Mortgage File or document shall
have 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 and the
Servicer shall have delivered to the Trustee or its designee an Officer's
Certificate of a Servicing Officer certifying as to the name and address of the
Person to which the Mortgage File or the documents therein were delivered and
the purpose or purposes of such delivery.
SECTION 3.14. Documents, Records and Funds in Possession of Servicer to be
Held for the Trustee.
All Mortgage Files and funds collected or held by, or under the control
of, the Servicer in respect of any Mortgage Loans, whether from the collection
of principal and interest payments or from Liquidation Proceeds, including but
not limited to, any funds on deposit in the Collection Account, shall be held by
the Servicer for and on behalf of the Trustee and shall be and remain the sole
and exclusive property of the Trustee, subject to the applicable provisions of
this Agreement. The Servicer also agrees that it shall not create, incur or
subject any Mortgage File or any funds that are deposited in the Collection
Account or Certificate Account or in any Escrow Account, or any funds that
otherwise are or may become due or payable to the Trustee for the benefit of the
Certificateholders, to any claim, lien, security interest, judgment, levy, writ
of attachment or other encumbrance, or assert by legal action or otherwise any
claim or right of set off against any Mortgage File or any funds collected on,
or in connection with, a Mortgage Loan, except, however, that the Servicer shall
be entitled to set off against and deduct from any such funds any amounts that
are properly due and payable to the Servicer under this Agreement.
SECTION 3.15. Servicing Compensation.
As compensation for its activities hereunder, the Servicer shall be
entitled to retain or withdraw from the Collection Account out of each payment
of interest on a Mortgage Loan included in the Trust Fund an amount equal to
interest at the applicable Servicing Fee Rate on the Stated Principal Balance of
the related Mortgage Loan as of the immediately preceding Distribution Date.
Additional servicing compensation in the form of any Excess Proceeds, late
payment fees, assumption fees (i.e. fees related to the assumption of a Mortgage
Loan upon the purchase of the related Mortgaged Property) and similar fees
payable by the Mortgagor, and all income and gain net of any losses realized
from Permitted Investments in the Collection Account shall be retained by the
Servicer to the
-62-
extent not required to be deposited in the Collection Account pursuant to
Sections 3.05, or 3.12(a) hereof. The Servicer shall be required to pay all
expenses incurred by it in connection with its servicing activities hereunder
(including payment of any premiums for hazard insurance, as required by Section
3.10 hereof and maintenance of the other forms of insurance coverage required by
Section 3.10 hereof) and shall not be entitled to reimbursement therefor except
as specifically provided in Sections 3.08 and 3.12 hereof.
SECTION 3.16. Access to Certain Documentation.
The Servicer shall provide to the OTS and the FDIC and to comparable
regulatory authorities supervising Holders of the Certificates and the examiners
and supervisory agents of the OTS, the FDIC and such other authorities, access
to the documentation regarding the Mortgage Loans required by applicable
regulations of the OTS and the FDIC. Such access shall be afforded without
charge, but only upon reasonable and prior written request and during normal
business hours at the offices of the Servicer designated by it provided, that
the Servicer shall be entitled to be reimbursed by each such Certificateholder
for actual expenses incurred by the Servicer in providing such reports and
access. Nothing in this Section shall limit the obligation of the Servicer to
observe any applicable law prohibiting disclosure of information regarding the
Mortgagors and the failure of the Servicer to provide access as provided in this
Section as a result of such obligation shall not constitute a breach of this
Section.
SECTION 3.17. Annual Statement as to Compliance.
Pursuant to this Agreement, the Servicer shall deliver to the Depositor,
the Trustee and the NIMs Insurer on or before February 28 of each year beginning
in 2004, (or such other date that the Depositor gives the Servicer at least 30
days prior notice of) in order to remain in compliance with the Section 302
Requirements, an Officer's Certificate 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 or a similar agreement has
been made under such officer's 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 officers and the nature and status thereof. The Trustee shall
forward a copy of each such statement received by it to each Rating Agency.
Copies of such statement shall be provided by the Trustee to any
Certificateholder upon written request at the Certificateholder's expense,
provided such statement has been delivered by the Servicer to the Trustee.
SECTION 3.18. Annual Independent Public Accountants' Servicing Statement;
Financial Statements.
On or before March 15 of each year, beginning in 2004 or such other date
in order to remain in compliance with the Section 302 Requirements, the Servicer
at its expense shall cause a nationally recognized firm of independent public
accountants (who may also render other services to the Servicer or any Affiliate
thereof) that is a member of the American Institute of Certified Public
Accountants to furnish a USAP Report to the Trustee, the NIMs Insurer and the
Depositor. Copies of the USAP Report shall be provided by the Trustee to any
Certificateholder upon request at the Certificateholder's expense, provided such
report has been delivered by the Servicer to the Trustee. In addition, at the
NIMs Insurer's written request, the Servicer shall deliver copies of evidence of
the Servicer's fidelity bond or errors and omissions insurance coverage to the
NIMs Insurer.
-63-
SECTION 3.19. Rights of the NIMs Insurer. Each of the rights of the NIMs
Insurer set forth in this agreement shall exist so long as the notes issued
pursuant to the Indenture remain outstanding or the NIMs Insurer is owed amounts
in respect of its guarantee of payment on such notes.
SECTION 3.20. Periodic Filings.
(a) As part of the Form 10-K required to be filed pursuant to the terms of
this Agreement, the Trustee shall include the accountants report required
pursuant to Section 3.18 as well as the Officer's Certificate delivered by the
Servicer pursuant to Section 3.17 relating to the Servicer's performance of its
obligations under this Agreement.
(b) The Trustee shall prepare for filing, and execute (other than the Form
10-Ks and the Certification), on behalf of the Trust Fund, and file with the
Securities and Exchange Commission, (i) within 15 days after each Distribution
Date in each month, each Monthly Statement on Form 8-K under the Exchange Act
executed by the Trustee, (ii) on or before March 31 of each year beginning in
2004 or such other date in order to remain in compliance with the Section 302
Requirements, a Form 10-K under the Exchange Act executed by the Depositor,
including any certification (the "Certification") required by the Section 302
Requirements, and (iii) any and all reports, statements and information
respecting the Trust Fund and/or the Certificates required to be filed on behalf
of the Trust Fund under the Exchange Act executed by the Trustee. The
Certification shall be executed by a senior officer of the Depositor. Upon such
filing with the Securities and Exchange Commission, the Trustee shall promptly
deliver to the Depositor a copy of any such executed report, statement or
information. Prior to making any such filings and certifications, the Trustee
shall comply with the provisions set forth in this Section. If permitted by
applicable law and unless the Depositor otherwise directs, the Trustee shall
file a Form 15 under the Exchange Act on or before January 30, 2004 as soon as
it is able to do so pursuant to applicable law. The Depositor hereby grants to
the Trustee a limited power of attorney to execute (other than the Form 10-Ks
and the Certification) and file each such document on behalf of the Depositor.
Such power of attorney shall continue until either 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 Fund. 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 and 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.
(c) [RESERVED].
(d) The obligations set forth in paragraphs (a) through (c) of this
Section shall only apply with respect to periods for which the Trustee is
obligated to file Form 8-Ks and 10-Ks pursuant to paragraph (b) of this Section.
In the event a Form 15 is properly filed pursuant to paragraph (b) of this
Section, there shall be no further obligations under paragraphs (a) through (c)
of this Section commencing with the fiscal year in which the Form 15 is filed
(other than the obligations in paragraphs (a) and (b) of this Section to be
performed in such fiscal year that relate back to the prior fiscal year).
SECTION 3.21. Annual Certificate by Trustee
(a) Within 15 days prior to the date on which a Form 10-K is to be filed
with a Certification by the Depositor, an officer of the Trustee shall execute
and deliver an Officer's Certificate, signed by a Responsible Officer of the
Trustee or any officer to whom that officer reports, to the Depositor for the
benefit of such Depositor and its officers, directors and affiliates, certifying
as to the matters described in the Officer's Certificate attached hereto as
Exhibit K.
-64-
(b) The Trustee shall indemnify and hold harmless the Depositor and its
officers, directors, agents and affiliates from and against any losses, damages,
penalties, fines, forfeitures, reasonable legal fees and related costs,
judgments and other costs and expenses arising out of or based upon a breach by
the Trustee or any of its officers, directors, agents or affiliates of its
obligations under this Section 3.21 any material misstatement or omission in the
Officer's Certificate required under this Section or the negligence, bad faith
or willful misconduct of the Trustee in connection therewith. If the
indemnification provided for herein is unavailable or insufficient to hold
harmless the Depositor, then the Trustee 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 Trustee on the one had and the Depositor on
the other in connection with a breach of the Trustee's obligations under this
Section 3.21, any material misstatement or omission in the Officer's Certificate
required under this Section or the Trustee's negligence, bad faith or willful
misconduct in connection therewith.
SECTION 3.22. Annual Certificate by Servicer
(a) Within 15 days prior to the date on which a Form 8-K is required to be
filed with a Certification by the Depositor, the Servicer shall execute and
deliver an Officer's Certificate in the form of Exhibit L attached hereto,
signed by the senior officer in charge of servicing of the Servicer or any
officer to whom that officer reports, to the Trustee, the NIMs Insurer and
Depositor for the benefit of the Trustee and Depositor and their respective
officers, directors and affiliates, certifying as to the following matters:
(i) I have reviewed the information required to be delivered to the
Trustee pursuant to the Pooling and Servicing Agreement (the "Servicing
Information").
(ii) Based on my knowledge, the information in the Annual Statement
of Compliance, and all servicing reports, officer's certificates and other
information relating to the servicing of the Mortgage Loans submitted to
the Trustee by the Servicer taken as a whole, does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make any such reports, certificates or other information, in light of the
circumstances under which such statements were made, not misleading as of
the last day of the period covered by the Annual Statement of Compliance;
(iii) Based on my knowledge, the Servicing Information required to
be provided to the Trustee by the Servicer under this Agreement has been
provided to the Trustee; and
(iv) I am responsible for reviewing the activities performed by the
Servicer under this Agreement and based upon the review required
hereunder, and except as disclosed in the Annual Statement of Compliance,
the Annual Independent Certified Public Accountant's Servicing Report and
all servicing reports, officer's certificates and other information
relating to the servicing of the Mortgage Loans submitted to the Trustee
by the Servicer, the Servicer has, as of the last day of the period
covered by the Annual Statement of Compliance fulfilled its obligations
under this Agreement.
(b) The Servicer shall indemnify and hold harmless the NIMs Insurer, the
Trustee and the Depositor and their respective officers, directors, agents and
affiliates from and against any losses, damages, penalties, fines, forfeitures,
reasonable legal fees and related costs, judgments and other costs and expenses
arising out of or based upon a breach by the Servicer or any of its officers,
directors, agents or affiliates of its obligations under this Section 3.22, any
material misstatement or omission in the Officer's Certificate required under
this Section or the negligence, bad faith or willful misconduct of the
-65-
Servicer in connection therewith. If the indemnification provided for herein is
unavailable or insufficient to hold harmless the NIMs Insurer and the Depositor,
then the Servicer agrees that it shall contribute to the amount paid or payable
by the Trustee and 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 Servicer on the other in
connection with a breach of the Servicer's obligations under this Section 3.22,
any material misstatement or omission in the Officer's Certificate required
under this Section or the Servicer's negligence, bad faith or willful misconduct
in connection therewith.
SECTION 3.23. Prepayment Penalty Reporting Requirements
(a) Promptly after each Distribution Date, the Servicer shall provide to
the Depositor and the NIMs Insurer the following information with regard to each
Mortgage Loan that has prepaid during the related Prepayment Period:
(i) loan number;
(ii) current Mortgage Rate;
(iii) current principal balance;
(iv) original principal balance;
(v) Prepayment Penalty amount due;
(vi) Prepayment Penalty amount collected; and
(vii) reason why full Prepayment Penalty amount was not collected,
if applicable.
SECTION 3.24. Statements to Trustee
(a) Not later than the tenth calendar day of each month, the Servicer
shall furnish to the Trustee and the NIMs Insurer an electronic file providing
loan level accounting data for the period ending on the last Business Day of the
preceding month in the format mutually agreed upon between the Servicer and the
Trustee, including but not limited to information described in Section 4.05(a).
SECTION 3.25. Indemnification
(a) The Servicer shall indemnify the Seller, the Trust Fund, the Trustee,
the Master Servicer, the Depositor and the NIMs Insurer and hold each of them
harmless against any and all claims, losses, damages, penalties, fines,
forfeitures, reasonable and necessary legal fees and related costs, judgements,
and any other costs, fees and expenses that any of such parties may sustain in
any way related to the failure of the Servicer to perform its duties and service
the Mortgage Loans in compliance with the terms of this Agreement. The Servicer
immediately shall notify the Seller, the Trustee, the Master Servicer, the
Depositor and the NIMs Insurer or any other relevant party if a claim is made by
a third party with respect to this Agreement or the Mortgage Loans, assume (with
the prior written consent of the indemnified party, which consent shall not be
unreasonably withheld or delayed) the defense of any such claim and pay all
expenses in connection therewith, including counsel fees, and promptly pay,
discharge and satisfy any judgement or decree which may be entered against it or
any of such parties in respect of such claim. The Servicer shall follow any
written instructions received from the Trustee and the NIMs Insurer in
connection with such claim. The Servicer shall provide the Trustee, the
Depositor, the Master Servicer, and the NIMs Insurer with a written report of
all expenses and advances incurred by the Servicer pursuant to this Section
3.25(a), and the Servicer from the assets of the Trust Fund in the Collection
Account
-66-
promptly shall reimburse itself for all amounts advanced by it pursuant to the
preceding sentence except when the claim in any way relates to the failure of
the Servicer to service and administer the Mortgage Loans in material compliance
with the terms of this Agreement or the gross negligence, bad faith or willful
misconduct of the Servicer. The provisions of this paragraph shall survive the
termination of this Agreement and the payment of the outstanding Certificates.
(b) The Master Servicer shall indemnify the Seller, the Trust Fund, the
Trustee, the Servicer, the Depositor and the NIMs Insurer and hold each of them
harmless against any and all claims, losses, damages, penalties, fines,
forfeitures, reasonable and necessary legal fees and related costs, judgements,
and any other costs, fees and expenses that any of such parties may sustain in
any way related to the failure of the Servicer to perform its duties and service
the Mortgage Loans in compliance with the terms of this Agreement. The Master
Servicer immediately shall notify the Seller, the Trustee, the Servicer, the
Depositor and the NIMs Insurer or any other relevant party if a claim is made by
a third party with respect to this Agreement or the Mortgage Loans, assume (with
the prior written consent of the indemnified party, which consent shall not be
unreasonably withheld or delayed) the defense of any such claim and pay all
expenses in connection therewith, including counsel fees, and promptly pay,
discharge and satisfy any judgement or decree which may be entered against it or
any of such parties in respect of such claim. The Master Servicer shall follow
any written instructions received from the Trustee and the NIMs Insurer in
connection with such claim. The Master Servicer shall provide the Trustee, the
Servicer, the Depositor and the NIMs Insurer with a written report of all
expenses and advances incurred by the Master Servicer pursuant to this Section
3.25(b), and the Master Servicer from the assets of the Trust Fund in the
Collection Account promptly shall reimburse itself for all amounts advanced by
it pursuant to the preceding sentence except when the claim in any way relates
to the failure of the Master Servicer to service and administer the Mortgage
Loans in material compliance with the terms of this Agreement or the gross
negligence, bad faith or willful misconduct of the Master Servicer. The
provisions of this paragraph shall survive the termination of this Agreement and
the payment of the outstanding Certificates.
SECTION 3.26. Nonsolicitation.
For as long as the Servicer services the Mortgage Loans, the Servicer
covenants that it will not, and that it will ensure that its affiliates and
agents, will not, directly solicit or provide information for any other party to
solicit for prepayment or refinancing of any of the Mortgage Loans by the
related Mortgagors. It is understood that the promotions undertaken by the
Servicer which are directed to the general public at large, or certain segments
thereof, shall not constitute solicitation as that term is used in this Section
3.26.
SECTION 3.27. Maintenance of LPMI Policy.
The Servicer shall take all such actions as are necessary to service,
maintain and administer the LPMI Loans in accordance with the LPMI Policy and to
perform and enforce the rights of the insured under such LPMI Policy. Except as
expressly set forth herein, the Servicer shall have full authority on behalf of
the Trust Fund to do anything it reasonably deems appropriate or desirable in
connection with the servicing, maintenance and administration of the LPMI
Policy. The Servicer shall not modify or assume a Mortgage Loan covered by the
LPMI Policy or take any other action with respect to such Mortgage Loan which
would result in non-coverage under the LPMI Policy of any loss which, but for
the actions of the Servicer, would have been covered thereunder. If the LPMI
insurer fails to pay a claim under the LPMI Policy as a result of breach by the
Servicer of its obligations hereunder or under the LPMI Policy, the Servicer
shall be required to deposit in the Collection Account on or prior to the net
succeeding Remittance Date an amount equal to such unpaid claim from its own
funds without any right to reimbursement from the Trust Fund. The Servicer shall
cooperate with the LPMI insurer and the
-67-
Master Servicer and shall use its best efforts to furnish all reasonable aid,
evidence and information in the possession of the Servicer to which the Servicer
has access with respect to any LPMI Loan.
ARTICLE IV
DISTRIBUTIONS
SECTION 4.01. Advances.
Subject to the conditions of this Article IV, beginning on the related
Servicing Transfer Date, the Servicer, as required below, shall make an Advance
and deposit such Advance in the Collection Account. Each such Advance shall be
remitted to the Collection Account no later than 1:00 p.m. Eastern Standard time
on the Servicer Advance Date in immediately available funds. The Servicer shall
be obligated to make any such Advance only to the extent that such advance would
not be a Non-Recoverable Advance. If the Servicer shall have determined that it
has made a Non-Recoverable Advance or that a proposed Advance or a lesser
portion of such Advance would constitute a Non-Recoverable Advance, the Servicer
shall deliver (i) to the Trustee for the benefit of the Certificateholders funds
constituting the remaining portion of such Advance, if applicable, and (ii) to
the Depositor, the NIMs Insurer, each Rating Agency and the Trustee an Officer's
Certificate setting forth the basis for such determination. The Servicer may, in
its sole discretion, make an Advance with respect to the principal portion of
the final Scheduled Payment on a Balloon Loan, but the Servicer is under no
obligation to do so; provided, however, that nothing in this sentence shall
affect the Servicer's obligation under this Section 4.01 to Advance the interest
portion of the final Scheduled Payment with respect to a Balloon Loan as if such
Balloon Loan were a fully amortizing Mortgage Loan. If a Mortgagor does not pay
its final Scheduled Payment on a Balloon Loan when due, the Servicer shall
Advance (unless it determines in its good faith judgment that such amounts would
constitute a Non-Recoverable Advance) a full month of interest (net of the
Servicing Fee) on the Stated Principal Balance thereof each month until its
Stated Principal Balance is reduced to zero.
In lieu of making all or a portion of such Advance from its own funds, the
Servicer may (i) cause to be made an appropriate entry in its records relating
to the Collection Account that any amount held for future distribution has been
used by the Servicer in discharge of its obligation to make any such Advance and
(ii) transfer such funds from the Collection Account to the Certificate Account.
In addition, the Servicer shall have the right to reimburse itself for any such
Advance from amounts held from time to time in the Collection Account to the
extent such amounts are not then required to be distributed. Any funds so
applied and transferred pursuant to the previous two sentences shall be replaced
by the Servicer by deposit in the Collection Account no later than the close of
business on the Servicer Advance Date on which such funds are required to be
distributed pursuant to this Agreement. The Servicer shall be entitled to be
reimbursed from the Collection Account for all Advances of its own funds made
pursuant to this Section as provided in Section 3.08. The obligation to make
Advances with respect to any Mortgage Loan shall continue until such Mortgage
Loan is paid in full or the related Mortgaged Property or related REO Property
has been liquidated or until the purchase or repurchase thereof (or substitution
therefor) from the Trust Fund pursuant to any applicable provision of this
Agreement, except as otherwise provided in this Section 4.01.
SECTION 4.02. Reduction of Servicing Compensation in Connection with
Prepayment Interest Shortfalls.
In the event that any Mortgage Loan is the subject of a Prepayment
Interest Shortfall, beginning on the related Servicing Transfer Date, the
Servicer shall, from amounts in respect of the Servicing Fee for such
Distribution Date, deposit into the Collection Account, as a reduction of the
Servicing Fee for
-68-
such Distribution Date, no later than the Servicer Advance Date immediately
preceding such Distribution Date, an amount up to the Prepayment Interest
Shortfall; provided that any such deposit in reduction of the Servicing Fee
shall be limited to the product of (x) one-twelfth of 0.25% and (y) the
aggregate Stated Principal Balance of the Mortgage Loans with respect to the
related Distribution Date. In case of such deposit, the Servicer shall not be
entitled to any recovery or reimbursement from the Depositor, the Trustee, the
Trust Fund or the Certificateholders. With respect to any Distribution Date, to
the extent that the Prepayment Interest Shortfall exceeds Compensating Interest
(such excess, a "Non-Supported Interest Shortfall"), such Non-Supported Interest
Shortfall shall reduce the Current Interest with respect to each Class of
Certificates, pro rata based upon the amount of interest each such Class would
otherwise be entitled to receive on such Distribution Date.
SECTION 4.03. Distributions on the REMIC Interests.
On each Distribution Date, amounts on deposit in the Certificate Account
shall be treated for federal income tax purposes as applied to distributions on
the interests in both the Lower Tier REMIC and the Upper Tier REMIC in an amount
sufficient to make the distributions on the respective Certificates on such
Distribution Date in accordance with the provisions of Section 4.04.
SECTION 4.04. Distributions.
(a) [Reserved].
(b) On each Distribution Date, the Trustee shall make the following
distributions from the Certificate Account of an amount equal to the Interest
Funds in the following order of priority:
(i) [Reserved]
(ii) to each Class of R Certificate and Class A Certificates, the
Current Interest and any Interest Carryforward Amount with respect to such
Class; provided, however, if such amount is not sufficient to make a full
distribution of the Current Interest and any Interest Carryforward Amount
with respect to all the Class of R Certificate and Class A Certificates,
such amount will be distributed pro rata among each Class of the Class of
R Certificate and Class A Certificates based on the ratio of (x) the
Current Interest and Interest Carryforward Amount for each Class of the
Class of R Certificate and Class A Certificates to (y) the total amount of
Current Interest and any Interest Carryforward Amount for the Class of R
Certificate and Class A Certificates;
(iii) to the Class M-1 Certificates, the Class M-1 Current Interest
and any Class M-1 Interest Carryforward Amount;
(iv) to the Class M-2 Certificates, the Class M-2 Current Interest
and any Class M-2 Interest Carryforward Amount;
(v) to the Class B Certificates, the Class B Current Interest and
any Class B Interest Carryforward Amount; and
(vi) any remainder pursuant to Section 4.04(f) hereof.
(c) [Reserved]
(d) On each Distribution Date, the Trustee shall make the following
distributions from the Certificate Account of an amount equal to the Principal
Distribution Amount in the following order of priority, and each such
distribution shall be made only after all distributions pursuant to Section
4.04(b)
-69-
above shall have been made until such amount shall have been fully distributed
for such Distribution Date:
(i) to the Class R Certificate and the Class A Certificates,
sequentially, the Class A Principal Distribution Amount, until the
Certificate Principal Balances thereof have been reduced to zero;
(ii) to the Class M-1 Certificates, the Class M-1 Principal
Distribution Amount;
(iii) to the Class M-2 Certificates, the Class M-2 Principal
Distribution Amount;
(iv) to the Class B Certificates, the Class B Principal Distribution
Amount; and
(v) any remainder pursuant to Section 4.04(f) hereof.
(e) [Reserved].
(f) On each Distribution Date, the Trustee shall make the following
distributions up to the following amounts from the Certificate Account of the
remainders pursuant to Section 4.04(b)(vi) and (d)(v) hereof and, to the extent
required to make the distributions set forth below in clauses (i) through (iv)
of this Section 4.04(f), and each such distribution shall be made only after all
distributions pursuant to Sections 4.04(b) and (d) above shall have been made
until such remainders shall have been fully distributed for such Distribution
Date:
(i) for distribution as part of the Principal Distribution Amount,
the Extra Principal Distribution Amount;
(ii) to the Class M-1 Certificates, the Class M-1 Unpaid Realized
Loss Amount;
(iii) to the Class M-2 Certificates, the Class M-2 Unpaid Realized
Loss Amount;
(iv) to the Class B Certificates, the Class B Unpaid Realized Loss
Amount;
(v) to the extent required to make the allocations set forth below,
in the following order of priority (however, that to the extent the
amounts to be allocated pursuant to clauses (A) and (B) are insufficient
to make all payments of Floating Rate Certificate Carryovers for the Class
A Certificates and the Class R Certificate, the distributions made
pursuant to clauses (A) and (B) shall be made on a pro rata basis and not
sequentially):
(A) to the Class A Certificates, the Class A Floating Rate
Certificate Carryover, and to the Class R Certificate,
the Class R Floating Rate Certificate Carryover;
(B) to the Class M-1 Certificates, the Class M-1 Floating
Rate Certificate Carryover;
(C) to the Class M-2 Certificates, the Class M-2 Floating
Rate Certificate Carryover; and
(D) to the Class B Certificates, the Class B Floating Rate
Certificate Carryover;
(vi) the remainder pursuant to Section 4.04(g) hereof.
-70-
(g) on each Distribution Date, the Trustee shall allocate the remainders
pursuant to Section 4.01(f)(vi) and all amounts representing Prepayment
Penalties and amounts payable by the Master Servicer or Servicer, as applicable,
in respect of Prepayment Penalties pursuant to this Agreement as follows:
(i) to the Class N Certificates in the following order of
priority, (I) the Class N Current Interest, (II) the Class N Interest
Carryforward Amount, and (III) any other amounts remaining after
application pursuant to clauses (I) and (II) , to reduce the Class N
Certificate Notional Balance until the Class N Certificate Notional
Balance has been reduced to zero.
(ii) to the Holders of the Class X Certificates, the Class X
Distributable Amount, and
(iii) the remainder pursuant to Section 4.04(h) hereof.
(h) On each Distribution Date, the Trustee shall allocate the remainder
pursuant to Section 4.04(g)(iii) hereof, (i) to the Trustee to reimburse amounts
or pay indemnification amounts owing to the Trustee from the Trust Fund pursuant
to Section 8.06 to the extent such amounts shall have exceeded the cap set forth
in Section 8.06(c), and (ii) thereafter, to the Class R Certificate and such
distributions shall be made only after all preceding distributions shall have
been made until such remainder shall have been fully distributed.
(i) On each Distribution Date, after giving effect to distributions on
such Distribution Date, the Trustee shall allocate the Applied Realized Loss
Amount for the Certificates to reduce the Certificate Principal Balances of the
Subordinated Certificates in the following order of priority:
(i) to the Class B Certificates until the Class B Certificate
Principal Balance is reduced to zero;
(ii) to the Class M-2 Certificates until the Class M-2 Certificate
Principal Balance is reduced to zero; and
(iii) to the Class M-1 Certificates until the Class M-1 Certificate
Principal Balance is reduced to zero.
(j) Subject to Section 9.02 hereof respecting the final distribution, on
each Distribution Date the Trustee shall make distributions to each
Certificateholder of record on the preceding Record Date either by wire transfer
in immediately available funds to the account of such holder at a bank or other
entity having appropriate facilities therefor, if such Holder has so notified
the Trustee at least five (5) Business Days prior to the related Record Date or,
if not, by check mailed by first class mail to such Certificateholder at the
address of such holder appearing in the Certificate Register. Notwithstanding
the foregoing, but subject to Section 9.02 hereof respecting the final
distribution, distributions with respect to Certificates registered in the name
of a Depository shall be made to such Depository in immediately available funds.
In accordance with this Agreement, the Master Servicer, or, beginning in
the month following the related Servicing Transfer Date, the Servicer, shall
prepare and deliver a report (the "Remittance Report") to the Trustee and the
NIMs Insurer in the form of a computer readable magnetic tape (or by such other
means as the Master Servicer or the Servicer, as applicable, the Trustee and the
NIMs Insurer may agree from time to time) containing such data and information
such as to permit the Trustee to prepare the Monthly Statement to
Certificateholders and make the required distributions for the related
Distribution Date.
-71-
The Trustee shall promptly notify the NIMs Insurer of any proceeding or
the institution of any action, of which a Responsible Officer of the Trustee has
actual knowledge, seeking the avoidance as a preferential transfer under
applicable bankruptcy, insolvency, receivership or similar law (a "Preference
Claim") of any distribution made with respect to the Class N Certificates. Each
Holder of the Class N Certificates, by its purchase of such Certificates and the
Trustee hereby agree that the NIMs Insurer may at any time during the
continuation of any proceeding relating to a Preference Claim direct all matters
relating to such Preference Claim, including, without limitation, (i) the
direction of any appeal of any order relating to such Preference Claim and (ii)
the posting of any surety, supersedes or performance bond pending any such
appeal. In addition and without limitation of the foregoing, the NIMs Insurer
shall be subrogated to the rights of the Trustee and each Holder of the Class N
Certificates in the conduct of any such Preference Claim, including, without
limitation, all rights of any party to an adversary proceeding action with
respect to any court order issued in connection with any such Preference Claim;
provided, however, that the NIMs Insurer will not have any rights with respect
to any Preference Claim set forth in this paragraph unless the indenture trustee
with respect to the NIM Notes or the holder of any NIMs Notes has been required
to relinquish a distribution made on the Class N Certificates or the NIM Notes,
as applicable, and the NIMs Insurer made a payment in respect of such
relinquished amount.
(k) Any payments received under the terms of the Cap Contract will be
available to pay the holders of the Offered Certificates up to the amount of any
Floating Rate Certificate Carryover remaining after the application of Section
4.04(f)(v) on such Distribution Date. Any amounts in the Cap Contract Account on
any Distribution Date in excess of amounts required to pay outstanding Floating
Rate Certificate Carryovers on such Distribution Date will be distributed to the
holders of the Class N and Class X Certificates in accordance with the
provisions of Section 4.01(g) hereof (after all other distributions have been
made thereunder on such Distribution Date). Payments from the Cap Contract
Account in respect of the Floating Rate Certificate Carryovers shall be paid to
the Offered Certificates in accordance with the provisions of Section 4.04(f)(v)
hereof.
(i) On or prior to the Cap Contract Termination Date, amounts, if
any, received by the Trustee for the benefit of the Trust Fund in respect
of the Cap Contract shall be deposited by the Trustee into the Cap
Contract Account. With respect to any Distribution Date on or prior to the
Cap Contract Termination Date, the amount, if any, payable by the Cap
Contract Counterparty under the Cap Contract will equal the product of (i)
the excess of (x) One-Month LIBOR (as determined by the Cap Contract
Counterparty and subject to a cap equal to the rate with respect to such
Distribution Date as shown under the heading "1ML Upper Collar" in the Cap
Table), over (y) the rate with respect to such Distribution Date as shown
under the heading "1ML Lower Collar" in the Cap Table, (ii) an amount
equal to the Cap Contract Notional Balances and (iii) the number of days
in such Accrual Period, divided by 360. If a payment is made to the Trust
Fund under the Cap Contract and the Trustee intends to distribute excess
amounts to the holders of the Class N and Class X Certificates as
described above, the Trustee shall send a notice on the Business Day prior
to the related Distribution Date stating the amount received on the Cap
Contract, the amount paid with respect to Floating Rate Certificate
Carryovers and the amount due to the holders of the Class N and Class X
Certificates. Such notice shall be sent by the Trustee via facsimile to
the holders of the Class N and Class X Certificates.
(ii) Amounts on deposit in the Cap Contract Account will remain
uninvested pending distribution to Certificateholders.
(iii) The Cap Contract is scheduled to remain in effect until the
Cap Contract Termination Date and will be subject to early termination
only in limited circumstances. Such circumstances include certain
insolvency or bankruptcy events in relation to the Cap Contract
-72-
Counterparty (after a grace period of three Local Business Days, as
defined in the Cap Contract, after notice of such failure is received by
the Cap Contract Counterparty) to make a payment due under the Cap
Contract, the failure by the Cap Contract Counterparty or the Trustee
(after a cure period of 20 days after notice of such failure is received)
to perform any other agreement made by it under the Cap Contract, the
termination of the Trust Fund and the Cap Contract becoming illegal or
subject to certain kinds of taxation.
SECTION 4.05. Monthly Statements to Certificateholders.
(a) Not later than each Distribution Date based on information provided
by the Master Servicer or Servicer, as applicable, the Trustee shall prepare and
make available on its website located at ▇▇▇.▇▇▇▇▇▇▇▇▇.▇▇▇.▇▇▇ to each Holder of
a Class of Certificates of the Trust Fund, the Master Servicer, the Servicer,
the NIMs Insurer, the Rating Agencies and the Depositor a statement setting
forth for each $1,000 principal amount of Certificates:
(i) the amount of the related distribution to Holders of each
Class allocable to principal, separately identifying (A) the aggregate
amount of any Principal Prepayments included therein, (B) the aggregate of
all scheduled payments of principal included therein, (C) the Extra
Principal Distribution Amount, if any, and (D) the aggregate amount of
prepayment penalties, if any;
(ii) the amount of such distribution to Holders of each Class
allocable to interest, together with any Non-Supported Interest Shortfalls
allocated to each Class;
(iii) any Interest Carryforward Amount for each Class of the Offered
Certificates;
(iv) the Class Certificate Principal Balance of each Class after
giving effect (i) to all distributions allocable to principal on such
Distribution Date and (ii) the allocation of any Applied Realized Loss
Amounts for such Distribution Date;
(v) the Pool Stated Principal Balance for such Distribution Date;
(vi) the related amount of the Servicing Fee paid to or retained by
the Servicer;
(vii) the Pass-Through Rate for each Class of Certificates for such
Distribution Date;
(viii) the amount of Advances included in the distribution on such
Distribution Date;
(ix) the cumulative amount of (A) Realized Losses and (B) Applied
Realized Loss Amounts to date;
(x) the amount of (A) Realized Losses and (B) Applied Realized
Loss Amounts with respect to such Distribution Date;
(xi) the number and aggregate principal amounts of Mortgage Loans
(A) Delinquent (exclusive of Mortgage Loans in foreclosure) (1) 31 to 60
days, (2) 61 to 90 days and (3) 91 or more days, and (B) in foreclosure
and Delinquent (1) 31 to 60 days, (2) 61 to 90 days and (3) 91 or more
days, in each case as of the close of business on the last day of the
calendar month preceding such Distribution Date;
(xii) with respect to any Mortgage Loan that became an REO Property
during the preceding calendar month, the loan number and Stated Principal
Balance of such Mortgage Loan
-73-
as of the close of business on the last day of the calendar month
preceding such Distribution Date and the date of acquisition thereof;
(xiii) the total number and principal balance of any REO Properties
as of the close of business on the last day of the calendar month
preceding such Distribution Date;
(xiv) the aggregate Stated Principal Balance of all Liquidated Loans
as of the preceding Distribution Date;
(xv) whether a Trigger Event has occurred;
(xvi) with respect to each Class of Certificates, any Interest
Carryforward Amount with respect to such Distribution Date for each such
Class, any Interest Carryforward Amount paid for each such Class and any
remaining Interest Carryforward Amount for each such Class;
(xvii) with respect to each Class Certificates any Floating Rate
Certificate Carryover with respect to such Distribution Date for each such
Class, any Floating Rate Certificate Carryover paid for each such Class
and any remaining Floating Rate Certificate Carryover for each such Class;
(xviii) the number and Stated Principal Balance (as of the preceding
Distribution Date) of any Mortgage Loans which were purchased or
repurchased during the preceding Due Period and since the Cut-off Date;
(xix) the number of Mortgage Loans for which prepayment penalties
were received during the related Prepayment Period and, for each such
Mortgage Loan, the amount of prepayment penalties received during the
related Prepayment Period and in the aggregate of such amounts for all
such Mortgage Loans since the Cut-off Date;
(xx) [Reserved];
(xxi) the amount and purpose of any withdrawal from the Collection
Account pursuant to Section 3.08(a)(v);
(xxii) the amount of any payments to each Class of Certificates that
are treated as payments received in respect of a REMIC Regular Interest
and the amount of any payments to each Class of Certificates that are not
treated as payments received in respect of a REMIC Regular Interest;
(xxiii) as of each Distribution Date, the amount, if any, to be
deposited in the Cap Contract Account as described in Section 4.04(k) and
the amount thereof to be paid to the Offered Certificates as described in
Section 4.04(k) hereof.
(b) The Master Servicer or Servicer shall deliver to the NIMs Insurer a
copy of any report delivered by the Servicer or the Master Servicer, as
applicable, to the Trustee.
(c) Within a reasonable period of time after the end of each calendar
year, the Trustee shall make available on its website or cause to be furnished
to the NIMs Insurer and each Person who at any time during the calendar year was
a Certificateholder, a statement containing the information set forth in clauses
(a)(i) and (a)(ii) of this Section 4.02 aggregated for such calendar year or
applicable portion thereof during which such Person was a Certificateholder.
Such obligation of the Trustee shall be deemed
-74-
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 in effect.
(d) Upon filing with the Internal Revenue Service, the Trustee shall
furnish to the Holders of the Class R Certificate and the NIMs Insurer the Form
1066 and each Form 1066Q and shall respond promptly to written requests made not
more frequently than quarterly by any Holder of Class R Certificate with respect
to the following matters:
(i) The original projected principal and interest cash flows on
the Closing Date on each Class of regular and residual interests created
hereunder and on the Mortgage Loans, based on the Prepayment Assumption;
(ii) The projected remaining principal and interest cash flows as
of the end of any calendar quarter with respect to each Class of regular
and residual interests created hereunder and the Mortgage Loans, based on
the Prepayment Assumption;
(iii) The Prepayment Assumption and any interest rate assumptions
used in determining the projected principal and interest cash flows
described above;
(iv) The original issue discount (or, in the case of the Mortgage
Loans, market discount) or premium accrued or amortized through the end of
such calendar quarter with respect to each Class of regular or residual
interests created hereunder and to the Mortgage Loans, together with each
constant yield to maturity used in computing the same;
(v) The treatment of losses realized with respect to the Mortgage
Loans or the regular interests created hereunder, including the timing and
amount of any cancellation of indebtedness income of the REMICs with
respect to such regular interests or bad debt deductions claimed with
respect to the Mortgage Loans;
(vi) The amount and timing of any non-interest expenses of the
REMICs; and
(vii) Any taxes (including penalties and interest) imposed on the
REMICs, including, without limitation, taxes on "prohibited transactions,"
"contributions" or "net income from foreclosure property" or state or
local income or franchise taxes.
The information pursuant to clauses (i), (ii), (iii) and (iv) above shall
be provided by the Depositor pursuant to Section 8.11.
ARTICLE V
THE CERTIFICATES
SECTION 5.01. The Certificates.
The Certificates shall be substantially in the forms attached hereto as
exhibits. The Certificates shall be issuable in registered form, in the minimum
dollar denominations, integral dollar multiples in excess thereof (except that
one Certificate of each Class may be issued in a different amount which must be
in excess of the applicable minimum dollar denomination) and aggregate dollar
denominations as set forth in the following table:
-75-
Original Certificate
Minimum Integral Multiples in Principal Balance or
Class Denomination Excess of Minimum Notional Balance
----- ------------ ----------------- ----------------
A $25,000.00 $1.00 $149,448,000.00
M-1 $25,000.00 $1.00 $9,934,000.00
M-2 $25,000.00 $1.00 $5,183,000.00
B $25,000.00 $1.00 $5,183,000.00
N $250,000.00 $1,000.00 $9,950,000.00
R $100.00 N/A $100.00
The Certificates shall be executed by manual or facsimile signature on
behalf of the Trustee by an authorized officer. Certificates bearing the manual
or facsimile signatures of individuals who were, at the time when such
signatures were affixed, authorized to sign on behalf of the Trustee shall bind
the Trust Fund, notwithstanding that such individuals or any of them have ceased
to be so authorized prior to the authentication and delivery of such
Certificates or did not hold such offices at the date of such authentication and
delivery. 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 set forth as attached
hereto executed by the Trustee by manual signature, and such certificate of
authentication upon any Certificate shall be conclusive evidence, and the only
evidence, that such Certificate has been duly authenticated and delivered
hereunder. All Certificates shall be dated the date of their authentication. On
the Closing Date, the Trustee shall authenticate the Certificates to be issued
at the written direction of the Depositor, or any Affiliate thereof.
SECTION 5.02. Certificate Register; Registration of Transfer and Exchange
of Certificates.
(a) The Trustee shall maintain, or cause to be maintained in accordance
with the provisions of Section 5.09 hereof, a Certificate Register for the Trust
Fund in which, subject to the provisions of subsections (b) and (c) below and 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. Upon surrender for registration of Transfer of any
Certificate, the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Certificates of the same
Class and of like aggregate Percentage Interest.
At the option of a Certificateholder, Certificates may be exchanged for
other Certificates of the same Class in authorized denominations and evidencing
the same aggregate Percentage Interest upon surrender of the Certificates to be
exchanged at the office or agency of a Trustee. Whenever any Certificates are so
surrendered for exchange, the Trustee shall execute and the Trustee shall
authenticate and deliver the Certificates that the Certificateholder making the
exchange is entitled to receive. Every Certificate presented or surrendered for
registration of Transfer or exchange shall be accompanied by a written
instrument of Transfer in form satisfactory to a Trustee duly executed by the
holder thereof or his attorney duly authorized in writing.
No service charge to the Certificateholders shall be made for any
registration of Transfer or exchange of Certificates, but 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 may be required. All
Certificates surrendered for registration of Transfer or exchange shall be
canceled and subsequently destroyed by a Trustee in accordance with such
Trustee's customary procedures.
-76-
No Transfer of a Class N or Class X Certificate shall be made unless such
Transfer is made pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws or is exempt from the
registration requirements under the Securities Act and such state securities
laws. In the event that a Transfer is to be made in reliance upon an exemption
from the Securities Act and such laws, in order to assure compliance with the
Securities Act and such laws, the Certificateholder desiring to effect such
Transfer and such Certificateholder's prospective transferee shall (except with
respect to the initial transfer of a Class N or Class X Certificate by ▇▇▇▇▇▇▇
▇▇▇▇▇ & Co.) each certify to each Trustee in writing the facts surrounding the
Transfer in substantially the forms set forth in Exhibit F (the "Transferor
Certificate") and (i) deliver a letter in substantially the form of either
Exhibit G (the "Investment Letter") or Exhibit H (the "Rule 144A Letter") or
(ii) there shall be delivered to the Trustee an Opinion of Counsel that such
Transfer may be made pursuant to an exemption from the Securities Act, which
Opinion of Counsel shall not be an expense of the Depositor or the Trustee. The
Depositor shall provide to any Holder of a Class N or Class X Certificate and
any prospective transferee designated by any such Holder, information regarding
the related Certificates and the Mortgage Loans and such other information as
shall be necessary to satisfy the condition to eligibility set forth in Rule
144A(d)(4) for Transfer of any such Certificate without registration thereof
under the Securities Act pursuant to the registration exemption provided by Rule
144A. The Trustee shall cooperate with the Depositor in providing the Rule 144A
information referenced in the preceding sentence, including providing to the
Depositor such information in the possession of the Trustee regarding the
Certificates, the Mortgage Loans and other matters regarding the Trust Fund as
the Depositor shall reasonably request to meet its obligation under the
preceding sentence. Each Holder of a Class N or Class X Certificate desiring to
effect such Transfer shall, and does hereby agree to, indemnify the Depositor
and the Trustee 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.
The beneficial ownership (as determined for federal income tax purposes)
of a Class N Certificate or Class X Certificate shall not be transferred to a
non-United States Person unless (i) such beneficial ownership is transferred to
a non-United States Person who will at all times be a Proportionate Holder and
(ii) the Trustee has received, in the manner required by applicable Treasury
regulations (and with all required attachments, including, where the non-United
States Person is providing a Form W-8IMY, Forms W-8BEN or W-9 from all persons
treated as beneficially owning an interest in the Class X or Class N Certificate
through such non-U.S. Person either directly, through an intermediary or through
another entity that is treated as a partnership for U.S. federal income tax
purposes), a properly completed Internal Revenue Service Form W-8IMY, Form
W-8BEN or Form W-8ECI from such non-United States Person. No Class N or Class X
Certificate may be pledged or used as collateral for any obligation if it would
cause any portion of the Trust Fund to be treated as a taxable mortgage pool
under Section 7701(i) of the Code. The foregoing restrictions on transfers of
beneficial ownership of the Class N and Class X Certificates and on the pledging
or use as collateral of the Class N and Class X Certificates shall cease to
apply with respect to transfers occurring after delivery to the Trustee of an
Opinion of Counsel, which Opinion of Counsel shall not be an expense of the
Trustee, the Depositor, the Servicer or the Master Servicer, to the effect that
the elimination of such restrictions will not cause any REMIC included in the
Trust Fund to fail to qualify as a REMIC at any time that the Certificates are
outstanding or result in the imposition of any tax or tax reporting obligation
on the Trust Fund, a Certificateholder or another person.
No Transfer of an ERISA Restricted Certificate shall be made unless the
Trustee shall have received either (i) a representation from the transferee of
such Certificate acceptable to and in form and substance satisfactory to the
Trustee and the NIMs Insurer, to the effect that such transferee is not an
employee benefit plan subject to Title I of ERISA or a plan subject to Section
4975 of the Code or a plan subject to any applicable Federal, state or local law
materially similar to the foregoing provisions of ERISA and the Code ("Similar
Law"), or a Person acting on behalf of any such plan or using the assets of any
such plan, (ii) except in the case of a Class R Certificate which may not be
transferred to a transferee
-77-
that does not provide the representation described in clause (i), a
representation that the transferee is an insurance company that is purchasing
such Certificates with funds contained in an "insurance company general account"
(as such term is defined in Section V(e) of Prohibited Transaction Class
Exemption 95-60, 60 Fed. Reg. 35925 (July 12, 1995) ("PTCE 95-60")) and that the
purchase and holding of such Certificates is covered under Sections I and III of
PTCE 95-60, or (iii) in the case of any such ERISA Restricted Certificate, other
than a Class R Certificate, presented for registration in the name of an
employee benefit plan subject to ERISA, a plan subject to Section 4975 of the
Code, or a plan subject to Similar Law (or comparable provisions of any
subsequent enactments), or a trustee of any such plan or any other person acting
on behalf of any such plan, an Opinion of Counsel satisfactory to the Trustee
and the NIMs Insurer to the effect that the purchase and holding of such ERISA
Restricted Certificate will not result in a prohibited transaction under ERISA
or the Code or Similar Law and will not subject the NIMs Insurer or the Trustee
to any obligation in addition to those expressly undertaken in this Agreement,
which Opinion of Counsel shall not be an expense of the NIMs Insurer or the
Trustee. For purposes of clause (i) of the preceding sentence, such
representation shall be deemed to have been made to the Trustee by the
transferee's acceptance of an ERISA Restricted Certificate (or the acceptance by
a Certificate Owner of the beneficial interest in any Class of ERISA Restricted
Certificates) unless the Trustee shall have received from the transferee an
alternative representation acceptable in form and substance to the Trustee.
Notwithstanding anything else to the contrary herein, any purported transfer of
an ERISA Restricted Certificate to or on behalf of an employee benefit plan
subject to Title I of ERISA, a plan subject to Section 4975 of the Code, or a
plan subject to Similar Law without the delivery to the Trustee and the NIMs
Insurer of an Opinion of Counsel satisfactory to the Trustee and the NIMs
Insurer as described above shall be void and of no effect. The Trustee shall be
under no liability to any Person for any registration of transfer of any ERISA
Restricted Certificate that is in fact not permitted by this Section 5.02(b) or
for making any payments due on such Certificate to the Holder thereof or taking
any other action with respect to such Holder under the provisions of this
Agreement so long as the transfer was registered by the Trustee in accordance
with the foregoing requirements. The Trustee shall be entitled, but not
obligated, to recover from any Holder of any ERISA Restricted Certificate that
was in fact an employee benefit plan subject to Title I of ERISA, a plan subject
to Section 4975 of the Code, or a plan subject to Similar Law or a Person acting
on behalf of any such plan at the time it became a Holder or, at such subsequent
time as it became such a plan or Person acting on behalf of such a plan, all
payments made on such ERISA Restricted Certificate at and after either such
time. Any such payments so recovered by the Trustee shall be paid and delivered
by the Trustee to the last preceding Holder of such Certificate that is not such
a plan or Person acting on behalf of a plan.
(b) Each Person who has or who acquires any Ownership Interest in a
Class R Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions, and
the rights of each Person acquiring any Ownership Interest in a Class R
Certificate are expressly subject to the following provisions:
(i) Each Person holding or acquiring any Ownership Interest in a
Class R Certificate shall be a Permitted Transferee and shall promptly
notify the Trustee of any change or impending change in its status as a
Permitted Transferee.
(ii) No Ownership Interest in a Class R Certificate may be
purchased, transferred or sold, directly or indirectly, except in
accordance with the provisions hereof. No Ownership Interest in a Class R
Certificate may be registered on the Closing Date or thereafter
transferred, and the Trustee shall not register the Transfer of any Class
R Certificate unless, in addition to the certificates required to be
delivered to the Trustee under subparagraph (b) above, the Trustee shall
have been furnished with an affidavit (a "Transfer Affidavit") of the
initial owner or the proposed transferee in the form attached hereto as
Exhibit E-1 and an affidavit of the proposed transferor in the form
attached hereto as Exhibit E-2. In the absence of a contrary instruction
from the
-78-
transferor of a Class R Certificate, declaration (11) in Appendix A of the
Transfer Affidavit may be left blank. If the transferor requests by
written notice to the Trustee prior to the date of the proposed transfer
that one of the two other forms of declaration (11) in Appendix A of the
Transfer Affidavit be used, then the requirements of this Section
5.02(c)(ii) shall not have been satisfied unless the Transfer Affidavit
includes such other form of declaration.
(iii) Each Person holding or acquiring any Ownership Interest in a
Class R Certificate shall agree (A) to obtain a Transfer Affidavit from
any other Person to whom such Person attempts to Transfer its Ownership
Interest in a Class R Certificate, (B) to obtain a Transfer Affidavit from
any Person for whom such Person is acting as nominee, trustee or agent in
connection with any Transfer of a Class R Certificate and (C) not to
Transfer its Ownership Interest in a Class R Certificate or to cause the
Transfer of an Ownership Interest in a Class R Certificate to any other
Person if it has actual knowledge that such Person is not a Permitted
Transferee. Further, no transfer, sale or other disposition of any
Ownership Interest in a Class R Certificate may be made to a person who is
not a U.S. Person (within the meaning of section 7701 of the Code) unless
such person furnishes the transferor and the Trustee with a duly completed
and effective Internal Revenue Service Form W-8ECI (or any successor
thereto) and the Trustee consents to such transfer, sale or other
disposition in writing.
(iv) Any attempted or purported Transfer of any Ownership Interest
in a Class R Certificate in violation of the provisions of this Section
5.02(c) shall be absolutely null and void and shall vest no rights in the
purported Transferee. If any purported transferee shall become a Holder of
a Class R Certificate in violation of the provisions of this Section
5.02(c), then the last preceding Permitted Transferee shall be restored to
all rights as Holder thereof retroactive to the date of registration of
Transfer of such Class R Certificate. The Trustee shall be under no
liability to any Person for any registration of Transfer of a Class R
Certificate that is in fact not permitted by Section 5.02(b) and this
Section 5.02(c) or for making any payments due on such Certificate to the
Holder thereof or taking any other action with respect to such Holder
under the provisions of this Agreement so long as the Transfer was
registered after receipt of the related Transfer Affidavit. The Trustee
shall be entitled but not obligated to recover from any Holder of a Class
R Certificate that was in fact not a Permitted Transferee at the time it
became a Holder or, at such subsequent time as it became other than a
Permitted Transferee, all payments made on such Class R Certificate at and
after either such time. Any such payments so recovered by the Trustee
shall be paid and delivered by the Trustee to the last preceding Permitted
Transferee of such Certificate.
(v) At the option of the Holder of the Class R Certificate, the
Class LTR Interest and Residual Interest in the Upper Tier REMIC may be
severed and represented by separate certificates (with the separate
certificate that represents the Residual Interest also representing all
rights of the Class R Certificate to distributions attributable to a
Pass-Through Rate on the Class R Certificate in excess of the Net Rate);
provided, however, that such separate certification may not occur until
the NIMs Insurer and the Trustee receive an Opinion of Counsel to the
effect that separate certification in the form and manner proposed would
not result in the imposition of federal tax upon the Trust Fund or any of
the REMICs provided for herein or cause any of the REMICs provided for
herein to fail to qualify as a REMIC; and provided further, that the
provisions of Sections 5.02(b) and (c) will apply to each such separate
certificate as if the separate certificate were a Class R Certificate. If,
as evidenced by an Opinion of Counsel, it is necessary to preserve the
REMIC status of any of the REMICs provided for herein, the Class LTR
Interest and the Residual Interest in the Upper Tier REMIC shall be
severed and represented by separate certificates (with the separate
certificate that represents the Residual Interest also
-79-
representing all rights of the Class R Certificate to distributions
attributable to a Pass-Through Rate on the Class R Certificate in excess
of the Net Rate).
The restrictions on Transfers of a Class R Certificate set forth in this
Section 5.02(c) shall cease to apply (and the applicable portions of the legend
on a Class R Certificate may be deleted) with respect to Transfers occurring
after delivery to the Trustee and the NIMs Insurer of an Opinion of Counsel,
which Opinion of Counsel shall not be an expense of the Trustee or the
Depositor, to the effect that the elimination of such restrictions will not
cause any of the REMICs provided for herein to fail to qualify as a REMIC at any
time that the Certificates are outstanding or result in the imposition of any
tax on the Trust Fund, any REMIC provided for herein, a Certificateholder or
another Person. Each Person holding or acquiring any Ownership Interest in a
Class R Certificate hereby consents to any amendment of this Agreement that,
based on an Opinion of Counsel furnished to the Trustee, is reasonably necessary
(a) to ensure that the record ownership of, or any beneficial interest in, a
Class R Certificate is not transferred, directly or indirectly, to a Person that
is not a Permitted Transferee and (b) to provide for a means to compel the
Transfer of a Class R Certificate that is held by a Person that is not a
Permitted Transferee to a Holder that is a Permitted Transferee.
(c) The transferor of the Class R Certificate shall notify the Trustee
in writing upon the transfer of the Class R Certificate.
(d) The preparation and delivery of all certificates, opinions and other
writings referred to above in this Section 5.02 shall not be an expense of the
Trust Fund, the Depositor or the Trustee.
SECTION 5.03. Mutilated, Destroyed, Lost or Stolen Certificates.
If (a) any mutilated Certificate is surrendered to the Trustee or the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Certificate and of the ownership thereof and (b) there is delivered to
the Trustee and the NIMs Insurer such security or indemnity as may be required
by them to save each of them harmless, then, in the absence of notice to the
Trustee that such Certificate has been acquired by a bona fide purchaser, the
Trustee shall execute, authenticate and deliver, in exchange for or in lieu of
any such mutilated, destroyed, lost or stolen Certificate, a new Certificate of
like Class, tenor and Percentage Interest. In connection with the issuance of
any new Certificate under this Section 5.03, 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 Trustee) connected therewith. Any replacement Certificate issued
pursuant to this Section 5.03 shall constitute complete and indefeasible
evidence of ownership in the Trust Fund, as if originally issued, whether or not
the lost, stolen or destroyed Certificate shall be found at any time. All
Certificates surrendered to the Trustee under the terms of this Section 5.03
shall be canceled and destroyed by the Trustee in accordance with its standard
procedures without liability on its part.
SECTION 5.04. Persons Deemed Owners.
The NIMs Insurer, the Trustee and any agent of the NIMs Insurer or the
Trustee may treat the Person in whose name any Certificate is registered as the
owner of such Certificate for the purpose of receiving distributions as provided
in this Agreement and for all other purposes whatsoever, and neither the NIMs
Insurer nor the Trustee, nor any agent of the NIMs Insurer or the Trustee shall
be affected by any notice to the contrary.
-80-
SECTION 5.05. Access to List of Certificateholders' Names and Addresses.
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 with respect to their rights under
this Agreement or under the Certificates, and (c) provide a copy of the
communication that such Certificateholders propose to transmit or if the NIMs
Insurer or the Depositor shall request such information in writing from the
Trustee, then the Trustee shall, within ten Business Days after the receipt of
such request, provide the NIMs Insurer, the Depositor or such Certificateholders
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, 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 hereunder, regardless of
the source from which such information was derived.
SECTION 5.06. Book-Entry Certificates.
The Regular Certificates, upon original issuance, shall be issued in the
form of one or more typewritten Certificates representing the Book-Entry
Certificates, to be delivered to the Depository by or on behalf of the
Depositor. The Class N, Class R and Class X Certificates shall be definitive
certificates. The Book-Entry Certificates shall initially be registered on the
Certificate Register in the name of the Depository or its nominee, and no
Certificate Owner of a Book-Entry Certificate will receive a definitive
certificate representing such Certificate Owner's interest in such Certificates,
except as provided in Section 5.08. Unless and until definitive, fully
registered Certificates ("Definitive Certificates") have been issued to the
Certificate Owners of the Book-Entry Certificates pursuant to Section 5.08:
(a) the provisions of this Section shall be in full force and effect;
(b) the Depositor, the Trustee and the NIMs Insurer may deal with the
Depository and the Depository Participants for all purposes (including the
making of distributions) as the authorized representative of the respective
Certificate Owners of the Book-Entry Certificates;
(c) registration of the Book-Entry Certificates may not be transferred
by the Trustee except to another Depository;
(d) the rights of the respective Certificate Owners of the Book-Entry
Certificates shall be exercised only through the Depository and the Depository
Participants and shall be limited to those established by law and agreements
between the Owners of the Book-Entry Certificates and the Depository and/or the
Depository Participants. Pursuant to the Depository Agreement, unless and until
Definitive Certificates are issued pursuant to Section 5.08, the Depository will
make book-entry transfers among the Depository Participants and receive and
transmit distributions of principal and interest on the related Certificates to
such Depository Participants;
(e) the Depository may collect its usual and customary fees, charges and
expenses from its Depository Participants;
(f) the Trustee may rely and shall be fully protected in relying upon
information furnished by the Depository with respect to its Depository
Participants; and
(g) to the extent that the provisions of this Section conflict with any
other provisions of this Agreement, the provisions of this Section shall
control.
For purposes of any provision of this Agreement requiring or permitting
actions with the consent of, or at the direction of, Certificateholders
evidencing a specified percentage of the aggregate unpaid
-81-
principal amount of any Class of Certificates, such direction or consent may be
given by Certificate Owners (acting through the Depository and the Depository
Participants) owning Book-Entry Certificates evidencing the requisite percentage
of principal amount of such Class of Certificates.
SECTION 5.07. Notices to Depository.
Whenever any notice or other communication is required to be given to
Certificateholders of the Class with respect to which Book-Entry Certificates
have been issued, unless and until Definitive Certificates shall have been
issued to the related Certificate Owners and the Trustee shall give all such
notices and communications to the Depository.
SECTION 5.08. Definitive Certificates.
If, after Book-Entry Certificates have been issued with respect to any
Certificates, (a) the Depository or the Depositor advises the Trustee that the
Depository is no longer willing, qualified or able to discharge properly its
responsibilities under the Depository Agreement with respect to such
Certificates and the Trustee or the Depositor is unable to locate a qualified
successor, (b) the Depositor, at its sole option, advises the Trustee that it
elects to terminate the book-entry system with respect to such Certificates
through the Depository or (c) after the occurrence and continuation of an Event
of Default, Certificate Owners of such Book-Entry Certificates having not less
than 51% of the Voting Rights evidenced by any Class of Book-Entry Certificates
advise the Trustee and the Depository in writing through the Depository
Participants that the continuation of a book-entry system with respect to
Certificates of such Class through the Depository (or its successor) is no
longer in the best interests of the Certificate Owners of such Class, then the
Trustee shall notify all Certificate Owners of such Book-Entry Certificates and
the NIMs Insurer, through the Depository, of the occurrence of any such event
and of the availability of Definitive Certificates to Certificate Owners of such
Class requesting the same. The Depositor shall provide the Trustee with an
adequate inventory of certificates to facilitate the issuance and transfer of
Definitive Certificates. Upon surrender to the Trustee of any such Certificates
by the Depository, accompanied by registration instructions from the Depository
for registration, the Trustee shall authenticate and deliver such Definitive
Certificates. Neither the Depositor nor the Trustee shall be liable for any
delay in delivery of such instructions and each may conclusively rely on, and
shall be protected in relying on, such instructions. Upon the issuance of such
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 such Definitive
Certificates as Certificateholders hereunder.
SECTION 5.09. Maintenance of Office or Agency.
The Trustee will maintain or cause to be maintained at its expense an office or
offices or agency or agencies where Certificates may be surrendered for
registration of transfer or exchange. The Trustee initially designates its
offices at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Services - Series TMTS 2003-2HE as offices for such
purposes. The Trustee will give prompt written notice to the Certificateholders
of any change in such location of any such office or agency.
-82-
ARTICLE VI
THE DEPOSITOR, THE MASTER SERVICER AND THE SERVICER
SECTION 6.01. Respective Liabilities of the Depositor, the Master Servicer
and the Servicer.
The Depositor, the Master Servicer and the Servicer shall each be liable
in accordance herewith only to the extent of the obligations specifically and
respectively imposed upon and undertaken by them herein.
SECTION 6.02. Merger or Consolidation of the Depositor, the Master
Servicer or the Servicer.
Except as provided in the next paragraph, the Depositor, the Master
Servicer and the Servicer will each keep in full effect its existence, rights
and franchises as a corporation or banking association under the laws of the
United States or under the laws of one of the States thereof and will each
obtain and preserve its qualification to do business as a foreign corporation in
each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of this Agreement, or any of the
Mortgage Loans and to perform its respective duties under this Agreement.
Any Person into which the Depositor, the Master Servicer or Servicer may
be merged or consolidated, or any Person resulting from any merger or
consolidation to which the Depositor, the Master Servicer or Servicer shall be a
party, or any Person succeeding to the business of the Depositor, the Master
Servicer or Servicer, shall be the successor of the Depositor, the Master
Servicer or 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 (except for the execution of an
assumption agreement where such succession is not effected by operation of law);
provided, however, that the successor or surviving Person to a Servicer shall be
qualified to sell mortgage loans to, and to service mortgage loans on behalf of,
▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac.
SECTION 6.03. Limitation on Liability of the Depositor, the Master
Servicer, the Servicer and Others.
None of the Depositor, the Master Servicer, the Servicer nor any of the
directors, officers, employees or agents of the Depositor, the Master Servicer
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
Master Servicer, the Servicer or any such Person against any breach of
representations or warranties made by it herein or protect the Depositor, the
Master Servicer, the Servicer or any such Person from any liability that would
otherwise be imposed by reasons 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 Master Servicer or the Servicer and any
director, officer, employee or agent of the Depositor, the Master Servicer or
the Servicer may rely in good faith on any document of any kind prima facie
properly executed and submitted by any Person respecting any matters arising
hereunder. The Depositor, the Master Servicer, the Servicer and any director,
officer, employee or agent of the Depositor, the Master Servicer or the Servicer
shall be indemnified by the Trust Fund and held harmless against any loss,
liability or expense, incurred in connection with the performance of their
duties under this agreement or incurred in connection with any audit,
controversy or judicial proceeding relating to a governmental taxing authority
or any legal action relating to this Agreement or the Certificates, other than
any loss, liability or expense incurred by reason of willful misfeasance, bad
faith or negligence in the performance of duties hereunder or by reason of
reckless disregard of obligations and duties hereunder. None of the Depositor,
the Master Servicer nor the
-83-
Servicer shall be under any obligation to appear in, prosecute or defend any
legal action that is not incidental to its respective duties hereunder and that
in its opinion may involve it in any expense or liability; provided, however,
that any of the Depositor, the Master Servicer or the Servicer may, in its
discretion undertake any such action that it may deem necessary or desirable in
respect of this Agreement and the rights and duties of the parties hereto and
interests of the Servicer and the Certificateholders hereunder. In such event,
the legal expenses and costs of such action and any liability resulting
therefrom shall be, expenses, costs and liabilities of the Trust Fund, and the
Depositor, the Master Servicer and the Servicer shall be entitled to be
reimbursed therefor out of the Collection Account as provided by Section 3.08
hereof.
SECTION 6.04. Limitation on Resignation of Servicer.
The Servicer shall not resign from the obligations and duties hereby
imposed on it except upon determination that its duties hereunder are no longer
permissible under applicable law. Any such determination permitting the
resignation of the Servicer shall be evidenced by an Opinion of Counsel to such
effect delivered to the Trustee and the NIMs Insurer. No such resignation shall
become effective until the Trustee or a successor servicer reasonably acceptable
to the Trustee and the NIMs Insurer is appointed and has assumed the Servicer's
responsibilities, duties, liabilities and obligations hereunder. Any such
resignation shall not relieve the Servicer of any of the obligations specified
in Section 7.01 and 7.02 as obligations that survive the resignation or
termination of the Servicer.
The Trustee and the Depositor hereby specifically (i) consent to the
pledge and assignment by the Servicer of all the Servicer's right, title and
interest in, to and under this Agreement to the Servicing Rights Pledgee, for
the benefit of certain lenders, and (ii) agree that upon delivery to the Trustee
by the Servicing Rights Pledgee of a letter signed by the Servicer whereby the
Servicer shall resign as Servicer under this Agreement, the Trustee shall
appoint the Servicing Rights Pledgee or its designee as successor Servicer,
provided that at the time of such appointment, the Servicing Rights Pledgee or
such designee meets the requirements of a successor Servicer as set forth herein
and agrees to be subject to the terms of this Agreement. 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. Errors and Omissions Insurance; Fidelity Bonds.
The Servicer shall, for so long as it acts as servicer under this
Agreement, obtain and maintain in force (a) a policy or policies of insurance
covering errors and omissions in the performance of its obligations as servicer
hereunder, and (b) a fidelity bond in respect of its officers, employees and
agents. Each such policy or policies and bond shall, together, comply with the
requirements from time to time of ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac for Persons
performing servicing for mortgage loans purchased by ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac.
The Servicer shall provide the Trustee and the NIMs Insurer, upon request, with
copies of such policies and fidelity bond or a certification from the insurance
provider evidencing such policies and fidelity bond. In the event that any such
policy or bond ceases to be in effect, the Servicer shall use its reasonable
best efforts to obtain a comparable replacement policy or bond from an insurer
or issuer meeting the requirements set forth above as of the date of such
replacement. Any such policy or fidelity bond shall by its terms not be
cancelable without thirty days' prior written notice to the Trustee and the NIMs
Insurer.
SECTION 6.06. Limitation on Resignation of the Master Servicer.
Prior to the Final Servicing Transfer Date, the Master Servicer shall not
resign from the obligations and duties hereby imposed on it except upon
determination that its duties hereunder are no
-84-
longer permissible under applicable law. Any such determination pursuant to the
preceding sentence permitting the resignation of the Master Servicer shall be
evidenced by an Opinion of Counsel to such effect obtained at the expense of the
Master Servicer and delivered to the Trustee and the Rating Agencies. No
resignation of the Master Servicer shall become effective until the Trustee or a
successor Master Servicer shall have assumed the Master Servicer's
responsibilities, duties, liabilities (other than those liabilities arising
prior to the appointment of such successor) and obligations under this
Agreement.
SECTION 6.07. Assignment of Master Servicing.
The Master Servicer may sell and assign its rights and delegate its duties
and obligations in its entirety as Master Servicer under this Agreement;
provided, however, that, prior to the Final Servicing Transfer Date: (i) the
purchaser or transferee accept in writing such assignment and delegation and
assume the obligations of the Master Servicer hereunder (a) shall be a Person
which shall be qualified to service mortgage loans for ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇
Mac; (b) shall have a net worth of not less than $15,000,000 (unless otherwise
approved by each Rating Agency pursuant to clause (ii) below); (c) shall be
reasonably satisfactory to the Trustee (as evidenced in a writing signed by the
Trustee); and (d) shall execute and deliver to the Trustee an agreement, in form
and substance reasonably satisfactory to the Trustee, which contains an
assumption by such Person of the due and punctual performance and observance of
each covenant and condition to be performed or observed by it as master servicer
under this Agreement, any custodial agreement from and after the effective date
of such agreement; (ii) each Rating Agency shall be given prior written notice
of the identity of the proposed successor to the Master Servicer and each Rating
Agency's rating of the Certificates in effect immediately prior to such
assignment, sale and delegation will not be downgraded, qualified or withdrawn
as a result of such assignment, sale and delegation, as evidenced by a letter to
such effect delivered to the Master Servicer and the Trustee; and (iii) the
Master Servicer assigning and selling the master servicing shall deliver to the
Trustee an officer's certificate and an Independent opinion of counsel, each
stating that all conditions precedent to such action under this Agreement have
been completed and such action is permitted by and complies with the terms of
this Agreement. No such assignment or delegation shall affect any liability of
the Master Servicer arising out of acts or omissions prior to the effective date
thereof.
ARTICLE VII
DEFAULT; TERMINATION OF SERVICER
SECTION 7.01. Events of Default.
"Event of Default," wherever used herein, means any one of the following
events:
(i) any failure by the Servicer to make any Advance to deposit in
the Collection Account or the Certificate Account or remit to the Trustee
any payment (excluding a payment required to be made under Section 4.01
hereof) required to be made under the terms of this Agreement, which
failure shall continue unremedied for three calendar days and, with
respect to a payment required to be made under Section 4.01 hereof, for
one calendar day, after the date on which written notice of such failure
shall have been given to the Servicer by the Trustee or the Depositor, or
to the Trustee and the Servicer by the NIMs Insurer or the Holders of
Certificates evidencing not less than 25% of the Voting Rights evidenced
by the Certificates; or
(ii) any failure by the Servicer to observe or perform in any
material respect any other of the covenants or agreements on the part of
the Servicer contained in this Agreement or any representation or warranty
shall prove to be untrue, which failure or breach shall continue
unremedied for a period of 60 days after the date on which written notice
of such failure shall
-85-
have been given to the Servicer by the Trustee or the Depositor, or to the
Trustee by the NIMs Insurer or the Holders of Certificates evidencing not
less than 25% of the Voting Rights evidenced by the Certificates; or
(iii) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a receiver or
liquidator in any insolvency, readjustment of debt, marshaling of assets
and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the Servicer
and such decree or order shall have remained in force undischarged or
unstayed for a period of 60 consecutive days; or
(iv) consent by the Servicer to the appointment of a receiver or
liquidator in any insolvency, readjustment of debt, marshaling of assets
and liabilities or similar proceedings of or relating to the Servicer or
all or substantially all of the property of the Servicer; or
(v) admission by a Servicer in writing of its inability to pay its
debts generally as they become due, file a petition to take advantage of,
or commence a voluntary case under, any applicable insolvency or
reorganization statute, make an assignment for the benefit of its
creditors, or voluntarily suspend payment of its obligations.
If an Event of Default shall occur with respect to the Servicer, then, and
in each and every such case, so long as such Event of Default shall not have
been remedied within the applicable grace period, or solely with respect to
clause (i) above by 5:00 p.m. on the Servicer Remittance Date, the Trustee may
(with the written consent of the NIMs Insurer, except after a NIMs Insurer
Default), or at the direction of the NIMs Insurer or the Holders of Certificates
evidencing not less than 25% of the Voting Rights evidenced by the Certificates
(with the written consent of the NIMs Insurer, except after a NIMs Insurer
Default), shall, by notice in writing to the Servicer (with a copy to each
Rating Agency), terminate all of the rights and obligations of the Servicer
under this Agreement and in and to the Mortgage Loans and the proceeds thereof,
other than its rights as a Certificateholder hereunder. On or after the receipt
by the Servicer of such written notice, all authority and power of the Servicer
hereunder, whether with respect to the Mortgage Loans or otherwise, shall pass
to and be vested in the Trustee. To the extent the Event of Default resulted
from the failure of the Servicer to make a required Advance, the Trustee shall
thereupon make any Advance described in Section 4.01 hereof subject to Section
3.04 hereof. The Trustee is hereby authorized and empowered to execute and
deliver, on behalf of the Servicer, as attorney-in-fact or otherwise, any and
all documents and other instruments, and to do or accomplish all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement or assignment of
the Mortgage Loans and related documents, or otherwise. Unless expressly
provided in such written notice, no such termination shall affect any obligation
of the Servicer to pay amounts owed pursuant to Article VIII. The Servicer
agrees to cooperate with the Trustee in effecting the termination of the
Servicer's responsibilities and rights hereunder, including, without limitation,
the transfer to the Trustee of all cash amounts which shall at the time be
credited to the Collection Account, or thereafter be received with respect to
the Mortgage Loans. The Servicer and the Trustee shall promptly notify the
Rating Agencies of the occurrence of an Event of Default or an event that, with
notice, passage of time, other action or any combination of the foregoing would
be an Event of Default, such notice to be provided in any event within two
Business Days of such occurrence.
Notwithstanding any termination of the activities of the Servicer
hereunder, the Servicer shall be entitled to receive, out of any late collection
of a Scheduled Payment on a Mortgage Loan that was due prior to the notice
terminating the Servicer's rights and obligations as Servicer hereunder and
received after such notice, that portion thereof to which the Servicer would
have been entitled pursuant to Sections 3.08(a)(i) through (viii), and any other
amounts payable to the Servicer hereunder the entitlement to which arose prior
to the termination of its activities hereunder. Notwithstanding anything herein
to the
-86-
contrary, upon termination of the Servicer hereunder, any liabilities of the
Servicer which accrued prior to such termination shall survive such termination.
SECTION 7.02. Trustee to Act; Appointment of Successor.
On and after the time the Servicer receives a notice of termination
pursuant to Section 7.01 hereof, the Trustee shall, to the extent provided in
Section 3.04, be the successor to the Servicer in its capacity as servicer under
this Agreement and the transactions set forth or provided for herein and shall
be subject to all the responsibilities, duties and liabilities relating thereto
placed on the Servicer by the terms and provisions hereof and applicable law
including the obligation to make advances pursuant to Section 4.01. As
compensation therefor, subject to the last paragraph of Section 7.01, the
Trustee shall be entitled to all fees, compensation and reimbursement for costs
and expenses that the Servicer would have been entitled to hereunder if the
Servicer had continued to act hereunder. Notwithstanding the foregoing, if the
Trustee has become the successor to the Servicer in accordance with Section 7.01
hereof, the Trustee may, if it shall be unwilling to so act, or shall, if it is
prohibited by applicable law from making Advances pursuant to Section 4.01
hereof or if it is otherwise unable to so act, appoint, or petition a court of
competent jurisdiction to appoint, any established mortgage loan servicing
institution the appointment of which successor shall be approved by the NIMs
Insurer and which does not adversely affect the then current rating of the
Certificates by each Rating Agency as the successor to the Servicer hereunder in
the assumption of all or any part of the responsibilities, duties or liabilities
of the Servicer hereunder. Any successor Servicer shall be an institution that
is acceptable to the NIMs Insurer and is a ▇▇▇▇▇▇ ▇▇▇ and ▇▇▇▇▇▇▇ Mac approved
seller/servicer in good standing, that has a net worth of at least $15,000,000,
and that is willing to service the Mortgage Loans and executes and delivers to
the Depositor and the Trustee an agreement accepting such delegation and
assignment, that contains an assumption by such Person of the rights, powers,
duties, responsibilities, obligations and liabilities of the Servicer (other
than liabilities of the Servicer under Section 6.03 hereof incurred prior to
termination of the Servicer under Section 7.01), with like effect as if
originally named as a party to this Agreement; and provided further that each
Rating Agency acknowledges that its rating of the Certificates in effect
immediately prior to such assignment and delegation will not be qualified or
reduced as a result of such assignment and delegation. No appointment of a
successor to the Servicer hereunder shall be effective until the Trustee and the
NIMs Insurer shall have consented thereto, prior written consent of the NIMs
Insurer is obtained and written notice of such proposed appointment shall have
been provided by the Trustee to each Certificateholder. The Trustee shall not
resign as servicer until a successor servicer has been appointed and has
accepted such appointment. Pending appointment of a successor to the Servicer
hereunder, the Trustee, unless the Trustee is prohibited by law from so acting,
shall, subject to Section 3.04 hereof, act in such capacity as hereinabove
provided. In connection with such appointment and assumption, the Trustee may
make such arrangements for the compensation of such successor out of payments on
Mortgage Loans as it and such successor shall agree; provided, however, that no
such compensation shall be in excess of that permitted the Servicer hereunder.
The Trustee and such successor shall take such action, consistent with this
Agreement, as shall be necessary to effectuate any such succession. Neither the
Trustee nor any other successor servicer shall be deemed to be in default
hereunder by reason of any failure to make, or any delay in making, any
distribution hereunder or any portion thereof or any failure to perform, or any
delay in performing, any duties or responsibilities hereunder, in either case
caused by the failure of the Servicer to deliver or provide, or any delay in
delivering or providing, any cash, information, documents or records to it.
Any successor to the Servicer as servicer shall give notice to the
Mortgagors of such change of servicer and shall, during the term of its service
as servicer maintain in force the policy or policies that the Servicer is
required to maintain pursuant to Section 6.05.
-87-
In the event of an Event of Default, notwithstanding anything to the
contrary above, the Trustee and the Depositor hereby agree that upon delivery to
the Trustee by the Servicing Rights Pledgee of a letter signed by the Servicer
within ten Business Days of when notification of such event shall have been
provided to the Trustee, whereunder the Servicer shall resign as Servicer under
this Agreement, the Servicing Rights Pledgee or its designee shall be appointed
as successor Servicer (provided that at the time of such appointment the
Servicing Rights Pledgee or such designee meets the requirements of a successor
Servicer set forth above) and the Servicing Rights Pledgee agrees to be subject
to the terms of this Agreement.
SECTION 7.03. Notification to Certificateholders.
(a) Upon any termination of or appointment of a successor to the
Servicer, the Trustee shall give prompt written notice thereof to
Certificateholders, the NIMs Insurer and to each Rating Agency.
(b) Within 60 days after the occurrence of any Event of Default, the
Trustee shall transmit by mail to all Certificateholders and the NIMs Insurer
notice of each such Event of Default hereunder known to the Trustee, unless such
Event of Default shall have been cured or waived.
ARTICLE VIII
CONCERNING THE TRUSTEE
SECTION 8.01. Duties of Trustee.
The Trustee, prior to the occurrence of an Event of Default and after the
curing of all Events of Default that may have occurred, shall undertake to
perform such duties and only such duties as are specifically set forth in this
Agreement. In case an Event of Default has occurred and remains uncured, 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. In case an Event of Default or other default by the
Servicer or the Depositor hereunder shall occur and be continuing, the Trustee,
shall, at the direction of the majority of the Certificateholders or the NIMs
Insurer, or may, proceed to protect and enforce its rights and the rights of the
Certificateholders or the NIMs Insurer under this Agreement by a suit, action or
proceeding in equity or at law or otherwise, whether for the specific
performance of any covenant or agreement contained in this agreement or in aid
of the execution of any power granted in this Agreement or for the enforcement
of any other legal, equitable or other remedy, as the Trustee, being advised by
counsel, and subject to the foregoing, shall deem most effectual to protect and
enforce any of the rights of the Trustee, the NIMs Insurer and the
Certificateholders.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee that 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 notify the person providing such Agreement of such
non-conformance instrument corrected, and if the instrument is not corrected to
the Trustee's satisfaction, the Trustee will provide notice thereof to the NIMs
Insurer and the Certificateholders and take such further action as directed by
the NIMs Insurer and 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, its negligent failure to perform its
-88-
obligations in compliance with this Agreement, or any liability that would be
imposed by reason of its willful misfeasance or bad faith; provided, however,
that:
(i) prior to the occurrence of an Event of Default, and after the
curing of all such Events of Default that 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,
individually or as Trustee, 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 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 and conforming to the
requirements of this Agreement that it reasonably believed in good faith
to be genuine and to have been duly executed by the proper authorities
respecting any matters arising hereunder;
(ii) the Trustee shall not be liable, individually or as Trustee,
for an error of judgment made in good faith by a Responsible Officer or
Responsible Officers of the Trustee, unless the Trustee was negligent or
acted in bad faith or with willful misfeasance;
(iii) the Trustee shall not be liable, individually or as Trustee,
with respect to any action taken, suffered or omitted to be taken by it in
good faith in accordance with the direction of the NIMs Insurer or the
Holders of each Class of Certificates evidencing not less than 25% of the
Voting Rights of such Class 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 the Trustee under this
Agreement; and
(iv) 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, upon the request of the NIMs Insurer or the Holders of the
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 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, Officer's
Certificate, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal,
bond or other paper or document believed by it to be genuine and to have
been signed or presented by the proper party or parties;
(ii) the Trustee may consult with counsel of its choice 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 liable, individually or as Trustee,
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;
-89-
(iv) prior to the occurrence of an Event of Default hereunder and
after the curing of all Events of Default that 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 so to do by the NIMs
Insurer or the Holders of each Class of Certificates evidencing not less
than 25% of the Voting Rights of such Class;
(v) the Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents,
custodians, accountants or attorneys or independent contractors and the
Trustee will not be responsible for any misconduct or negligence on the
part of any agent, custodian, accountant, attorney or independent
contractor appointed with due care by it hereunder;
(vi) with respect to expenses that would be treated as
"unanticipated expenses" within the meaning of Treasury Regulations
Section 1.860G-1(b)(3)(ii) if paid by the Trust Fund or any of the REMICs
provided for herein, the Trustee shall not be required to expend its own
funds or otherwise incur any financial liability in the performance of any
of its duties hereunder if it shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity against such liability
is not assured to it;
(vii) the Trustee shall not be liable, individually or as Trustee,
for any loss on any investment of funds pursuant to this Agreement (other
than as issuer of the investment security);
(viii) the Trustee shall not be deemed to have knowledge of an Event
of Default until a Responsible Officer of the Trustee shall have received
written notice thereof;
(ix) the Trustee shall be under no obligation to exercise any of
the trusts or powers vested in it by this Agreement or to make any
investigation of matters arising hereunder or to institute, conduct or
defend any litigation hereunder or in relation hereto at the request,
order or direction of any of the NIMs Insurer or the Certificateholders,
pursuant to the provisions of this Agreement, unless the NIMs Insurer or
such Certificateholders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities that may
be incurred therein or thereby;
(x) if requested by the Servicer, the Trustee may appoint the
Servicer as the trustee's attorney-in-fact in order to carry out and
perform certain activities that are necessary or appropriate for the
servicing and administration of the Mortgage Loans pursuant to this
Agreement. Such appointment shall be evidenced by a power of attorney in
such form as may be agreed to by the Trustee and the Servicer. The Trustee
shall have no liability for any action or inaction of the Servicer in
connection with such power of attorney and the Trustee shall be
indemnified by the Servicer for all liabilities, costs and expenses
incurred by the Trustee in connection with the Servicer's use or misuse of
such powers of attorney; and
(xi) the Depositor, the Servicer and the Master Servicer hereby
approve of the appointment of Deutsche Bank National Trust Company to act
as custodian pursuant to the Custody Agreement attached hereto as Exhibit
M and each further agree that the Trustee appointed Deutsche Bank to act
as custodian with due care.
(b) All rights of action under this Agreement or under any of the
Certificates, enforceable by the Trustee, may be enforced by the Trustee 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
-90-
instituted by the Trustee shall be brought in its name for the benefit of all
the Holders of the Certificates, subject to the provisions of this Agreement.
SECTION 8.03. Trustee Not Liable for Mortgage Loans.
The recitals contained herein shall be taken as the statements of the
Depositor or the Servicer, as the case may be, and the Trustee assumes no
responsibility for their correctness. The Trustee makes no representations as to
the validity or sufficiency of this Agreement, of any Mortgage Loan, of any
guarantee of a NIMs Insurer or related document other than with respect to the
Trustee's execution and authentication of the Certificates . The Trustee shall
not be accountable for the use or application by the Depositor or the Servicer
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 or Certificate
Account by the Depositor or the Servicer.
SECTION 8.04. Trustee May Own Certificates.
The Trustee in its individual or any other capacity may become the owner
or pledgee of Certificates with the same rights as it would have if it were not
the Trustee.
SECTION 8.05. Trustee's Fees.
The Trustee shall be entitled to the Trustee Fee and earnings on or
investment income with respect to funds in or credited to the Certificate
Account.
SECTION 8.06. Indemnification of Trustee.
(a) The Trustee and its respective directors, officers, employees and
agents shall be entitled to indemnification from the Trust Fund for any loss,
liability or expense incurred in connection with any legal proceeding or
incurred without negligence or willful misconduct on their part, arising out of,
or in connection with, the acceptance or administration of the trusts created
hereunder or in connection with the performance of their duties hereunder,
including any applicable fees and expenses payable hereunder and the costs and
expenses of defending themselves against any claim in connection with the
exercise or performance of any of their powers or duties hereunder, provided
that:
(i) with respect to any such claim, the Trustee shall have given
the Depositor and the Holders written notice thereof promptly after the
Trustee shall have knowledge thereof; provided that failure to so notify
shall not relieve the Trust Fund of the obligation to indemnify the
Trustee; however, any reasonable delay by the Trustee to provide written
notice to the Depositor and the Holders promptly after the Trustee shall
have obtained knowledge of a claim shall not relieve the Trust Fund of the
obligation to indemnify the Trustee under this Section 8.06;
(ii) while maintaining control over its own defense, the Trustee
shall cooperate and consult fully with the Depositor in preparing such
defense;
(iii) notwithstanding anything to the contrary in this Section 8.06,
the Trust Fund shall not be liable for settlement of any such claim by the
Trustee entered into without the prior consent of the Depositor, which
consent shall not be unreasonably withheld; and
(iv) any such loss, liability or expense to be indemnified by the
Trust Fund must constitute an "unanticipated expense" of the Trust Fund
within the meaning of Treasury Regulations Section 1.860G-1(b)(3)(ii).
-91-
The provisions of this Section 8.06 shall survive any termination of this
Agreement and the resignation or removal of the Trustee and shall be construed
to include, but not be limited to any loss, liability or expense under any
environmental law.
(b) The Trustee shall be entitled to all reasonable expenses,
disbursements and advancements incurred or made by the Trustee in accordance
with this Agreement (including fees and expenses of its counsel and all persons
not regularly in its employment), except any such expenses, disbursements and
advancements that either (i) arise from its negligence, bad faith or willful
misconduct or (ii) do not constitute "unanticipated expenses" within the meaning
of Treasury Regulations Section 1.860G-1(b)(3)(ii).
(c) The Trustee's right to indemnification and reimbursement shall be
subject to a cap of $300,000, excluding any Servicing Transfer Costs, in the
aggregate in any calendar year; provided, however, that such cap shall apply
only if NIM Notes have been issued and are outstanding and shall cease to apply
after the date on which any NIM Notes are paid in full and all amounts which the
NIMs Insurer is entitled to be paid or reimbursed shall have been paid or
reimbursed. Any amounts not in excess of this cap may be withdrawn by the
Trustee from the Certificate Account at any time.
SECTION 8.07. Eligibility Requirements for Trustee.
The Trustee hereunder shall, at all times, be a corporation or association
organized and doing business under the laws of a 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, subject to supervision or
examination by federal or state authority and with a credit rating that would
not cause any of the Rating Agencies to reduce their respective ratings of any
Class of Certificates below the ratings issued on the Closing Date (or having
provided such security from time to time as is sufficient to avoid such
reduction) and reasonably acceptable to the NIMs Insurer. If such corporation or
association publishes reports of condition at least annually, pursuant to law or
to the requirements of the aforesaid supervising or examining authority, then
for the purposes of this Section 8.07 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 condition so published. In
case at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section 8.07, the Trustee shall resign immediately in the
manner and with the effect specified in Section 8.08 hereof. The corporation or
national banking association serving as Trustee may have normal banking and
trust relationships with the Depositor and the NIMs Insurer and their respective
Affiliates; provided, however, that such corporation cannot be an Affiliate of
the Servicer other than the Trustee in its role as successor to the Servicer.
SECTION 8.08. Resignation and Removal of Trustee.
The Trustee may at any time resign and be discharged from the trusts
hereby created by (1) giving written notice of resignation to the Depositor and
the NIMs Insurer and by mailing notice of resignation by first class mail,
postage prepaid, to the Certificateholders at their addresses appearing on the
Certificate Register and each Rating Agency, not less than 60 days before the
date specified in such notice when, subject to Section 8.09, such resignation is
to take effect, and (2) acceptance of appointment by a successor trustee
acceptable to the NIMs Insurer in accordance with Section 8.09 and meeting the
qualifications set forth in Section 8.07. If no successor trustee shall have
been so appointed and have accepted appointment within 30 days after the giving
of such notice or resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor trustee.
If at any time (i) the Trustee shall cease to be eligible in accordance
with the provisions of Section 8.07 hereof and shall fail to resign after
written request thereto by the Depositor or the NIMs Insurer, (ii) the Trustee
shall become incapable of acting, or shall be adjudged as bankrupt or insolvent,
or
-92-
a receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, or
(iii)(A) a tax is imposed with respect to the Trust Fund by any state in which
the Trustee or the Trust Fund is located, (B) the imposition of such tax would
be avoided by the appointment of a different trustee and (C) the Trustee fails
to indemnify the Trust Fund against such tax, then the Depositor or the NIMs
Insurer may remove the Trustee and the Depositor with the consent of the NIMs
Insurer shall promptly appoint a successor trustee by written instrument, in
triplicate, one copy of which instrument shall be delivered to the Trustee, one
copy of which shall be delivered to the Servicer and one copy of which shall be
delivered to the successor trustee.
The Holders evidencing at least 51% of the Voting Rights of all Classes of
Certificates, with the consent of the NIMs Insurer, or the NIMs Insurer upon
failure of the Trustee to perform its obligations hereunder may at any time
remove the Trustee and the Depositor shall appoint a successor trustee by
written instrument or instruments, in triplicate, signed by such Holders or
their attorneys-in-fact duly authorized (or by the NIMs Insurer), one complete
set of which instruments shall be delivered by the successor Trustee to the
Servicer, one complete set to the Trustee so removed and one complete set to the
successor so appointed. Notice of any removal of the Trustee shall be given to
the NIMs Insurer and each Rating Agency by the Successor Trustee.
Any resignation or removal of the Trustee and appointment of a successor
trustee pursuant to any of the provisions of this Section 8.08 shall become
effective upon acceptance of appointment by the successor trustee as provided in
Section 8.09 hereof.
SECTION 8.09. Successor Trustee.
Any successor trustee appointed as provided in Section 8.08 hereof shall
execute, acknowledge and deliver to the Depositor and to its predecessor
trustee, the NIMs Insurer and the Servicer an instrument accepting such
appointment hereunder and thereupon the resignation or removal of the
predecessor trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become fully vested with all the
rights, powers, duties and obligations of its predecessor hereunder, with the
like effect as if originally named as trustee herein.
No successor trustee shall accept appointment as provided in this Section
8.09 unless at the time of such acceptance such successor trustee shall be
eligible under the provisions of Section 8.07 hereof and its appointment shall
not adversely affect the then current rating of the Certificates.
Upon acceptance of appointment by a successor trustee as provided in this
Section 8.09, the Depositor shall mail notice of the succession of such trustee
hereunder to all Holders of Certificates. If the Depositor fails to mail such
notice within ten 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 8.10. Merger or Consolidation of Trustee.
Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided that such corporation shall be eligible under the provisions of Section
8.07 hereof without the execution or filing of any paper or further act on the
part of any of the parties hereto, anything herein to the contrary
notwithstanding (except for the execution of an assumption agreement where such
succession is not effected by operation of law).
-93-
SECTION 8.11. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for
the purpose of meeting any legal requirements of any jurisdiction in which any
part of the Trust Fund or property securing any Mortgage Note 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 and the NIMs Insurer to act as co-trustee or co-trustees
jointly with the Trustee, or separate trustee or separate trustees, of all or
any part of the Trust Fund, and to vest in such Person or Persons, in such
capacity and for the benefit of the Certificateholders, such title to the Trust
Fund or any part thereof, whichever is applicable, and, subject to the other
provisions of this Section 8.11, 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 and the NIMs Insurer. The Trustee shall not be liable for the
actions of any co-trustee appointed with due care; provided that the appointment
of a co-trustee shall not relieve the Trustee of its obligations hereunder. If
the Servicer and the NIMs Insurer shall not have joined in such appointment
within 15 days after the receipt by it of a request to do so, or in the case an
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 8.07 and no notice to Certificateholders of the
appointment of any co-trustee or separate trustee shall be required under
Section 8.09.
Every separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) All rights, powers, duties and obligations conferred or
imposed upon the Trustee, except for the obligation of the Trustee under
this Agreement to advance funds on behalf of the Servicer, shall be
conferred or imposed upon and exercised or performed by the Trustee and
such separate trustee or co-trustee jointly (it being understood that such
separate trustee or co-trustee is not authorized to act separately without
the Trustee joining in such act), except to the extent that under any law
of any jurisdiction in which any particular act or acts are to be
performed (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 the Trust Fund or any
portion thereof in any such jurisdiction) shall be exercised and performed
singly by such separate trustee or co-trustee, but solely at the direction
of the Trustee;
(ii) No trustee hereunder shall be held personally liable by reason
of any act or omission of any other trustee hereunder; and
(iii) The Trustee with the consent of the NIMs Insurer may at any
time accept the resignation of or remove any separate trustee or
co-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 trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to the
Servicer, the NIMs Insurer and the Depositor.
-94-
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 8.12. Tax Matters.
(a) It is intended that each of the REMICs provided for herein REMIC
shall constitute, and that the affairs of the Trust Fund shall be conducted so
as to allow each such REMIC to qualify as, a "real estate mortgage investment
conduit" as defined in and in accordance with the REMIC Provisions. It is also
intended that each of the grantor trusts provided for in Section 2.07 hereof
shall constitute, and that the affairs of the Trust Fund shall be conducted so
as to allow each such grantor trust to qualify as, a grantor trust under the
provisions of Subpart E, Part I of Subchapter J of the Code. In furtherance of
such intention, the Trustee covenants and agrees that it shall act as agent (and
the Trustee is hereby appointed to act as agent) on behalf of each of the REMICs
and grantor trusts provided for herein and that in such capacity it shall: (a)
prepare and file, or cause to be prepared and filed, in a timely manner, a U.S.
Real Estate Mortgage Investment Conduit Income Tax Return (Form 1066 or any
successor form adopted by the Internal Revenue Service) and prepare and file or
cause to be prepared and filed with the Internal Revenue Service and applicable
state or local tax authorities income tax or information returns for each
taxable year with respect to each of the REMICs and grantor trusts provided for
herein, containing such information and at the times and in the manner as may be
required by the Code or state or local tax laws, regulations, or rules, and
furnish or cause to be furnished to Certificateholders the schedules, statements
or information at such times and in such manner as may be required thereby; (b)
within thirty days of the Closing Date, furnish or cause to be furnished to the
Internal Revenue Service, on Forms 8811 or as otherwise may be required by the
Code, the name, title, address, and telephone number of the person that the
holders of the Certificates may contact for tax information relating thereto,
together with such additional information as may be required by such Form, and
update such information at the time or times in the manner required by the Code
for each of the REMICs provided for herein; (c) make or cause to be made
elections, on behalf of each of the REMICs provided for herein to be treated as
a REMIC on the federal tax return of such REMICs for their first taxable years
(and, if necessary, under applicable state law); (d) prepare and forward, or
cause to be prepared and forwarded, to the Certificateholders and to the
Internal Revenue Service and, if necessary, state tax authorities, all
information returns and reports as and when required to be provided to them in
accordance with the REMIC Provisions or other applicable tax law or with respect
to the grantor trusts provided for herein, including without limitation, the
calculation of any original issue discount using the Prepayment Assumption; (e)
provide information necessary for the computation of tax imposed on the transfer
of a Class R Certificate to a Person that is not a Permitted Transferee, or an
agent (including a broker, nominee or other middleman) of a Person that is not a
Permitted Transferee, or a pass-through entity in which a Person that is not a
Permitted Transferee is the record holder of an interest (the reasonable cost of
computing and furnishing such information may be charged to the Person liable
for such tax); (f) to the extent that they are under its control conduct the
affairs of each of the REMICs and grantor trusts provided for herein at all
times that any Certificates are outstanding so as to maintain the status of each
of the REMICs provided for herein as a REMIC under the REMIC Provisions and the
status of each of the grantor trusts provided for herein as a grantor trust
under Subpart E, Part I of subchapter J of the Code; (g) not knowingly or
intentionally take any action or omit to take any action that would cause the
termination of the REMIC status of any of the REMICs provided for herein or
result in the imposition of tax upon any such REMIC; (h) not knowingly or
intentionally take any action or omit to take any action that would cause the
termination of the grantor trust status under Subpart E, Part I of Subchapter J
of the Code of any of the grantor trusts provided to herein or result in the
imposition of tax upon any such grantor trusts; (i) pay, from the sources
specified in the last paragraph
-95-
of this Section 8.12, the amount of any federal, state and local taxes,
including prohibited transaction taxes as described below, imposed on each of
the REMICs or grantor trusts provided for herein prior to the termination of the
Trust Fund when and as the same shall be due and payable (but such obligation
shall not prevent the Trustee or any other appropriate Person from contesting
any such tax in appropriate proceedings and shall not prevent the Trustee from
withholding payment of such tax, if permitted by law, pending the outcome of
such proceedings); (j) sign or cause to be signed federal, state or local income
tax or information returns; (k) maintain records relating to each of the REMICs
and grantor trusts provided for herein, including but not limited to the income,
expenses, assets and liabilities of each of the REMICs and grantor trusts
provided for herein, and the fair market value and adjusted basis of the Trust
Fund property determined at such intervals as may be required by the Code, as
may be necessary to prepare the foregoing returns, schedules, statements or
information; and (l) as and when necessary and appropriate, represent each of
the REMICs and grantor trusts provided for herein in any administrative or
judicial proceedings relating to an examination or audit by any governmental
taxing authority, request an administrative adjustment as to any taxable year of
any of the REMICs provided for herein, enter into settlement agreements with any
governmental taxing agency, extend any statute of limitations relating to any
tax item of any of the REMICs provided for herein, and otherwise act on behalf
of each of the REMICs and grantor trusts provided for herein in relation to any
tax matter involving any of such REMICs or any controversy involving the Trust
Fund.
In order to enable the Trustee to perform its duties as set forth herein,
the Depositor shall provide, or cause to be provided, to the Trustee within 10
days after the Closing Date all information or data that the Trustee requests in
writing and determines to be relevant for tax purposes to the valuations and
offering prices of the Certificates, including, without limitation, the price,
yield, prepayment assumption and projected cash flows of the Certificates and
the Mortgage Loans. Thereafter, the Depositor shall provide to the Trustee
promptly upon written request therefor, any such additional information or data
that the Trustee may, from time to time, request in order to enable the Trustee
to perform its duties as set forth herein. The Depositor hereby agrees to
indemnify the Trustee for any losses, liabilities, damages, claims or expenses
of the Trustee arising from any errors or miscalculations of the Trustee that
result from any failure of the Depositor to provide, or to cause to be provided,
accurate information or data to the Trustee on a timely basis.
In the event that any tax is imposed on "prohibited transactions" of any
of the REMICs provided for herein as defined in Section 860F(a)(2) of the Code,
on the "net income from foreclosure property" of the any of such REMICs as
defined in Section 860G(c) of the Code, on any contribution to the Trust Fund
after the Startup Day pursuant to Section 860G(d) of the Code, or any other tax
is imposed, if not paid as otherwise provided for herein, such tax shall be paid
by (i) the Trustee, if any such other tax arises out of or results from a breach
by the Trustee of any of its obligations under this Agreement or as a result of
the location of the Trustee, (ii) any party hereto (other than the Trustee) to
the extent any such other tax arises out of or results from a breach by such
other party of any of its obligations under this Agreement or as a result of the
location of such other party or (iii) in all other cases, or in the event that
any liable party here fails to honor its obligations under the preceding clauses
(i) or (ii), any such tax will be paid first with amounts otherwise to be
distributed to the Class R Certificateholders (pro rata) pursuant to Section
4.04, and second with amounts (other than amounts derived by the Trust Fund from
a payment on the Cap Contract) otherwise to be distributed to all other
Certificateholders in the following order of priority: first, to the Class N
Certificates (pro rata), second to the Class B Certificates (pro rata), third,
to the Class M-2 Certificates (pro rata), fourth, to the Class M-1 Certificates
(pro rata) and fifth to the Class A Certificates and Class R Certificate (pro
rata). Notwithstanding anything to the contrary contained herein, to the extent
that such tax is payable by the Class R Certificate, the Trustee is hereby
authorized pursuant to such instruction to retain on any Distribution Date, from
the Holders of the Class R Certificate (and, if necessary, from the Holders of
all other Certificates in the priority specified in the preceding sentence),
funds otherwise distributable to such Holders in an amount sufficient to pay
such tax. The Trustee agrees
-96-
to promptly notify in writing the party liable for any such tax of the amount
thereof and the due date for the payment thereof.
(b) Each of the Depositor and the Trustee agrees not to knowingly or
intentionally take any action or omit to take any action that would (i) cause
the termination of the REMIC status of any of the REMICs provided for herein or
result in the imposition of a tax upon any of the REMICs provided for herein or
(ii) cause the termination of the grantor trust status of any of the grantor
trusts provided for herein or result in the imposition of a tax upon any of the
grantor trusts provided for herein.
(c) In the event that the beneficial ownership of the Class N and Class
X Certificates is held by a single Person for federal income tax purposes or by
multiple Persons who beneficially own the Class N and Class X Certificates
proportionately, such Person or Persons shall be treated as the direct or
indirect beneficial owner of the Class UTXN Interest, the Cap Contract and the
Cap Contract Account. In the event that beneficial ownership of the Class N and
the Class X Certificates is held by two or more Persons for federal income tax
purposes that do not beneficially own the Class N and Class X Certificates
proportionately, the Trustee shall treat the Class N Certificateholders and the
Class X Certificateholders as partners in a partnership that owns the Class UTXN
Interest, the Cap Contract and the Cap Contract Account and shall not treat the
Class N and Class X Certificates as a direct interest in any REMIC hereunder. By
acquiring the Class N and the Class X Certificates, the respective Holders will
agree to treat the Class N and Class X Certificates in the manner described in
the preceding sentences for federal income tax purposes in the event that the
beneficial ownership of the Class N Certificates and the Class X Certificates is
separated. In such event, (i) a separate capital account shall be established
and maintained for each Holder of a Class N or Class X Certificate in accordance
with Treasury Regulations Section 1.704-1(b)(2)(iv), which shall be credited
with income or gain and debited by any expenses (including any payments deemed
made to the Holders of any of the Class A, Class M-1, Class M-2, Class B or
Class R Certificates on interest rate cap agreements for federal income tax
purposes) or losses or distributions allocable to the assets deemed held by such
partnership, (ii) the Class N Certificates shall be allocated income in an
amount equal to interest at the Class N Distributable Interest Rate and any
original issue discount that would be reportable thereon if the Class N
Certificate were a debt instrument issued on the date ownership of the Class N
and Class X Certificates is separated, with a principal balance equal to the
Class N Notional Balance, (iii) the Class X and Class N Certificates shall be
allocated income with respect to all prepayment penalties (including amounts in
connection with the full or partial waiver of prepayment penalties) in
accordance with the allocation of such amounts pursuant to Section 4.04(g), to
the extent not allocated under Section 8.12(c)(ii) above, (iv) the Class X and
Class N Certificates shall be allocated accruals (under any reasonable method)
of any "cap premiums" deemed received on the date ownership of the Class X and
Class N Certificates is separated in respect of the obligation of the Class UTXN
Interest to pay amounts of Excess Interest, and shall be allocated expense in
respect of any actual payment of such Excess Interest based on which one of such
Classes economically bears such expense, (v) the Class X Certificates shall be
allocated all remaining income and any expenses and Realized Losses with respect
to the Class UTXN Interest, until the capital account of the Class X
Certificates is reduced to zero, and any remaining expenses or losses shall be
allocated to the Class N Certificates, (vi) neither the Class N nor the Class X
Certificates shall be responsible for restoring any deficit to its capital
account, (vii) upon termination of the Trust Fund pursuant to Article IX, all
amounts available for distribution to Holders of the Class N and Class X
Certificates shall be distributed in accordance with their positive capital
account balances, first to the Class N Certificates until their Notional Amount
and any accrued but unpaid interest thereon are reduced to zero, and then to the
Class X Certificates, and (viii) the Trustee shall maintain books and records
with respect to the partnership on a calendar year basis (unless a different
taxable year is required by the Code) and shall prepare or cause to be prepared,
and shall cause the Holder of the largest Percentage Interest of the Class X
Certificates to sign and file or cause to be filed all federal and state tax and
information returns for the partnership and shall furnish or cause to be
furnished Schedule K-1's to the Holders of the Class N and Class X Certificates
at the time required by
-97-
the Code. Unless otherwise directed by a majority of the Percentage Interests of
the Class N and Class X Certificates, the Trustee shall not make an election
under Section 754 of the Code. The Holder of the largest Percentage Interest of
the Class X Certificates, by acceptance of its Class X Certificate(s), agrees to
act as "tax matters partner" (within the meaning of Section 6231(a)(7) of the
Code) and to sign and timely file all federal and state partnership tax and
information returns prepared by the Trustee pursuant to this Section 8.12(c).
ARTICLE IX
TERMINATION
SECTION 9.01. Termination upon Liquidation or Repurchase of all Mortgage
Loans.
Subject to Section 9.03, the obligations and responsibilities of the
Depositor, the Master Servicer, the Servicer and the Trustee created hereby with
respect to the Trust Fund shall terminate upon the earlier of (a) the exercise
by the Servicer or the NIMs Insurer of an Optional Termination; and (b) the
later of (i) the maturity or other liquidation (or any Advance with respect
thereto) of the last Mortgage Loan remaining in the Trust Fund and the
disposition of all REO Property and (ii) the distribution to Certificateholders
of all amounts required to be distributed to them pursuant to this Agreement, as
applicable. In no event shall the trusts created hereby continue beyond the
earlier of (i) the expiration of 21 years from the death of the last survivor of
the descendants of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the late Ambassador of the United States
to the Court of St. James's, living on the date hereof and (ii) the Latest
Possible Maturity Date.
Any termination pursuant to clause (a) above shall be effected by the
Servicer purchasing all Mortgage Loans and REO Properties at a price equal to
the amount described in clause (i) of the definition of Optional Termination
Price. If the Servicer elects not to exercise its right to effect an Optional
Termination, the NIMs Insurer may, at its option, terminate the Trust Fund by
purchasing all of the Mortgage Loans and REO Properties at the price equal to
the amount described in clause (ii) of the definition of "Optional Termination
Price." Notwithstanding anything to the contrary herein, the Optional
Termination Amount paid by either the Servicer or the NIMs Insurer shall be
deposited by the Trustee directly into the Certificate Account immediately upon
Optional Termination. Any Optional Termination Amount to be paid by the NIMs
Insurer may be paid by the NIMs Insurer to the Trustee for deposit into the
Certificate Account.
The right of the Servicer or the NIMs Insurer to effect an Optional
Termination pursuant to clause (a) above shall be conditioned upon the aggregate
Stated Principal Balance of the Mortgage Loans, at the time of any such
repurchase, aggregating ten (10) percent or less of the Stated Principal Balance
of the Mortgage Loans as of the Cut-off Date.
SECTION 9.02. Final Distribution on the Certificates.
If on any Determination Date, (i) the Trustee determines that there are no
Outstanding Mortgage Loans and no other funds or assets in the Trust Fund other
than the funds in the Collection Account, the Trustee shall send a final
distribution notice promptly to each Certificateholder and the NIMs Insurer or
(ii) the Trustee determines that a Class of Certificates shall be retired after
a final distribution on such Class, the Trustee shall notify the
Certificateholders within seven (7) Business Days after such Determination Date
that the final distribution in retirement of such Class of Certificates is
scheduled to be made on the immediately following Distribution Date. Any final
distribution made pursuant to the immediately preceding sentence will be made
only upon presentation and surrender of the Certificates at the office of the
Trustee specified in such notice. If the Servicer or the NIMs Insurer elects to
terminate
-98-
the Trust Fund pursuant to clause (a) of Section 9.01, at least 10 days prior to
the date notice is to be mailed to the affected Certificateholders, the Trustee
shall notify the Depositor, the NIMs Insurer and the Servicer of the date such
electing party intends to terminate the Trust Fund and of the applicable
repurchase price of the Mortgage Loans and REO Properties.
Notice of any termination of the Trust Fund, specifying the Distribution
Date on which Certificateholders may surrender their Certificates for payment of
the final distribution and cancellation, shall be given promptly by the Trustee
by letter to Certificateholders mailed not earlier than the 10th day and no
later than the 15th day of the month immediately preceding the month of such
final distribution. Any such notice shall specify (a) the Distribution Date upon
which final distribution on the Certificates will be made upon presentation and
surrender of Certificates at the office therein designated, (b) the location of
the office or agency at which such presentation and surrender must be made, and
(c) that the Record Date otherwise applicable to such Distribution Date is not
applicable, distributions being made only upon presentation and surrender of the
Certificates at the office therein specified. The Trustee will give such notice
to the NIMs Insurer and each Rating Agency at the time such notice is given to
Certificateholders.
In the event such notice is given, the Servicer shall cause all funds in
the Collection Account to be deposited in the Certificate Account on the
Business Day prior to the applicable Distribution Date in an amount equal to the
final distribution in respect of the Certificates. Upon such final deposit with
respect to the Trust Fund and the receipt by the Trustee of a Request for
Release therefor, the Trustee shall promptly release to the Trustee or the NIMs
Insurer, as applicable, the Mortgage Files for the Mortgage Loans.
Upon presentation and surrender of the Certificates, the Trustee shall
cause to be distributed to Certificateholders of each Class the amounts
allocable to such Certificates held in the Certificate Account in the order and
priority set forth in Section 4.04 hereof on the final Distribution Date and in
proportion to their respective Percentage Interests.
In the event that any affected Certificateholders shall not surrender
Certificates for cancellation within six months after the date specified in the
above mentioned written notice, the Trustee shall give a second written notice
to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
six months after the second notice all the applicable Certificates shall not
have been surrendered for cancellation, the Trustee may take appropriate steps,
or may appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates, and the cost
thereof shall be paid out of the funds and other assets that remain a part of
the Trust Fund. If within one year after the second notice all Certificates
shall not have been surrendered for cancellation, the Class R Certificateholders
shall be entitled to all unclaimed funds and other assets of the Trust Fund that
remain subject hereto. Upon payment to the Class R Certificateholders of such
funds and assets, the Trustee shall have no further duties or obligations with
respect thereto.
SECTION 9.03. Additional Termination Requirements.
(a) In the event the Servicer or the NIMs Insurer exercises its option
to effect an Optional Termination as provided in Section 9.01, the Trust Fund
shall be terminated in accordance with the following additional requirements,
unless the Trustee has been supplied with an Opinion of Counsel, at the expense
of the Servicer or the NIMs Insurer, as applicable, to the effect that the
failure of the Trust Fund to comply with the requirements of this Section 9.03
will not (i) result in the imposition of taxes on "prohibited transactions" of
any of the REMICs provided for herein as defined in section 860F of the
-99-
Code, or (ii) cause any of the REMICs provided for herein to fail to qualify as
a REMIC at any time that any Certificates are outstanding:
(i) The Depositor shall establish a 90-day liquidation period and
notify the Trustee thereof, which shall in turn specify the first day of
such period in a statement attached to the final tax returns of each of
the REMICs provided for herein pursuant to Treasury Regulation Section
1.860F-1. The Depositor shall satisfy all the 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
Servicer or the NIMs Insurer, as applicable;
(ii) During such 90-day liquidation period, and at or prior to the
time of making the final payment on the Certificates, the Depositor as
agent of the Trustee shall sell all of the assets of the Trust Fund 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 Class R Certificateholders all cash on
hand (other than cash retained to meet outstanding claims known to the
Trustee), and the Trust Fund shall terminate at that time, whereupon the
Trustee shall have no further duties or obligations with respect to sums
distributed or credited to the Class R Certificateholders.
(b) By their acceptance of the Certificates, the Holders thereof hereby
authorize the Depositor to specify the 90-day liquidation period for the Trust
Fund, which authorization shall be binding upon all successor
Certificateholders.
(c) The Trustee as agent for each REMIC hereby agrees to adopt and sign
such a plan of complete liquidation prepared and delivered to it by Depositor
upon the written request of the Depositor, and the receipt of the Opinion of
Counsel referred to in Section 9.03(b)(i) and to take such other action in
connection therewith as may be reasonably requested by the Depositor.
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.01. Amendment.
This Agreement may be amended from time to time by the Depositor, the
Master Servicer, the Servicer and the Trustee, with the consent of the NIMs
Insurer and without the consent of any of the Certificateholders to,
(i) to cure any ambiguity or correct any mistake,
(ii) to correct, modify or supplement any provision therein which
may be inconsistent with any other provision herein,
(iii) to add any other provisions with respect to matters or
questions arising under this Agreement, or
(iv) to modify, alter, amend, add to or rescind any of the terms or
provisions contained in this Agreement, provided, however, that, in the
case of clauses (iii) and (iv), such amendment will not, as evidenced by
an Opinion of Counsel addressed to the Trustee to such effect, adversely
effect in any material respect the interests of any Holder; provided,
further, however, that such amendment will be deemed to not adversely
affect in any material respect the
-100-
interest of any Holder if the Person requesting such amendment obtains a
letter from each Rating Agency stating that such amendment will not result
in a reduction or withdrawal of its rating of any Class of the
Certificates, it being understood and agreed that any such letter in and
of itself will not represent a determination as to the materiality of any
such amendment and will represent a determination only as to the credit
issues affecting any such rating.
Notwithstanding the foregoing, without the consent of the
Certificateholders, the Depositor, the Master Servicer, the Servicer and the
Trustee may at any time and from time to time amend this Agreement to modify,
eliminate or add to any of its provisions to such extent as shall be necessary
or appropriate to maintain the qualification of any of the REMICs provided for
herein as REMICs under the Code or to avoid or minimize the risk of the
imposition of any tax on the Trust Fund or any of the REMICs provided for herein
pursuant to the Code that would be a claim against the Trust Fund at any time
prior to the final redemption of the Certificates, provided that the Trustee and
the NIMs Insurer have been provided an Opinion of Counsel, which opinion shall
be an expense of the party requesting such amendment but in any case shall not
be an expense of the Trustee, to the effect that such action is necessary or
appropriate to maintain such qualification or to avoid or minimize the risk of
the imposition of such a tax.
This Agreement may also be amended from time to time by the Depositor, the
Servicer, the Trustee and the Holders of the Certificates affected thereby
evidencing not less than 66 2/3% of the Voting Rights, with the consent of the
NIMs Insurer, 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 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 in a manner other than
as described in (i), without the consent of the Holders of Certificates of such
Class evidencing 66 2/3% or more of the Voting Rights of such Class or (iii)
reduce the aforesaid percentages of Certificates the Holders of which are
required to consent to any such amendment without the consent of the Holders of
all such Certificates then outstanding.
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, which opinion shall be an expense of the party
requesting such amendment but in any case shall not be an expense of the
Trustee, to the effect that such amendment will not cause the imposition of any
tax on the Trust Fund, any of the REMICs provided for herein or the
Certificateholders or cause any of the REMICs provided for herein to fail to
qualify as a REMIC at any time that any Certificates are outstanding. A copy of
such Opinion of Counsel shall be provided to the NIMs Insurer.
Promptly after the execution of any amendment to this Agreement requiring
the consent of Certificateholders, the Trustee or upon the written request of
the Trustee to the Servicer, the Servicer shall furnish written notification of
the substance of such amendment to each Certificateholder, the NIMs Insurer and
each Rating Agency.
It shall not be necessary for the consent of Certificateholders under this
Section 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.
-101-
Nothing in this Agreement shall require the Trustee or the Servicer to
enter into an amendment without receiving an Opinion of Counsel, satisfactory to
the Trustee or the Servicer that (i) such amendment is permitted and is not
prohibited by this Agreement and that all requirements for amending this
Agreement have been complied with; and (ii) either (A) the amendment does not
adversely affect in any material respect the interests of any Certificateholder
or (B) the conclusion set forth in the immediately preceding clause (A) is not
required to be reached pursuant to this Section 10.01.
The Trustee may, but shall not be obligated to, enter into any supplement,
modification or waiver which affects its rights, duties or obligations
hereunder.
SECTION 10.02. Counterparts.
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 10.03. Governing Law.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
SUBSTANTIVE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO
BE PERFORMED IN THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES
OF THE PARTIES HERETO AND THE CERTIFICATEHOLDERS SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO THE CONFLICTS OF LAWS PRINCIPLES
THEREOF.
SECTION 10.04. Intention of Parties.
It is the express intent of the parties hereto that the conveyance of the
Mortgage Notes, Mortgages, assignments of Mortgages, title insurance policies
and any modifications, extensions and/or assumption agreements and private
mortgage insurance policies relating to the Mortgage Loans by the Depositor to
the Trustee be, and be construed as, an absolute sale thereof to the Trustee. It
is, further, not the intention of the parties that such conveyance be deemed a
pledge thereof by the Depositor to the Trustee. However, in the event that,
notwithstanding the intent of the parties, such assets are held to be the
property of the Depositor, or if for any other reason this Agreement is held or
deemed to create a security interest in such assets, then (i) this Agreement
shall be deemed to be a security agreement within the meaning of the Uniform
Commercial Code of the State of New York and (ii) the conveyance provided for in
this Agreement shall be deemed to be an assignment and a grant by the Depositor
to the Trustee, for the benefit of the Certificateholders, of a security
interest in all of the assets that constitute the Trust Fund, whether now owned
or hereafter acquired.
The Depositor for the benefit of the Certificateholders shall, to the
extent consistent with this Agreement, take such actions as may be necessary to
ensure that, if this Agreement were deemed to create a security interest in the
assets of the Trust Fund, such security interest would be deemed to be a
perfected security interest of first priority under applicable law and will be
maintained as such throughout the term of the Agreement. The Depositor shall
arrange for filing any Uniform Commercial Code continuation statements in
connection with any security interest granted or assigned to the Trustee for the
benefit of the Certificateholders.
SECTION 10.05. Notices.
(a) The Trustee shall use its best efforts to promptly provide notice to
each Rating Agency and the NIMs Insurer with respect to each of the following of
which it has actual knowledge:
-102-
(i) Any material change or amendment to this Agreement;
(ii) The occurrence of any Event of Default that has not been
cured;
(iii) The resignation or termination of the Trustee or the Servicer
and the appointment of any successor;
(iv) The repurchase or substitution of Mortgage Loans pursuant to
Sections 2.02, 2.03 and 3.12;
(v) The final payment to Certificateholders; and
(vi) Any change in the location of the Certificate Account or the
Certificate Account.
The Trustee shall promptly furnish or make available to each Rating Agency
copies of the following:
(i) Each report to Certificateholders described in Section 4.05;
(ii) Each annual statement as to compliance described in Section
3.17; and
(iii) Each annual independent public accountants' servicing report
described in Section 3.18.
All directions, demands and notices hereunder shall be in writing and
shall be deemed to have been duly given when delivered to (a) in the case
of the Depositor, ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors, Inc. ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
4 World Financial Center, 10th Floor, New York, New York 10080, Attention:
Asset-Backed Finance; (b) in the case of the Trustee, Wachovia Bank, N.A.,
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: Corporate Trust Services - Series TMTS 2003-2HE; (c) in the
case of the Rating Agencies, (i) Standard & Poor's Ratings Services, a
division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇; and (ii) Fitch, Inc. ▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇; (d) in the case of the Servicer, ▇▇▇▇▇▇ Loan Servicing LP,
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇; (e) in the case of the
Master Servicer, Universal Master Servicing, LLC, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and in the case of any of the
foregoing persons, such other addresses as may hereafter be furnished by
any such persons to the other parties to this Agreement. Notices to
Certificateholders shall be deemed given when mailed, first class postage
prepaid, to their respective addresses appearing in the Certificate
Register.
SECTION 10.06. 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 10.07. Assignment.
Notwithstanding anything to the contrary contained herein, except as
provided pursuant to Section 6.02, this Agreement may not be assigned by the
Servicer without the prior written consent of the Trustee and Depositor.
-103-
SECTION 10.08. 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 representative or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a petition or winding up of the Trust
Fund, or 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 provided
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 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
party 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 or by availing itself
of any provisions 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 such
Holder previously shall have given to the Trustee a written notice of an Event
of Default and of the continuance thereof, as hereinbefore provided, the Holders
of Certificates evidencing not less than 25% of the Voting Rights evidenced by
the Certificates shall also have made written request to the Trustee to
institute such action, suit or proceeding in its own name as Trustee hereunder
and shall have offered to the Trustee such reasonable indemnity as it may
require against the costs, expenses, and liabilities to be incurred therein or
thereby, and the Trustee, for 60 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 being understood and intended, and being
expressly covenanted by each Certificateholder with every other
Certificateholder and the Trustee, that no one or more Holders of Certificates
shall have any right in any manner whatever by virtue or by availing itself or
themselves of any provisions of this Agreement to affect, disturb or prejudice
the rights of the Holders of any other of the Certificates and/or the NIMs
Insurer, or to obtain or seek to obtain priority over or preference to any other
such Holder and/or the NIMs Insurer or to enforce any right under this
Agreement, except in the manner herein provided and for the common benefit of
all Certificateholders. For the protection and enforcement of the provisions of
this Section 10.08, each and every Certificateholder and the Trustee shall be
entitled to such relief as can be given either at law or in equity.
SECTION 10.09. Inspection and Audit Rights.
The Master Servicer and Servicer each agree that, on reasonable prior
notice, it will permit any representative of the NIMs Insurer, the Depositor or
the Trustee during the Master Servicer's or Servicer's normal business hours, to
examine all the books of account, records, reports and other papers of the
Master Servicer or Servicer relating to the Mortgage Loans, to make copies and
extracts therefrom, to cause such books to be audited by independent certified
public accountants selected by the NIMs Insurer, Depositor or the Trustee and to
discuss its affairs, finances and accounts relating to the Mortgage Loans with
its officers, employees, agents, counsel and independent public accountants (and
by this provision the Master Servicer or Servicer hereby authorizes such
accountants to discuss with such representative such affairs, finances and
accounts), all at such reasonable times and as often as may be reasonably
requested. Any out-of-pocket expense incident to the exercise by the NIMs
Insurer, Depositor or the Trustee of any right under this Section 10.09 shall be
borne by the party requesting such inspection; all other such expenses shall be
borne by the Servicer.
-104-
SECTION 10.10. Certificates Nonassessable and Fully Paid.
It is the intention of the Depositor that Certificateholders shall not be
personally liable for obligations of the Trust Fund, that the interests in the
Trust Fund represented by the Certificates shall be nonassessable for any reason
whatsoever, and that the Certificates, upon due authentication thereof by the
Trustee pursuant to this Agreement, are and shall be deemed fully paid.
SECTION 10.11. Third Party Rights.
The NIMs Insurer shall be deemed a third-party beneficiary of this
Agreement to the same extent as if it were a party hereto, and shall have the
right to enforce the provisions of this Agreement.
SECTION 10.12. Additional Rights of the NIMs Insurer.
(a) Each party to this Agreement, any agent thereof and any successor
thereto shall furnish to the NIMs Insurer a copy of any notice, direction,
demand, opinion, schedule, list, certificate, report, statement, filing,
information, data or other communication provided by it or on its behalf to any
other Person pursuant to this Agreement at the same time, in the same form and
in the same manner as such communication is so provided and shall address or
cause such communication to be addressed to the NIMs Insurer in addition to any
other addressee thereof. The Servicer shall cause the NIMs Insurer to be an
addressee of any report furnished pursuant to this Agreement.
(b) Wherever in this Agreement there shall be a requirement that there be
no downgrade, reduction, withdrawal or qualification of or other effect on the
rating of any Class of Certificates by any Rating Agency as of any date, there
also shall be deemed to be a requirement that there be no such effect on any
class of notes issued pursuant to the Indenture and guaranteed by the NIMs
Insurer as of such date. In addition, unless there exists a continuance of any
failure by the NIMs Insurer to make a required payment under the policy insuring
the NIM Notes (such event, a "NIMs Insurer Default"), wherever in this Agreement
there shall be a requirement that any Person or any communication, object or
other matter be acceptable or satisfactory to or otherwise receive the consent
or other approval of any other Person (whether as a condition to the eligibility
of such Person to act in any capacity, as a condition to any circumstance or
state of affairs related to such matter, or otherwise), there also shall be
deemed to be a requirement that such Person or matter be approved in writing by
the NIMs Insurer, which approval shall not be unreasonably withheld or delayed.
SECTION 10.13. [Reserved]
SECTION 10.14. Assignment; Sales; Advance Facilities.
(a) The Servicer is hereby authorized to enter into a financing or other
facility (any such arrangement, an "Advance Facility"), the documentation for
which complies with Section 10.14(e) below, under which (1) the Servicer assigns
or pledges its rights under this Agreement to be reimbursed for any or all
Advances and/or Servicing Advances to (i) a Person, which may be a
special-purpose bankruptcy-remote entity (an "SPV"), (ii) a Person, which may
simultaneously assign or pledge such rights to an SPV or (iii) a lender (a
"Lender"), which, in the case of any Person or SPV of the type described in
either of the preceding clauses (i) or (ii), may directly or through other
assignees and/or pledgees, assign or pledge such rights to a Person, which may
include a trustee acting on behalf of holders of debt instruments (any such
Person or any such Lender, an "Advance Financing Person"), and/or (2) an Advance
Financing Person agrees to fund all the Advances and/or Servicing Advances
required to be made by the Servicer pursuant to this Agreement. No consent of
the Trustee, Certificateholders or any other party shall be required before the
Servicer may enter into an Advance Facility nor shall the Trustee or the
-105-
Certificateholders be a third party beneficiary of any obligation of an Advance
Financing Person to the Servicer. Notwithstanding the existence of any Advance
Facility under which an Advance Financing Person agrees to fund Advances and/or
Servicing Advances, (A) the Servicer (i) shall remain obligated pursuant to this
Agreement to make Advances and/or Servicing Advances pursuant to and as required
by this Agreement and (ii) shall not be relieved of such obligations by virtue
of such Advance Facility and (B) neither the Advance Financing Person nor any
Servicer's Assignee (as hereinafter defined) shall have any right to proceed
against or otherwise contact any Mortgagor for the purpose of collecting any
payment that may be due with respect to any related Mortgage Loan or enforcing
any covenant of such Mortgagor under the related Mortgage Loan documents.
(b) If the Servicer enters into an Advance Facility, the Servicer and the
related Advance Financing Person shall deliver to the Trustee at the address set
forth in Section 10.05 hereof a written notice (an "Advance Facility Notice"),
stating (a) the identity of the Advance Financing Person and (b) the identity of
the Person (the "Servicer's Assignee") that will, subject to Section 10.14(c)
hereof, have the right to receive amounts available from the Collection Account
pursuant to Section 3.08(a) hereof to reimburse previously unreimbursed Advances
and/or Servicing Advances ("Advance Reimbursement Amounts"). Advance
Reimbursement Amounts (i) shall consist solely of amounts in respect of Advances
and/or Servicing Advances for which the Servicer would be permitted to reimburse
itself in accordance with Section 3.08 hereof, assuming the Servicer had made
the related Advance(s) and/or Servicing Advance(s) and (ii) shall not consist of
amounts payable to a successor Servicer in accordance with Section 3.08 hereof
to the extent permitted under Section 10.14(e) below.
(c) Notwithstanding the existence of an Advance Facility, the Servicer, on
behalf of the Advance Financing Person and the Servicer's Assignee, shall be
entitled to receive reimbursements of Advances and/or Servicing Advances in
accordance with Section 3.08 hereof, which entitlement may be terminated by the
Advance Financing Person pursuant to a written notice to the Trustee in the
manner set forth in Section 10.05 hereof. Upon receipt of such written notice,
the Servicer shall no longer be entitled to receive reimbursement for any
Advance Reimbursement Amounts and the Servicer's Assignee shall immediately have
the right to receive from the Collection Account all Advance Reimbursement
Amounts. Notwithstanding the foregoing, and for the avoidance of doubt, (i) the
Servicer and/or the Servicer's Assignee shall only be entitled to reimbursement
of Advance Reimbursement Amounts hereunder from withdrawals from the Collection
Account pursuant to Section 3.08 of this Agreement and shall not otherwise be
entitled to make withdrawals or receive amounts that shall be deposited in the
Certificate Account pursuant to Section 3.05(f) hereof, and (ii) none of the
Trustee or the Certificateholders shall have any right to, or otherwise be
entitled to, receive any Advance Reimbursement Amounts to which the Servicer or
Servicer's Assignee, as applicable, shall be entitled pursuant to Section 3.08
hereof. An Advance Facility may be terminated by the joint written direction of
the Servicer and the related Advance Financing Person. Written notice of such
termination shall be delivered to the Trustee in the manner set forth in Section
10.05 hereof. None of the Depositor or the Trustee shall, as a result of the
existence of any Advance Facility, have any additional duty or liability with
respect to the calculation or payment of any Advance Reimbursement Amount, nor,
as a result of the existence of any Advance Facility, shall the Depositor or the
Trustee have any additional responsibility to track or monitor the
administration of the Advance Facility or the payment of Advance Reimbursement
Amounts to the Servicer's Assignee. The Servicer shall indemnify the Depositor,
the Trustee, any successor Servicer and the Trust Fund for any claim, loss,
liability or damage resulting from any claim by the related Advancing Financing
Person, except to the extent that such claim, loss, liability or damage resulted
from or arose out of negligence, recklessness or willful misconduct on the part
of the Depositor, the Trustee or any successor Servicer, as the case may be, or
failure by the successor Servicer or the Trustee, as the case may be, to remit
funds as required by this Agreement or the commission of an act or omission to
act by the successor Servicer or the Trustee, as the case may be, and the
passage of any applicable cure or grace period, such that an Event of Default
under this Agreement occurs or such entity is subject to termination for cause
under this
-106-
Agreement. The Servicer shall maintain and provide to any successor Servicer
and, upon request, the Trustee a detailed accounting on a loan-by-loan basis as
to amounts advanced by, pledged or assigned to, and reimbursed to any Advancing
Financing Person. The successor Servicer shall be entitled to rely on any such
information provided by the predecessor Servicer, and the successor Servicer
shall not be liable for any errors in such information.
(d) [Reserved].
(e) As between a predecessor Servicer and its Advance Financing Person, on
the one hand, and a successor Servicer and its Advance Financing Person, if any,
on the other hand, Advance Reimbursement Amounts on a loan-by-loan basis with
respect to each Mortgage Loan as to which an Advance and/or Servicing Advance
shall have been made and be outstanding shall be allocated on a "first-in, first
out" basis. In the event the Servicer's Assignee shall have received some or all
of an Advance Reimbursement Amount related to Advances and/or Servicing Advances
that were made by a Person other than such predecessor Servicer or its related
Advance Financing Person in error, then such Servicer's Assignee shall be
required to remit any portion of such Advance Reimbursement Amount to each
Person entitled to such portion of such Advance Reimbursement Amount. Without
limiting the generality of the foregoing, the Servicer shall remain entitled to
be reimbursed by the Advance Financing Person for all Advances and/or Servicing
Advances funded by the Servicer to the extent the related Advance Reimbursement
Amounts have not been assigned or pledged to such Advance Financing Person or
Servicer's Assignee.
(f) For purposes of any Officer's Certificate of the Servicer made
pursuant to Section 4.01, any Non-Recoverable Advance referred to therein may
have been made by such Servicer or any predecessor Servicer. In making its
determination that any Advance or Servicing Advance theretofore made has become
a Non-Recoverable Advance, the Servicer shall apply the same criteria in making
such determination regardless of whether such Advance or Servicing Advance shall
have been made by the Servicer or any predecessor Servicer.
(g) Any amendment to this Section 10.14 or to any other provision of this
Agreement that may be necessary or appropriate to effect the terms of an Advance
Facility as described generally in this Section 10.14, including amendments to
add provisions relating to a successor Servicer, may be entered into by the
Trustee, the Depositor and the Servicer without the consent of any
Certificateholder, provided such amendment complies with Section 10.01 hereof.
All reasonable costs and expenses (including attorneys' fees) of each party
hereto of any such amendment shall be borne solely by the Servicer. The parties
hereto hereby acknowledge and agree that: (a) the Advances and/or Servicing
Advances financed by and/or pledged to an Advance Financing Person under any
Advance Facility are obligations owed to the Servicer payable only from the cash
flows and proceeds received under this Agreement for reimbursement of Advances
and/or Servicing Advances only to the extent provided herein, and the Trustee
and the Trust are not, as a result of the existence of any Advance Facility,
obligated or liable to repay any Advances and/or Servicing Advances financed by
the Advance Financing Person; (b) the Servicer will be responsible for remitting
to the Advance Financing Person the applicable amounts collected by it as
reimbursement for Advances and/or Servicing Advances funded by the Advance
Financing Person, subject to the provisions of this Agreement; and (c) the
Trustee shall not have any responsibility to track or monitor the administration
of the financing arrangement between the Servicer and any Advance Financing
Person.
-107-
ARTICLE XI
MASTER SERVICING OF THE MORTGAGE LOANS
BY THE MASTER SERVICER
SECTION 11.01. Master Servicer.
The Master Servicer shall deliver a copy of the Mortgage Loan Schedule to
the Servicer on the Final Servicing Transfer Date.
Prior to the Final Servicing Transfer Date, the Master Servicer shall
supervise, monitor and oversee the obligation of the Interim Servicers to
service and administer the Mortgage Loans in accordance with the terms of the
Interim Servicing Agreements and shall have full power and authority to do any
and all things which it may deem necessary or desirable in connection with such
master servicing and administration. In performing its obligations hereunder,
the Master Servicer shall act in a manner consistent with Accepted Master
Servicing Practices. Furthermore, prior to the Final Servicing Transfer Date,
the Master Servicer shall oversee and consult with the Interim Servicers as
necessary from time-to-time to carry out the Master Servicer's obligations
hereunder, shall receive, review and evaluate all reports, information and other
data provided to the Master Servicer by the Interim Servicers and shall cause
the Interim Servicers to perform and observe the covenants, obligations and
conditions to be performed or observed by the Interim Servicers under the
Interim Servicing Agreements. The Master Servicer shall independently and
separately monitor the Interim Servicers' servicing activities with respect to
each related Mortgage Loan, reconcile the results of such monitoring with such
information provided in the previous sentence on a monthly basis and coordinate
corrective adjustments to the Interim Servicers' and Master Servicer's records,
and based on such reconciled and corrected information, prepare the statements
specified in Section 4.05 and any other information and statements required to
be provided by the Master Servicer hereunder. The Master Servicer shall
reconcile the results of its Mortgage Loan monitoring with the actual
remittances of the Interim Servicer to the Master Servicer Account pursuant to
the terms hereof based on information provided to the Master Servicer by the
Interim Servicers.
The Trustee shall furnish the Interim Servicers and the Master Servicer
with any limited powers of attorney and other documents in form as provided to
it necessary or appropriate to enable the Interim Servicers and the Master
Servicer to service and administer the related Mortgage Loans and REO Property.
The Trustee shall have no responsibility for any action of the Master Servicer
or the Interim Servicers pursuant to any such limited power of attorney and
shall be indemnified by the Master Servicer or the Interim Servicers, as
applicable, for any cost, liability or expense incurred by the Trustee in
connection with such Person's use or misuse of any such power of attorney.
The Trustee and the Master Servicer shall provide access to the records
and documentation in possession of the Trustee or the Master Servicer regarding
the related Mortgage Loans and REO Property and the servicing thereof to the
Certificateholders, the FDIC, and the supervisory agents and examiners of the
FDIC, such access being afforded only upon reasonable prior written request and
during normal business hours at the office of the Trustee or the Master
Servicer; provided, however, that, unless otherwise required by law, none of the
Trustee or the Master Servicer shall be required to provide access to such
records and documentation if the provision thereof would violate the legal right
to privacy of any Mortgagor. The Trustee and the Master Servicer shall allow
representatives of the above entities to photocopy any of the records and
documentation and shall provide equipment for that purpose at a charge that
covers the Trustee's or the Master Servicer's actual costs.
-108-
The Trustee shall execute and deliver to the Interim Servicers or the
Master Servicer upon written request any court pleadings, requests for trustee's
sale or other documents necessary or desirable prepared by the Servicer or the
Master Servicer to (i) the foreclosure or trustee's sale with respect to a
Mortgaged Property; (ii) any legal action brought to obtain judgment against any
Mortgagor on the Mortgage Note or any other Mortgage Loan Document; (iii) obtain
a deficiency judgment against the Mortgagor; or (iv) enforce any other rights or
remedies provided by the Mortgage Note or any other Mortgage Loan Document or
otherwise available at law or equity.
SECTION 11.02. Monitoring of Interim Servicers.
(a) The Master Servicer shall be responsible for monitoring the compliance
by the Interim Servicers with their duties under the Interim Servicing
Agreements. In the review of an Interim Servicer's activities, the Master
Servicer may rely upon an Officer's Certificate of the Interim Servicer with
regard to the Interim Servicer's compliance with the terms of the Interim
Servicing Agreements. In the event that the Master Servicer, in its judgment,
determines that an Interim Servicer should be terminated in accordance with the
terms of the applicable Interim Servicing Agreement, or that a notice should be
sent pursuant to the terms thereof with respect to the occurrence of an event
that, unless cured, would constitute an event of default, the Master Servicer
shall notify the Seller and the Trustee thereof and the Master Servicer shall
issue such notice or take such other action as it deems appropriate.
(b) The Master Servicer, for the benefit of the Trustee and the
Certificateholders, shall enforce the obligations of the Interim Servicers under
the Interim Servicing Agreements, and shall, in the event that an Interim
Servicer fails to perform its obligations in accordance with such Interim
Servicing Agreement, subject to the preceding paragraph and Article VII, cause
the Trustee to terminate the rights and obligations of such Interim Servicer.
Such enforcement, including, without limitation, the legal prosecution of claims
and the pursuit of other appropriate remedies, shall be in such form and carried
out to such an extent and at such time as the Master Servicer, in its good faith
business judgment, would require were it the owner of the related Mortgage
Loans. The Master Servicer shall pay the costs of such enforcement at its own
expense, provided that the Master Servicer shall not be required to prosecute or
defend any legal action except to the extent that the Master Servicer shall have
received reasonable indemnity for its costs and expenses in pursuing such
action.
(c) To the extent that the costs and expenses of the Master Servicer
related to the termination of an Interim Servicer, appointment of a successor
Interim Servicer or the transfer and assumption of the servicing by the Master
Servicer (including, without limitation, (i) all legal costs and expenses and
all due diligence costs and expenses associated with an evaluation of the
potential termination of an Interim Servicer as a result of an event of default
and (ii) all costs and expenses associated with the complete transfer of
servicing, including all servicing files and all servicing data and the
completion, correction or manipulation of such servicing data as may be required
by the successor servicer to correct any errors or insufficiencies in the
servicing data or otherwise to enable the successor servicer to service the
Mortgage Loans in accordance with this Agreement) are not fully and timely
reimbursed by the terminated Servicer, the Master Servicer shall be entitled to
reimbursement of such costs and expenses from the Master Servicer Account.
(d) The Master Servicer shall require the Interim Servicers to comply with
the remittance requirements and other obligations set forth in the Interim
Servicing Agreements.
(e) If the Master Servicer acts as a successor Interim Servicer, it will
not assume liability for the representations and warranties of the terminated
Interim Servicer.
-109-
SECTION 11.03. Fidelity Bond.
The Master Servicer, at its expense, shall maintain in effect a blanket
fidelity bond and an errors and omissions insurance policy, affording coverage
with respect to all directors, officers, employees and other Persons acting on
such Master Servicer's behalf, and covering errors and omissions in the
performance of the Master Servicer's obligations hereunder. The errors and
omissions insurance policy and the fidelity bond shall be in such form and
amount generally acceptable for entities serving as master servicers or
trustees.
SECTION 11.04. Powers to Act; Procedures.
The Master Servicer shall master service the Mortgage Loans and shall have
full power and authority, subject to the REMIC Provisions and the provisions of
Section 8.12, to do any and all things that it may deem necessary or desirable
in connection with the master servicing and administration of the Mortgage
Loans, including but not limited to the power and authority (i) to execute and
deliver, on behalf of the Certificateholders and the Trustee, customary consents
or waivers and other instruments and documents, (ii) to consent to transfers of
any Mortgaged Property and assumptions of the Mortgage Notes and related
Mortgages, (iii) to collect any Insurance Proceeds and Liquidation Proceeds, and
(iv) to effectuate foreclosure or other conversion of the ownership of the
Mortgaged Property securing any Mortgage Loan, in each case, in accordance with
the provisions of this Agreement; provided, however, that the Master Servicer
shall not (and, consistent with its responsibilities under Section 11.02, shall
not permit the Servicer to) knowingly or intentionally take any action, or fail
to take (or fail to cause to be taken) any action reasonably within its control
and the scope of duties more specifically set forth herein, that, under the
REMIC Provisions, if taken or not taken, as the case may be, would cause any
REMIC formed hereby to fail to qualify as a REMIC or 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) unless the
Master Servicer has received an Opinion of Counsel (but not at the expense of
the Master Servicer) to the effect that the contemplated action will not cause
any REMIC formed hereby to fail to qualify as a REMIC or result in the
imposition of a tax upon any REMIC. The Trustee shall furnish the Master
Servicer, upon written request from a Servicing Officer, with any powers of
attorney empowering the Master Servicer or the Servicer to execute and deliver
instruments of satisfaction or cancellation, or of partial or full release or
discharge, and to foreclose upon or otherwise liquidate Mortgaged Property, and
to appeal, prosecute or defend in any court action relating to the Mortgage
Loans or the Mortgaged Property, in accordance with this Agreement, and the
Trustee shall execute and deliver such other documents, as the Master Servicer
or the Servicer may request, to enable the Master Servicer to master service and
administer the Mortgage Loans and carry out its duties hereunder, in each case
in accordance with Accepted Master Servicing Practices (and the Trustee shall
have no liability for misuse of any such powers of attorney by the Master
Servicer or the Servicer and shall be indemnified by the Master Servicer or the
Servicer, as applicable, for any cost, liability or expense incurred by the
Trustee in connection with such Person's use or misuse of any such power of
attorney). If the Master Servicer or the Trustee has been advised that it is
likely that the laws of the state in which action is to be taken prohibit such
action if taken in the name of the Trustee or that the Trustee would be
adversely affected under the "doing business" or tax laws of such state if such
action is taken in its name, the Master Servicer shall join with the Trustee in
the appointment of a co-trustee pursuant to Section 8.11. In the performance of
its duties hereunder, the Master Servicer shall be an independent contractor and
shall not, except in those instances where it is taking action in the name of
the Trustee, be deemed to be the agent of the Trustee.
-110-
SECTION 11.05. Due-on-Sale Clauses; Assumption Agreements.
To the extent Mortgage Loans contain enforceable due-on-sale clauses, the
Master Servicer shall cause the Interim Servicers to enforce such clauses in
accordance with this Agreement. If applicable law prohibits the enforcement of a
due-on-sale clause or such clause is otherwise not enforced in accordance with
this Agreement, and, as a consequence, a Mortgage Loan is assumed, the original
Mortgagor may be released from liability in accordance with this Agreement.
SECTION 11.06. Master Servicing of Mortgage Loans Prior to Servicing
Transfer Dates.
As of the Closing Date and during the Interim Servicing Period, the Master
Servicer shall oversee and monitor the servicing of each Mortgage Loan by the
related Interim Servicer in accordance with Accepted Master Servicing Standards,
but subject to the provisions of the related Interim Servicing Agreements.
During such period, the Master Servicer shall remain obligated to perform all
duties and responsibilities required of it under this Agreement, and shall have
all of the rights and limitations set forth herein, as if such Mortgage Loans
are being serviced in accordance with the terms of this Agreement. The Master
Servicer will not have any master servicing obligations with regard to any
Mortgage Loan after the servicing function is transferred to the Servicer.
SECTION 11.07. Documents, Records and Funds in Possession of Master
Servicer to be Held for Trustee.
(a) The Master Servicer shall transmit to the Trustee such documents and
instruments coming into the possession of the Master Servicer from time to time
as are required by the terms hereof to be delivered to the Trustee. Any funds
received by the Master Servicer in respect of any Mortgage Loan or which
otherwise are collected by the Master Servicer as Liquidation Proceeds or
Insurance Proceeds in respect of any Mortgage Loan shall be deposited in the
Master Servicer Account. The Master Servicer shall, and shall cause the Servicer
to, provide access to information and documentation regarding the Mortgage Loans
to the Trustee, its agents and accountants at any time upon reasonable request
and during normal business hours, and to Certificateholders that are savings and
loan associations, banks or insurance companies, the OTS, the FDIC and the
supervisory agents and examiners of such Office and Corporation or examiners of
any other federal or state banking or insurance regulatory authority if so
required by applicable regulations of the Office of Thrift Supervision or other
regulatory authority, such access to be afforded without charge but only upon
reasonable request in writing and during normal business hours at the offices of
the Master Servicer designated by it. In fulfilling such a request the Master
Servicer shall not be responsible for determining the sufficiency of such
information.
(b) All Mortgage Files and funds collected or held by, or under the
control of, the Master Servicer, in respect of any Mortgage Loans, whether from
the collection of principal and interest payments or from Liquidation Proceeds
or Insurance Proceeds, shall be deposited in the Master Servicer Account.
SECTION 11.08. Standard Hazard Insurance and Flood Insurance Policies.
For each Mortgage Loan, the Master Servicer shall enforce the obligation
of the Interim Servicers under the Interim Servicing Agreements to maintain or
cause to be maintained standard fire and casualty insurance and, where
applicable, flood insurance, all in accordance with the provisions of this
Agreement. It is understood and agreed that such insurance shall be with
insurers meeting the standard eligibility requirements and that no earthquake or
other additional insurance is to be required of any Mortgagor or to be
maintained on property acquired in respect of a defaulted loan, other than
pursuant to such applicable laws and regulations as shall at any time be in
force and as shall require such additional insurance.
-111-
SECTION 11.09. Presentment of Claims and Collection of Proceeds.
The Master Servicer shall enforce the Interim Servicers' obligations under
the Interim Servicing Agreements to, prepare and present on behalf of the
Trustee and the Certificateholders all claims under the Insurance Policies and
take such actions (including the negotiation, settlement, compromise or
enforcement of the insured's claim) as shall be necessary to realize recovery
under such policies. Any proceeds disbursed to the Master Servicer in respect of
such policies, bonds or contracts shall be promptly deposited in the Certificate
Account upon receipt, except that any amounts realized that are to be applied to
the repair or restoration of the related Mortgaged Property as a condition
precedent to the presentation of claims on the related Mortgage Loan to the
insurer under any applicable insurance policy need not be so or remitted.
SECTION 11.10. Trustee to Retain Possession of Certain Insurance Policies
and Documents
The Trustee, shall retain possession and custody of the originals (to the
extent available) of any primary mortgage insurance policies, or certificate of
insurance if applicable, and any certificates of renewal as to the foregoing as
may be issued from time to time as contemplated by this Agreement. Until all
amounts distributable in respect of the Certificates has been distributed in
full and the Master Servicer and the Interim Servicers have otherwise fulfilled
their respective obligations under this Agreement, the Trustee shall also retain
possession and custody of each Mortgage File in accordance with and subject to
the terms and conditions of this Agreement. The Master Servicer shall promptly
deliver or cause to be delivered to the Custodian, upon the execution or receipt
thereof the originals of any primary mortgage insurance policies, any
certificates of renewal, and such other documents or instruments that constitute
Mortgage Loan Documents that come into the possession of the Master Servicer
from time to time.
SECTION 11.11. Realization Upon Defaulted Mortgage Loans.
The Master Servicer shall cause the Interim Servicers to foreclose upon,
repossess or otherwise comparably convert the ownership of Mortgaged Properties
securing such of the Mortgage Loans as come into and continue in default and as
to which no satisfactory arrangements can be made for collection of delinquent
payments, all in accordance with this Agreement.
SECTION 11.12. REO Property.
(a) In the event the Trust Fund acquires ownership of any REO Property in
respect of any related Mortgage Loan, the deed or certificate of sale shall be
issued to the Trustee, or to its nominee, on behalf of the related
Certificateholders. The Master Servicer shall cause the Interim Servicers to
sell, any REO Property as expeditiously as possible and in accordance with the
provisions of this Agreement. Further, the Master Servicer shall cause the
Interim Servicers to sell any REO Property prior to three years after the end of
the calendar year of its acquisition by the Subsidiary REMIC unless (i) the
Trustee and the Master Servicer shall have been supplied by the Servicer with an
Opinion of Counsel to the effect that the holding by the Trust Fund of such REO
Property subsequent to such three-year period will not result in the imposition
of taxes on "prohibited transactions" of any REMIC hereunder as defined in
section 860F of the Code or cause any REMIC hereunder to fail to qualify as a
REMIC at any time that any Certificates are outstanding, in which case the Trust
Fund may continue to hold such Mortgaged Property (subject to any conditions
contained in such Opinion of Counsel) or (ii) the Interim Servicers shall have
applied for, prior to the expiration of such three-year period, an extension of
such three-year period in the manner contemplated by Section 856(e)(3) of the
Code, in which case the three-year period shall be extended by the applicable
extension period. The Master Servicer shall cause the Servicer to protect and
conserve, such REO Property in the manner and to the extent required by this
Agreement, in accordance with the REMIC Provisions and in a manner that does not
result in a tax on "net income from
-112-
foreclosure property" or cause such REO Property to fail to qualify as
"foreclosure property" within the meaning of Section 860G(a)(8) of the Code.
(b) The Master Servicer shall cause the Interim Servicers to deposit all
funds collected and received in connection with the operation of any REO
Property in the Collection Account.
SECTION 11.13. Annual Statement as to Compliance.
Pursuant to this Agreement, the Master Servicer shall deliver to the
Depositor, the Trustee and the NIMs Insurer on or before February 28 of each
year beginning in 2004, (or such other date that the Depositor gives the
Servicer at least 30 days prior notice of) in order to remain in compliance with
the Section 302 Requirements, an Officer's Certificate stating, as to each
signatory thereof, that (i) a review of the activities of the Master Servicer
during the preceding calendar year and of performance under this Agreement or a
similar agreement has been made under such officer's supervision, and (ii) to
the best of such officers' knowledge, based on such review, the Master 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 officers and the nature and status
thereof. The Trustee shall forward a copy of each such statement received by it
to each Rating Agency. Copies of such statement shall be provided by the Trustee
to any Certificateholder upon written request at the Certificateholder's
expense, provided such statement has been delivered by the Servicer to the
Trustee.
SECTION 11.14. Annual Independent Public Accountants' Servicing Statement;
Financial Statements.
If the Master Servicer has, during the course of any calendar year,
directly serviced any of the Mortgage Loans, then on or before March 15 of each
year, beginning in 2004 or such other date in order to remain in compliance with
the Section 302 Requirements, the Master Servicer at its expense shall cause a
nationally recognized firm of independent public accountants (who may also
render other services to the Servicer or any Affiliate thereof) that is a member
of the American Institute of Certified Public Accountants to furnish a USAP
Report to the Trustee, the NIMs Insurer and the Depositor. Copies of the USAP
Report shall be provided by the Trustee to any Certificateholder upon request at
the Certificateholder's expense, provided such report has been delivered by the
Servicer to the Trustee. In addition, at the NIMs Insurer's written request, the
Master Servicer shall deliver copies of evidence of the Master Servicer's
fidelity bond or errors and omissions insurance coverage to the NIMs Insurer.
SECTION 11.15. Obligation of the Master Servicer in Respect of Certain
Prepayment Interest Shortfalls.
In the event a Prepayment Interest Shortfall occurs during the related
Interim Servicing Period, the Master Servicer shall deposit in the Certificate
Account not later than the related Distribution Date an amount equal to the
aggregate Prepayment Interest Shortfalls attributable to Principal Prepayments
on the related Mortgage Loans for the related Distribution Date, to the extent
such Prepayment Interest Shortfalls were not so paid by the Interim Servicer.
SECTION 11.16. Collection Account.
The Master Servicer shall enforce the obligation of the Interim Servicers
to establish and maintain a collection account in accordance with the Interim
Servicing Agreements, with records to be kept with respect thereto on a Mortgage
Loan by Mortgage Loan basis, into which accounts shall be deposited within two
Business Days of receipt all collections of principal and interest on any
Mortgage Loan and with respect to any REO Property received by the Interim
Servicers, including Principal Prepayments,
-113-
Insurance Proceeds, Liquidation Proceeds, and advances made from the Interim
Servicers' own funds (less servicing compensation) and all other amounts to be
deposited in the collection account.
SECTION 11.17. Obligation of the Master Servicer in Respect of Certain
Advances.
With respect to each Mortgage Loan during the related Interim Servicing
Period, in connection with any payment of principal and interest that was due
but not received by the Interim Servicer during the related Due Period, the
Master Servicer shall make an Advance and deposit such Advance in the
Certificate Account no later than the Business Day immediately prior to the
related Distribution Date.
SECTION 11.18. Termination of the Master Servicer. Notwithstanding
anything to the contrary in this Agreement, the parties hereto hereby agree that
following the Final Servicing Transfer Date, all of the rights, duties and
obligations of the Master Servicer hereunder shall terminate except as set forth
in Section 4.04(j); provided, however, that the Master Servicer shall be
obligated first to remit all remaining funds in the Master Servicing Account to
the Trustee or the Servicer, as applicable and to provide the Trustee with the
related Remittance Report; provided, further, that the obligation of the Master
Servicer to indemnify the other parties hereto and the right of the Master
Servicer to receive the benefit of the indemnification provisions hereunder
shall survive the termination of the Master Servicer.
-114-
IN WITNESS WHEREOF, the Depositor, the Master Servicer, the Servicer and
the Trustee have caused their names to be signed hereto by their respective
officers thereunto duly authorized as of the day and year first above written.
▇▇▇▇▇▇▇ ▇▇▇▇▇ MORTGAGE INVESTORS, INC.,
as Depositor
By:
------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
UNIVERSAL MASTER SERVICING, LLC,
as Master Servicer
By:
------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Senior Vice President
▇▇▇▇▇▇ LOAN SERVICING LP,
as Servicer
By:
------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Senior Vice President
WACHOVIA BANK, N.A.,
not in its individual capacity,
but solely as Trustee
By:
------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice President
EXHIBIT A
FORMS OF OFFERED CERTIFICATES
[INTENTIONALLY OMITTED]
A-1
EXHIBIT B
MORTGAGE LOAN SCHEDULE
[INTENTIONALLY OMITTED]
B-1-1
EXHIBIT C
SCHEDULE OF MORTGAGE LOANS WITH NO PREPAYMENT ENFORCEMENT
[INTENTIONALLY OMITTED]
C-1
EXHIBIT D
FORM OF TRUSTEE CERTIFICATION
[DATE]
▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
4 World Financial Center, 10th Floor
New York, New York 10080
▇▇▇▇▇▇ Loan Servicing LP
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Re: Pooling and Servicing Agreement dated as of July 1, 2003 among ▇▇▇▇▇▇▇
▇▇▇▇▇ Mortgage Investors, Inc., as depositor, Universal Master Servicing,
LLC, as master servicer, ▇▇▇▇▇▇ Loan Servicing LP, as servicer and
Wachovia Bank, N.A., as trustee, Terwin Mortgage Trust, Asset-Backed
Certificates, Series TMTS 2003-2HE
Ladies and Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Trustee, hereby certifies that [,
except as set forth in Schedule A hereto,] as to each Mortgage Loan listed in
the Mortgage Loan Schedule attached hereto (other than any Mortgage Loan paid in
full or listed on the attachment hereto) it has reviewed the Mortgage File and
the Mortgage Loan Schedule and has determined that:
(i) All documents in the Mortgage File required to be delivered to the
Trustee pursuant to Section 2.01 of the Pooling and Servicing Agreement are in
its possession;
(ii) In connection with each Mortgage Loan or Assignment thereof as to
which documentary evidence of recording was not received on the Closing Date, it
has received evidence of such recording; and
(iii) Such documents have been reviewed by it and such documents do not
contain any material omissions or defects within the meaning of Section 2.01 or
2.02.
The Trustee has made no independent examination of any documents contained
in each Mortgage File beyond confirming (i) that the Mortgage Loan number and
the name of the Mortgagor in each Mortgage File conform to the respective
Mortgage Loan number and name listed on the Mortgage Loan Schedule and (ii) the
existence in each Mortgage File of each of the documents listed in subparagraphs
(i)(A) through (G), inclusive, of Section 2.01 in the Agreement. The Trustee
makes no representations or warranties as to the validity, legality,
recordability, sufficiency, enforceability or genuineness of any of the
documents contained in each Mortgage Loan or the collectibility, insurability,
effectiveness or suitability of any such Mortgage Loan.
D-1
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
WACHOVIA BANK, N.A.,
as Trustee
By: ___________________________________
Name: _________________________________
Title: ________________________________
D-2
EXHIBIT E-1
FORM OF TRANSFEREE'S LETTER
▇▇▇▇▇▇▇ ▇▇▇▇▇ MORTGAGE INVESTORS, INC.
ASSET-BACKED CERTIFICATES, SERIES TMTS 2003-2HE
[DATE]
Wachovia Bank, N.A.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Services - Series TMTS 2003-2HE
Ladies and Gentlemen:
We propose to purchase Terwin Mortgage Trust, Asset-Backed Certificates,
Series TMTS 2003-2HE, Class R, described in the Prospectus Supplement, dated
July __, 2003, and Prospectus, dated July 3, 2003.
1. We certify that (a) we are not a disqualified organization and (b) we
are not purchasing such Class R Certificate on behalf of a disqualified
organization; for this purpose the term "disqualified organization" means the
United States, any state or political subdivision thereof, any foreign
government, any international organization, any agency or instrumentality of any
of the foregoing (except any entity treated as other than an instrumentality of
the foregoing for purposes of Section 168(h)(2)(D) of the Internal Revenue Code
of 1986, as amended (the "Code")), any organization (other than a cooperative
described in Section 521 of the Code) that is exempt from taxation under the
Code (unless such organization is subject to tax on excess inclusions) and any
organization that is described in Section 1381(a)(2)(C) of the Code. We
understand that any breach by us of this certification may cause us to be liable
for an excise tax imposed upon transfers to disqualified organizations.
2. We certify that (a) we have historically paid our debts as they became
due, (b) we intend, and believe that we will be able, to continue to pay our
debts as they become due in the future, (c) we understand that, as beneficial
owner of the Class R Certificate, we may incur tax liabilities in excess of any
cash flows generated by the Class R Certificate, and (d) we intend to pay any
taxes associated with holding the Class R Certificate as they become due and (e)
we will not cause income from the Class R Certificate to be attributable to a
foreign permanent establishment or fixed base (within the meaning of an
applicable income tax treaty) of ours or another U.S. taxpayer.
3. We acknowledge that we will be the beneficial owner of the Class R
Certificate and:*
----------
* Check appropriate box and if necessary fill in the name of the Transferee's
nominee.
______ The Class R Certificate will be registered in our name.
______ The Class R Certificate will be held in the name of our
nominee, _________________, which is not a disqualified
organization.
4. We certify that we are not an employee benefit plan subject to Title I
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or
a plan within the meaning of Section 4975 of the Code or a plan subject to
federal, state or local law materially similar to the foregoing provisions of
ERISA and the Code (each, a "Plan"), and are not directly or indirectly
purchasing the Class R Certificate on behalf of, as investment manager of, as
named fiduciary of, as trustee of or with the assets of a Plan or directly or
indirectly purchasing the Class R Certificate with the assets of any insurance
company separate account or general account containing any "plan assets" or of
any Plan.
5. We certify that (i) we are a U.S. person or (ii) we will hold the Class
R Certificate in connection with the conduct of a trade or business within the
United States and have furnished the transferor, the Trustee and the Trustee
with a duly completed and effective Internal Revenue Service Form W-8ECI or
successor form at the time and in the manner required by the Code; for this
purpose the term "U.S. person" means a citizen or resident of the United States,
a corporation, or partnership (unless, in the case of a partnership, Treasury
regulations are adopted that provide otherwise) created or organized in or under
the laws of the United States, any State thereof or the District of Columbia,
including an entity treated as a corporation or partnership for federal income
tax purposes, an estate whose income is subject to United States federal income
tax regardless of the source of its income, 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 such U.S. persons have the authority to control all
substantial decisions of the trust (or, to the extent provided in applicable
Treasury regulations, certain trusts in existence on August 20, 1996 which are
eligible to elect to be treated as U.S. Persons. We agree that any breach by us
of this certification shall render the transfer of any interest in the Class R
Certificate to us absolutely null and void and shall cause no rights in the
Class R Certificate to vest in us.
6. We agree that in the event that at some future time we wish to transfer
any interest in the Class R Certificate, we will transfer such interest in the
Class R Certificate only (a) to a transferee that (i) is not a disqualified
organization and is not purchasing such interest in the Class R Certificate on
behalf of a disqualified organization, (ii) is a U.S. person or will hold the
Class R Certificate in connection with the conduct of a trade or business within
the United States and will furnish us, the Trustee and the Trustee with a duly
completed and effective Internal Revenue Service Form W-8ECI or successor form
at the time and in the manner required by the Code and (iii) has delivered to
the Trustee and the Trustee a letter in the form of this letter (including the
affidavit appended hereto) and, we will provide the Trustee and the Trustee a
written statement substantially in the form of Exhibit E-2 to the Agreement.
7. We hereby designate _______________________ as our fiduciary to act as
the tax matters person for each of the REMICs provided for in the Agreement.
E-1-2
Very truly yours,
[PURCHASER]
By:______________________________
Name:
Title:
Accepted as of __________ __, 200__
▇▇▇▇▇▇▇ ▇▇▇▇▇ MORTGAGE INVESTORS, INC.
By:_____________________________
Name:
Title:
E-1-3
APPENDIX A
Affidavit pursuant to (i) Section 860E(e)(4)
of the Internal Revenue Code of 1986, as
amended, and (ii) certain provisions of the
Pooling and Servicing Agreement
Under penalties of perjury, the undersigned declares that the following is true:
(1) He or she is an officer of _________________________ (the "Transferee"),
(2) the Transferee's Employer Identification number is __________,
(3) the Transferee is not a "disqualified organization" (as defined below),
has no plan or intention of becoming a disqualified organization, and is
not acquiring any of its interest in the Terwin Mortgage Trust,
Asset-Backed Certificates, Series TMTS 2003-2HE, Class R on behalf of a
disqualified organization or any other entity,
(4) unless ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors, Inc.("MLMI") has consented to the
transfer to the Transferee by executing the form of Consent affixed as
Appendix B to the Transferee's Letter to which this Certificate is affixed
as Appendix A, the Transferee is a "U.S. person" (as defined below),
(5) that no purpose of the transfer is to avoid or impede the assessment or
collection of tax,
(6) the Transferee has historically paid its debts as they became due,
(7) the Transferee intends, and believes that it will be able, to continue to
pay its debts as they become due in the future,
(8) the Transferee understands that, as beneficial owner of the Class R
Certificate, it may incur tax liabilities in excess of any cash flows
generated by the Class R Certificate,
(9) the Transferee intends to pay any taxes associated with holding the Class
R Certificate as they become due,
(10) the Transferee consents to any amendment of the Pooling and Servicing
Agreement that shall be deemed necessary by MLMI (upon advice of counsel)
to constitute a reasonable arrangement to ensure that the Class R
Certificate will not be owned directly or indirectly by a disqualified
organization, and
(11) IF BRACKETED, THE FOLLOWING CERTIFICATIONS ARE INAPPLICABLE [the transfer
is not a direct or indirect transfer of the Class R Certificate to a
foreign permanent establishment or fixed base (within the meaning of an
applicable income tax treaty) of the Transferee, and as to each of the
residual interests represented by the Class R Certificate, the present
value of the anticipated tax liabilities associated with holding such
residual interest does not exceed the sum of:
E-1-4
(A) the present value of any consideration given to the Transferee to
acquire such residual interest;
(B) the present value of the expected future distributions on such
residual interest; and
(C) the present value of the anticipated tax savings associated with
holding such residual interest as the related REMIC generates
losses.
For purposes of this declaration, (i) the Transferee is assumed to pay tax
at a rate equal to the highest rate of tax specified in Section 11(b)(1)
of the Code, but the tax rate specified in Section 55(b)(1)(B) of the Code
may be used in lieu of the highest rate specified in Section 11(b)(1) of
the Code if the Transferee has been subject to the alternative minimum tax
under Section 55 of the Code in the preceding two years and will compute
its taxable income in the current taxable year using the alternative
minimum tax rate, and (ii) present values are computed using a discount
rate equal to the Federal short-term rate prescribed by Section 1274(d) of
the Code for the month of the transfer and the compounding period used by
the Transferee;]
[(11) (A) at the time of the transfer, and at the close of each of the
Transferee's two fiscal years preceding the Transferee's fiscal year
of transfer, the Transferee's gross assets for financial reporting
purposes exceed $100 million and its net assets for financial
reporting purposes exceed $10 million; and
(B) the Transferee is an eligible corporation as defined in Treasury
regulations Section 1.860E-1(c)(6)(i) and has agreed in writing that
any subsequent transfer of the Class R Certificate will be to
another eligible corporation in a transaction that satisfies
Treasury regulation Sections 1.860E-1(c)(4)(i), 1.860E-1(c)(4)(ii),
1.860E-1(c)(4)(iii) and 1.860E-1(c)(5) and such transfer will not be
a direct or indirect transfer to a foreign permanent establishment
(within the meaning of an applicable income tax treaty) of a
domestic corporation.
For purposes of this declaration, the gross and net assets of the Transferee do
not include any obligation of any related person as defined in Treasury
regulation Section 1.860E-1(c)(6)(ii) or any other asset if a principal purpose
for holding or acquiring the other asset is to permit the Transferee to make
this declaration or to satisfy the requirements of Treasury regulation Section
1.860E-1(c)(5)(i).]
(12) The Transferee will not cause income from the Class R Certificate to be
attributable to a foreign permanent establishment or fixed base (within the
meaning of an applicable income tax treaty) of the Transferee or another U.S.
taxpayer.
For purpose of this affidavit, the term "disqualified organization" means the
United States, any state or political subdivision thereof, any foreign
government, any international organization, any agency or instrumentality of any
of the foregoing (except any entity treated as other than an instrumentality of
the foregoing for purposes of Section 168(h)(2)(D) of the Internal Revenue Code
of 1986, as amended (the "Code")), any organization (other than a cooperative
described in Section 521 of the Code) that is exempt from taxation under the
Code (unless such organization is subject to tax on excess inclusions) and any
organization that is described in Section 1381(a)(2)(C) of the Code and the term
"U.S. Person" means a citizen or resident of the United States, a corporation or
partnership (unless, in the case of a partnership, Treasury regulations are
adopted that provide otherwise) created or organized in or under the laws of the
United States, any state thereof or the District of Columbia, including an
entity treated as a corporation or partnership for federal income tax purposes,
an estate whose income is subject to Unites States federal income tax regardless
of its source, or a trust if a court within the United States is able to
exercise primary
E-1-5
supervision over the administration of such trust, and one or more such U.S.
Persons have the authority to control all substantial decisions of such trust,
(or, to the extent provided in applicable Treasury regulations, certain trusts
in existence on August 20, 1996 which are eligible to elect to be treated as
U.S. Persons).
---------------------------------
By:
------------------------------
---------------------------------
Address of Investor for receipt of distribution:
Address of Investor for receipt of tax information:
(Corporate Seal)
Attest:
---------------------------------
, Secretary
---------------------------------
E-1-6
Personally appeared before me the above-named ______________, known or
proved to me to be the same person who executed the foregoing instrument
and to be the _______ of the Investor, and acknowledged to me that he
executed the same as his free act and deed and the free act and deed of
the Investor.
Subscribed and sworn before me this day of
, 200_ .
--------------------------
Notary Public
County of
--------------------
State of
---------------------
My commission expires the day of
-------- --------------
By:
----------------------------
Name:
----------------------
Title:
----------------------
Dated:
-------------
E-1-7
EXHIBIT E-2
FORM OF TRANSFEROR'S AFFIDAVIT
▇▇▇▇▇▇▇ ▇▇▇▇▇ MORTGAGE INVESTORS, INC.
ASSET-BACKED CERTIFICATES, SERIES TMTS 2003-2HE
[DATE]
Wachovia Bank, N.A.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Services - Series TMTS 2003-2HE
Re: Terwin Mortgage Trust, Asset-Backed Certificates, Series TMTS 2003-2HE
_______________________ (the "Transferor") has reviewed the attached
affidavit of _____________________________ (the "Transferee"), and has no actual
knowledge that such affidavit is not true, and has no reason to believe that the
Transferee has the intention to impede the assessment or collection of any
federal, state or local taxes legally required to be paid with respect to the
Class R Certificate referred to in the attached affidavit. In addition, the
Transferor has conducted a reasonable investigation at the time of the transfer
and found that the Transferee had historically paid its debts as they came due
and found no significant evidence to indicate that the Transferee will not
continue to pay its debts as they become due.
Very truly yours,
-------------------------------
Name:
Title:
E-2-1
EXHIBIT F
FORM OF TRANSFEROR CERTIFICATE FOR
CLASS N AND CLASS X CERTIFICATES
Wachovia Bank, N.A.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Services - Series TMTS
2003-2HE
RE: Terwin Mortgage Trust, Asset-Backed Certificates,
Series TMTS 2003-2HE
Ladies and Gentlemen:
In connection with our disposition of the Class [N or X] Certificate, we
certify that (a) we understand that the Certificates have not been registered
under the Securities Act of 1933, as amended (the "Act"), and are being disposed
by us in a transaction that is exempt from the registration requirements of the
Act and (b) we have not offered or sold any Certificates to, or solicited offers
to buy any Certificates from, any person, or otherwise approached or negotiated
with any person with respect thereto, in a manner that would be deemed, or taken
any other action that would result in, a violation of Section 5 of the Act. All
capitalized terms used herein but not defined herein shall have the meanings
assigned to them in the Pooling and Servicing Agreement dated as of July 1,
2003, among ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage, Inc., as depositor, Universal Master
Servicing, LLC, as master servicer, ▇▇▇▇▇▇ Loan Servicing LP, as servicer and
Wachovia Bank, N.A., as trustee.
Very truly yours,
------------------------------
Name of Transferor
By:
---------------------------
Name:
Title
F-1
EXHIBIT G
FORM OF INVESTMENT LETTER
(ACCREDITED INVESTOR)
[DATE]
Wachovia Bank, N.A.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Services - Series TMTS 2003-2HE
Re: Pooling and Servicing Agreement dated as of July 1, 2003 among ▇▇▇▇▇▇▇
▇▇▇▇▇ Mortgage Investors, Inc., as depositor, Universal Master Servicing,
LLC, as master servicer, ▇▇▇▇▇▇ Loan Servicing LP, as servicer and
Wachovia Bank, N.A., as trustee, Terwin Mortgage Trust, Asset-Backed
Certificates, Series TMTS 2003-2HE [Class N or X]
Ladies and Gentlemen:
______________ (the "Purchaser") intends to purchase from ________________
(the "Transferor") $_______ by original principal balance (the "Transferred
Certificates") of Asset-Backed Certificates, Series TMTS 2003-2HE, [Class N or
X] (the "Certificates"), issued pursuant to a Pooling and Servicing Agreement,
dated as of July 1, 2003 (the "Pooling and Servicing Agreement"), among ▇▇▇▇▇▇▇
▇▇▇▇▇ Mortgage Investors, Inc., as depositor (the "Depositor"), Universal Master
Servicing, LLC, as master servicer (the "Master Servicer"), ▇▇▇▇▇▇ Loan
Servicing LP, as servicer (the "Servicer") and Wachovia Bank, N.A., as trustee
(the "Trustee"). [THE PURCHASER INTENDS TO REGISTER THE TRANSFERRED CERTIFICATE
IN THE NAME OF ____________________, AS NOMINEE FOR _________________.] All
terms used and not otherwise defined herein shall have the meanings set forth in
the Pooling and Servicing Agreement.
For good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Purchaser certifies, represents and warrants to, and
covenants with, the Depositor and the Trustee that:
1. The Purchaser understands that (a) the Certificates have not been
registered or qualified under the Securities Act of 1933, as amended (the
"Securities Act"), or the securities laws of any state, (b) neither the
Depositor nor the Trustee is required, and neither of them intends, to so
register or qualify the Certificates, (c) the Certificates cannot be resold
unless (i) they are registered and qualified under the Securities Act and the
applicable state securities laws or (ii) an exemption from registration and
qualification is available and (d) the Pooling and Servicing Agreement contains
restrictions regarding the transfer of the Certificates.
2. The Certificates will bear a legend to the following effect:
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED
(THE "1940 ACT") OR ANY STATE SECURITIES OR "BLUE SKY" LAWS, AND MAY NOT,
DIRECTLY OR INDIRECTLY, BE SOLD OR OTHERWISE
G-1
TRANSFERRED, OR OFFERED FOR SALE, UNLESS SUCH TRANSFER IS NOT SUBJECT TO
REGISTRATION UNDER THE ACT, THE 1940 ACT AND ANY APPLICABLE STATE
SECURITIES LAWS AND SUCH TRANSFER ALSO COMPLIES WITH THE OTHER PROVISIONS
OF SECTION 5.02 OF THE POOLING AND SERVICING AGREEMENT. NO TRANSFER OF
THIS CERTIFICATE SHALL BE MADE UNLESS THE TRUSTEE SHALL HAVE RECEIVED, IN
FORM AND SUBSTANCE SATISFACTORY TO THE SERVICER (A) AN INVESTMENT LETTER
FROM THE PROSPECTIVE INVESTOR; AND (B) REPRESENTATIONS FROM THE TRANSFEROR
REGARDING THE OFFERING AND SALE OF THE CERTIFICATES.
NO TRANSFER OF THIS CERTIFICATE SHALL BE MADE UNLESS THE TRUSTEE SHALL
HAVE RECEIVED EITHER (I) A REPRESENTATION LETTER FROM THE TRANSFEREE OF
THIS CERTIFICATE TO THE EFFECT THAT SUCH TRANSFEREE EITHER (A) IS NOT AN
EMPLOYEE BENEFIT PLAN SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED ("ERISA") OR SECTION 4975 OF THE CODE OR
ANY APPLICABLE FEDERAL, STATE OR LOCAL LAW ("SIMILAR LAW") (EACH, A
"PLAN") MATERIALLY SIMILAR TO THE FOREGOING PROVISIONS OF ERISA AND THE
CODE, AND IS NOT DIRECTLY OR INDIRECTLY PURCHASING ANY CERTIFICATE ON
BEHALF OF, AS INVESTMENT MANAGER OF, AS NAMED FIDUCIARY OF, AS TRUSTEE OF
OR WITH ASSETS OF A PLAN OR, IN THE CASE OF AN INSURANCE COMPANY, THE
ASSETS OF ANY SEPARATE ACCOUNTS CONTAINING ANY "PLAN ASSETS" PURSUANT TO
THE DEPARTMENT OF LABOR REGULATIONS SET FORTH IN 29 CFR Section 2510.3-101
TO EFFECT SUCH ACQUISITION OR (B) IF THE TRANSFEREE IS AN INSURANCE
COMPANY, A REPRESENTATION LETTER THAT THE TRANSFEREE IS AN INSURANCE
COMPANY THAT IS PURCHASING THE CERTIFICATE WITH FUNDS CONTAINED IN AN
"INSURANCE COMPANY GENERAL ACCOUNT" (AS SUCH TERM IS DEFINED IN SECTION
V(E) OF PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 ("PTCE 95-60"), 60
FED. REG. 35925 (JULY 12, 1995), AND THE PURCHASE AND HOLDING OF THE
CERTIFICATE IS COVERED UNDER SECTIONS I AND III OF PTCE 95-60, OR (II) AN
OPINION OF COUNSEL TO THE EFFECT THAT THE PURCHASE AND HOLDING OF THE
CERTIFICATE WILL NOT RESULT IN A PROHIBITED TRANSACTION UNDER ERISA, THE
CODE OR SIMILAR LAW AND WILL NOT SUBJECT THE NIMS INSURER OR THE TRUSTEE
TO ANY OBLIGATION IN ADDITION TO THOSE EXPRESSLY UNDERTAKEN IN THE POOLING
AND SERVICING AGREEMENT, WHICH OPINION OF COUNSEL SHALL NOT BE AN EXPENSE
OF THE NIMS INSURER OR THE TRUSTEE.
3. The Purchaser is acquiring the Transferred Certificates for its own
account [FOR INVESTMENT ONLY]**/ and not with a view to or for sale or other
transfer in connection with any distribution of the Transferred Certificates in
any manner that would violate the Securities Act or any applicable state
securities laws, subject, nevertheless, to the understanding that disposition of
the Purchaser's property shall at all times be and remain within its control.
4. The Purchaser (a) is a substantial, sophisticated institutional
investor having such knowledge and experience in financial and business matters,
and in particular in such matters related to securities similar to the
Certificates, such that it is capable of evaluating the merits and risks of
investment in the Certificates, (b) is able to bear the economic risks of such
an investment and (c) is an "accredited investor" within the meaning of Rule
501(a) promulgated pursuant to the Securities Act.
G-2
5. The Purchaser will not nor has it authorized nor will it authorize any
person to (a) offer, pledge, sell, dispose of or otherwise transfer any
Certificate, any interest in any Certificate or any other similar security to
any person in any manner, (b) solicit any offer to buy or to accept a pledge,
disposition or other transfer of any Certificate, any interest in any
Certificate or any other similar security from any person in any manner, (c)
otherwise approach or negotiate with respect to any Certificate, any interest in
any Certificate or any other similar security with any person in any manner, (d)
make any general solicitation by means of general advertising or in any other
manner, or (e) take any other action, that would constitute a distribution of
any Certificate under the Securities Act or the Investment Company Act of 1940,
as amended (the "1940 Act"), that would render the disposition of any
Certificate a violation of Section 5 of the Securities Act or any state
securities law, or that would require registration or qualification pursuant
thereto. Neither the Purchaser nor anyone acting on its behalf has offered the
Certificates for sale or made any general solicitation by means of general
advertising or in any other manner with respect to the Certificates. The
Purchaser will not sell or otherwise transfer any of the Certificates, except in
compliance with the provisions of the Pooling and Servicing Agreement.
-------------
**/ Not required of a broker/dealer purchaser.
G-3
6. The Purchaser either (A) is not an employee benefit plan subject to
Title I of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or a plan within the meaning of Section 4975 of the Internal Revenue
Code of 1986, as amended (the "Code") or a plan subject to federal state or
local law materially similar to the foregoing provisions of ERISA and the Code
("Similar Law") (each, a "Plan"), and is not directly or indirectly purchasing
any Certificate on behalf of, as investment manager of, as named fiduciary of,
as trustee of or with assets of a Plan or directly or indirectly purchasing any
certificates with the assets of any insurance company separate account
containing any "plan assets" or of any Plan, (B) is an insurance company that is
purchasing the Certificate with funds contained in an "insurance company general
account" (as such term is defined in Section V(e) of Prohibited Transaction
Class Exemption 95-60 ("PTCE 95-60"), 60 Fed. Reg. 35925 (July 12, 1995), and
the purchase and holding of the Certificate is covered under Sections I and III
of PTCE 95-60, or (C) herewith delivers to the Trustee an Opinion of Counsel
satisfactory to the Trustee, and upon which the Trustee shall be entitled to
rely, to the effect that the purchase and holding of the Certificate by the
Purchaser will not result in a prohibited transaction under ERISA, the Code or
Similar Law and will not subject the NIMs Insurer or the Trustee to any
obligation in addition to those expressly undertaken in the Pooling and
Servicing Agreement, which Opinion of Counsel shall not be an expense of the
NIMs Insurer or the Trustee.
7. Prior to the sale or transfer by the Purchaser of any of the
Certificates, the Purchaser will obtain from any subsequent purchaser
substantially the same certifications, representations, warranties and covenants
contained in the foregoing paragraphs and in this letter or a letter
substantially in the form of Exhibit [H] to the Pooling and Servicing Agreement.
8. The Purchaser agrees to indemnify the Trustee, the Master Servicer, the
Servicer and the Depositor against any liability that may result from any
misrepresentation made herein.
Very truly yours,
[PURCHASER]
By:
-----------------------------------
Name:
Title:
G-4
EXHIBIT H
FORM OF RULE 144A INVESTMENT LETTER
(QUALIFIED INSTITUTIONAL BUYER)
[DATE]
Wachovia Bank, N.A.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Services - Series TMTS 2003-2HE
Re: Pooling and Servicing Agreement dated as of July 1, 2003 among ▇▇▇▇▇▇▇
▇▇▇▇▇ Mortgage Investors, Inc., as depositor, Universal Master Servicing,
LLC, as master servicer, ▇▇▇▇▇▇ Loan Servicing LP, as servicer and
Wachovia Bank, N.A., as trustee, Terwin Mortgage Trust, Asset-Backed
Certificates, Series TMTS 2003-2HE [Class N or X]
Ladies and Gentlemen:
______________ (the "Purchaser") intends to purchase from ________________
(the "Transferor") $_______ by original principal balance (the "Transferred
Certificates") of Asset-Backed Certificates, Series 2003-2HE, [Class N or X]
(the "Certificates"), issued pursuant to a Pooling and Servicing Agreement,
dated as of July 1, 2003 (the "Pooling and Servicing Agreement"), among ▇▇▇▇▇▇▇
▇▇▇▇▇ Mortgage Investors, Inc., as depositor (the "Depositor"), Universal Master
Servicing, LLC, as master servicer (the "Master Servicer"), ▇▇▇▇▇▇ Loan
Servicing LP, as servicer (the "Servicer"), and Wachovia Bank, N.A., as trustee
(the "Trustee"). [THE PURCHASER INTENDS TO REGISTER THE TRANSFERRED CERTIFICATE
IN THE NAME OF ____________________, AS NOMINEE FOR __________________.] All
terms used and not otherwise defined herein shall have the meanings set forth in
the Pooling and Servicing Agreement.
For good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Purchaser certifies, represents and warrants to, and
covenants with, the Depositor and the Trustee that:
In connection with our acquisition of the above Transferred Certificates
we certify that (a) we understand that the Certificates are not being registered
under the Securities Act of 1933, as amended (the "Act"), or any state
securities laws and are being transferred to us in a transaction that is exempt
from the registration requirements of the Act and any such laws, (b) we have
such knowledge and experience in financial and business matters that we are
capable of evaluating the merits and risks of investments in the Certificates,
(c) we have had the opportunity to ask questions of and receive answers from the
Depositor concerning the purchase of the Transferred Certificates and all
matters relating thereto or any additional information deemed necessary to our
decision to purchase the Transferred Certificates, (d) we either (i) are not an
employee benefit plan subject to Title I of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or a plan within the meaning of
Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code") or a
plan subject to federal, state or local law materially similar to the foregoing
provisions of ERISA and the Code ("Similar Law") (each, a "Plan"), nor are we
directly or
H-1
indirectly purchasing any Certificate on behalf of, as investment manager of, as
named fiduciary of, as trustee of or with assets of a Plan or directly or
indirectly purchasing any certificates with the assets of any insurance company
separate account containing any "plan assets" or of any Plan, (ii) are an
insurance company that is purchasing the Transferred Certificates with funds
contained in an "insurance company general account" (as such term is defined in
Section V(e) of Prohibited Transaction Class Exemption 95-60 ("PTCE 95-60"), 60
Fed. Reg. 35925 (July 12, 1995), and the purchase and holding of the
Certificates is covered under Sections I and III of PTCE 95-60, or (iii)
herewith have delivered to the Trustee an Opinion of Counsel satisfactory to the
Trustee, and upon which the Trustee shall be entitled to rely, to the effect
that the purchase and holding of the Transferred Certificates by the Purchaser
will not result in a prohibited transaction under ERISA, the Code or Similar Law
and will not subject the NIMs Insurer or the Trustee to any obligation in
addition to those expressly undertaken in the Pooling and Servicing Agreement,
which Opinion of Counsel shall not be an expense of the NIMs Insurer or the
Trustee, (e) we have not, nor has anyone acting on our behalf offered,
transferred, pledged, sold or otherwise disposed of the Certificates, any
interest in the Certificates or any other similar security to, or solicited any
offer to buy or accept a transfer, pledge or other disposition of the
Certificates, any interest in the Certificates or any other similar security
from, or otherwise approached or negotiated with respect to the Certificates,
any interest in the Certificates or any other similar security with, any person
in any manner, or made any general solicitation by means of general advertising
or in any other manner, or taken any other action, that would constitute a
distribution of the Certificates under the Securities Act or that would render
the disposition of the Certificates a violation of Section 5 of the Securities
Act or require registration pursuant thereto, nor will act, nor has authorized
or will authorize any person to act, in such manner with respect to the
Certificates, (f) we are a "qualified institutional buyer" as that term is
defined in Rule 144A under the Securities Act and have completed one of the
forms of certification to that effect attached hereto as Annex 1 or Annex 2. We
are aware that the sale of the Transferred Certificates to us is being made in
reliance on Rule 144A. We are acquiring the Transferred Certificates for our own
account or for resale pursuant to Rule 144A and further understand that such
Certificates may be resold, pledged or transferred only (i) to a person
reasonably believed by us, based upon certifications of such purchaser or
information we have in our possession, to be a qualified institutional buyer
that purchases for its own account or for the account of a qualified
institutional buyer to whom notice is given that the resale, pledge or transfer
is being made in reliance on Rule 144A, or (ii) pursuant to another exemption
from registration under the Securities Act.
We agree to indemnify the Trustee, the Master Servicer, the Servicer and
the Depositor against any liability that may result from any misrepresentation
made herein.
Very truly yours,
[PURCHASER]
By:
-----------------------------
Name:
Title:
▇-▇
▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ BUYER STATUS UNDER SEC RULE 144A
[FOR TRANSFEREES OTHER THAN REGISTERED INVESTMENT COMPANIES]
The undersigned (the "Buyer") hereby certifies as follows to the
parties listed in the Rule 144A
1. As indicated below, the undersigned is the President, Chief Financial
Officer, Senior Transferee Certificate to which this certification relates with
respect to the Certificates described therein: Vice President or other executive
officer of the Buyer.
2. In connection with the purchases by the Buyer, the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A") because (i) the Buyer owned
and/or invested on a discretionary basis $____________* in securities (except
for the excluded securities referred to below) as of the end of the Buyer's most
recent fiscal year (such amount being calculated in accordance with Rule 144A)
and (ii) the Buyer satisfies the criteria in the category marked below.
____ Corporation, etc. The Buyer is a corporation (other than a
bank, savings and loan association or similar institution),
Massachusetts or similar business trust, partnership, or
charitable organization described in Section 501(c)(3) of the
Internal Revenue Code of 1986, as amended.
____ Bank. The Buyer (a) is a national bank or banking institution
organized under the laws of any State, territory or the
District of Columbia, the business of which is substantially
confined to banking and is supervised by Federal, State or
territorial banking commission or similar official or is a
foreign bank or equivalent institution, and (b) has an audited
net worth of at least $25,000,000 as demonstrated in its
latest annual financial statements, a copy of which is
attached hereto.
____ Savings and Loan. The Buyer (a) is a savings and loan
association, building and loan association, cooperative bank,
homestead association or similar institution, which is
supervised and examined by a State or Federal authority having
supervision over such institution or is a foreign savings and
loan association or equivalent institution and (b) has an
audited net worth of at least $25,000,000 as demonstrated in
its latest annual financial statements, a copy of which is
attached hereto.
____ Broker-dealer. The Buyer is a dealer registered
pursuant to Section 15 of the Securities Exchange Act of
1934, as amended.
____ Insurance Company. The Buyer is an insurance company whose
primary and predominant business activity is the writing of
insurance or the reinsuring of risks underwritten by insurance
companies and which is subject to supervision by the
-------------
* Buyer must own and/or invest on a discretionary basis at least $100,000,000 in
securities unless Buyer is a dealer, and, in that case, Buyer must own and/or
invest on a discretionary basis at least $10,000,000 in securities.
H-3
insurance commissioner or a similar official or agency of the
State, territory or the District of Columbia.
____ State or Local Plan. The Buyer is a plan established and
maintained by a State, its political subdivisions, or any
agency or instrumentality of the State or its political
subdivisions, for the benefit of its employees.
____ ERISA Plan. The Buyer is an employee benefit plan subject to
Title I of the Employee Retirement Income Security Act of
1974, as amended.
____ Investment Advisor. The Buyer is an investment advisor
registered under the Investment Advisors Act of 1940, as
amended.
____ Small Business Investment Company. Buyer is a small business
investment company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small
Business Investment Act of 1958, as amended.
____ Business Development Company. Buyer is a business
development company as defined in Section 202(a)(22) of
the Investment Advisors Act of 1940, as amended.
3. The term "securities" as used for purposes of the calculation of the
dollar amount in paragraph 2 excludes: (i) securities of issuers that are
affiliated with the Buyer, (ii) securities that are part of an unsold allotment
to or subscription by the Buyer, if the Buyer is a dealer, (iii) securities
issued or guaranteed by the U.S. or any instrumentality thereof, (iv) bank
deposit notes and certificates of deposit, (v) loan participations, (vi)
repurchase agreements, (vii) securities owned but subject to a repurchase
agreement and (viii) currency, interest rate and commodity swaps.
4. For purposes of determining the aggregate amount of securities owned
and/or invested on a discretionary basis by the Buyer, the Buyer used the cost
of such securities to the Buyer and did not include any of the securities
referred to in the preceding paragraph, except (i) where the Buyer reports its
securities holdings in its financial statements on the basis of their market
value, and (ii) no current information with respect to the cost of those
securities has been published. If clause (ii) in the preceding sentence applies,
the securities may be valued at market. Further, in determining such aggregate
amount, the Buyer may have included securities owned by subsidiaries of the
Buyer, but only if such subsidiaries are consolidated with the Buyer in its
financial statements prepared in accordance with generally accepted accounting
principles and if the investments of such subsidiaries are managed under the
Buyer's direction. However, such securities were not included if the Buyer is a
majority-owned, consolidated subsidiary of another enterprise and the Buyer is
not itself a reporting company under the Securities Exchange Act of 1934, as
amended.
5. The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the Certificates
are relying and will continue to rely on the statements made herein because one
or more sales to the Buyer may be in reliance on Rule 144A.
6. Until the date of purchase of the Rule 144A Securities, the Buyer will
notify each of the parties to which this certification is made of any changes in
the information and conclusions herein. Until such notice is given, the Buyer's
purchase of the Certificates will constitute a reaffirmation of this
certification as of the date of such purchase. In addition, if the Buyer is a
bank or savings and loan as provided above, the Buyer agrees that it will
furnish to such parties updated annual financial statements promptly after they
become available.
H-4
By:
-------------------------------
Name:
Title:
Date:
-----------------------------
▇-▇
▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ BUYER STATUS UNDER SEC RULE 144A
[FOR TRANSFEREES THAT ARE REGISTERED INVESTMENT COMPANIES]
The undersigned (the "Buyer") hereby certifies as follows to the parties
listed in the Rule 144A Transferee Certificate to which this certification
relates with respect to the Certificates described therein:
1. As indicated below, the undersigned is the President, Chief Financial
Officer or Senior Vice President of the Buyer or, if the Buyer is a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act of 1933, as amended ("Rule 144A"), because Buyer is part of a Family of
Investment Companies (as defined below), is such an officer of the Adviser.
2. In connection with purchases by Buyer, the Buyer is a "qualified
institutional buyer" as defined in Rule 144A because (i) the Buyer is an
investment company registered under the Investment Company Act of 1940, as
amended and (ii) as marked below, the Buyer alone, or the Buyer's Family of
Investment Companies, owned at least $100,000,000 in securities (other than the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year. For purposes of determining the amount of securities owned by the
Buyer or the Buyer's Family of Investment Companies, the cost of such securities
was used, except (i) where the Buyer or the Buyer's Family of Investment
Companies reports its securities holdings in its financial statements on the
basis of their market value, and (ii) no current information with respect to the
cost of those securities has been published. If clause (ii) in the preceding
sentence applies, the securities may be valued at market.
____ The Buyer owned $___________ in securities (other than the
excluded securities referred to below) as of the end of the
Buyer's most recent fiscal year (such amount being calculated
in accordance with Rule 144A).
____ The Buyer is part of a Family of Investment Companies which
owned in the aggregate $__________ in securities (other than
the excluded securities referred to below) as of the end of
the Buyer's most recent fiscal year (such amount being
calculated in accordance with Rule 144A).
3. The term "Family of Investment Companies" as used herein means two or
more registered investment companies (or series thereof) that have the same
investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).
4. The term "securities" as used herein does not include (i) securities of
issuers that are affiliated with the Buyer or are part of the Buyer's Family of
Investment Companies, (ii) securities issued or guaranteed by the U.S. or any
instrumentality thereof, (iii) bank deposit notes and certificates of deposit,
(iv) loan participations, (v) repurchase agreements, (vi) securities owned but
subject to a repurchase agreement and (vii) currency, interest rate and
commodity swaps.
5. The Buyer is familiar with Rule 144A and understands that the parties
listed in the Rule 144A Transferee Certificate to which this certification
relates are relying and will continue to rely on the statements made herein
because one or more sales to the Buyer will be in reliance on Rule 144A. In
addition, the Buyer will only purchase for the Buyer's own account.
H-6
6. Until the date of purchase of the Certificates, the undersigned will
notify the parties listed in the Rule 144A Transferee Certificate to which this
certification relates of any changes in the information and conclusions herein.
Until such notice is given, the Buyer's purchase of the Certificates will
constitute a reaffirmation of this certification by the undersigned as of the
date of such purchase.
By:
----------------------------------
Name:
Title:
IF AN ADVISER:
-------------------------------------
Print Name of Buyer
Date:
--------------------------------
H-7
EXHIBIT I
REQUEST FOR RELEASE OF DOCUMENTS
To: Wachovia Bank, N.A.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
[and/or its designee]
Re: Pooling and Servicing Agreement dated as of July 1, 2003 among ▇▇▇▇▇▇▇
▇▇▇▇▇ Mortgage Investors, Inc., as depositor, Universal Master Servicing,
LLC, as master servicer, ▇▇▇▇▇▇ Loan Servicing LP, as servicer and
Wachovia Bank, N.A., as trustee, Terwin Mortgage Trust, Asset-Backed
Certificates, Series TMTS 2003-2HE
In connection with the administration of the Mortgage Loans held by you,
as Trustee, pursuant to the above-captioned Pooling and Servicing Agreement, we
request the release, and hereby acknowledge receipt, of the Mortgage File for
the Mortgage Loan described below, for the reason indicated.
Mortgage Loan Number:
Mortgagor Name, Address & Zip Code:
Reason for Requesting Documents (check one):
_______ 1. Mortgage Paid in Full
_______ 2. Foreclosure
_______ 3. Substitution
_______ 4. Other Liquidation (Repurchases, etc.)
_______ 5. Nonliquidation Reason:
--------------------------
Address to which the Trustee should deliver the Mortgage File:
By:
-------------------------------
(authorized signer)
Address:
--------------------------
Date:
-----------------------------
I-1
If box 1 or 2 above is checked, and if all or part of the Mortgage File was
previously released to us, please release to us our previous receipt on file
with you, as well as any additional documents in your possession relating to the
above specified Mortgage Loan.
If box 3, 4 or 5 above is checked, upon our return of all of the above documents
to you as Trustee, please acknowledge your receipt by signing in the space
indicated below, and returning this form.
Trustee
Wachovia Bank, N.A.
Please acknowledge the execution of the above request by your signature and date
below:
--------------------------------- ---------------------------------
Signature Date
Documents returned to Trustee:
--------------------------------- ---------------------------------
Trustee Date
I-2
EXHIBIT J
LIST OF INTERIM SERVICING AGREEMENTS
FLOW SERVICING AGREEMENT, dated as of December 2002, by and between TERWIN
CAPITAL LLC dba THE WINTER GROUP, as Owner and WILSHIRE CREDIT CORPORATION, as
Servicer
PURCHASE, WARRANTIES AND INTERIM SERVICING AGREEMENT, dated as of May 1, 2003,
between TERWIN ADVISORS LLC, as Purchaser, and FINANCE AMERICA, LLC, as Seller
and Servicer
SERVICING AGREEMENT, dated as of September 1, 2002, between UBS WARBURG
REAL ESTATE SECURITIES INC., as Owner and US MORTGAGE CORP., as Servicer
SELLER'S PURCHASE, WARRANTIES AND INTERIM SERVICING AGREEMENT dated March
1, 2003 between TERWIN ADVISORS LLC, as Purchaser and CHAPEL MORTGAGE
CORPORATION, as Seller and Servicer
SELLER'S PURCHASE, WARRANTIES AND INTERIM SERVICING AGREEMENT dated April
1, 2003 between TERWIN ADVISORS LLC, as Purchaser and GREENPOINT MORTGAGE
FUNDING INC., as Seller and Servicer
SELLER'S PURCHASE, WARRANTIES AND INTERIM SERVICING AGREEMENT, dated as of
March 1, 2003, between TERWIN ADVISORS LLC, as Purchaser, and BAYROCK
MORTGAGE CORP., as Seller and Servicer
J-1
EXHIBIT K
OFFICER'S CERTIFICATE OF TRUSTEE
▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
4 World Financial ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Re: Pooling and Servicing Agreement (the "Agreement") dated as of July 1, 2003
among ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors, Inc., as depositor, Universal
Master Servicing, LLC, as master servicer, ▇▇▇▇▇▇ Loan Servicing LP, as
servicer and Wachovia Bank, N.A., as trustee, Terwin Mortgage Trust,
Asset-Backed Certificates, Series TMTS 2003-2HE [Class N or X]
I, [identify the certifying individual], a [title] of the Trustee hereby certify
to the Depositor, and its officers, directors and affiliates, and with the
knowledge and intent that they will rely upon this certification, that:
1. I have reviewed the Monthly Statements delivered pursuant to the Agreement
since the last Officer's Certificate executed pursuant to Section 4.02 of
the Agreement [or in the case of the first certification, since the
Cut-off Date] (the "Trustee Information").
2. Based on my knowledge, the information in the Monthly Statement, taken as
a whole, does not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements made, in light
of the circumstances under which such statements were made, not misleading
as of the date hereof;
3. Based on my knowledge, the Monthly Statements required to be prepared by
the Trustee under the Agreement has been prepared and provided in
accordance with the Agreement; and
4. I am responsible for reviewing the activities performed by the Trustee
under the Agreement and the Trustee has, as of the date hereof fulfilled
its obligations under the Agreement and there are no significant
deficiencies relating to the Trustee's compliance with this Agreement.
Date:
Wachovia Bank, N.A., as Trustee
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
K-1
EXHIBIT L
OFFICER'S CERTIFICATE OF SERVICER
▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
4 World Financial ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Wachovia Bank, N.A.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Services - Series TMTS 2003-2HE
Re: Terwin Mortgage Trust, Asset-Backed Certificates, Series TMTS 2003-2HE
[Class N or X]
Reference is made to the Pooling and Servicing Agreement, dated as of July 1,
2003 (the "Agreement"), by and among ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors, Inc., as
depositor, Universal Master Servicing, LLC, as master servicer (the "Master
Servicer"), ▇▇▇▇▇▇ Loan Servicing LP, as servicer (the "Servicer") and Wachovia
Bank, N.A., as trustee. I, [identify the certifying individual], an authorized
representative of the Servicer hereby certify to the Trustee and the Depositor,
and its officers, directors and affiliates, and with the knowledge and intent
that they will rely upon this certification, that:
1. I have reviewed the information required to be delivered to the Trustee
pursuant to the Servicing Agreement (the "Servicing Information").
2. Based on my knowledge, the information in the Annual Statement of
Compliance, and all servicing reports, officer's certificates and other
information relating to the servicing of the Mortgage Loans submitted to
the Trustee by the Servicer taken as a whole, does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading as of the last day of the period
covered by the Annual Statement of Compliance;
3. Based on my knowledge, the Servicing Information required to be provided
to the Trustee by the Servicer under this Agreement has been provided to
the Trustee; and
L-1
4. I am responsible for reviewing the activities performed by the Servicer
under this Agreement and based upon the review required hereunder, and
except as disclosed in the Annual Statement of Compliance, the Annual
Independent Certified Public Accountant's Servicing Report and all
servicing reports, officer's certificates and other information relating
to the servicing of the Mortgage Loans submitted to the Trustee by the
Servicer, the Servicer has, as of the last day of the period covered by
the Annual Statement of Compliance fulfilled its obligations under this
Agreement.
Date:
▇▇▇▇▇▇ Loan Servicing LP, as Servicer
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
L-2
EXHIBIT M
CUSTODIAL AGREEMENT
[INTENTIONALLY OMITTED]
M-1
EXHIBIT N
FORM OF CAP CONTRACT
[INTENTIONALLY OMITTED]
N-1