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EXHIBIT 4.1
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AAMES CAPITAL CORPORATION
as Seller and Servicer
and
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
as Trustee
POOLING AND SERVICING AGREEMENT
Dated as of [ ]
Aames Mortgage Trust 199[ ]-[ ]
Mortgage Pass-Through Certificates,
Series 199[ ]-[ ]
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TABLE OF CONTENTS
ARTICLE ONE DEFINITIONS......................................................................1
Section 1.01. Definitions................................................................1
Section 1.02. Interest Calculations.....................................................45
ARTICLE TWO CONVEYANCE OF THE TRUST; ORIGINAL ISSUANCE OF CERTIFICATES......................46
Section 2.01. Conveyance of the Trust...................................................46
Section 2.02. Conveyance of the Subsequent Mortgage Loans; Fixed Price Contract.........48
Section 2.03. Acceptance by the Trustee; Repurchase or Substitution of Mortgage Loans...51
Section 2.04. Representations and Warranties Regarding the Servicer and the Seller......54
Section 2.05. Representations and Warranties of the Seller Regarding the Mortgage
Loans.....................................................................55
Section 2.06. Execution and Authentication of Certificates..............................65
Section 2.07. [Reserved]................................................................66
Section 2.08. Indemnification of the Trust..............................................66
ARTICLE THREE ADMINISTRATION AND SERVICING OF MORTGAGE LOANS; CERTIFICATE ACCOUNT...........66
Section 3.01. The Servicer and the Sub-Servicers........................................66
Section 3.02. Collection of Certain Mortgage Loan Payments; Collection Account and
Certificate Account.......................................................68
Section 3.03. Additional Servicing Responsibilities for the Adjustable Rate
Mortgage Loans............................................................70
Section 3.04. Hazard Insurance Policies.................................................71
Section 3.05. Enforcement of Due-on-Sale Clauses; Assumption and Modification
Agreements................................................................71
Section 3.06. Realization upon Liquidated Mortgage Loans................................72
Section 3.07. Trustee to Cooperate; Release of Mortgage Files...........................74
Section 3.08. Servicing Compensation; Payment of Certain Expenses by the Servicer.......75
Section 3.09. Annual Statement as to Compliance.........................................75
Section 3.10. Annual Independent Public Accountants' Servicing Report...................76
Section 3.11. Access to Certain Documentation and Information Regarding the Mortgage
Loans.....................................................................76
Section 3.12. Maintenance of Fidelity Bond and Errors and Omission Policy...............76
Section 3.13. Notices to the Rating Agencies and the Trustee............................77
Section 3.14. Reports of Foreclosures and Abandonment of Mortgaged Properties...........77
Section 3.15. Sub-Servicers and Sub-Servicing Agreements................................77
Section 3.16. Prefunding Account........................................................78
Section 3.17. Capitalized Interest Account..............................................79
Section 3.18. Supplemental Interest Reserve Fund........................................80
Section 3.19. Payments on the Financial Guaranty Insurance Policy.......................81
Section 3.20. Rights of the Financial Guaranty Insurer to Exercise Rights of
Adjustable Rate Group Certificateholders..................................84
Section 3.21. Trust and Accounts Held for Benefit of the Certificateholders and
Financial Guaranty Insurer................................................84
ARTICLE FOUR REMITTANCE REPORT..............................................................85
Section 4.01. Servicer Remittance Report................................................85
Section 4.02. Trustee Distribution Date Statement.......................................85
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ARTICLE FIVE PAYMENTS AND STATEMENTS TO CERTIFICATEHOLDERS.................................87
Section 5.01. Distributions.............................................................87
Section 5.02. Monthly Advances; Servicing Advances......................................92
Section 5.03. Statements to Certificateholders..........................................93
Section 5.04. Applied Realized Loss Amount..............................................95
ARTICLE SIX THE CERTIFICATES................................................................96
Section 6.01. The Certificates..........................................................96
Section 6.02. Registration of Transfer and Exchange of Certificates.....................96
Section 6.03. Mutilated, Destroyed, Lost or Stolen Certificates........................101
Section 6.04. Persons Deemed Owners....................................................101
Section 6.05. Actions of Certificateholders............................................102
ARTICLE SEVEN THE SERVICER AND THE SELLER..................................................102
Section 7.01. Liability of the Servicer................................................102
Section 7.02. Merger or Consolidation of, or Assumption of the Obligations of, the
Servicer.................................................................102
Section 7.03. Limitation on Liability of the Servicer and Others.......................102
Section 7.04. Servicer Not to Resign...................................................103
Section 7.05. Merger or Consolidation of the Seller....................................103
ARTICLE EIGHT DEFAULT......................................................................104
Section 8.01. Events of Default........................................................104
Section 8.02. Trustee to Act; Appointment of Successor.................................106
Section 8.03. Notifications to Certificateholders......................................106
Section 8.04. Assumption or Termination of Sub-Servicing Agreements by the Trustee
or any Successor Servicer................................................107
ARTICLE NINE THE TRUSTEE...................................................................107
Section 9.01. Duties of the Trustee....................................................107
Section 9.02. Certain Matters Affecting the Trustee....................................108
Section 9.03. Trustee Not Liable for Certificates or Mortgage Loans....................110
Section 9.04. Trustee May Own Certificates.............................................110
Section 9.05. Payment of the Trustee's Fees and Expenses...............................110
Section 9.06. Eligibility Requirements for the Trustee.................................111
Section 9.07. Resignation or Removal of the Trustee....................................111
Section 9.08. Successor Trustee........................................................112
Section 9.09. Merger or Consolidation of the Trustee...................................112
Section 9.10. Appointment of Co-Trustee or Separate Trustee............................112
Section 9.11. Compliance with REMIC Provisions.........................................114
Section 9.12. Trustee May Enforce Claims Without Possession of Certificates............114
Section 9.14. Tax Returns..............................................................115
Section 9.15. Taxpayer Identification Number...........................................116
Section 9.16. Miscellaneous REMIC Provisions...........................................116
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ARTICLE TEN TERMINATION....................................................................124
Section 10.01. Termination Upon Purchase or Liquidation of Mortgage Loans..............124
Section 10.02. Additional Termination Requirements.....................................126
ARTICLE ELEVEN MISCELLANEOUS PROVISIONS....................................................127
Section 11.01. Amendment...............................................................127
Section 11.02. Recordation of Agreement................................................128
Section 11.03. Limitation on Rights of Certificateholders..............................128
Section 11.04. Governing Law...........................................................129
Section 11.05. Notices.................................................................129
Section 11.06. Severability of Provisions..............................................130
Section 11.07. Assignment..............................................................130
Section 11.08. Certificates Nonassessable and Fully Paid...............................130
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SCHEDULES AND EXHIBITS
Schedule I List of Sub-Servicers
Exhibit A Forms of Certificates
Exhibit B Mortgage Loan Schedule
Exhibit C Form of Annual Statement as to Compliance
Exhibit D Form of Transfer Affidavit
Exhibit E Form of Payoff Notice
Exhibit F Form of Liquidation Report
Exhibit G Form of Officer's Certificate as to Charge-offs
Exhibit H Form of Transferor Affidavit
Exhibit I Form of Subsequent Transfer Agreement
Exhibit J Form of Financial Guaranty Insurance Policy
Exhibit K Form of Notice of Claim and Certificate
Exhibit L Form of Insurance and Indemnity Agreement
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THIS POOLING AND SERVICING AGREEMENT (this "Agreement"), dated as of [ ],
between Aames Capital Corporation, as seller (in such capacity, the "Seller")
and as servicer (in such capacity, together with permitted successors hereunder,
the "Servicer"), and Bankers Trust Company of California, N.A., as trustee (the
"Trustee"),
W I T N E S S E T H T H A T:
In consideration of the mutual agreements herein contained, the parties
hereto agree as follows:
ARTICLE ONE
DEFINITIONS
Section 1.01. Definitions. Whenever used in this Agreement, the following
words and phrases, unless the context otherwise requires, shall have the
meanings specified in this Article.
Accrued Certificate Interest: With respect to any Class and Distribution
Date, means the amount of interest due for any Class of Offered Certificates in
respect of any Interest Period at the applicable Pass-Through Rate, less the
related pro rata share of Interest Shortfalls. All calculations of interest on
the Fixed Rate Group Certificates other than the Class A-1F Certificates will be
made on the basis of a 360-day year assumed to consist of twelve 30-day months,
and all calculations of interest on the Class A-1F Certificates and the
Adjustable Rate Group Certificates will be made on the basis of the actual
number days elapsed in the related Interest Period and a year of 360 days.
Addition Notice: With respect to the transfer of Subsequent Mortgage Loans
to the Trust pursuant to Section 2.02 of this Agreement, notice of the Seller's
designation of Subsequent Mortgage Loans to be sold to the Trust separated by
Mortgage Loan Group and the aggregate Subsequent Cut-off Date Principal Balance
of such Subsequent Mortgage Loans in each Mortgage Loan Group, which notice
shall be given to the Trustee and Financial Guaranty Insurer not later than one
Business Day prior to the related Subsequent Transfer Date.
Adjustable Rate Group: The Mortgage Loan Group comprised of all Mortgage
Loans identified in the Mortgage Loan Schedule as having been assigned to the
Adjustable Rate Group, including any Qualified Replacement Mortgage Loans
delivered in replacement thereof.
Adjustable Rate Group Available Funds Cap: With respect to any
Distribution Date, the per annum rate expressed as the percentage obtained by
(A) dividing (x) the amount of interest that accrued on the Mortgage Loans in
the Adjustable Rate Group in respect of the related Collection Period at the
weighted average of the related Mortgage Loan Rates applicable to Monthly
Mortgage Payments due on such Mortgage Loans during such Collection Period,
reduced by (i) the Monthly Servicing Fee and the Financial Guaranty Insurer
Premium for the related Collection Period and (ii) after the first six
Distribution Dates, one-twelfth of 1.00% of the Adjustable Rate Group Balance as
of the first day of the related Collection Period, by (y) the product of (i) the
Adjustable Rate Group
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Balance as of the first day of the related Interest Period and (ii) the actual
number of days elapsed during such Interest Period divided by 360 and (B)
multiplying the result by 100.
Adjustable Rate Group Balance: With respect to any Distribution Date the
sum of the aggregate of the Principal Balances of the Mortgage Loans in the
Adjustable Rate Group as of the end of the related Collection Period plus in the
case of any Distribution Date relating to a Collection Period that includes any
part of the Funding Period, any portion of the Adjustable Rate Group Prefunding
Account Deposit remaining on deposit in the Prefunding Account or Certificate
Account as of the related Determination Date.
Adjustable Rate Group Capitalized Interest Account Deposit: The amount
deposited in the Capitalized Interest Account for the benefit of the Adjustable
Rate Group Certificateholders, which amount will be $0 if the Subsequent
Mortgage Loans are purchased on the Closing Date.
Adjustable Rate Group Certificates: The Class [ ] Certificates and the
[ ] A Certificates.
Adjustable Rate Group Principal Distribution Amount: With respect to any
Distribution Date, generally means the sum, without duplication, of (i)
Principal Distribution Amount with respect to the Adjustable Rate Group and the
related Collection Period, (ii) any related Extra Principal Distribution Amount
as more fully described in Section 5.01(d), (iii) the principal portion of any
Insured Amount, and (iv) any optional payment by the Financial Guaranty Insurer
of Realized Losses with respect to the Adjustable Rate Group during the related
Collection Period.
Adjustable Rate Group Prefunding Account Deposit: The amount deposited in
the Prefunding Account that is allocated for the purchase of Subsequent Mortgage
Loans having adjustable Mortgage Loan Rates to be included in the Adjustable
Rate Group, which amount is $[ ] or $0 if the Subsequent Mortgage Loans are
purchased on the Closing Date.
Adjustable Rate Mortgage Loan: Any Mortgage Loan with a Mortgage Loan Rate
that is adjustable at regular periodic intervals, based on the Index plus the
related Gross Margin subject to any Minimum Rate, Maximum Rate and any periodic
limitations on adjustment from time to time, all as set forth in the Mortgage
Loan Schedule. All Adjustable Rate Mortgage Loans will be included in the
Adjustable Rate Group.
Adjustment Date: With respect to any Adjustable Rate Mortgage Loan, the
date on which a change to the Mortgage Loan Rate on a Mortgage Loan becomes
effective.
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Affiliate: With respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise, and the terms "controlling" and
"controlled" have meanings corresponding to the foregoing.
Aggregate Certificate Principal Balance: With respect to any Distribution
Date means the sum of the Certificate Principal Balances of all Classes of the
Offered Certificates. The Aggregate Certificate Principal Balance for a
particular Mortgage Loan Group is the sum of the Certificate Principal Balances
of all Classes of the Offered Certificates relating to such Group.
Agreement: This Pooling and Servicing Agreement and all amendments hereof
and supplements hereto.
Annual Statement of Compliance: The annual statement to be prepared and
delivered by the Servicer in accordance with Section 3.09.
Applied Realized Loss Amount: With respect to the Fixed Rate Group and any
Distribution Date, means the excess of the related Realized Losses over the
amount, if any by which the related Overcollateralization Amount exceeds zero
after taking into account the application of the Fixed Rate Group Principal
Distribution Amount, as appropriate, on such Distribution Date and the
application of any Monthly Excess Cashflow Amount available from the Adjustable
Rate Group to cover such Realized Losses as set forth in Section 5.01(d).
Appraised Value: The appraised value of any Mortgaged Property based upon
the appraisal made at the time of origination of the related Mortgage Loan or,
in the case of a Mortgage Loan that is a purchase money mortgage loan, the sales
price of the related Mortgaged Property if such sales price is less than such
appraised value.
Book-Entry Certificate: Any Certificate registered in the name of the
Depository or its nominee, ownership of which is reflected on the books of the
Depository or on the books of a person maintaining an account with such
Depository (directly or as an indirect participant in accordance with the rules
of such Depository). As of the Closing Date, only the Offered Certificates
constitute Book-Entry Certificates.
Book-Entry Nominee: As defined in Section 6.02(c).
Business Day: Any day other than (a) a Saturday or a Sunday or (b) a day
on which banking institutions in the State of California or the State of New
York are required or authorized by law, executive order or governmental decree
to be closed.
Capitalized Interest Account: The segregated account, which, if utilized,
shall be an Eligible Account, established and maintained pursuant to Section
3.17 and entitled "Bankers Trust
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Company of California, N.A., as Trustee for Aames Mortgage Trust 199[ ]-[ ]
Mortgage Pass-Through Certificates, Series 199[ ]-[ ], Capitalized Interest
Account".
Capitalized Interest Account Deposit: $0 if all of the Subsequent Mortgage
Loans are purchased by the Trust on the Closing Date.
Certificate: Any Fixed Rate Group, Adjustable Rate Group, Subordinate or
Retained Certificate.
Certificate Account: The segregated account, which shall be an Eligible
Account, established and maintained pursuant to Section 3.02(e) and entitled
"Bankers Trust Company of California, N.A., as Trustee for Aames Mortgage Trust
199[ ]-[ ] Mortgage Pass-Through Certificates, Series 199[ ]-[ ], Certificate
Account".
Certificate Owner: With respect to any Book-Entry Certificate, the Person
who is the beneficial owner thereof.
Certificate Principal Balance: With respect to the Class A- Certificates,
the Class A-1F Certificate Principal Balance; with respect to the Class A-2F
Certificates, the Class A-2F Certificate Principal Balance; with respect to the
Class A-3F Certificates, the Class A-3F Certificate Principal Balance; with
respect to the Class A-4F Certificates, the Class A-4F Certificate Principal
Balance; with respect to the Class A-5F Certificates, the Class A-5F Certificate
Principal Balance; with respect to the Class A-6F Certificates, the Class A-6F
Certificate Principal Balance; with respect to the Class M-1F Certificates, the
Class M-1F Certificate Principal Balance; with respect to the Class M-2F
Certificates, the Class M-2F Certificate Principal Balance; with respect to the
Class B-1F Certificates, the Class B-1F Certificate Principal Balance; with
respect to the Class A-1A Certificates, the Class A-1A Certificate Principal
Balance; with respect to the Class A-2A Certificates, the Class A-2A Certificate
Principal Balance. The Class C Certificates have a Certificate Principal Balance
only the extent described in Section 9.16. The Class R Certificates do not have
a Certificate Principal Balance. With respect to any other designation (e.g. the
Fixed Rate Group Certificate Principal Balance), the sum of the Certificate
Principal Balances of each Class contemplated by such designation, in each case
excluding the Certificate Principal Balances of the Class C Certificates and
Class R Certificates.
Certificate Register: The register maintained pursuant to Section 6.02.
Certificateholder or Holder: The Person in whose name a Certificate is
registered in the Certificate Register, except that, solely for the purpose of
taking any action under Article Eight or giving any consent pursuant to this
Agreement, any Certificate registered in the name of the Seller or the Servicer
or any Person actually known to a Responsible Officer of the Trustee to be an
Affiliate of the Seller or the Servicer shall be deemed not to be outstanding
and the Percentage Interest evidenced thereby shall not be taken into account in
determining whether Holders of the requisite Percentage Interests necessary to
take any such action or effect any such consent have acted or consented unless
the Seller, the Servicer or any such Person is an owner of record of all of the
Certificates of any Class.
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Class: All of the Class A-1F Certificates, Class A-2F Certificates, Class
A-3F Certificates, Class A-4F Certificates, Class A-5F Certificates, Class A-6F
Certificates, Class M-1F Certificates, Class M-2F Certificates, Class B-1F
Certificates, Class A-1A Certificates, the Class A-2A Certificates, Class C
Certificates or the Class R Certificate, as the case may be, taken as a whole.
Class A Certificate Principal Balance: With respect to any Distribution
Date and the Fixed Rate Group Class A Certificates means the aggregate of the
Initial Certificate Principal Balances of each such Class as reduced by the sum
of all Principal Distribution Amounts and Extra Principal Distribution Amounts
actually distributed to the related A Certificateholders on all prior
Distribution Dates.
Class A Principal Distribution Amount: With respect to the Fixed Rate
Group and each Distribution Date on or after the Stepdown Date, the excess of
(x) the aggregate of the Certificate Principal Balances of the Fixed Rate Group
Class A Certificates immediately prior to such Distribution Date over (y) the
lesser of (A) the product of (i) the lesser of (1) the Stepped Up Enhancement
percentage and (2) [ ]% and (ii) the aggregate of the principal balances of the
Mortgage Loans in the Fixed Rate Group as of the last day of the related
Collection Period (plus any portion of the Fixed Rate Group Prefunding Account
Deposit remaining on deposit in the Prefunding Account or Escrow Account as of
such date allocable to the Fixed Rate Group), and (B) the excess of the
aggregate amount described in clause (ii) over [$ ].
Class A-1A Certificate: Any one of the Class A-1A Certificates executed by
the Trustee on behalf of the Trust, not in its individual capacity, but solely
as Trustee, authenticated by the Trustee and in substantially the form set forth
with respect thereto in Exhibit A.
Class A-1A Certificate Principal Balance: As to any Distribution Date, the
Class A-1A Initial Certificate Principal Balance less the sum of all Fixed Rate
Group and Adjustable Rate Group Principal Distribution Amounts and Extra
Principal Distribution Amounts actually distributed to Holders of Class A-1A
Certificates on previous Distribution Dates.
Class A-1A Coverage Deficit: As to any Distribution Date, an amount equal
to the product of (i) the Coverage Deficit with respect to such Distribution
Date and (ii) the percentage equivalent of a fraction, the numerator of which is
the Class A-1A Certificate Principal Balance and the denominator of which is the
sum of the Class A-1A Certificate Principal Balance and the Class A-2A
Certificate Principal Balance.
Class A-1A Formula Pass-Through Rate: The interest rate described in
clause (a) of the definition of Class A-1A Pass-Through Rate.
Class A-1A Pass-Through Rate: With respect to the period from [ ] through
[ ], [ %] per annum; with respect to each subsequent week (from Saturday through
Friday) during any Interest Period, a per annum rate equal to the lesser of (a)
the Fed Funds Average Rate plus [ %] and (b) the Adjustable Rate Group Available
Funds Cap.
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Class A-1A Principal Percentage: With respect to any Distribution Date to
and including that in which the Class A-1A Certificate Principal Balance is
reduced to zero, [50%], and thereafter, [0%].
Class A-1A Supplemental Interest Amount: As of any Distribution Date, the
excess, if any, of (x) the sum of (i) the excess, if any, of (a) the amount of
interest that would have accrued on the Class A-1A Certificates during the
related Interest Period at the Class A-1A Formula Pass-Through Rate over (b) the
amount of interest accrued and distributed thereon at the Class A-1A
Pass-Through Rate, and (ii) the sum of the amount described in clause (i) for
each preceding Distribution Date (together with interest thereon at the related
Formula Pass-Through Rate), over (y) all Class A-1A Supplemental Interest
Payment Amounts actually funded on all prior Distribution Dates.
Class A-1A Supplemental Interest Payment Amount: With respect to the Class
A-1A Certificates and any Distribution Date, an amount equal to the lesser of
(i) the amount of any accrued and unpaid Class A-1A Supplemental Interest Amount
and (ii) the product of (x) the amount deposited in the Supplemental Interest
Reserve Fund pursuant to Section 5.01(d) (ii) and (y) a fraction, the numerator
of which is the accrued and unpaid Class A-1A Supplemental Interest Amount, and
the denominator of which is the sum of the accrued and unpaid Class A-1A
Supplemental Interest Amount plus the accrued and unpaid Class A-2A Supplemental
Interest Amount.
Class A-1F Certificate: Any one of the Class A-1F Certificates executed by
the Trustee on behalf of the Trust, not in its individual capacity, but solely
as Trustee, authenticated by the Trustee and in substantially the form set forth
with respect thereto in Exhibit A.
Class A-1F Certificate Principal Balance: As to any Distribution Date, the
Class A-1F Initial Certificate Principal Balance less the sum of all Principal
Distribution Amounts and Extra Principal Distribution Amounts actually
distributed to Holders of Class A-1F Certificates on previous Distribution
Dates.
Class A-1F Pass-Through Rate: With respect to the Interest Period relating
to the [ ] Distribution Date, [ ]% per annum. With respect to each subsequent
Interest Period, the per annum rate equal to the lesser of (x) LIBOR plus [ ]%
per annum and (y) the product of the Fixed Rate Net WAC and a fraction, the
numerator of which is 30 and the denominator of which is the actual number of
days in the related Interest Period.
Class A-2A Certificate: Any one of the Class A-2A Certificates executed by
the Trustee on behalf of the Trust, not in its individual capacity, but solely
as Trustee, authenticated by the Trustee and in substantially the form set forth
with respect thereto in Exhibit A.
Class A-2A Certificate Principal Balance: As to any Distribution Date, the
Class A-2A Initial Certificate Principal Balance less the sum of all Principal
Distribution Amounts and Extra Principal Distribution Amounts actually
distributed to Holders of Class A-2A Certificates on previous Distribution
Dates.
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Class A-2A Coverage Deficit: As to any Distribution Date, an amount equal
to the product of (i) the Coverage Deficit with respect to such Distribution
Date and (ii) the percentage equivalent of a fraction, the numerator of which is
the Class A-2A Certificate Principal Balance and the denominator of which is the
sum of the Class A-1A Certificate Principal Balance and the Class A-2A
Certificate Principal Balance.
Class A-2A Formula Pass-Through Rate: The interests rate described in
clause (a) of the definition of Class A-2A Pass-Through Rate.
Class A-2A Pass-Through Rate: With respect to the initial Interest Period
and the [ ] Distribution Date, [ ]% per annum; with respect to each subsequent
Interest Period, a per annum rate equal to the lesser of (a) with respect to
Distribution Dates occurring prior to the Clean-up Call Date, LIBOR plus [ ]%
and, with respect to Distribution Dates occurring on or after the Clean-up Call
Date, LIBOR plus [ ]% and (b) the Adjustable Rate Group Available Funds Cap.
Class A-2A Principal Percentage: With respect to any Distribution Date,
100% minus the Class A-1A Percentage for such Distribution Date.
Class A-2A Supplemental Interest Amount: As of any Distribution Date, the
excess, if any, of (x) the sum of (i) the excess, if any, of (a) the amount of
interest that would have accrued on the Class A-2A Certificates during the
related Interest Period at the Class A-2A Formula Pass-Through Rate over (b) the
amount of interest accrued and distributed thereon (1) at the Class A-2A
Pass-Through, and (ii) the sum of the amount described in clause for each
preceding Distribution Date (together with interest thereon at the related
Formula Pass-Through Rate), over (y) all Class A-2A Supplemental Interest
Payment Amounts actually funded on all prior Distribution Dates.
Class A-2A Supplemental Interest Payment Amount: With respect to the Class
A-2A Certificates and any Distribution Date, an amount equal to the lesser of
(i) the amount of any accrued and unpaid Class A-2A Supplemental Interest Amount
and (ii) the product of (x) the amount deposited in the Supplemental Interest
Reserve Fund pursuant to Section 5.01(d) (ii) and (y) a fraction, the numerator
of which is the accrued and unpaid Class A-2A Supplemental Interest Amount, and
the denominator of which is the sum of the accrued and unpaid Class A-1A
Supplemental Interest Amount plus the accrued and unpaid Class A-2A Supplemental
Interest Amount.
Class A-2F Certificate: Any one of the Class A-2F Certificates executed by
the Trustee on behalf of the Trust, not in its individual capacity, but solely
as Trustee, authenticated by the Trustee and in substantially the form set forth
with respect thereto in Exhibit A.
Class A-2F Certificate Principal Balance: As to any Distribution Date, the
Class A-2F Initial Certificate Principal Balance less the sum of all Principal
Distribution Amounts and Extra
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Principal Distribution Amounts actually distributed to Holders of Class A-2F
Certificates on previous Distribution Dates.
Class A-2F Pass-Through Rate: With respect to any Interest Period, [ ]%
per annum.
Class A-3F Certificate: Any one of the Class A-3F Certificates executed by
the Trustee on behalf of the Trust, not in its individual capacity, but solely
as Trustee, authenticated by the Trustee and in substantially the form set forth
with respect thereto in Exhibit A.
Class A-3F Certificate Principal Balance: As to any Distribution Date, the
Class A-3F Initial Certificate Principal Balance less the sum of all Principal
Distribution Amounts and Extra Principal Distribution Amounts actually
distributed to Holders of Class A-3F Certificates on previous Distribution
Dates.
Class A-3F Pass-Through Rate: With respect to any Interest Period, [ ]%
per annum.
Class A-4F Certificate: Any one of the Class A-4F Certificates executed by
the Trustee on behalf of the Trust, not in its individual capacity, but solely
as Trustee, authenticated by the Trustee and in substantially the form set forth
with respect thereto in Exhibit A.
Class A-4F Certificate Principal Balance: As to any Distribution Date, the
Class A-4F Initial Certificate Principal Balance less the sum of all Principal
Distribution Amounts and Extra Principal Distribution Amounts actually
distributed to Holders of Class A-4F Certificates on previous Distribution
Dates.
Class A-4F Pass-Through Rate: With respect to any Interest Period, [ ]%
per annum.
Class A-5F Certificate: Any one of the Class A-5F Certificates executed by
the Trustee on behalf of the Trust, not in its individual capacity, but solely
as Trustee, authenticated by the Trustee and in substantially the form set forth
with respect thereto in Exhibit A.
Class A-5F Certificate Principal Balance: As to any Distribution Date, the
Class A-5F Initial Certificate Principal Balance less the sum of all Principal
Distribution Amounts and Extra Principal Distribution Amounts actually
distributed to Holders of Class A-5F Certificates on previous Distribution
Dates.
Class A-5F Pass-Through Rate: With respect to any Interest Period, the
lesser of (i) [ ]% per annum and (ii) the Fixed Rate Net WAC..
Class A-6F Certificate: Any one of the Class A-6F Certificates executed by
the Trustee on behalf of the Trust, not in its individual capacity, but solely
as Trustee, authenticated by the Trustee and in substantially the form set forth
with respect thereto in Exhibit A.
Class A-6F Certificate Principal Balance: As to any Distribution Date, the
Class A-6F Initial Certificate Principal Balance less the sum of all Principal
Distribution Amounts and Extra
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Principal Distribution Amounts actually distributed to Holders of Class A-6F
Certificates on previous Distribution Dates.
Class A-6F Lockout Distribution Amount: With respect to any Distribution
Date means the lesser of (a) product of (i) the applicable Class A-6F Lockout
Percentage for such Distribution Date and (ii) the Class A-6F Lockout Pro Rata
Distribution Amount for such Distribution Date, not to exceed the related Class
A Principal Distribution Amount or (b) the Class A Principal Distribution
Amount.
Class A-6F Lockout Percentage: With respect to each Distribution Date
occurring during the indicated periods means the indicated percentage:
Class A-6F
Period Lockout Percentage
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Class A-6F Lockout Pro Rata Distribution Amount: With respect to any
Distribution Date means an amount equal to the product of (x) a fraction, the
numerator of which is the Certificate Principal Balance of the Class A-6F
Certificates immediately prior to such Distribution Date and the denominator of
which is the Aggregate Certificate Principal Balance of the Fixed Rate Group
Class A Certificates immediately prior to such Distribution Date, and (y) the
related Class A Principal Distribution Amount for such Distribution Date.
Class A-6F Pass-Through Rate: With respect to any Interest Period, the
lesser of (i) [ ]% per annum and (ii) the Fixed Rate Net WAC.
Class B-1F Applied Realized Loss Amount: With respect to any Distribution
Date, the lesser of (x) the related Class B-1F Certificate Principal Balance
(after taking into account the distribution of the sum of the related Principal
Distribution Amount and Extra Principal Distribution Amount on such Distribution
Date, but prior to the application of the Class B-1F Applied Realized Loss
Amount, if any, on such Distribution Date) and (y) the related Applied Realized
Loss Amount as of such Distribution Date.
Class B-1F Certificate Principal Balance: With respect to any Distribution
Date means the Initial Class B-1F Certificate Principal Balance as reduced by
the sum of (x) the sum of all Principal Distribution Amounts and Extra Principal
Distribution Amounts actually distributed to the Class B-1F Certificateholders
on all prior Distribution Dates and (y) the aggregate cumulative amount of Class
B-1F Applied Realized Loss Amounts on all prior Distribution Dates.
Class B-1F Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, means the excess of (x) the sum of (i) the
Aggregate Certificate Principal
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Balances of the Fixed Rate Group Class A Certificates (after application of the
related Class A Principal Distribution Amount on such Distribution Date), (ii)
the Class M-1F Certificate Principal Balance (after application of the Class
M-1F Principal Distribution Amount on such Distribution Date), (iii) the Class
M-2F Certificate Principal Balance (after application of the Class M-2F
Principal Distribution Amount on such Distribution Date) and (iv) the Class B-1F
Certificate Principal Balance immediately prior to such Distribution Date, over
(y) the lesser of (i) [ ]% of the aggregate of the outstanding Principal
Balances of the Mortgage Loans in the Fixed Rate Group as of the last day of the
related Collection Period (plus any portion of the Fixed Rate Group Prefunding
Account Deposit remaining on deposit in the Prefunding Account or Escrow Account
as of such date allocable to the Fixed Rate Group) and (ii) the excess of the
aggregate amount described in clause (i) over $[ ].
Class B-1F Realized Loss Amortization Amount With respect to any
Distribution Date, the lesser of (x) the Class B-1F Unpaid Realized Loss Amount
as of such Distribution Date and (y) the related Monthly Excess Cashflow Amount
remaining after distribution of any Class A Interest Carry Forward Amount, the
related Extra Principal Distribution Amount, the Class M-1F Realized Loss
Amortization Amount, the related Class M-2F Realized Loss Amortization Amount,
the related Class M-1F Interest Carry Forward Amount, the related Class M-2F
Interest Carry Forward Amount and the related Class B-1F Interest Carry Forward
Amount, in each case for such Distribution Date.
Class B-1F Certificates: Any one of the Class B-1F Certificates executed
by the Trustee on behalf of the Trust, not in its individual capacity, but
solely as Trustee, authenticated by the Trustee and in substantially the form
set forth with respect thereto in Exhibit A.
Class B-1F Pass Though Rate: With respect to any Interest Period, the
lesser of (i) [ ]% per annum and (ii) the Fixed Rate Net WAC.
Class C Certificates: Any one of the Class C Certificates executed by the
Trustee on behalf of the Trust, not in its individual capacity, but solely as
Trustee, authenticated by the Trustee and in substantially the form set forth
with respect thereto in Exhibit A.
Class C Carryforward Amount: With respect to any Distribution Date, means
the amount by which the aggregate of the amount by which the Class C
Distribution Amount for each prior Distribution Date exceeded the amount
actually distributed in respect of the Class C Distribution Amount on each such
date, reduced by the aggregate of the amounts distributed in respect of the
Class C Carryforward Amount on each such prior Distribution Dates, and reduced
by the aggregate of the amounts of Realized Losses that have resulted in the
reduction of the Overcollateralization Amount on each such prior Distribution
Date.
Class C Distribution Amount: With respect to any Distribution Date, means
the interest allocated to the Class C Certificates as separate components in
accordance with Section 9.16 with respect to such Distribution Date.
Class M Certificates:Collectively, the Class M-1F and Class M-2F
Certificates.
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Class M-1F Applied Realized Loss Amount: With respect to any Distribution
Date, means the lesser of (x) the Class M-1F Certificate Principal Balance
(after taking into account the distribution of the related Principal
Distribution Amount on such Distribution Date, but prior to the application of
the Class M-1F Applied Realized Loss Amount, if any, on such Distribution Date),
and (y) the excess of (i) the related Applied Realized Loss Amount over (ii) the
sum of the Class M-2F Applied Realized Loss Amount and Class B-1F Applied
Realized Loss Amounts, in each case as of such Distribution Date.
Class M-1F Certificates: Any one of the Class M-1F Certificates executed
by the Trustee on behalf of the Trust, not in its individual capacity, but
solely as Trustee, authenticated by the Trustee and in substantially the form
set forth with respect thereto in Exhibit A.
Class M-1F Certificate Principal Balance: With respect to any date of
determination, means the Initial Class M-1F Certificate Principal Balance as
reduced by the sum of (x) the sum of all Principal Distribution Amounts and
Extra Principal Distribution Amounts actually distributed to the Class M-1F
Certificateholders on all prior Distribution Dates and (y) the aggregate
cumulative amount of related Class M-1F Applied Realized Loss Amounts on all
prior Distribution Dates.
Class M-1F Pass-Through Rate: With respect to any Interest Period, the
lesser of (i) [ ]% per annum and (ii) the Fixed Rate Net WAC.
Class M-1F Principal Distribution Amount: With respect to each
Distribution Date on or after the Stepdown Date, the excess of (x) the sum of
(i) the Aggregate Certificate Principal Balance of the Fixed Rate Group Class A
Certificates (after application of the related Class A Principal Distribution
Amount on such Distribution Date and (ii) the related Class M-1F Certificate
Principal Balance immediately prior to such Distribution Date over (y) the
lesser of (i) [ ]% of the aggregate of the outstanding Principal Balances of the
Mortgage Loans in the Fixed Rate Group as of the last day of the related
Collection Period (plus any portion of the Fixed Rate Group Prefunding Account
Deposit remaining on deposit in the Prefunding Account or Escrow Account as of
such date allocable to the Fixed Rate Group) and (ii) the excess of the
aggregate amount described in clause (i) over $[ ].
Class M-1F Realized Loss Amortization Amount: With respect to any
Distribution Date means the lesser of (x) the Class M-1F Unpaid Realized Loss
Amount and (y) the related Monthly Excess Cashflow Amount remaining after
distribution of the related Class A Interest Carry Forward Amount, the related
Extra Principal Distribution Amount and the related Class M-1F Interest Carry
Forward Amount.
Class M-2F Applied Realized Loss Amount: With respect to any Distribution
Date means the lesser of (x) the Class M-2F Certificate Principal Balance (after
taking into account the distribution of the related Principal Distribution
Amount, but prior to the application of the Class M-2F Applied Realized Loss
Amount, if any, on such Distribution Date) and (y) the excess of (i) the related
Applied Realized Loss Amount over (ii) the Class B-1F Applied Realized Loss
Amounts, in each case as of such Distribution Date.
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Class M-2F Certificates: Any one of the Class M-2F Certificates executed
by the Trustee on behalf of the Trust, not in its individual capacity, but
solely as Trustee, authenticated by the Trustee and in substantially the form
set forth with respect thereto in Exhibit A.
Class M-2F Certificate Principal Balance: With respect to any date of
determination means, the Initial Class M-2F Certificate Principal Balance as
reduced by the sum of (x) the sum of all Principal Distribution Amounts and
Extra Principal Distribution Amounts actually distributed to the Class M-2F
Certificateholders on all prior Distribution Dates and (y) the aggregate,
cumulative amount of related Class M-2F Applied Realized Loss Amounts on all
prior Distribution Dates.
Class M-2F Pass-Through Rate: With respect to any Interest Period, the
lesser of (i) [ ]% per annum and the Fixed Rate Net WAC.
Class M-2F Principal Distribution Amount: With respect to any Distribution
Date on or after the related Stepdown Date means the excess of (x) the sum of
(i) the Aggregate Certificate Principal Balance of the Fixed Rate Group Class A
Certificates (after application of the related Class A Principal Distribution
Amount on such Distribution Date), (ii) the Class M-1F Certificate Principal
Balance (after application of the M-1F Principal Distribution Amount on such
Distribution Date) and (iii) the related Class M-2F Certificate Principal
Balance immediately prior to such Distribution Date over (y) the lesser of (i) [
]% of the aggregate of the outstanding Principal Balances of the Mortgage Loans
in the Fixed Rate Group as of the last day of the related Collection Period
(plus any portion of the Fixed Rate Group Prefunding Account Deposit remaining
on deposit in the Prefunding Account or Escrow Account as of such date allocable
to the Fixed Rate Group) and (ii) the excess of the aggregate amount described
in clause (i) over $[ ].
Class M-2F Realized Loss Amortization Amount: With respect to any
Distribution Date, means the lesser of (x) the Class M-2F Unpaid Realized Loss
Amount and (y) the related Monthly Excess Cashflow Amount remaining after
distribution of the related Class A Interest Carry Forward, the related Extra
Principal Distribution Amount, the Class M-1F Realized Loss Amortization Amount,
the Class M-1F Interest Carry Forward Amount and the Class M-2F Interest Carry
Forward Amount.
Class R Certificate: Any one of the Class R-I, Class R-II or Class R-III
Certificates.
Class R-I Certificates: That certificate representing certain residual
rights to distribution from the REMIC I in substantially the form set forth as
Exhibit A hereto.
Class R-II Certificates: That certificate representing certain residual
rights to distribution from the REMIC II in substantially the form set forth as
Exhibit A hereto.
Class R-III Certificates: That certificate representing certain residual
rights to distribution from the REMIC III in substantially the form set forth as
Exhibit A hereto.
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Clean-up Call Date: The first Distribution Date on which the aggregate of
the Principal Balances of the Mortgage Loans is less than [ ]% of the sum of the
aggregate of such Principal Balances as of the close of business on the Closing
Date plus the Prefunding Account Deposit Amount.
Closing Date: [ ].
Closing Date Deposit: The aggregate amount deposited by the Seller in the
Collection Account on or prior to the Closing Date pursuant to Section 2.01,
which amount shall be the aggregate of the amounts of interest that would have
accrued (at the related Mortgage Loan Rate net of the Servicing Fee Rate) on
each Initial Mortgage Loan for each 30-day period from the Cut-off Date through
the end of the last Collection Period preceding the Collection Period in which
such Mortgage Loan has its first Monthly Payment Due.
Code: The Internal Revenue Code of 1986, as amended.
Collection Account: The segregated account, which shall at all times be an
Eligible Account, established and maintained pursuant to Section 3.02(a) and
entitled "[Servicer], in trust for the benefit of Holders of Aames Mortgage
Trust [ ]-[ ] Mortgage Pass-Through Certificates, Series [ ]-[ ], Collection
Account". References herein to the Collection Account shall include any
Sub-Servicing Account as the context requires.
Collection Period: As to any Distribution Date, the period beginning on
the first day of the calendar month immediately preceding the month in which
such Distribution Date occurs and ending on the last day of such calendar month.
Combined Loan-to-Value Ratio: With respect to a Mortgage Loan, the ratio
(expressed as a percentage) of (i) the sum of the Original Principal Amount of
such related Mortgage Loan plus the outstanding principal balance (at the time
of origination of such Mortgage Loan) of each mortgage loan secured by the
related Mortgaged Property that is senior to such Mortgage Loan to (ii) the
Appraised Value of the related Mortgaged Property determined by the Seller at
the time of origination of such Mortgage Loan.
Company: Aames Capital Corporation, a California corporation.
Compensating Interest: As to any Distribution Date and each Mortgage Loan
Group, an amount equal to the lesser of (a) the related Monthly Servicing Fee
for the related Collection Period and (b) the difference between (i) 30 days'
interest (at the related Mortgage Loan Rates, net of the Servicing Fee Rate) on
the Principal Balance of each Mortgage Loan in such Mortgage Loan Group as to
which a Principal Prepayment was received and that became a Liquidated Mortgage
Loan or that was otherwise charged-off (before giving effect to any related
reduction in the Principal Balance of such Mortgage Loan) by the Servicer during
the related Collection Period and (ii) the amount of interest actually collected
by the Servicer for such Mortgage Loans in such Mortgage Loan Group during such
Collection Period.
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Corporate Trust Office: The principal office of the Trustee at which at
any particular time its corporate trust business with respect to this Agreement
shall be principally administered, which office at the date of the execution of
this Agreement is located at [3 ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇] Attention:
Aames Mortgage Loan Pass-Through Certificates, Series [ ]-[ ].
Coverage Deficit: With respect to the Adjustable Rate Group and any
Distribution Date, means the excess, if any, of (i) the aggregate of the Class
A-1A Certificate Principal Balance and the Class A-2A Certificate Principal
Balance (after taking into account all distributions thereto in respect of
principal on such Distribution Date other than any amounts paid by the Financial
Guaranty Insurer) over (ii) the Adjustable Rate Group Balance as of the last day
of the related Collection Period (plus, in the case of any Collection Period
during the Funding Period, the portion of the Adjustable Rate Group Prefunding
Account Deposit remaining on deposit in the Prefunding Account as of such date).
Cut-off Date: [ ]or, in the case of Initial Mortgage Loans originated
prior to the Closing Date, the related origination date of each such Initial
Mortgage Loan.
Cut-off Date Pool Balance: The aggregate of the Cut-off Date Principal
Balances of the Initial Mortgage Loans.
Cut-off Date Principal Balance: As to any Mortgage Loan, its Principal
Balance as of the open of business on the Cut-off Date.
Defective Mortgage Loan: Any Mortgage Loan that is required to be
repurchased or substituted by the Seller pursuant to Section 2.03 or 2.05.
Definitive Certificates: As defined in Section 6.02(f).
Deleted Mortgage Loan: A Mortgage Loan replaced or to be replaced by a
Qualified Replacement Mortgage Loan.
Delinquency Percentage: As to any Distribution Date and (a) the Fixed Rate
Group, the percentage equivalent of the fraction obtained by dividing (i) the
aggregate of the Principal Balances of all Mortgage Loans in such Mortgage Loan
Group, as the case may be, that were then [60] days contractually delinquent as
of the end of the related Collection Period or were either foreclosed upon or
transferred pursuant to Section 3.06 during such Collection Period, by (ii) the
Principal Balance of the Mortgage Loans included in such Mortgage Loan Group as
of the last day of such Collection Period or (b) the Adjustable Rate Group, the
percentage equivalent of the fraction obtained by dividing (i) the aggregate of
the Principal Balances of all Mortgage Loans in such Mortgage Loan Group, as the
case may be, that were then [90] days contractually delinquent as of the end of
the related Collection Period or were either foreclosed upon or transferred
pursuant to Section 3.06 during such Collection Period, by (ii) the Principal
Balance of the Mortgage Loans included in such Mortgage Loan Group as of the
last day of such Collection Period.
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Deposit Date: As to any Distribution Date, the third Business Day prior to
such Distribution Date.
Depository: The initial depository shall be The Depository Trust Company,
the nominee of which is Cede & Co. The Depository shall at all times be a
"clearing corporation" as defined in Section 8102(3) of the Uniform Commercial
Code of the State of California, as amended, or any successor provisions
thereto.
Depository Participant: A broker, dealer, bank or other financial
institution or other person for which, from time to time, the Depository effects
book-entry transfers and pledges of securities deposited with such Depository.
Determination Date: As to any Distribution Date, the last day of the
calendar month immediately preceding the calendar month in which such
Distribution Date occurs.
Disqualified Organization: Any Person that is (i) the United States, any
state or any political subdivision thereof, any possession of the United States,
or any agency or instrumentality of any of the foregoing (other than an
instrumentality that is a corporation if all of its activities are subject to
tax and a majority of its board of directors is not selected by any such
governmental unit), (ii) a foreign government, international organization or any
agency or instrumentality of either of the foregoing (other than an
instrumentality that is a corporation if all of its activities are subject to
tax and a majority of its board of directors is not selected by any such
governmental unit), (iii) an organization (except certain farmers' cooperatives
described in Code Section 521) exempt from tax imposed by Chapter 1 of the Code
(including the tax imposed by Code Section 511 on unrelated business taxable
income) on any excess inclusions (as defined in Code Section 860E(c)(1)) with
respect to any Class R Certificate, (iv) rural electric and telephone
cooperatives described in Code Section 1381(a)(2)(C), and (v) any other Person
so designated by the Trustee based upon an Opinion of Counsel that the holding
of an ownership interest in a Class R Certificate by such Person may cause any
REMIC Pool or any Person having an ownership interest in any Class R
Certificate, other than such Person, to incur a liability for any tax imposed
under the Code that would not otherwise be imposed but for the transfer of an
ownership interest in a Class R Certificate to such Person. The terms "United
States", "state" and "international organization" shall have the meanings set
forth in Code Section 7701 or successor provisions.
Distribution Date: The [ ] day of each month or, if such day is not a
Business Day, the Business Day immediately following such [ ] day, beginning
[ ].
Eligible Account: Either (A) a segregated account or accounts maintained
with an institution the deposits of which are insured by the Bank Insurance Fund
or the Savings Association Insurance Fund of the FDIC, the unsecured and
uncollateralized debt obligations of which shall be rated "A" or better by
Standard & Poor's and "A2" or better by ▇▇▇▇▇'▇ and in the highest short term
rating category by Standard & Poor's and ▇▇▇▇▇'▇, and that is either (i) a
federal savings and loan association duly organized, validly existing and
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in good standing under the federal banking laws, (ii) an institution duly
organized, validly existing and in good standing under the applicable banking
laws of any state, (iii) a national banking association duly organized, validly
existing and in good standing under the federal banking laws and (iv) a
principal subsidiary of a bank holding company, or (B) segregated account
maintained with the trust department of a federal or state chartered depository
institution or trust company, having capital and surplus of not less than
$50,000,000, acting in its fiduciary capacity, the unsecured and
uncollateralized debt obligations of which shall be rated "Baa3" or better by
▇▇▇▇▇'▇. Any Eligible Accounts maintained with the Trustee shall conform to the
preceding clause (B).
ERISA: The Employee Retirement Income Security Act of 1974, as amended.
ERISA Plan: Any Person that is an employee benefit plan within the meaning
of Section 3(3) of ERISA or any Person that is an individual retirement account
or employee benefit plan, trust or account subject to Section 4975 of the Code.
ERISA Prohibited Holder: As defined in Section 6.02(c).
Escrow Account: The segregated account, which shall be an Eligible
Account, established and maintained pursuant to Section 3.19(d) and entitled
"Bankers Trust Company of California, N.A., as Trustee for Aames Mortgage Trust
[ ] Mortgage Pass-Through Certificates, Series 199[ ]-[ ], 199[ ]-[ ] Reserve
Fund held on behalf of Financial Security Assurance Inc." which will constitute
a "qualified reserve fund" as defined in the REMIC Provisions.
Escrowed Amount: With respect to each Subsequent Mortgage Loan that is an
Adjustable Rate Mortgage Loan, [ ]% of the related Subsequent Purchase Price,
which amount will be withdrawn from the Prefunding Account on the related
Subsequent Transfer Date for deposit in the Escrow Account pursuant to Section
3.19(d) for the period from the related Subsequent Transfer Date until the date
released therefrom to the Company or to the Trust, as described in Section
3.19(d).
Event of Default: As defined in Section 8.01.
Excess Spread Trigger: With respect to any Distribution Date on or after
the thirteenth Distribution Date and the Adjustable Rate Group Certificates, the
related Monthly Excess Cashflow Amount is less than one-twelfth of [ ]% of the
sum of the Class A-1A Certificate Principal Balance and the Class A-2A
Certificate Principal Balance as of the close of business on such Distribution
Date (without giving effect to any Overcollateralization Release Amount on such
Distribution Date).
Extra Principal Distribution Amount: With respect to a Mortgage Loan Group
and any Distribution Date, means the lesser of (x) the amount, if any, of
Monthly Interest remaining in the Certificate Account with respect to such
Mortgage Loan Group after application with respect to the priorities set forth
in Section 5.01(a), clause First through Fifth and (y) the related
Overcollateralization Deficiency.
FDIC: The Federal Deposit Insurance Corporation and its successors in
interest.
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FEMA: The Federal Emergency Management Agency and its successors in
interest.
Fed Funds Average Rate: (a) for the period from [ ] through [ ], [ ]% and
(b) for any subsequent week during any Interest Period (excluding any day during
such week that is not included in such Interest Period), (i) the sum of (A) the
Fed Funds Rate on each Fed Funds Interest Reset Date during the applicable Fed
Funds Calculation Period and (B) for each day during such Fed Funds Calculation
Period that is not a Fed Funds Interest Reset Date, the Fed Funds Rate in effect
on the immediately preceding Fed Funds Interest Reset Date, divided by (ii) the
number of days in such applicable Fed Funds Calculation Period. The Trustee will
determine the Fed Funds Average Rate for each week (from Saturday through
Friday) during each Interest Period after the period from [ ] through [ ]. All
percentages resulting from a calculation with respect to the Fed Funds Average
Rate or the Class A-2A Formula Pass-Through Rate based on the Fed Funds Average
Rate for any Interest Period will be rounded to the nearest one
hundred-thousandth of a percentage point, with five one-millionths of a
percentage point rounded upwards (e.g., 9.876545% (or .09876545) would be
rounded to 9.87655% (or .0987655)), and all dollar amounts used in or resulting
from such calculation will be rounded to the nearest cent, with one-half cent
rounded upwards. The establishment of the Fed Funds Rate on any Fed Funds Reset
Date or of the Fed Funds Average Rate for any Interest Period by the Trustee and
the Trustee's calculation of the rate of interest applicable to the Class A-1A
Adjustable Rate Certificates for the related Interest Period shall (in the
absence of manifest error) be final and binding. Each such rate of interest may
be obtained by telephoning the Trustee at [ ].
Fed Funds Business Day: Means any day other than a Saturday or Sunday or a
day on which banking institutions in The City of New York are authorized or
required by law, regulation or executive order to close.
Fed Funds Calculation Period: With respect to any week (from Saturday
through Friday) during any Interest Period, the period commencing on the Monday
of the third preceding week, and ending on the Friday of the third preceding
week.
Fed Funds Interest Determination Date: Means each Fed Funds Interest Reset
Date and, with respect to each day during a Fed Funds Calculation Period that is
not a Fed Funds Interest Reset Date, the next succeeding Fed Funds Interest
Reset Date.
Fed Funds Interest Reset Date: Means each Fed Funds Business Day during
the relevant Fed Funds Calculation Period.
Fed Funds Rate: With respect to a Fed Funds Interest Reset Date, means (in
the following order of priority):
(a) the rate with respect to each Fed Funds Interest Reset Date
(expressed as a percentage per annum) that appears opposite the caption
"Federal Funds Effective" on
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Telerate page 120 as of 11:00 a.m., New York City time on such Fed Funds
Interest Reset Date;
(b) if such rate does not appear on Telerate Page 120 as of 11:00
a.m., New York City time, on such Fed Funds Interest Reset Date, then the
Fed Funds Rate with respect to such Fed Funds Interest Reset Date will be
the rate with respect to the related Fed Funds Interest Determination Date
(expressed as a percentage per annum) that appears on Reuters Screen NYAA
Page (as defined below) as of 11:00 a.m., New York City time, on such Fed
Funds Interest Reset Date.
(c) if such rate does not appear on Reuters Screen NYAA Page as of
11:00 a.m., New York City time, on such Fed Funds Interest Reset Date,
then the Trustee will request three leading brokers of Federal Funds
transactions in The City of New York to provide the rate (expressed as a
percentage per annum) for the last transaction in overnight Federal Funds
arranged by such broker on the related Fed Funds Interest Determination
Date. If rates are provided by such three brokers, then the Fed Funds Rate
with respect to such Fed Funds Interest Reset Date will be the arithmetic
mean (rounded to the nearest one hundred-thousandth of one percentage
point with five one-millionths of one percentage point rounded upwards) of
such rates; and
(d) if fewer than three such rates are provided, then the Fed
Funds Rate with respect to such Fed Funds Interest Determination Date will
be the Fed Funds Rate for the preceding Fed Funds Interest Reset Date (or,
in the case of the first Fed Funds Interest Date, the immediately
preceding Fed Funds Business Day on which a rate appeared on Telerate Page
120 as described in (a) above).
If a rate that initially appears on Telerate Page 120 or Reuters Screen
NYAA Page, as the case may be, as of 11:00 a.m., New York City Time, on the
applicable Fed Funds Interest Reset Date is superseded on Telerate Page 120 or
Reuters Screen NYAA page, as the case may be, by a corrected rate before 12:00
noon, New York City time, on such Fed Funds Interest Reset Date, such corrected
rate as so superseded on the applicable page shall be the applicable rate for
calculating the applicable Fed Funds Rate for such Fed Funds Interest
Determination Date.
FHLMC: The Federal Home Loan Mortgage Corporation and its successors in
interest.
FNMA: The Federal National Mortgage Association and its successors in
interest.
Final Scheduled Distribution Date: with respect to each Class of Offered
Certificates shall mean:
Class Final Scheduled Distribution Date
----- ---------------------------------
Class A-1F Certificates
Class A-2F Certificates
Class A-3F Certificates
Class A-4F Certificates
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Class A-5F Certificates
Class A-6F Certificates
Class M-1F Certificates
Class M-2F Certificates
Class B-1F Certificates
Class A-1A Certificates
Class A-2A Certificates
Financial Guaranty Insurance Policy: The Financial Guaranty Insurance
Policy (No. [ ]), dated [ ], including any endorsements thereto, issued by the
Financial Guaranty Insurer for the benefit of the Holders of the Adjustable Rate
Group Certificates, pursuant to which the Financial Guaranty Insurer guarantees
payment of the Insured Amounts. A form of the Financial Guaranty Insurance
Policy is attached hereto as Exhibit J.
Financial Guaranty Insurer: Financial Security Assurance Inc., a stock
insurance company organized and created under the laws of the State of New York,
and any successors thereto.
Financial Guaranty Insurer Default: The existence and continuance of any
of the following:
(a) the Financial Guaranty Insurer fails to make a payment required
under the Financial Guaranty Insurance Policy in accordance with its terms;
(b) the entry by a court having jurisdiction in the premises of (i) a
decree or order for relief in respect of the Financial Guaranty Insurer in an
involuntary case or proceeding under any applicable United States federal or
state bankruptcy, insolvency, rehabilitation, reorganization or other similar
law of (ii) a decree or order adjudging the Financial Guaranty Insurer bankrupt
or insolvent, or approving as properly filed a petition seeking reorganization,
rehabilitation, arrangement, adjustment or composition of or in respect of the
Financial Guaranty Insurer under any applicable United States federal or state
law, or appointing a custodian, receiver, liquidator, rehabilitator, assignee,
trustee, sequestrator or other similar official of the Financial Guaranty
Insurer or of any substantial part of its property, or ordering the winding-up
or liquidation of its affairs, and the continuance of any such decree or order
for relief or any such other decree or order unstayed and in effect for a period
of 60 consecutive days; or
(c) the commencement by the Financial Guaranty Insurer of a voluntary
case or proceeding under any applicable United States federal or state
bankruptcy, insolvency, reorganization or other similar law or of any other case
or proceeding to be adjudicated bankrupt or insolvent, or the consent of the
Financial Guaranty Insurer to the entry of a decree or order for relief in
respect of the Financial Guaranty Insurer in an involuntary case or proceeding
under any applicable United States federal or state bankruptcy, insolvency case
or proceeding against Financial Guaranty Insurer, or the filing by the
Certificate Insurer of a petition or answer or consent seeking reorganization or
relief under any applicable United States federal or state law, or the consent
by the Financial Guaranty Insurer to the filing of such petition or to the
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appointment of or the taking possession by a custodian, receiver, liquidator,
assignee, trustee, sequestrator or similar official of the Financial Guaranty
Insurer or of any substantial part of its property, or the failure by the
Financial Guaranty Insurer to pay debts generally as they become due, or the
admission by the Certificate Insurer in writing of its inability to pay its
debts generally as they become due, or the taking of corporate action by the
Financial Guaranty Insurer in furtherance of any such action.
Financial Guaranty Insurer Parties: The Financial Guaranty Insurer or its
respective agents, representatives, directors, officers or employees.
Financial Guaranty Insurer Premium: With respect to the Adjustable Rate
Group, the premium due to the Financial Guaranty Insurer on each Distribution
Date, which amount shall be equal to 1/12 of the product of the applicable
Insurer Premium Rate and the sum of the Class A-1A Certificate Principal Balance
and the Class A-2A Certificate Principal Balance immediately prior to such
Distribution Date.
Fitch: Fitch IBCA, Inc.
Fixed Rate Class A Certificates: Any or all of the Class A-2F
Certificates, Class A-3F Certificates, Class A-4F Certificates, Class A-5F
Certificates or Class A-6F Certificates, as the case may be.
Fixed Rate Group: The group of Mortgage Loans comprised of fixed rate
mortgage loans identified in the Mortgage Loan Schedule as having been assigned
to the Fixed Rate Group, including any Qualified Replacement Mortgage Loans
delivered in replacement thereof.
Fixed Rate Group Balance: As to any Distribution Date, the sum of the
aggregate of the Principal Balances of the Mortgage Loans in the Fixed Rate
Group as of the end of the related Collection Period plus in the case of any
Distribution Date relating to a Collection Period that includes any part of the
Funding Period, any portion of the Fixed Rate Group Prefunding Account Deposit
remaining on deposit in the Prefunding Account or Certificate Account as of the
last day of such Collection Period.
Fixed Rate Group Capitalized Interest Account Deposit: The amount
deposited in the Capitalized Interest Account for the benefit of the Fixed Rate
Class A Certificateholders, which amount is $0 if the Subsequent Mortgage Loans
are purchased on the Closing Date.
Fixed Rate Group Certificates: Collectively, the Fixed Rate Group Class A
Certificates and the Subordinate Certificates.
Fixed Rate Group Class A Certificates: Any or all of the Class A-1F
Certificates, Class A-2F Certificates, Class A-3F Certificates, Class A-4F
Certificates, Class A-5F Certificates or Class A-6F Certificates, as the case
may be.
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Fixed Rate Group Principal Distribution Amount: With respect to any
Distribution Date, generally means the sum, without duplication, of (i) the
Principal Distribution Amount with respect to the Fixed Rate Group and the
related Collection Period and (ii) under certain circumstances described in
Section 5.01(c) any related Extra Principal Distribution Amount.
Fixed Rate Group Prefunding Account Deposit: The amount deposited in the
Prefunding Account that is allocated for the purchase of Subsequent Mortgage
Loans having fixed Mortgage Loan Rates to be included in the Fixed Rate Group,
which amount is $[ ] or $0 if the Subsequent Mortgage Loans are purchased on the
Closing Date.
Fixed Rate Group Subsequent Purchase Price: With respect to any Subsequent
Mortgage Loan to be included in the Fixed Rate Group, means an amount equal to
100% of the Principal Balance of such Subsequent Mortgage Loan.
Fixed Rate Net WAC: With respect to any Distribution Date, means the
weighted average Mortgage Loan Rate of the Mortgage Loans in the Fixed Rate
Group as of the first day of the related Collection Period less the Servicing
Fee Rate.
Foreign Person: A Person that is not a citizen or resident of the United
States, a corporation, partnership, or other entity created or organized in or
under the laws of the United States or any political subdivision thereof, an
estate that is subject to United States federal income tax regardless of the
source of its income or a trust if (a) a court within the United States is able
to exercise primary supervision of the Administration thereof and (b) one or
more United States fiduciaries have the authority to control all substantial
decisions of the trust.
Formula Pass-Through Rate: With respect to (a) the Class A-1F
Certificates, the Class A-1F Pass-Through Rate in effect for such Class if the
Fixed Rate Net WAC is disregarded and (b) any Class of Adjustable Rate Group
Certificates, the Pass-Through Rate in effect for such Class if the Adjustable
Rate Group Available Funds Cap is disregarded.
Funding Period: The period beginning on the Closing Date and ending on the
earlier of (a) the date on which the amount on deposit in the Prefunding Account
is zero and (b) the close of business on [ ].
Gross Margin: With respect to an Adjustable Rate Mortgage Loan, the fixed
percentage amount set forth in the related Mortgage Note, which amount is added
to the Index in accordance with the terms of the related Mortgage Note to
determine the Mortgage Loan Rate.
Group Balance: As of any date of determination, the related Fixed Rate
Group Balance or Adjustable Rate Group Balance.
Group Factor: As to any Distribution Date and each Mortgage Loan Group,
the percentage (carried to eight places, rounded down) obtained by dividing the
aggregate Principal Balances of the Mortgage Loans in the related Mortgage Loan
Group (after giving effect to any distribution of principal on the related
Certificates on such Distribution Date) by the sum of the aggregate
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Principal Balances of the Mortgage Loans in the related Mortgage Loan Group as
of the Cut-off Date and the Fixed Rate Group Prefunding Account Deposit or
Adjustable Rate Group Prefunding Account Deposit, as applicable.
Index: With respect to any Adjustable Rate Mortgage Loan, the applicable
index for computing the Mortgage Loan Rate as specified in the Mortgage Note.
Initial Certificate Principal Balance: With respect to each Class of
Certificates that has a Certificate Principal Balance, means:
Initial Certificate
Class Principal Balance
----- -------------------
Class A-1F Certificates
Class A-2F Certificates
Class A-3F Certificates
Class A-4F Certificates
Class A-5F Certificates
Class A-6F Certificates
Class M-1F Certificates
Class M-2F Certificates
Class B-1F Certificates
Class A-1A Certificates
Class A-2A Certificates
Initial Mortgage Loan: Means any Mortgage Loan in either Mortgage Loan
Group included in the assets of the Trust as of the Closing Date that is
indicated as such on the Mortgage Loan Schedule.
Insurance and Indemnity Agreement: The Insurance and Indemnity Agreement,
dated as of [ ], between the Financial Guaranty Insurer and the Company, a copy
of which is attached hereto as Exhibit L.
Insurance Proceeds: With respect to any Distribution Date, proceeds paid
by any insurer and received by the Servicer during the related Collection Period
pursuant to any insurance policy covering a Mortgage Loan or the related
Mortgaged Property (excluding the Financial Guaranty Insurance Policy),
including any deductible payable by the Servicer with respect to a blanket
insurance policy pursuant to Section 3.04 and the proceeds from any fidelity
bond or errors and omission policy pursuant to Section 3.12 (to the extent such
payments compensate for losses that would otherwise be payable to
Certificateholders pursuant to this Agreement), net of any component thereof
covering any expenses incurred by or on behalf of the Servicer and specifically
reimbursable under this Agreement.
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Insured Amount: With respect to the Adjustable Rate Group and any
Distribution Date, the amount to be paid by the Financial Guaranty Insurer under
the Financial Guaranty Insurance Policy (in the manner described in Section
3.19) pursuant to a Notice of Claim presented by the Trustee. The Insured Amount
as of any Distribution Date shall be equal to the sum of (i) the amount by which
the Accrued Certificate Interest with respect to each Class of Adjustable Rate
Group Certificates exceeds (a) the Monthly Interest with respect to the
Adjustable Rate Group available therefor pursuant to Section 5.01(a) and (b) the
amount of any Monthly Excess Cashflow Amount with respect to either Mortgage
Loan Group available to cover any Interest Carry Forward Amount with respect to
either Class of Adjustable Rate Group Certificates pursuant to Section 5.01(d)
clause (1) with respect to the Adjustable Rate Group, (ii) the Class A-1A
Coverage Deficit and Class A-2A Coverage Deficit with respect to such
Distribution Date, if any, after giving effect to all distributions of principal
(including any Excess Principal Distribution Amount and any Monthly Excess
Cashflow Amounts available therefor from the Fixed Rate Group), (iii) on the
Final Scheduled Distribution Date for the Class A-2A Certificates, the
outstanding Class A-2 Certificate Principal Balance (after giving effect to all
others distributions thereto) and (iv) the Preference Amount for the Adjustable
Rate Group Certificates with respect to such Distribution Date, if any, in each
case as determined by the Trustee on the date a Notice of Claim is required to
be made in respect of such Distribution Date. Pursuant to the Financial Guaranty
Insurance Policy, the Financial Guaranty Insurer also has the option, but not
the obligation, to fund any Realized Losses with respect to the Adjustable Rate
Group and the related Collection Period, which amounts will not be "Insured
Amounts" as used herein.
Insurer Premium Rate: With respect to each Collection Period, [ ]%;
provided, however, that if on any Distribution Date subsequent to the Clean-up
Call Date the Overcollateralization Amount is less than the Targeted
Overcollateralization Amount, the Insurer Premium Rate with respect to the
following Collection Period and the related Distribution Date shall be [ ]%.
Interest Carry Forward Amount: With respect to any Class of Offered
Certificates on any Distribution Date, means the amount, if any, by which (i)
the Accrued Certificate Interest on such Class as of such Distribution Date plus
any outstanding Interest Carry Forward Amount with respect to such Class from
the preceding Distribution Date (together with interest on such outstanding
Interest Carry Forward Amount at the related Pass-Through Rate for the related
Interest Period to the extent lawful) exceeds (ii) the amount of Monthly
Interest actually distributed to the holders of such Certificates on such
Distribution Date.
Interest Period: With respect to the Fixed Rate Group Certificates other
than the Class A-1F Certificates, the calendar month preceding the month in
which such Distribution Date occurs; and with respect to any Adjustable Rate
Group Certificate and any Class A-1F Certificate and the first Interest Period,
the period beginning on the Closing Date and ending on the day preceding the
Distribution Date in [ ], and as to any subsequent Distribution Date, the period
beginning on the immediately preceding Distribution Date and ending on the day
prior to the related Distribution Date.
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Interest Shortfall: As to any Distribution Date, the amount of any
Prepayment Interest Shortfall and Relief Act Shortfall for the related Mortgage
Loan Group.
Investment Company Act: The Investment Company Act of 1940, as amended.
Junior Mortgage Loan: Any Mortgage Loan secured by a Mortgage with a lien
of other than first priority.
LIBOR: With respect to the [ ] Distribution Date, [ ]% per annum. With
respect to any subsequent Distribution Date, the per annum rate determined by
the Trustee on the related LIBOR Determination Date on the basis of the offered
rates of the Reference Banks for one-month U.S. dollar deposits as such rates
appear on the Dow ▇▇▇▇▇ Telerate Service Page 3750 (or any replacement page on
that service for the purpose of displaying London Interbank offered rates of
major banks) as of 11:00 a.m. (London time) on such LIBOR Determination Date. On
each LIBOR Determination Date, LIBOR will be established by the Trustee as
follows:
(i) if on such LIBOR Determination Date two or more Reference Banks
provide such offered quotations, LIBOR shall be the arithmetic mean (rounded
upwards if necessary to the nearest whole multiple of 0.0625%) of such offered
quotations.
(ii) if on such LIBOR Determination Date, fewer than two Reference Banks
provide such offered quotations, LIBOR shall be the greater of (x) LIBOR as
determined on the previous LIBOR Determination Date and (y) the Reserve Interest
Rate.
LIBOR Determination Date: With respect to any Interest Period after the
first Interest Period, the second London Business Day immediately preceding the
first day of such Interest Period.
Liquidated Mortgage Loan: As to any Distribution Date, any Mortgage Loan
as to which the Servicer has determined, in accordance with the servicing
procedures specified herein, during the related Collection Period that all
Liquidation Proceeds that it expects to recover from or on account of such
Mortgage Loan have been recovered.
Liquidation Expenses: Expenses that are incurred by the Servicer in
connection with the liquidation of any Mortgage Loan and not recovered under any
insurance policy or from any Mortgagor. Such expenses shall include, without
limitation, legal fees and expenses, real estate brokerage commissions, any
unreimbursed amount expended by the Servicer pursuant to Section 3.06 respecting
the related Mortgage Loan (including, without limitation, amounts voluntarily
advanced to correct defaults on each mortgage loan that is senior to such
Mortgage Loan), any other related and previously unreimbursed Servicing Advances
and any related and previously unreimbursed Property Protection Expenses.
Liquidation Proceeds: Cash (other than Insurance Proceeds) received in
connection with the liquidation of any Mortgaged Property, whether through
trustee's sale, foreclosure sale, condemnation, taking by eminent domain or
otherwise received in respect of any Mortgage Loan
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foreclosed upon as described in Section 3.06 (including, without limitation,
proceeds from the rental of the related Mortgaged Property).
Liquidation Report: A liquidation report in the form of Exhibit F attached
hereto.
Loan-to-Value Ratio: The Original Principal Amount of a Mortgage Loan as a
percentage of the Appraised Value of the related Mortgaged Property determined
by the Seller at the time of origination of such Mortgage Loan.
London Business Day: A day on which banks are open for dealing in foreign
currency and exchange in London and New York City.
Loss Percentage: As to any Distribution Date and either Mortgage Loan
Group, the percentage equivalent of the fraction obtained by dividing (i) the
principal amount of cumulative Realized Losses on Mortgage Loans in such
Mortgage Loan Group from the Cut-off Date through the end of the related
Collection Period by (ii) the aggregate of the Principal Balances of the
Mortgage Loans in such Mortgage Loan Group as of the Cut-off Date and the amount
deposited in the Prefunding Account with respect to such Mortgage Loan Group on
the Closing Date.
Maximum Rate: With respect to an Adjustable Rate Mortgage Loan, any
absolute maximum Mortgage Loan Rate set by provisions in the related Mortgage
Note.
Minimum Rate: With respect to an Adjustable Rate Mortgage Loan, any
absolute minimum Mortgage Loan Rate, set by provisions in the related Mortgage
Note, subject to the initial Mortgage Loan Rate first adjusting to a level in
excess of such minimum Mortgage Loan Rate in accordance with the terms of the
Mortgage Note.
Monthly Advance: As defined in Section 5.02(a).
Monthly Excess Cashflow Amount: With respect to either Mortgage Loan Group
and any Distribution Date means the sum of (x) the amount, if any, of Monthly
Interest remaining in the Certificate Account with respect to such Mortgage Loan
Group after application with respect to the priorities set forth in Section
5.01(a), clause First through Fifth, plus (y) the amount of any
Overcollateralization Release Amount with respect to such Mortgage Loan Group
for such Distribution Date.
Monthly Excess Interest Amount: With respect to either Mortgage Loan Group
and any Distribution Date means the excess, if any, of the interest accrued on
the related Mortgage Loans at weighted average net Mortgage Loan Rate for the
Mortgage Loans in such Mortgage Loan Group over the Accrued Certificate Interest
for the related Offered Certificates during the related Interest Period.
Monthly Interest: With respect to either Mortgage Loan Group and any
Distribution Date, means the aggregate of the following amounts in respect of
interest and such Mortgage Loan Group:
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(i) all payments in respect of or allocable to interest received or
deemed to have been received during the related Collection Period, net of
amounts representing interest accrued in respect of any period prior to the
Cut-off Date or related Subsequent Cut-off Date;
(ii) all Trust Insurance Proceeds received during the related Collection
Period;
(iii) all Net Liquidation Proceeds received during the related Collection
Period (excluding any amount distributed to the Holders of the Class C
Certificates pursuant to Section 3.06)
(iv) the aggregate of the amounts deposited in the Certificate Account on
the related Deposit Date by the Seller or the Servicer, as applicable, in
connection with any purchase, repurchase, shortage or substitution pursuant to
Section 2.03, 2.05, 3.01, 3.03 or 3.06;
(v) the aggregate of the amounts deposited in the Certificate Account by
the Servicer in connection with a purchase pursuant to Section 10.01;
(vi) the amount of Monthly Advances made by the Servicer in respect of
such Distribution Date pursuant to Section 5.02(a);
(vii) the amount of any Compensating Interest paid by the Servicer in
respect of such Distribution Date;
(viii) the amount deposited in the Certificate Account from the
Capitalized Interest Account on the [ ] Distribution Date in respect of the
Fixed Rate Group Capitalized Interest Account Deposit or Adjustable Rate Group
Capitalized Interest Account Deposit, as the case may be; and
(ix) in the case of the [ ] Distribution Date, the amount deposited in
the Certificate Account in respect of the Closing Date Deposit, and in the case
of the [ ] Distribution Date, the amount deposited in the Certificate Account in
respect of any Subsequent Closing Date Deposit;
reduced by the sum of:
(X) the Monthly Servicing Fee and any other compensation payable to the
Servicer pursuant to Section 3.08 for the related Collection Period (without
regard to any Compensating Interest payable therefrom) to the extent not
previously paid to the Servicer;
(Y) the aggregate amount of Monthly Advances and Servicing Advances
(other than those included in the Liquidation Expenses for any Liquidated
Mortgage Loan and reimbursed from the related Liquidation Proceeds) reimbursable
to the Servicer on such Distribution Date pursuant to the provisions of this
Agreement; and
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(Z) the aggregate amounts (i) deposited into the Collection Account or
Certificate Account that may not be withdrawn therefrom pursuant to a final and
nonappealable order of a United States bankruptcy court of competent
jurisdiction imposing a stay pursuant to ▇▇▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Bankruptcy Code and that would otherwise have been included in Monthly Interest
on such Distribution Date and (ii) received by the Trustee that are recoverable
and sought to be recovered from the Trustee as a voidable preference by a
trustee in bankruptcy pursuant to the United States Bankruptcy Code in
accordance with a final, nonappealable order of a court of competent
jurisdiction.
Monthly Mortgage Payment: With respect to any Mortgage Note, the amount of
each monthly payment (other than any final balloon payment) payable under such
Mortgage Note in accordance with its terms, including one month's accrued
interest on the related Principal Balance at then applicable Mortgage Loan Rate
but net of any portion of such monthly payment that represents late payment
charges, prepayment or extension fees or collections allocable to payments to be
made by Mortgagors for payment of insurance premiums or similar items.
Monthly Servicing Fee: With respect to any Collection Period and each
Mortgage Loan Group, 1/12 of the product of the Servicing Fee Rate and the
aggregate Principal Balances of the Mortgage Loans in such Mortgage Loan Group
as of the close of business on the Determination Date occurring in the preceding
month (or, in the case of the first Collection Period, the Principal Balance of
the related Mortgage Loans as of the Closing Date. The Monthly Servicing Fee
shall be payable on the following Deposit Date to the Servicer as servicing
compensation hereunder pursuant to Section 3.08.
Moody's: ▇▇▇▇▇'▇ Investors Service, Inc. and its successors in interest.
Mortgage: The mortgage, deed of trust or other instrument creating a
first, second or third lien on an estate in fee simple in real property securing
a Mortgage Loan.
Mortgage File: The mortgage documents listed in Section 2.01 pertaining to
a particular Mortgage Loan and any additional documents required to be added to
such Mortgage File pursuant to this Agreement.
Mortgage Loan: Each of the Mortgage Loans transferred and assigned to the
Trustee pursuant to Section 2.01 or 2.02 that from time to time comprise part of
the Trust, the Mortgage Loans originally so held being identified in the
Mortgage Loan Schedule attached hereto as Exhibit B.
Mortgage Loan Group: Either the Fixed Rate Group or the Adjustable Rate
Group. References herein to any Class or Classes of Certificates being related
to a Mortgage Loan Group, shall mean (A) in the case of the Fixed Rate Group,
the Fixed Rate Group Class A Certificates, the Subordinate Certificates, the
Class C Certificates and the Class R-III Certificates and (B) in the case of the
Adjustable Rate Group, the Class A-1A and Class A-2A Certificates, the Class C
Certificates and the Class R-III Certificates.
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Mortgage Loan Rate: With respect to any Adjustable Rate Mortgage Loan, the
per annum rate of interest computed in accordance with the provisions of the
related Mortgage Note as the sum of the Index and the Gross Margin, subject to
any Minimum Rate, the Maximum Rate or periodic limitation on adjustments to such
rate applicable from time to time to the calculation of interest thereon. As to
any other Mortgage Loan, the fixed per annum rate of interest applicable to the
calculation of interest thereon specified in the related Mortgage Note.
Mortgage Loan Schedule: As of any date, the schedule of Mortgage Loans
separated by Mortgage Loan Group. The initial schedule of Mortgage Loans as of
the Cut-off Date is attached hereto as Exhibit B and sets forth as to each such
Mortgage Loan, among other things, (a) its identifying number and the name of
the related Mortgagor; (b) the street address of the related Mortgaged Property
including the state, county and zip code; (c) its date of origination; (d) the
original number of months to stated maturity; (e) its original stated maturity;
(f) its Original Principal Amount; (g) its Cut-off Date Principal Balance; (h)
the related Mortgage Loan Rate as of the Cut-off Date and, with respect to any
Adjustable Rate Mortgage Loan, the related Index, Gross Margin, Minimum Rate,
Maximum Rate and any periodic limitations on adjustment; (i) the scheduled
Monthly Mortgage Payment; (j) the date in each month on which the related
Monthly Mortgage Payments are due; (k) its Combined Loan-to-Value Ratio or the
ratio, expressed as a percentage, of the Original Principal Amount of such
Mortgage Loan to the Appraised Value of the related Mortgaged Property, as
applicable; (l) the lien status of the related Mortgage and, with respect to any
Junior Mortgage Loan, the principal amount (as of the date of origination) of
all related Senior Liens; (m) whether the related Mortgaged Property is
owner-occupied or non-owner-occupied; (n) whether the related Mortgaged Property
is a single-family residence, a two- to four-family residence or a unit in a
condominium or planned unit development; (o) whether the Mortgage Loan has been
originated by an Affiliate of the Company; and (p) whether the Mortgage Loan is
being serviced by a Sub-Servicer and, if so, the identity of such Sub-Servicer.
Mortgage Note: The note or other instrument evidencing the indebtedness of
a Mortgagor under the related Mortgage Loan.
Mortgaged Property: The underlying property securing a Mortgage Loan.
Mortgagor: The obligor under a Mortgage Note.
Net Liquidation Proceeds: As to any Mortgage Loan, Liquidation Proceeds
net of Liquidation Expenses. For all purposes of this Agreement, Net Liquidation
Proceeds shall be allocated first to accrued and unpaid interest on the related
Mortgage Loan and then to the Principal Balance thereof.
Non-permitted Foreign Holder: As defined in Section 6.02(c).
Nonrecoverable Advance: Any Servicing Advance that, in the Servicer's
reasonable judgment, would not be ultimately recoverable by the Servicer from
late collections, Insurance Proceeds or Liquidation Proceeds on the related
Mortgage Loan or otherwise, as evidenced by an
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Officer's Certificate delivered to the Trustee no later than the Business Day
following the Servicer's determination thereof.
Notice of Claim: The notice required to be furnished by the Trustee to the
Financial Guaranty Insurer in the event an Insured Amount is required to be paid
under the Financial Guaranty Insurance Policy with respect to any Distribution
Date, in the form set forth as Exhibit K hereto.
Offered Certificates:The Certificates other than the Retained
Certificates.
Officer's Certificate: A certificate signed by the Chairman of the Board,
the Vice Chairman of the Board, the President or a Vice President of the Seller
or the Servicer, as the case may be, and delivered to the Trustee or each Rating
Agency, as the case may be.
Opinion of Counsel: A written opinion of counsel reasonably acceptable to
the Trustee (and the Financial Guaranty Insurer, if such opinion is to be
delivered thereto), who may be in-house counsel for the Seller or the Servicer
(except with respect to any opinion with respect to or concerning the REMIC
status of any REMIC Pool). Any expense related to obtaining an Opinion of
Counsel for an action requested by a party shall be borne by the party required
to obtain such opinion or seeking to effect the action that requires the
delivery of such Opinion of Counsel.
Original Adjustable Rate Group Balance: $[ ]
Original Fixed Rate Group Balance: $[ ]
Original Pool Balance: $[ ]
Original Principal Amount: With respect to any Mortgage Loan, the original
principal amount due under the related Mortgage Note as of its date of
origination.
Overcollateralization Amount: With respect to a Mortgage Loan Group and as
of any Distribution Date means the excess of (x) the aggregate of the
outstanding principal balances of the Mortgage Loans in such Mortgage Loan Group
as of the last day of the immediately preceding Collection Period (plus, in the
case of Collection Periods during the Funding Period, the portion, if any, of
the Prefunding Account Deposit relating to such Mortgage Loan Group remaining on
deposit in the Prefunding Account of such date) over (y) the Aggregate
Certificate Principal Balance of the related Offered Certificates (after taking
into account all distributions in respect of principal collections and all
amounts paid by the Financial Guaranty Insurer in respect of principal on such
Distribution Date).
Overcollateralization Deficiency: With respect to either Mortgage Loan
Group and any Distribution Date, means the excess, if any, of (x) the related
Targeted Overcollateralization Amount over (y) the related Overcollateralization
Amount, calculated for this purpose after taking into account the reduction on
such Distribution Date of the Certificate Principal Balances of all related
Classes of Offered Certificates resulting from principal distributions (other
than reductions
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resulting from the distribution of any related Extra Principal Distribution
Amount), but before taking into account any related Applied Realized Loss Amount
or amount paid by the Financial Guaranty Insurer in respect of principal for
such Distribution Date.
Overcollateralization Release Amount: With respect to either Mortgage Loan
Group and any Distribution Date, means, the lesser of (x) the related Fixed Rate
Group or Adjustable Rate Group Principal Distribution Amount (other than any
related Extra Principal Distribution Amount), ignoring clause (Z) of the
definition thereof in the case of the Fixed Rate Group, and (y) the excess of
(i) the related Overcollateralization Amount, assuming that 100% of such related
Principal Distribution Amount (excluding the application of any Extra Principal
Distribution Amount) is applied to the payment of principal on the related
Offered Certificates on such Distribution Date over (ii) the related Targeted
Overcollateralization Amount.
Pass-Through Rate: As indicated by the context, the Class A-1F
Pass-Through Rate, Class A-2F Pass-Through Rate, Class A-3F Pass-Through Rate,
Class A-4F Pass-Through Rate, Class A-5F Pass-Through Rate, Class A-6F
Pass-Through Rate, Class M-1F Pass-Through Rate, Class M-2F Pass-Through Rate,
Class B-1F Pass-Through Rate, Class A-1A Pass-Through Rate or Class A-2A
Pass-Through Rate.
Payment Ahead: Any payment of one or more Monthly Mortgage Payments
remitted by a Mortgagor with respect to a Mortgage Note in excess of the Monthly
Mortgage Payment due during such Collection Period with respect to such Mortgage
Note, which sums the related Mortgagor has instructed the Servicer to apply to
Monthly Mortgage Payments due in one or more subsequent Collection Periods. A
Monthly Mortgage Payment that was a Payment Ahead shall, for purposes of
computing certain amounts under this Agreement, be deemed to have been received
by the Servicer on the date in the related Collection Period on which such
Monthly Mortgage Payment would have been due if such Monthly Mortgage Payment
was not a Payment Ahead.
Payoff Notice: The certification delivered by the Servicer in connection
with any payment in full of the outstanding principal balance of a Mortgage Loan
pursuant to Section 3.07, to be substantially in the form of Exhibit E.
Percentage Interest: With respect to any Certificate, the undivided
percentage interest (carried to eight places, rounded down) obtained by dividing
the original principal balance of such Certificate by the Initial Certificate
Principal Balance of the related Class, as applicable, and multiplying the
result by 100; provided that with respect to a Class C Certificate or Class R
Certificate, Percentage Interest means the undivided percentage interest set
forth on the face of such Class R Certificate, which in the aggregate shall not
exceed 100%.
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Permitted Investments: One or more of the following obligations,
instruments and securities:
(a) direct general obligations of, or obligations fully and
unconditionally guaranteed as to the timely payment of principal and
interest by, the United States or any agency or instrumentality thereof,
provided such obligations are backed by the full faith and credit of the
United States;
(b) Federal Housing Administration debentures, FHLMC senior debt
obligations and FNMA senior debt obligations, but excluding any of such
securities whose terms do not provide for payment of a fixed dollar amount
upon maturity or call for redemption or that are not rated in one of the
two highest long-term rating categories by each Rating Agency;
(c) federal funds, certificates of deposit, time and demand
deposits and banker's acceptances (in each case having original maturities
of not more than 365 days) of any bank or trust company incorporated under
the laws of the United States or any state thereof, provided that the
short-term debt obligations of such bank or trust company at the date of
acquisition thereof have been rated "A-1" or better by Standard & Poor's
and Prime-1 by Moody's;
(d) deposits of any bank or savings and loan association that has
combined capital, surplus and undivided profits of at least $100,000,000
which deposits are held up to the applicable limits insured by the Bank
Insurance Fund or the Savings Association Insurance Fund of the FDIC;
(e) commercial paper (having original maturities of not more than
180 days) that has the highest short term rating of each of Standard &
Poor's and Moody's;
(f) investments in money market funds rated "AAAm" or "AAAm-G" by
Standard & Poor's and Aaa by Moody's; and
(g) investments approved in writing by each of the Rating
Agencies;
provided that no investment described hereunder shall evidence either the right
to receive (i) only interest with respect to obligations underlying such
instrument or (ii) both principal and interest payments derived from obligations
underlying such instrument and the principal and interest payments with respect
to such instrument provided a yield to maturity at par greater than [ ]% of the
yield to maturity of the underlying obligations; and provided, further, that no
instrument described hereunder may be purchased at a price greater than par if
such instrument may be prepaid or called at a price less than its purchase price
prior to stated maturity. Permitted Investments shall mature not later than the
Business Day prior to the date on which such monies will be needed to make
payments, or in the case of Permitted Investments held in the Prefunding
Account, shall be available on the Business Day next succeeding the date the
Trustee receives the Addition Notice that such monies will be needed.
Notwithstanding the foregoing, with respect to investment of amounts in any
account, any of the foregoing obligations, instruments or securities will not be
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Permitted Investments to the extent that an investment therein will cause then
outstanding principal amount thereof in which such funds are then invested to
exceed $[ ] (such investments being valued at par).
Person: Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
Policy Payments Account: The segregated account, which shall be an
Eligible Account, established and maintained pursuant to Section 3.19(a) and
entitled "Bankers Trust Company of California, N.A., as Trustee for Aames
Mortgage Trust 199[ ]-[ ] Mortgage Pass-Through Certificates, Series 199[ ]-[ ],
Policy Payments Account".
Pool Balance: As to any Distribution Date, the sum of the Fixed Rate Group
Balance and the Adjustable Rate Group Balance.
Preference Amount: With respect to any Distribution Date and any Class of
Certificates, any amounts included in previous distributions that are recovered
from the related Certificateholders as a voidable preference by a trustee in
bankruptcy pursuant to the United States Bankruptcy Code in accordance with a
final, nonappealable order of a court having competent jurisdiction and that
have not therefore been repaid to such Certificateholders, provided such
Certificateholders have complied with the provisions of Section 3.19(b).
Prefunding Account: The segregated account, which, if utilized shall be an
Eligible Account, established and maintained pursuant to Section 3.16 and
entitled "Bankers Trust Company of California, N.A., as Trustee for Aames
Mortgage Trust 199[ ]-[ ] Mortgage Pass-Through Certificates, Series 199[ ]-[ ],
Prefunding Account".
Prefunding Account Deposit: $[ ] or, if all of the Subsequent Mortgage
Loans are purchased by the Trust on the Closing Date, $0.
Prefunding Account Release: Means the amount to be released from the
Prefunding Account (or, if the Subsequent Mortgage Loans are purchased by the
Trust on the Closing Date, from the Certificate Account) on the Distribution
Date in [ ], equal to the portion of the Prefunding Account Deposit not used to
purchase Subsequent Mortgage Loans on the Closing Date.
Prepayment Interest Shortfall: As to any Distribution Date and either
Mortgage Loan Group, the amount, if any, by which the amount described in clause
(b) of the definition of Compensating Interest for such Distribution Date
exceeds the Monthly Servicing Fee for such Mortgage Loan Group and the related
Collection Period.
Principal Balance: As to any Mortgage Loan and any Determination Date, the
actual outstanding principal amount thereof as of the close of business on the
Determination Date in the preceding month (or, in the case of the first
Determination Date, as of the Cut-off Date) less (i) any
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Principal Payments received in respect of such Mortgage Loan during the related
Collection Period, (ii) Net Liquidation Proceeds and Trust Insurance Proceeds
allocable to principal recovered or collected in respect of such Mortgage Loan
during the related Collection Period, (iii) the portion of the Purchase Price
allocable to principal to be remitted by the Seller or the Servicer to the
Trustee on the next succeeding Deposit Date in connection with a purchase or
repurchase of such Mortgage Loan pursuant to Section 2.03, 2.05, 3.01, 3.06 or
10.01, to the extent such amount is actually received by the Trustee on such
Deposit Date, (iv) the amount to be remitted by the Seller to the Trustee on the
next succeeding Deposit Date in connection with a substitution of a Qualified
Replacement Mortgage Loan for such Mortgage Loan pursuant to Section 2.03 or
2.05, to the extent such amount is actually received by the Trustee on such
Deposit Date and (v) the amount to be remitted to the Trustee on the next
succeeding Deposit Date in connection with a purchase of such Mortgage Loan
pursuant to Section 10.01; provided, however that a Mortgage Loan that has
become a Liquidated Mortgage Loan since the preceding Determination Date (or, in
the case of the first Determination Date, since the Cut-off Date) will be deemed
to have a Principal Balance of zero on the current Determination Date.
Principal Distribution Amount: With respect to either Mortgage Loan Group
and any Distribution Date, means the aggregate of the following amounts in
respect of principal and such Mortgage Loan Group:
(i) Principal Payments received or deemed to have been received during
the related Collection Period;
(ii) all Trust Insurance Proceeds received during the related Collection
Period;
(iii) all Net Liquidation Proceeds received during the related Collection
Period (excluding any amount distributed to the Holders of the Class C
Certificates pursuant to Section 3.06)
(iv) the aggregate of the amounts deposited in the Certificate Account on
the related Deposit Date by the Seller or the Servicer, as applicable, in
connection with any purchase, repurchase, shortage or substitution pursuant to
Section 2.03, 2.05, 3.01, 3.03 or 3.06;
(v) the aggregate of the amounts deposited in the Certificate Account by
the Servicer in connection with a purchase pursuant to Section 10.01;
(vi) the amount of Monthly Advances made by the Servicer in respect of
such Distribution Date pursuant to Section 5.02(a); and
(vii) in the case of the [ ] Distribution Date, the amount, if any,
remaining on deposit in the Prefunding Account (net of any investment income
with respect thereto) or the Escrow Account;
reduced by the sum of:
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(X) the aggregate amount of Servicing Advances (other than those
included in the Liquidation Expenses for any Liquidated Mortgage Loan and
reimbursed from the related Liquidation Proceeds) reimbursable to the Servicer
on such Distribution Date pursuant to the provisions of this Agreement;
(Y) the aggregate amounts (i) deposited into the Collection Account or
Certificate Account that may not be withdrawn therefrom pursuant to a final and
nonappealable order of a United States bankruptcy court of competent
jurisdiction imposing a stay pursuant to ▇▇▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Bankruptcy Code and that would otherwise have been included in Monthly Interest
on such Distribution Date and (ii) received by the Trustee that are recoverable
and sought to be recovered from the Trustee as a voidable preference by a
trustee in bankruptcy pursuant to the United States Bankruptcy Code in
accordance with a final, nonappealable order of a court of competent
jurisdiction; and
(Z) in the case of the Fixed Rate Group, the related
Overcollateralization Release Amount.
Principal Payment: As to any Mortgage Loan and Collection Period, all
amounts received or, in the case of the principal portion of any Payment Ahead,
deemed to have been received by the Servicer from or on behalf of the related
Mortgagor during such Collection Period (including Principal Prepayments) that,
at the time of receipt or, in the case of any Payment Ahead, at the time such
Payment Ahead is deemed to have been received, were applied or were required to
be applied by the Servicer in reduction of the Principal Balance of such
Mortgage Loan.
Principal Prepayment: As to any Mortgage Loan and Collection Period, any
payment by a Mortgagor or other recovery in respect of principal on a Mortgage
Loan (including Net Liquidation Proceeds) that, in the case of a payment by a
Mortgagor, is received in advance of its scheduled due date and is not a Payment
Ahead.
Property Protection Expenses: Expenses (exclusive of overhead expenses)
reasonably paid or incurred by or for the account of the Servicer in connection
with the preservation or protection of a Mortgaged Property or the security of a
Mortgaged Property, including (a) hazard insurance policy premiums, (b) real
estate taxes and property repair, replacement, protection and preservation
expenses, (c) amounts expended to cure or prevent any default with respect to
any mortgage loan senior to the related Mortgage Loan and (d) similar expenses
reasonably paid or incurred to preserve or protect the value of such Mortgaged
Property or security (including but not limited to reasonable legal fees and
expenses).
Purchase Price: With respect to (a) any Defective Mortgage Loan or (b) any
Mortgage Loan to be purchased by the Servicer pursuant to Section 3.01 or
Section 3.06, an amount equal to (i) the sum of (A) the Principal Balance of
such Mortgage Loan or Defective Mortgage Loan, as the case may be, as of the
beginning of the Collection Period next preceding the Deposit Date on which such
repurchase or purchase is required to occur, (B) interest computed at the
applicable Mortgage Loan Rate on such Principal Balance from the date to which
interest was last paid by the Mortgagor
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to the last day of the Collection Period immediately preceding the Deposit Date
on which such repurchase or purchase occurs and (C) any previously unreimbursed
Servicing Advances made on or in respect of such Defective Mortgage Loan or
Mortgage Loan, as the case may be, less (ii) any payments of principal and
interest in respect of such Defective Mortgage Loan or Mortgage Loan, as the
case may be, made by or on behalf of the related Mortgagor during such
Collection Period; provided that the Purchase Price with respect to any
Restricted Mortgage Loan to be purchased by the Servicer pursuant to Section
3.06 will be the fair market value of the related Mortgaged Property as
described in such Section 3.06.
Qualified Replacement Mortgage Loan: A Mortgage Loan that is substituted
for a Deleted Mortgage Loan pursuant to Section 2.03 or Section 2.05 that must,
at the end of the Collection Period preceding the date of such substitution, (i)
have an outstanding principal balance (when taken together with any other
Qualified Replacement Mortgage Loan being substituted for such Deleted Mortgage
Loan), not in excess of and not substantially less than the unpaid principal
balance of the Deleted Mortgage Loan at the end of the Collection Period
preceding the date of substitution, (ii) if the Deleted Mortgage Loan is an
Adjustable Rate Mortgage Loan, have the Mortgage Loan Rate computed on the same
basis as the Mortgage Loan Rate on the related Mortgage Loan, utilizing the same
Index and having a Gross Margin or Minimum Rate not less than (and not more than
one percentage point in excess of) the Gross Margin and Minimum Rate applicable
to the Deleted Mortgage Loan and if the Deleted Mortgage Loan is not an
Adjustable Rate Mortgage Loan, have a Mortgage Loan Rate not less than (and not
more than one percentage point in excess of) the Mortgage Loan Rate of the
Deleted Mortgage Loan, (iii) have a remaining term to maturity not greater than
(and not more than one year less than) that of the Deleted Mortgage Loan, (iv)
have a Combined Loan-to-Value Ratio equal to or lower than the Combined
Loan-to-Value Ratio of the Deleted Mortgage Loan, (v) satisfy the criteria set
forth from time to time in the definition "qualified replacement mortgage" at
Section 860G(a)(4) of the Code, (vi) have the same or a superior lien priority
as the Deleted Mortgage Loan, (vii) comply as of the date of substitution with
each representation and warranty set forth in Section 2.05, (viii) have the same
or better property type as the Deleted Mortgage Loan and (ix) have the same or
better occupancy status. In the event that one or more mortgage loans are
proposed to be substituted for one or more Deleted Mortgage Loans, the foregoing
tests may be met on a weighted average basis or other aggregate basis (which, in
the case of the Adjustable Rate Mortgage Loans, must be acceptable to the
Financial Guaranty Insurer), except that the requirements of clauses (iv)
through (ix) hereof must be satisfied as to each Qualified Replacement Mortgage
Loan.
Rating Agencies: ▇▇▇▇▇'▇, Fitch and, with respect to the Adjustable Rate
Group Certificates, S&P (each, a "Rating Agency"). If either such agency or a
successor is no longer in existence, "Rating Agency" shall be such nationally
recognized statistical credit rating agency, or other comparable Person,
designated by the Servicer, notice of which designation shall be given to the
Trustee.
Realized Loss: With respect to any Liquidated Mortgage Loan, the amount,
if any, by which the Principal Balance of such Mortgage Loan and accrued and
unpaid interest thereon (determined as of the Determination Date immediately
prior to such Mortgage Loan becoming a Liquidated Mortgage Loan) exceeds the Net
Liquidation Proceeds, if any, in respect of such
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Mortgage Loan, which amount shall in no event exceed the Principal Balance of
such Mortgage Loan (determined as of the Determination Date immediately prior to
such Mortgage Loan becoming a Liquidated Mortgage Loan).
Record Date: As to any Distribution Date, the close of business, if
applicable, on the last Business Day of the calendar month immediately preceding
such Distribution Date.
Reference Banks: [Bankers Trust Company, ▇▇▇▇▇▇▇'▇ Bank PLC and National
Westminster Bank PLC]; provided that, if any of the foregoing banks are deemed
by the Servicer (as indicated in writing to the Trustee) not suitable to serve
as a Reference Bank, then any leading banks selected by the Trustee and engaged
in transactions in Eurodollar deposits in the international Eurocurrency market
(i) with an established place of business in London, (ii) whose quotations
appear on the Dow ▇▇▇▇▇ Telerate Service Page 3750 on the LIBOR Determination
Date in question, (iii) that have been designated as such by the Trustee and
(iv) not controlling, controlled by, or under common control with the Company or
any originator.
Relief Act: The Soldiers' and Sailors' Civil Relief Act of 1940, as
amended.
Relief Act Shortfall: As to any Distribution Date and either Mortgage Loan
Group, the amount of any reduction of interest collectible on any Mortgage Loan
in either Mortgage Loan Group for the related Collection Period due to the
application of the Relief Act.
REMIC: A "real estate mortgage investment conduit" as defined in Code
Section 860D, and in particular, any of the REMIC I, REMIC II and REMIC III as
indicated by the context.
REMIC Pool: With respect to the REMIC I, the REMIC I Pool which shall be
the assets of the Trust attributable to the Fixed Rate Group and Adjustable Rate
Group, other than the Prefunding Account, Capitalized Interest Account, Escrow
Account and Supplemental Interest Reserve Fund, the REMIC I Regular Interests
and the REMIC II Regular Interests; with respect to the REMIC II, the REMIC II
Pool which shall be the REMIC I Regular Interests; and with respect to REMIC
III, the REMIC III Pool which shall be the REMIC II Regular Interests.
REMIC Provisions: Provisions of the federal income tax law relating to
REMICs that appear at Sections 860A through 860G of Part IV of Subchapter M of
Chapter 1 of Subtitle A of the Code, and related provisions, and U.S. Department
of the Treasury proposed, temporary or final regulations and rulings promulgated
thereunder, as the foregoing may be in effect from time to time.
REO Property: As defined in Section 5.02(a).
Reserve Interest Rate: With respect to any LIBOR Determination Date, the
rate per annum that the Trustee determines to be either (i) the arithmetic mean
(rounded upwards if necessary to the nearest whole multiple of 0.0625%) of the
one-month U.S. dollar lending rates that New York City banks selected by the
Trustee are quoting on the relevant LIBOR Determination Date to the principal
London offices of leading banks in the London interbank market or (ii) in the
event that
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the Trustee can determine no such arithmetic mean, the lowest one-month U.S.
dollar lending rate that New York City banks selected by the Trustee are quoting
on such LIBOR Determination Dates to leading European banks.
Responsible Officer: When used with respect to the Trustee, any Vice
President or Assistant Vice President, any Assistant Secretary, any Assistant
Treasurer or any other officer of the Trustee customarily performing functions
similar to those performed by any of the above designated officers and 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.
Restricted Mortgage Loan: A Mortgage Loan that as of the Closing Date was
90 or more days contractually delinquent.
Restricted Mortgaged Property: With respect to any Restricted Mortgage
Loan, means the Mortgaged Property securing such Restricted Mortgage Loan.
Retained Certificates: Collectively, each of the Class C Certificates and
Class R Certificates.
Reuters Screen NYAA Page: The display designated as page "Reuters Screen
NYAA Page" on the Reuters Monitor Money Rates Service (or such other page
selected by the Trustee as may replace the NYAA page on that service for the
purpose of displaying Federal Funds rates).
Rolling Delinquency Percentage: For any Distribution Date and either
Mortgage Loan Group, the average of the Delinquency Percentages for such
Mortgage Loan Group as of the last day of each of the three (or one or two in
the case of the first three Distribution Dates, as applicable) most recently
ended Collection Periods.
Rolling Loss Percentage: With respect to either Mortgage Loan Group and
any Distribution Date, the percentage equivalent of a fraction, the numerator of
which is the aggregate amount of Realized Losses incurred with respect to such
Mortgage Loan Group during the preceding twelve Collection Periods, and the
denominator of which is the related Group Balance as of the first day of such
twelfth preceding Collection Period.
Securities Act: The Securities Act of 1933, as amended.
S&P: Standard and Poor's Corporation.
Seller: The Company.
Senior Enhancement Percentage: With respect to the Fixed Rate Group and
any Distribution Date means the percentage obtained by dividing (x) the sum of
(i) the Aggregate Certificate Principal Balance of the Fixed Rate Group
Certificates (or, after the Certificate Principal Balance of each Class of Fixed
Rate Group Class A Certificates has been reduced to zero, the
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Aggregate Certificate Principal Balance of the Subordinate Certificates other
than the most senior Class of such Subordinate Certificates then outstanding)
and (ii) the related Overcollateralization Amount, in each case after taking
into account distributions in respect of the Fixed Rate Group Principal
Distribution Amount to the related Offered Certificateholders on such
Distribution Date by (y) the aggregate of the outstanding Principal Balances of
the Mortgage Loans in the Fixed Rate Group as of the last day of the related
Collection Period (plus, in the case of Collection Periods during the Funding
Period, the portion, if any, of the Fixed Rate Group Prefunding Account Deposit
remaining on deposit in the Prefunding Account or escrow Account).
Senior Lien: With respect to any Junior Mortgage Loan, any liens on the
related Mortgaged Property of higher priority.
Servicer: The Company or any successor servicer appointed as provided
pursuant to this Agreement.
Servicer Cumulative Loss Rate Event: With respect to the Adjustable Rate
Group and any Distribution Date occurring during the periods indicated in the
following table, the Loss Percentage exceeds the percentage indicated
percentage:
from and including: to but excluding Loss Percentage
and, with respect to any Distribution Date in [ ] or thereafter, the Loss
Percentage exceeds [ ]%.
Servicer Delinquency Rate Event: With respect to the Adjustable Rate
Group, on any Distribution Date the Rolling Delinquency Percentage for such
Mortgage Loan Group equals or exceeds [ ]%.
Servicer Remittance Report: The monthly report prepared by the Servicer
and delivered to the Trustee and Financial Guaranty Insurer pursuant to Section
4.01.
Servicer Rolling Loss Rate Event: With respect to the Adjustable Rate
Group, on any Distribution Date on or after [ ] the Rolling Loss Percentage for
such Mortgage Loan Group exceeds [ ]%.
Servicing Advances: All reasonable and customary "out-of-pocket" costs and
expenses incurred in the performance by the Servicer of its servicing
obligation, including, but not limited to, the cost of (i) the preservation,
restoration and protection of the Mortgaged Property, including without
limitation advances in respect of real estate taxes and assessments and
insurance premiums on fire, hazard and, if applicable, flood insurance policies,
(ii) any enforcement or judicial
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proceedings, including foreclosures, (iii) the management and liquidation of any
REO Property, (iv) compliance with the obligations under Section 3.04 and (v)
expenditures relating to the correction of a default on any Senior Lien pursuant
to Section 3.06 in connection with the liquidation of a Mortgage Loan.
Servicing Fee Rate: With respect to each Mortgage Loan Group and each
Collection Period, [ ]%.
Servicing Officer: Any officer of the Servicer involved in, or responsible
for, the administration and servicing of the Mortgage Loans whose name and
specimen signature appear on a list of servicing officers annexed to an
Officer's Certificate furnished to the Trustee by the Servicer, as such list may
from time to time be amended.
Specified Senior Enhancement Percentage: With respect to any date of
determination, [ ]%.
Startup Day: As defined in Section 2.07.
Statement to Certificateholders: As defined in Section 5.03.
Stepdown Date: The later to occur of (x) the Distribution Date in [ ] or
(y) the first Distribution Date on which the Senior Enhancement Percentage
(after taking into account distributions on such Distribution Date in respect of
principal collections) is greater than or equal to the Specified Senior
Enhancement Percentage.
Step Down Cumulative Loss Test: With respect to any Distribution Date and
the Adjustable Rate Group, a determination as to whether: (i) for the
Distribution Dates occurring in [ ] through and including [ ], the Loss
Percentage for such Mortgage Loan Group and Distribution Date is [ ]% or less,
(ii) for the Distribution Dates occurring in [ ] through and including [ ], the
Loss Percentage for such Mortgage Loan Group and such Distribution Date is [ ]%
or less, (iii) for the Distribution Dates occurring in [ ] through and including
[ ], the Loss Percentage for such Mortgage Loan Group and such Distribution Date
is [ ]% or less, (iv) for any Distribution Date occurring in or [ ] through and
including [ ], the Loss Percentage for such Mortgage Loan Group and such
Distribution Date is [ ]% or less and (v) for any Distribution Date occurring in
or after [ ], the Loss Percentage for such Mortgage Loan Group and such
Distribution Date is [ ] or less.
Step Down Rolling Delinquency Test: On any relevant Distribution Date and
with respect to the Adjustable Rate Group, the related Rolling Delinquency
Percentage is less than [ ]%.
Step Down Rolling Loss Test: On any relevant Distribution Date and with
respect to the Adjustable Rate Group, the related Rolling Loss Percentage is
less than [ ]%.
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Stepped Down Targeted Overcollateralization Amount: With respect to the
Adjustable Rate Group and any Distribution Date, the product of the Adjustable
Rate Group Balance and the Stepped Down Targeted Overcollateralization
Percentage (or, if an Excess Spread Trigger has occurred, the Stepped Down
Targeted Overcollateralization Percentage (Excess Spread Trigger)).
Stepped Down Targeted Overcollateralization Percentage: With respect to
the Adjustable Rate Group and any Distribution Date on or after the twenty-fifth
Distribution Date on which the related Step Down Trigger has occurred a
percentage equal to the difference, if positive, of (i) the percentage
equivalent of a fraction, the numerator of which is [ ]% of the Original
Adjustable Rate Group Balance plus the Adjustable Rate Group Prefunding Account
Deposit and the denominator of which is the Adjustable Rate Group Balance as of
such Distribution Date, minus (ii) the percentage equivalent of a fraction, the
numerator of which is the product of (A) the percentage calculated under clause
(i) above minus [ ]%, multiplied by (B) the number of consecutive Distribution
Dates through and including the Distribution Date for which such calculation is
made, up to a maximum of twelve, from and including the twenty-fifth
Distribution Date, and the denominator of which is twelve.
Stepped Down Targeted Overcollateralization Percentage (Excess Spread
Trigger): With respect to the Adjustable Rate Group and any Distribution Date on
or after the twenty-fifth Distribution Date on which the related Step Down
Trigger has occurred a percentage equal to the difference, if positive, of (i)
the percentage equivalent of a fraction, the numerator of which is [ ]% of the
Original Adjustable Rate Group Balance plus the Adjustable Rate Group Prefunding
Account Deposit and the denominator of which is the Adjustable Rate Group
Balance as of such Distribution Date, minus (ii) the percentage equivalent of a
fraction, the numerator of which is the product of (A) the percentage calculated
under clause (i) above minus [ ]%, multiplied by (B) the number of consecutive
Distribution Dates through and including the Distribution Date for which such
calculation is made, up to a maximum of twelve, from and including the
twenty-fifth Distribution Date, and the denominator of which is twelve.
Step Down Trigger: With respect to any Distribution Date and the
Adjustable Rate Group, the Step Down Trigger will have occurred if each of the
Step Down Rolling Delinquency Test, Step Down Rolling Loss Test and Step Down
Cumulative Loss Test is satisfied.
Step Up Cumulative Loss Test: With respect to the Adjustable Rate Group
and any Distribution Date, a determination as to whether: (i) for any
Distribution Date occurring prior to [ ], the Loss Percentage for such Mortgage
Loan Group and Distribution Date is greater than [ ]%; (ii) for any Distribution
Date occurring in or after [ ] but prior to [ ], the Loss Percentage for such
Mortgage Loan Group and Distribution Date is greater than [ ]%; (iii) for any
Distribution Date occurring in or after [ ] but prior to [ ], the Loss
Percentage for such Mortgage Loan Group and Distribution Date is greater than [
]%; (iv) for any Distribution Date occurring in or after [ ] but prior to [ ],
the Loss Percentage for such Mortgage Loan Group and Distribution Date is
greater than [ ]%; and (v) for any Distribution Date occurring in or after [ ],
the Loss Percentage for such Mortgage Loan Group and Distribution Date is
greater than [ ]%.
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Stepped Up Enhancement Percentage: With respect to the Fixed Rate Group on
any Distribution Date, a percentage equal to (x) 100% minus (y) [ ] times the
Rolling Delinquency Percentage.
Step Up Rolling Delinquency Test: With respect to the Adjustable Rate
Group and any Distribution Date, a determination that the Rolling Delinquency
Percentage is more than [ ]%.
Step Up Rolling Loss Test: With respect to the Adjustable Rate Group and
any Distribution Date, a determination that the Rolling Loss Percentage is equal
to or greater than [ ]%.
Subordinate Certificates: The Class M-1F, Class M-2F and Class B-1F
Certificates.
Sub-Servicer: Any Person, including an Affiliate of the Servicer, with
whom the Servicer has entered into a Sub-Servicing Agreement and who satisfies
the requirements set forth in Section 3.15 hereof in respect of the
qualification of a Sub-Servicer. The Sub-Servicers with respect to any of the
Mortgage Loans as of the Cut-off Date are listed on Schedule I attached to this
Agreement.
Sub-Servicing Account: Any segregated account, which shall at all times be
an Eligible Account, established and maintained pursuant to Section 3.02(b) and
entitled "[Sub-Servicer], in trust for the benefit of Holders of Aames Mortgage
Trust [ ]-[ ] Mortgage Pass-Through Certificates, Series [ ], Collection
Account". References herein to the Collection Account shall include any
Sub-Servicing Account as the context requires.
Sub-Servicing Agreement: A written contract between the Servicer and any
Sub-Servicer relating to the servicing and/or administration of certain Mortgage
Loans.
Supplemental Interest Amount: With respect to either Class of Adjustable
Rate Group Certificates on any Distribution Date, the positive excess, if any,
of the amount of interest that would have accrued thereon during the related
Interest Period at the related Formula Pass-Through Rate over the amount of
interest that did accrue thereon at the Adjustable Rate Group Available Funds
Cap (and in the case of any such excess remaining unpaid from a prior
Distribution Date, interest thereon at the related Formula Pass-Through Rate, to
the extent lawful).
Supplemental Interest Reserve Fund: The Supplemental Interest Reserve Fund
established and maintained as described in Sections 3.18 and 9.16(x).
Subsequent Cut-off Date: With respect to any Subsequent Mortgage Loan, the
date specified as such in the related Subsequent Mortgage Loan Schedule.
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Subsequent Cut-off Date Principal Balance: As to any Subsequent Mortgage
Loan, the actual outstanding principal balance due thereunder from the Mortgagor
in the related Addition Notice.
Subsequent Mortgage Loan: A Mortgage Loan sold to the Trust pursuant to
Section 2.02 of this Agreement, which shall be listed on the Subsequent Mortgage
Loan Schedule attached to a Subsequent Transfer Agreement.
Subsequent Mortgage Loan Schedule: As of any Subsequent Transfer Date, the
schedule of Subsequent Mortgage Loans separated by Mortgage Loan Group as of the
related Subsequent Cut-off Date being transferred to the Trust on such
Subsequent Transfer Date pursuant to a Subsequent Transfer Agreement. Each
Subsequent Mortgage Loan Schedule shall contain information regarding the
related Subsequent Mortgage Loans of the type included in, and shall be
substantially in the form of, the Mortgage Loan Schedule attached hereto as
Exhibit B.
Subsequent Purchase Price: As of any Subsequent Transfer Date, with
respect to the Subsequent Mortgage Loans to be included in either Mortgage Loan
Group, an amount equal to the Principal Balances as of the Subsequent Cut-off
Date of such Subsequent Mortgage Loans listed in the related Subsequent Transfer
Agreement.
Subsequent Transfer Agreement: With respect to any Subsequent Mortgage
Loan, the agreement pursuant to which such Subsequent Mortgage Loan is
transferred to the Trust, in substantially the form attached hereto as Exhibit
I.
Subsequent Transfer Date: The date specified in each Subsequent Transfer
Agreement, but no later than [ ].
Subsequent Transfer Deposit: The amount deposited by the Seller in the
Collection Account in connection with each conveyance of Subsequent Mortgage
Loans pursuant to Section 2.02, which amount shall be the aggregate of the
amounts of interest that would have accrued (at the related Mortgage Loan Rates
net of the Servicing Fee Rate) on each such Subsequent Mortgage Loan for each
30-day period from the related Subsequent Transfer Date through the end of the
last Collection Period preceding the Collection Period in which such Mortgage
Loan has its first Monthly Payment Due. Each Subsequent Transfer Deposit shall
be allocated to the Fixed Rate Group or the Adjustable Rate Group, as
appropriate.
Targeted Overcollateralization Amount: (a) With respect to the Fixed Rate
Group (i) prior to the Stepdown Date, [ ]% of the aggregate of the Certificate
Principal Balances of the Fixed Rate Group Certificates as of the Cut-off Date,
and (ii) on and after the Stepdown Date, the greater of (A) [ ]% of Fixed Rate
Group Balance as of the last day of the related Collection Period and (B) $[ ];
and
(b) With respect to the Adjustable Rate Group on any Distribution Date
on which an Excess Spread Trigger has not occurred, (i) [ ]% of the sum of the
Original Adjustable Rate Group Balance and the Adjustable Rate Group Prefunding
Account Deposit, and (ii) on each
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Distribution Date as to which the Step Down Trigger has occurred, an amount
equal to the greater of (A) $[ ] and (B) the lesser of (x) [ ]% of the sum of
the Original Adjustable Rate Group Balance and the Adjustable Rate Group
Prefunding Account Deposit and (y) the product of the Stepped Down Targeted
Overcollateralization Percentage and the Adjustable Rate Group Balance as of the
last day of the related Collection Period, except that on any Distribution Date
in or after [ ] as to which any of the Step Up Cumulative Loss Test, Step Up
Rolling Delinquency Test or Step Up Rolling Loss Test is satisfied, and through
the Distribution Date on which each such test is no longer met, the Targeted
Overcollateralization Amount for the Adjustable Rate Group will be the sum of
(i) the product of [ ]% and the Adjustable Rate Group Balance and (ii) the
product of [ ] and the aggregate of the Principal Balances of all Adjustable
Rate Mortgage Loans that are 90 or more days contractually delinquent (including
Mortgage Loans as to which the related Mortgagor is in bankruptcy proceedings or
the related Mortgaged Property is an REO Property); and
(c) With respect to the Adjustable Rate Group on any Distribution Date
on which an Excess Spread Trigger has occurred, (i) [ ]% of the sum of the
Original Adjustable Rate Group Balance and the Adjustable Rate Group Prefunding
Account Deposit, and (ii) on each Distribution Date as to which the Step Down
Trigger has occurred, an amount equal to the greater of (A) $[ ] and (B) the
lesser of (x) [ ]% of the sum of the Original Adjustable Rate Group Balance and
the Adjustable Rate Group Prefunding Account Deposit and (y) the product of the
Stepped Down Targeted Overcollateralization Percentage and the Adjustable Rate
Group Balance as of the last day of the related Collection Period, except that
on any Distribution Date in or after [ ] as to which the Step Up Cumulative Loss
test, Step Up Rolling Delinquency Test or Step Up Rolling Loss Test is
satisfied, and through the Distribution Date on which each such test is no
longer met, the Targeted Overcollateralization Amount for the Adjustable Rate
Group will be the sum of (i) the product of [ ]% and the Adjustable Rate Group
Balance and (ii) the product of [ ] and the aggregate of the Principal Balances
of all Adjustable Rate Mortgage Loans that are 90 or more days contractually
delinquent (including Mortgage Loans as to which the related Mortgagor is in
bankruptcy proceedings or the related Mortgaged Property is an REO Property);
provided, however, that if a Trigger Event has occurred and is continuing for
either Mortgage Loan Group, the applicable Targeted Overcollateralization Amount
for such Mortgage Loan Group will not be reduced to less than the applicable
Targeted Overcollateralization Amount in effect on the Distribution Date
preceding the occurrence of such Trigger Event.
Targeted Overcollateralization Loss Event: With respect to any
Distribution Date during the indicated period and the Fixed Rate Group, means
that the related Loss Percentage equals or exceeds the indicated Loss
Percentage.
Period Loss Percentage
------ ---------------
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Telerate Page 120: The display designated as "Page 120" on the Dow ▇▇▇▇▇
Telerate Service (or such other page selected by the Servicer as may replace
Page 120 on that service for the purpose of displaying daily Federal Funds
rates).
Transfer Affidavit: The affidavit to be delivered by any transferee of an
interest in a Class R Certificate pursuant to Section 6.02(b), to be
substantially in the form attached hereto as Exhibit D.
Transferor Affidavit: The affidavit to be delivered by any transferor of
an interest in a Class R Certificate pursuant to Section 6.02(c), to be
substantially in the form attached hereto as Exhibit H.
Trigger Event: With respect to the Fixed Rate Group and any Distribution
Date, means (a) on such Distribution Date the Rolling Delinquency Percentage
equals or exceeds [ ]% of the Senior Enhancement Percentage or (b) the
occurrence and continuance of a Targeted Overcollateralization Loss Event with
respect to the Fixed Rate Group; provided that, notwithstanding the foregoing,
with respect to clause (a), a Trigger Event will not be in effect on any
Distribution Date as to which the percentage equivalent of a fraction, the
numerator of which is the aggregate Certificate Principal Balance of the Fixed
Rate Group Class A Certificates and the denominator of which is the Fixed Rate
Group Balance as of the last day of the related Collection Period is less than
or equal to the related Stepped Up Enhancement Percentage after all
distributions thereon in respect of principal. With respect to the Adjustable
Rate Group and any Distribution Date, means that any of the Step Down Rolling
Loss Test, the Step Down Rolling Delinquency Test or the Step Down Cumulative
Loss Test is not satisfied.
Trust: The trust created by this Agreement and the corpus thereof, which
consists of, to the extent described herein, the Mortgage Loans, such assets as
shall from time to time be identified or shall be required by this Agreement to
be deposited in the Collection Account, the Certificate Account, the Prefunding
Account or the Capitalized Interest Account or invested in Permitted Investments
in accordance with this Agreement, all rights under any insurance policy
covering a Mortgage Loan or the related Mortgaged Property and property and any
proceeds thereof that secured a Mortgage Loan and that has been acquired by
foreclosure, deed in lieu of foreclosure or by a comparable conversion.
Trust Insurance Proceeds: Insurance Proceeds that (a) are applied by the
Servicer to reduce the Principal Balance of the related Mortgage Loan and (b)
not applied to the restoration or repair of the related Mortgaged Property or
released to the related Mortgagor in accordance with the Servicer's normal
servicing procedures or the terms of the related Mortgage Loan.
Trust Parties: As defined in Section 5.04.
Trustee: Bankers Trust Company of California, N.A., a national banking
association, and its successors in interest or any successor trustee appointed
as provided pursuant to this Agreement.
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Trustee Fee: The annual fee of the Trustee, which shall be $[ ], and any
annual file access fees or other fees and expenses, payable by the Servicer
pursuant to Section 9.05.
Unpaid Realized Loss Amount: With respect to any Class of the Subordinate
Certificates and as to any Distribution Date means, the excess of (x) the
aggregate cumulative amount of related Applied Realized Loss Amounts with
respect to such Class for all prior Distribution Dates over (y) the aggregate
cumulative amount of related Realized Loss Amortization Amounts with respect to
such Class for all prior Distribution Dates.
Vice President: Any vice president, whether or not designated by a number
or a word or words added before or after the title "vice president".
Voting Interest: With respect to any provisions hereof providing for the
action, consent or approval of the Holders of all Certificates evidencing
specified Voting Interests in the Trust, the Holders of the Offered Certificates
will collectively be entitled to 100% of the aggregate Voting Interests
represented by all Certificates. Voting Interests will be allocated to the
Certificateholders of each Class pro rata, based on the respective Certificate
Principal Balances thereof. Each Certificateholder of a Class will have a Voting
Interest equal to the product of the Voting Interest to which such Class is
collectively entitled and the Percentage Interest in such Class represented by
such Holder's Certificates. With respect to any provision hereof providing for
action, consent or approval of each Class of Certificates or specified Classes
of Certificates, each Certificateholder of a Class will have a Voting Interest
in such Class equal to such Holder's Percentage Interest in such Class.
Section 1.02. Interest Calculations. All calculations of interest at the
Mortgage Loan Rate that are made in respect of the Principal Balance of a
Mortgage Loan, shall be made on a daily basis using a 360-day year of twelve
30-day months. All calculations of interest on the Fixed Rate Group Certificates
other than the Class A-1F Certificate will be computed on the basis of a 360-day
year of twelve 30-day months. All calculations of interest on the Adjustable
Rate Group Certificates and the Class A-1F Certificates will be computed on the
basis of the actual number of days elapsed in the related Interest Period and a
year of 360 days.
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ARTICLE TWO
CONVEYANCE OF THE TRUST;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01. Conveyance of the Trust. The Seller, concurrently with the
execution and delivery of this Agreement, does hereby irrevocably sell,
transfer, assign, set over and otherwise convey to the Trustee, in trust for the
benefit of the Certificateholders, without recourse (except as otherwise
explicitly provided for herein), all of its right, title and interest in and to
the Trust, including specifically, without limitation, the Mortgage Loans, the
Mortgages, the Mortgage Files and the Mortgage Notes, including all interest and
principal (whether in the form of payments by Mortgagors or other proceeds)
received or deemed to be received by the Seller on or with respect to the
Mortgage Loans on or after the Cut-off Date net of amounts in respect of
interest accrued on the Mortgage Loans in periods prior to the Cut-off Date
(whether in the nature of amounts held by the Seller for application on behalf
of the related Mortgagor as a Monthly Mortgage Payment that is due on any date
on or after the Cut-off Date or otherwise), together with all of its right,
title and interest in and to the proceeds received on or after the Cut-off Date
of any related insurance policies. In addition, on or prior to the Closing Date
the Seller shall (i) cause the Financial Guaranty Insurance Policy to be
delivered to the Trustee and (ii) deposit the Closing Date Deposit in the
Collection Account.
In the event that, notwithstanding the intent of the parties hereto to
effect a sale and assignment of the Trust by the Seller to the Trustee, such
sale and assignment is deemed to constitute a pledge of security for a loan, it
is the intent of this Agreement that the Seller shall be deemed to have granted
to the Trustee for the benefit of the Certificateholders a first priority
perfected security interest in all of the Seller's right, title and interest in
and to the Mortgage Loans, the Mortgages, the Mortgage Files and the Mortgage
Notes, all payments of principal or interest on the Mortgage Loans received on
or after the Cut-off Date net of amounts in respect of interest accrued on the
Mortgage Loans in periods prior to the Cut-off Date, all other payments
(exclusive of assumption fees, late payment charges, charges for checks returned
for insufficient funds, prepayment fees, if any, and extension and other
administrative charges) made in respect of such Mortgage Loans on or after the
Cut-off Date and all proceeds of any thereof, including all amounts on deposit
in the Certificate Account, the Collection Account, the Prefunding Account and
the Capitalized Interest Account and amounts invested in Permitted Investments
(but excluding all investment income with respect to the Prefunding Account and
Capitalized Interest Account), and that this Agreement shall constitute a
security agreement under applicable law.
The Company confirms to the Trustee that it has caused its computer
records relating to the Mortgage Loans to indicate by a code that the Mortgage
Loans have been sold to the Trustee on behalf of the Trust and constitute part
of the Trust in accordance with the terms of the Trust and that the Company will
treat the transaction contemplated by such sale and assignment as a sale in
accordance with generally accepted accounting principles and will reflect such
sale on its primary accounting records.
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In connection with such sale and assignment, the Company, in its capacity
as Seller hereunder, does hereby deliver to, and deposit with, the Trustee the
originals of the following documents or instruments with respect to each
Mortgage Loan so assigned:
(a) The original Mortgage Note, with all intervening endorsements
sufficient to show a complete chain of endorsement to the Seller, endorsed
(which endorsement may be by manual or facsimile signature) by the Seller
without recourse to the order of the Trustee in the following form: "Pay
to the order of Bankers Trust Company of California, N.A., in trust for
the benefit of holders of Aames Mortgage Trust [ ]-[ ] Mortgage
Pass-Through Certificates, Series [ ]-[ ], without recourse"; except that
with respect to 3 Mortgage Loans identified to the Trustee by loan number,
an original lost note affidavit has been supplied in lieu of the original
Mortgage Note;
(b) The original Mortgage with evidence of recording indicated
thereon;
(c) The original executed assignment of the Mortgage in recordable
form;
(d) Originals of all assumption, modification and substitution
agreements in those instances where the terms or provisions of a Mortgage
or Mortgage Note have been modified or such Mortgage or Mortgage Note has
been assumed;
(e) Originals of all intervening mortgage assignments with
evidence of recording indicated thereon sufficient to show a complete
chain of assignment from the originator of the Mortgage Loan to the Seller
or one of its Affiliates; and
(f) Original lender's title insurance policy issued on the date of
the origination of such Mortgage Loan.
As promptly as practicable subsequent to the Closing Date, and in any
event, within 30 days thereafter, the Company, in its capacity as Servicer shall
(i) affix the Trustee's name to each assignment of Mortgage, as the assignee
thereof, (ii) cause such assignment to be in proper form for recording in the
appropriate public office for real property records, and (iii) cause to be
delivered for recording in the appropriate public office for real property
records the assignments of the Mortgages to the Trustee, except that, with
respect to any assignments of Mortgage as to which the Servicer has not received
the information required to prepare such assignment in recordable form, the
Servicer shall be obligated to prepare and to deliver such assignment for such
recording as soon as practicable after receipt of such information and in any
event within 30 days after receipt thereof (and in no event more than one year
after the Closing Date) and that the Servicer need not cause to be recorded any
assignment that relates to a Mortgage Loan in any jurisdiction under the laws of
which, as evidenced by an Opinion of Counsel delivered or advice of counsel
satisfactory to the Trustee rendered to the Trustee by independent counsel (in
each case at the Seller's expense), to the effect that the recordation of such
assignment is not necessary to protect the Trustee's and the Certificateholders'
interest in the related Mortgage Loan.
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If the Company cannot deliver the original Mortgage or any intervening
mortgage assignment to the benefit of the Seller or one of its affiliates with
evidence of recording thereon concurrently with the execution and delivery of
this Agreement solely because of a delay caused by the public recording office
where such original Mortgage or mortgage assignment has been delivered for
recordation, the Company shall deliver to the Trustee an Officer's Certificate,
with a photocopy of such Mortgage or mortgage assignment, as the case may be,
attached thereto, stating that such original Mortgage or mortgage assignment has
been delivered to the appropriate public recording official for recordation. The
Company shall promptly deliver to the Trustee any such original Mortgage or
intervening mortgage assignment with evidence of recording indicated thereon
upon receipt thereof from the public recording official. If the Company within
six months from the Closing Date shall not have received such original Mortgage
or intervening mortgage assignment from the public recording official, it shall
obtain, and deliver to the Trustee within eight months from the Closing Date, a
copy of such original Mortgage or mortgage assignment certified by such public
recording official to be a true and complete copy of such original Mortgage or
mortgage assignment as recorded by such public recording office.
The costs relating to the delivery of the documents specified in this
Section shall be borne by the Seller.
Section 2.02. Conveyance of the Subsequent Mortgage Loans; Fixed Price
Contract. Subject to the conditions set forth in the paragraphs below, in
consideration of the Trustee's delivery on the Closing Date or related
Subsequent Transfer Dates to or upon the order of the Seller of the Subsequent
Purchase Price of the related Subsequent Mortgage Loans from amounts on deposit
in the Prefunding Account (or other amounts payable to the Company if such
purchases of all Subsequent Mortgage Loans occur on the Closing Date) with
respect to the related Mortgage Loan Group, the Seller shall, from time to time,
on any Subsequent Transfer Date sell, transfer, assign, set over and otherwise
convey without recourse, to the Trustee, all right, title and interest of the
Seller in and to each Subsequent Mortgage Loan identified on the Subsequent
Mortgage Loan Schedule attached to the related Subsequent Transfer Agreement
delivered by the Seller on the Closing Date or such Subsequent Transfer Date,
including all of its right, title and interest in and to principal and interest
(whether in the form of payments by Mortgagors or other proceeds) received or
deemed to be received by the Seller on each such Subsequent Mortgage Loan on and
after the related Subsequent Cut-off Date, net of amounts in respect of interest
accrued on such Subsequent Mortgage Loans in periods prior to the related
Subsequent Cut-off Date (whether in the nature of amounts held by the Seller for
application on behalf of the related Mortgagor as a Monthly Mortgage Payment
that is due on any date on or after the related Subsequent Cut-off Date or
otherwise), plus any Subsequent Transfer Deposit relating to such Subsequent
Mortgage Loan and all items with respect to such Subsequent Mortgage Loan to be
delivered pursuant to Section 2.01 and other items in the related Mortgage File;
provided, however, that the Seller reserves and retains all of its right, title
and interest in and to principal (including prepayments) and interest collected
on each such Subsequent Mortgage Loan prior to the related Subsequent Cut-off
Date (except for amounts held by the Seller for application on or after the
related Subsequent Cut-off Date). The transfer by the Seller of the Subsequent
Mortgage Loans set forth on the Subsequent Mortgage Loan Schedule to the Trustee
shall be absolute and shall be intended by the parties hereto to be treated as a
sale by the Seller. On or before the last day of the Funding Period, the Seller
shall
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convey to the Trustee pursuant to this Section 2.02 the lesser of: (i) all
Mortgage Loans then in its possession that satisfy the requirements of this
Section 2.02 or (ii) the maximum principal balance of Mortgage Loans as
determined by Seller that satisfy the requirements of this Section 2.02 whose
aggregate Subsequent Purchase Price does not exceed the Prefunding Account
Deposit. Subsequent Mortgage Loans to be conveyed on a given Subsequent Transfer
Date must have an aggregate Subsequent Cut-off Date Principal Balance of not
less than $[ ]; provided, however, that the Subsequent Mortgage Loans to be
conveyed on the final Subsequent Transfer Date may have an aggregate Subsequent
Cut-off Date Principal Balance of less than $[ ]. In connection with each
conveyance of Subsequent Mortgage Loans, the Seller shall deposit any applicable
Subsequent Transfer Deposit in the Collection Account on the related Subsequent
Transfer Date.
In the event that, notwithstanding the intent of the parties hereto to
effect a sale and assignment of the Subsequent Mortgage Loans on the related
Subsequent Transfer Date by the Seller to the Trustee, such sale and assignment
will be deemed to constitute a pledge of security for a loan, it is the intent
of this Agreement that the Seller shall be deemed to have granted to the Trustee
for the benefit of the Certificateholders a first priority perfected security
interest in all of the Seller's right, title and interest in and to the
Subsequent Mortgage Loans, the Mortgages, the Mortgage Files and the Mortgage
Notes, all payments of principal and interest on the Subsequent Mortgage Loans
received on or after their respective Subsequent Cut-off Dates, net of amounts
in respect of interest accrued on such Subsequent Mortgage Loans in periods
prior to the related Subsequent Cut-off Date, all other payments (exclusive of
assumption fees, late payment charges, charges for checks returned for
insufficient funds, prepayment fees, if any, and extension and other
administrative charges) made in respect of such Subsequent Mortgage Loans on or
after the related Subsequent Cut-off Date, plus any Subsequent Transfer Deposit
relating to such Subsequent Mortgage Loan and all proceeds of any thereof, and
that this Agreement and the related Subsequent Transfer Agreement shall each
constitute a security agreement with respect to the related Subsequent Mortgage
Loans under applicable law.
The amount released to the Seller from the Prefunding Account on any
Subsequent Transfer Date (or from other amounts payable to the Company on the
Closing Date) in connection with any conveyance of Subsequent Mortgage Loans to
be included in the Fixed Rate Group shall be equal to the aggregate of the
Subsequent Purchase Prices for such Subsequent Mortgage Loans, which amounts, in
the aggregate, shall not exceed the Fixed Rate Group Prefunding Account Deposit.
The amount released to the Seller from the Prefunding Account on any Subsequent
Transfer Date (or from other amounts payable to the Company on the Closing Date)
in connection with any conveyance of Subsequent Mortgage Loans to be included in
the Adjustable Rate Group shall be equal to the aggregate of the Subsequent
Purchase Prices for such Subsequent Mortgage Loans, which amounts, in the
aggregate, shall not exceed the Adjustable Rate Group Prefunding Account
Deposit. The amounts so released to the Seller in connection with any conveyance
of Subsequent Mortgage Loans shall, for federal income tax purposes, be
considered cash contributed to the related REMIC I Pool by the Seller and used
by the Trustee to acquire the related Subsequent Mortgage Loans pursuant to a
fixed price contract established pursuant to this Section 2.02.
On the Closing Date or other related Subsequent Transfer Date, the Seller
shall transfer to the Trustee the Subsequent Mortgage Loans and the other
property and rights related thereto
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described in the first paragraph in this section only upon the satisfaction of
each of the following conditions on or prior to the related Subsequent Transfer
Date:
(a) the Seller shall provide the Trustee and Financial Guaranty
Insurer with an Addition Notice and shall provide any information reasonably
requested by the Trustee with respect to the Subsequent Mortgage Loans;
(b) the Seller shall deliver to the Trustee, the Financial
Guaranty Insurer and the Rating Agencies a duly executed Subsequent Transfer
Agreement and any other related documentation in the forms of the exhibits
listed thereon;
(c) the Seller shall deposit in the Collection Account all
collections in respect of the Subsequent Mortgage Loans received or deemed
received by the Seller on or after the related Subsequent Cut-off Date (whether
in the nature of amounts held by the Seller for later application on behalf of
the related Mortgagor in respect of a Monthly Payment due after the related
Subsequent Cut-off Date or otherwise);
(d) the Seller shall certify that, as of such date, the Seller was
not insolvent, was not made insolvent by such transfer and is not aware of any
pending insolvency;
(e) the Seller shall certify that such addition of Subsequent
Mortgage Loans will not result in a material adverse tax consequence to the
Trust or the Certificateholders;
(f) the Funding Period shall not have expired;
(g) the Seller shall make the representations and warranties set
forth in Section (A) of Schedule II to this Agreement with respect to such
Subsequent Mortgage Loans; and
(h) on such date, the Seller shall deposit any applicable
Subsequent Transfer Deposit in the Collection Account.
In addition, the Seller will provide the Trustee and ▇▇▇▇▇'▇ with data
regarding all Subsequent Mortgage Loans to be transferred to the Trust on any
Subsequent Transfer Date at least 10 Business Days prior to the end of the
Funding Period or, if such Subsequent Transfer Data is the Closing Date, on the
Closing Date. No later than the end of the Funding Period, the following
conditions shall have been satisfied with respect to all Subsequent Mortgage
Loans to be transferred to the Trust on any Subsequent Transfer Date:
(a) the Seller shall have delivered to the Trustee an Officer's
Certificate confirming the satisfaction of each condition precedent specified in
this Section 2.02 and in the related Subsequent Transfer Agreements;
(b) the Seller shall have delivered to the Trustee Opinions of
Counsel with respect to the transfer of all of the Subsequent Mortgage Loans to
the Trust on any Subsequent Transfer
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Date substantially in the form of the Opinions of Counsel delivered to the
Trustee on the Closing Date regarding bankruptcy, corporate and tax matters;
(c) the Trustee shall deliver to the Rating Agencies and the
Seller an Opinion of Counsel with respect to each of the Subsequent Transfer
Agreements substantially in the form of the Opinion of Counsel delivered to the
Seller on the Closing Date;
(d) the Seller shall make the representations and warranties set
forth in Section B of Schedule II to this Agreement; and
(e) the Financial Guaranty Insurer shall deliver to the Seller,
the Trustee and the Rating Agencies a written notice confirming the Financial
Guaranty Insurer's consent and approval to the addition of all Subsequent
Mortgage Loans purchased by the Trust for inclusion in the Adjustable Rate Group
on any Subsequent Transfer Date.
The Seller shall certify that the Subsequent Mortgage Loans will be
transferred to the Trust in accordance with the foregoing and that all mortgage
loans identified in the Subsequent Mortgage Loan Schedule satisfy the
requirements of Subsequent Mortgage Loans as set forth in this Section 2.02 as
of the related Subsequent Transfer Date. On or before the last day of the
Funding Period, the Seller will also cause to be delivered to the Trustee (with
copies to the Certificate Insurer and each Rating Agency) a letter from
independent accountants confirming certain characteristics of the Subsequent
Mortgage Loans.
Subject to Section 3.16(d), if all of the Subsequent Mortgage Loans are
transferred to the Trust on the Closing Date, then the remaining portion of each
of the Fixed Rate Group Prefunding Account Deposit and the Adjustable Rate Group
Prefunding Account Deposit will be deposited into the Certificate Account and
held there, without investment thereof, until the first Distribution Date. On
such first Distribution Date, such amounts will be deemed to comprise a portion
of the Fixed Rate Group Principal Distribution Amount or Adjustable Rate Group
Principal Distribution Amount, as appropriate, and will be distributable to the
Certificateholders.
Section 2.03. Acceptance by the Trustee; Repurchase or Substitution of
Mortgage Loans. The Trustee acknowledges the sale and assignment to the Trust
and receipt by it of the original Mortgage Notes, Assignments and Mortgages
pursuant to this Agreement and the delivery to it, subject to (i) the provisions
of the penultimate paragraph of Section 2.01, (ii) the review provided for in
this Section of the documents referred to in clauses (a) through (f) of Section
2.01 and (iii) delivery of the Officer's Certificates pursuant to Section 2.01,
declares that it will hold the Trust in trust upon the terms herein set forth
for the use and benefit of all present and future Certificateholders. The
Trustee agrees, for the benefit of Certificateholders, to review each Mortgage
File within 45 days after the Closing Date (or, 45 days after the Subsequent
Transfer Date, with respect to the Subsequent Mortgage Loans) to determine
whether the documents described in Section 2.01(a)-(c), (e) and (f) have been
executed and received, and whether such documents relate to the Mortgage Loans
identified in the Mortgage Loan Schedule, or the Subsequent Mortgage Loan
Schedule, as applicable, and in so doing the Trustee may rely on the purported
due execution and genuineness of any such document and on the purported
genuineness
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of any signature thereon. If within such 45-day period the Trustee finds any
document constituting a part of a Mortgage File not to have been executed or
received or to be unrelated to the Mortgage Loans identified in the Mortgage
Loan Schedule, or the Subsequent Mortgage Loan Schedule, as applicable, the
Trustee shall promptly notify the Seller of such findings. The Seller shall have
a period of 60 days from the date of such notice to correct or cure any such
defect. Notwithstanding the second paragraph of Section 9.01, the Trustee shall
be under no duty or obligation to inspect, review or examine any such documents,
instruments, certificates or other papers to determine that they are genuine,
enforceable, or appropriate for the represented purpose or that they have
actually been recorded or that they are other than what they purport to be on
their face.
If the Trustee has notified the Seller of a defect in a Mortgage File that
materially and adversely affects the interests of the Certificateholders in the
related Mortgage Loan, and such defect remains uncured after such 60-day period,
the Seller shall, (i) in the case of a defect consisting solely of the failure
of the Company to deliver the original Mortgage or any intervening mortgage
assignment with evidence of recording thereon for reasons set forth in Section
2.01, on the first Deposit Date occurring after the expiration of eight months
from the Closing Date, and (ii) in the case of all other defects (and in any
case that the Servicer at any time becomes aware or the Trustee has actual
knowledge that a lost note affidavit is fraudulent or will not be enforceable),
on the Deposit Date occurring not later than 60 days after receipt of notice of
such defect (or the Servicer becomes aware of or the Trustee comes to have
actual knowledge of such defect and gives notice thereof to the Servicer) as the
case may be, either (I) repurchase the related Mortgage Loan (including any
property acquired in respect thereof and any insurance policy or current or
future insurance proceeds with respect thereto) from the Trust at a price equal
to the Purchase Price, which shall be accomplished by deposit of monies by the
Seller in the Certificate Account on such Deposit Date, or (II) substitute one
or more Qualified Replacement Mortgage Loan for the related Mortgage Loan.
Upon receipt by the Trustee of an Officer's Certificate of the Servicer to
the effect that the Purchase Price for a Defective Mortgage Loan (other than a
Defective Mortgage Loan that is a Deleted Mortgage Loan) has been deposited in
the Certificate Account, and upon confirmation by the Trustee that such Purchase
Price has been received by it, the Trustee shall execute and deliver such
instrument of transfer or assignment presented to it by the Seller, in each case
without recourse, as shall be necessary to vest in the Seller legal and
beneficial ownership of such repurchased Defective Mortgage Loan (including any
property acquired in respect thereof or insurance policy or current or future
insurance proceeds with respect thereto).
Payments received with respect to Qualified Replacement Mortgage Loans in
the Collection Period prior to the Deposit Date on which such substitution
occurs will not be part of the Trust and will be retained by the Seller. For the
Distribution Date following the Deposit Date on which such substitution occurs,
distributions to Certificateholders will reflect the payments received on such
Deleted Mortgage Loan in the related Collection Period representing amounts due
or accrued thereon prior to such Deposit Date, and the Seller shall thereafter
be entitled to retain all amounts subsequently received in respect of such
Deleted Mortgage Loan. In the case of a Qualified Replacement Mortgage Loan, the
Mortgage File relating thereto shall be delivered to the Trustee and the amount,
if any, by which the Principal Balance of the related Deleted Mortgage Loan as
of
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the related Deposit Date exceeds the Principal Balance of the Qualified
Replacement Mortgage Loan as of the first day of the related Collection Period
shall be remitted by the Seller to the Trustee for deposit in the Certificate
Account on the Deposit Date on which the substitution occurs. For purposes of
this Agreement, any such amount so deposited in the Certificate Account shall be
deemed a prepayment of the related Deleted Mortgage Loan received by the
Servicer as of the prior Determination Date. Upon receipt by the Trustee of an
Officer's Certificate certifying that the Qualified Replacement Mortgage Loan
conforms to the requirements of this Agreement and (a) written notification of
such deposit signed by a Servicing Officer and (b) the new Mortgage File
(containing all of the documents referred to in clauses (a), (b), (c), (d), (e)
and (f) of Section 2.01), the Trustee shall release or cause to be released to
the Seller the Mortgage File related to the Deleted Mortgage Loan or property
and shall execute and deliver or cause to be executed and delivered such
instrument of transfer or assignment presented to it by the Seller, without
recourse, as shall be necessary to vest in the Seller all of the legal and
beneficial ownership of such Deleted Mortgage Loan or property and the Trustee
shall have no further responsibility with respect to said Mortgage File. It is
understood and agreed that the obligation of the Seller to substitute a
Qualified Replacement Mortgage Loan for or repurchase any Defective Mortgage
Loan (or any property acquired in respect thereof or insurance policy or current
or future insurance proceeds with respect thereto) shall constitute the sole
remedy against it respecting such defect available to the Certificateholders or
the Trustee, and such obligation on the part of the Seller shall survive any
resignation or termination of the Company as Servicer under this Agreement.
Notwithstanding the foregoing, a substitution by the Seller for a defect in a
constituent document will not be made unless the Trustee receives an Officer's
Certificate certifying that the Qualified Replacement Mortgage Loan conforms to
the requirements of this Agreement and an Opinion of Counsel that such
substitution will not be a "prohibited transaction" as defined in Section
860F(a)(2) of the Code. Any substitution must be effected not later than two
years after the Closing Date, or within such longer period of time as may be
permitted under the REMIC Provisions for substitution of mortgage loans.
On or prior to [ ] ([ ] in the case of the Subsequent Mortgage Loans), the
Trustee shall certify to the Servicer that it has received all of the documents
referred to in clauses (a) (b), (c), (e) and (f) of Section 2.01 and that all
corrections or curative actions required to be taken by the Seller within the
60-day period referred to in the first paragraph of this Section have been
completed or effected, or the related Mortgage Loans have been repurchased or
substituted, in accordance with the provisions of this Section or, if any
deficiencies in the Mortgage Files or other omissions of the Seller with respect
to the Mortgage Files are known to the Trustee at the time of such
certification, the Trustee shall make such certification only with respect to
those Mortgage Loans as to which no such defects or omissions are known, and
shall qualify such certification with respect to the remaining Mortgage Loans,
identifying the related defects or omissions. Thereafter, the Trustee shall
provide the Seller and the Servicer with monthly exception reports indicating
the status of any exceptions until all such exceptions have been eliminated.
Such monthly exception reports shall be distributed by the Trustee on the
related Distribution Date with the Statement to Certificateholders.
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Section 2.04. Representations and Warranties Regarding the Servicer and
the Seller. The Company, as Seller and Servicer hereby represents and warrants
to the Trustee and the Certificateholders that, as of the Closing Date:
(i) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of California. The
Company is in compliance with the laws of each state in which it is acting
as Servicer with respect to a Mortgage Loan to the extent necessary to
perform all servicing obligations with respect to the related Mortgaged
Property hereunder. Each Sub-Servicer is in compliance with the laws of
each state where the Mortgaged Properties under the applicable
Sub-Servicing Agreement are located to the extent necessary to perform the
servicing obligations hereunder; the Company has the power and authority
to execute and deliver this Agreement and to perform its obligations in
accordance herewith; the execution, delivery and performance of this
Agreement (including all instruments of transfer to be delivered pursuant
to this Agreement) by the Company and the consummation of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action; this Agreement evidences the valid and binding
obligation of the Company enforceable against the Company in accordance
with its terms, subject to the effect of bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally or the application of equitable principles in
any proceeding, whether at law or in equity; and the consummation of the
transactions contemplated hereby will not result in the breach of any
terms or provisions of the articles of incorporation or by-laws of the
Company or result in the breach of any term or provision of, or conflict
with or constitute a default under or result in the acceleration of any
obligation under, any material agreement, indenture or loan or credit
agreement or other material instrument to which the Company or its
property is subject, or result in the violation of any law, rule,
regulation, order, judgment or decree to which the Company or its property
is subject. Each Sub-Servicer has all requisite corporate power and
authority to conduct its business and perform the obligations under the
Sub-Servicing Agreement to which such Sub-Servicer is a party;
(ii) All actions, approvals, consents, waivers, exemptions,
variances, franchises, orders, permits authorizations, rights and licenses
required to be taken, given or obtained, as the case may be, by or from
any federal, state or other governmental authority or agency, that are
necessary in connection with the execution and delivery by the Company of
this Agreement, have been duly taken, given or obtained, as the case may
be, are in full force and effect, are not subject to any pending
proceedings or appeals (administrative, judicial or otherwise) and either
the time within which any appeal therefrom may be taken or review thereof
may be obtained has expired or no review thereof may be obtained or appeal
therefrom taken, and are adequate to authorize the consummation of the
transactions contemplated by this Agreement on the part of the Company and
the performance by the Company of its obligations as Servicer under this
Agreement;
(iii) There is no action, suit, proceeding or investigation pending
or, to the best of the Company's knowledge, threatened against the Company
that, either in any one instance or in the aggregate, may result in any
material adverse change in the business, operations,
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financial condition, properties or assets of the Company or in any
material impairment of the right or ability of the Company to carry on its
business substantially as now conducted, or in any material liability on
the part of the Company or that would draw into question the validity of
this Agreement or the Mortgage Loans or of any action taken or to be taken
in connection with the obligations of the Company, in its capacity as
Servicer, contemplated herein, or that would be likely to impair the
ability of the Company to perform under the terms of this Agreement;
(iv) The Company is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal,
state, municipal or governmental agency, which default might have
consequences that would materially and adversely affect the condition
(financial or other) or operations of the Company or its properties or
might have consequences that would adversely affect its performance as
Servicer hereunder;
(v) The transfer, assignment and conveyance of the Mortgage Loans
by the Company, as Seller, pursuant to this Agreement are not subject to
the bulk transfer laws or any similar statutory provisions in effect in
any applicable jurisdiction;
(vi) The collection practices used by the Company and any
Sub-Servicer are in all material respects legal, proper, prudent and
customary in the home equity mortgage loan servicing business; and
(vii) Each Sub-Servicer engaged by the Servicer has obtained all
licenses and approvals required under state or federal law to service the
Mortgage Loans specified in the Sub-Servicing Agreement to which the
Sub-Servicer is a party.
The representations and warranties set forth in this Section shall survive the
sale and assignment of the Mortgage Loans to the Trust and the issuance, sale
and delivery of the Certificates. Upon discovery of a breach of any of the
foregoing representations and warranties that materially and adversely affects
the interests of the Certificateholders, the party discovering such breach shall
give prompt written notice to the other parties. Within 60 days of its discovery
or its receipt of notice of breach, the Company shall cure such breach in all
material respects.
Section 2.05. Representations and Warranties of the Seller Regarding the
Mortgage Loans. The Seller represents and warrants to the Trustee and the
Certificateholders as of the Closing Date and, with respect to any Subsequent
Mortgage Loan, as of the Subsequent Transfer Date (in either case except as
otherwise expressly stated), that as to each Mortgage Loan conveyed to the Trust
by it:
(i) The information with respect to each Mortgage Loan set forth
in the Mortgage Loan Schedule or Subsequent Mortgage Loan Schedule is true
and correct as of the Cut-off Date or related Subsequent Transfer Date;
(ii) All of the original or certified documentation set forth in
Section 2.01 (including all material documents related thereto), with
respect to each Mortgage Loan has
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been or will be delivered to the Trustee on the Closing Date or as
otherwise provided in Section 2.01 or Section 2.02, as applicable;
(iii) Except with respect to one Mortgaged Property comprised of
vacant land securing a Mortgage Loan with a Principal Balance as of the
Cut-off Date of not more than $[ ], each related Mortgaged Property is
improved by a one- to four-family residential dwelling owned by the
related Mortgagor in fee simple, which may include condominiums,
townhouses and manufactured housing or modular homes that are permanently
affixed to the land and constitute real property under the laws of the
state in which the Mortgaged Property is located but shall not include
co-operatives or mobile homes;
(iv) As of the Cut-off Date or Subsequent Cut-off Date, as
appropriate, no Mortgage Loan included in the Fixed Rate Group has a
Combined Loan-to-Value Ratio in excess of [ ]% and no Mortgage Loan
included in the Adjustable Rate Group has a Loan-to-Value Ratio in excess
of [ ]%, except that two Mortgage Loans representing not more than [ ]% of
the initial Fixed Rate Group Balance have Combined Loan-to-Value Ratios of
up to [ ]%, and four Mortgage Loans representing not more than [ ]%, of
the Original Adjustable Rate Group Balance have Combined Loan-to-Value
Ratios of up to [ ]%;
(v) Each Mortgage Loan was originated by an Affiliate of the
Company or by an originator not affiliated with the Company authorized to
originate such Mortgage Loan and is being serviced by the Company;
(vi) Each Mortgage Loan included in the Fixed Rate Group as of the
Cut-off Date bears a fixed Mortgage Loan Rate of at least [ ]% per annum
and each Mortgage Loan included in the Adjustable Rate Group as of the
Cut-off Date is an Adjustable Rate Mortgage Loan that has a Minimum Rate
of not less than [ ]% per annum and a Mortgage Loan Rate as of the Cut-off
Date of not less than [ ]% per annum; the terms of each Mortgage Loan
included in the Adjustable Rate Group require that adjustments in the
related Mortgage Loan Rate be made employing the related Index measured as
of a date not more than three months prior to the related adjustment date;
(vii) Each Mortgage Note provides for a schedule of substantially
level and equal Monthly Mortgage Payments (subject, in the case of an
Adjustable Rate Mortgage Loan, to periodic adjustments relating to changes
in the Mortgage Loan Rate) that are sufficient to amortize fully the
principal balance of such Mortgage Note on or before its maturity date,
except that, Mortgage Notes with respect to Mortgage Loans in the Fixed
Rate Group representing not more than [ ]% of the initial Fixed Rate Group
Balance, provide for level and equal Monthly Mortgage Payments that are
sufficient to amortize fully the principal balances of such Notes over a
period not exceeding [ ] years, with "balloon" payments at stated maturity
that are substantially in excess of the Monthly Mortgage Payments;
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(viii) Each Mortgage is a valid and subsisting lien of record on the
Mortgaged Property having the priority indicated on the Mortgage Loan
Schedule, subject, in the case of any Junior Mortgage Loan, only to any
Senior Lien or Senior Liens on such Mortgaged Property and subject in all
cases to the exceptions to title set forth in the title insurance policy
with respect to the related Mortgage Loan, which exceptions are generally
acceptable to home equity mortgage lending institutions, and such other
exceptions to which similar properties are commonly subject and that do
not individually, or in the aggregate, materially and adversely affect the
benefits of the security intended to be provided by such Mortgage;
(ix) Immediately prior to the sale, transfer and assignment herein
contemplated, the Company held good and indefeasible title to, and was the
sole owner of, each Mortgage Loan conveyed by the Company subject to no
liens, charges, mortgages, encumbrances or rights of others, except with
respect to liens that will be released simultaneously with such transfer
and assignment; and immediately upon the transfer and assignment herein
contemplated, the Trustee will hold good and indefeasible title to, and be
the sole owner of, each Mortgage Loan subject to no liens, charges,
mortgages, encumbrances or rights of others;
(x) The Mortgage Loan Rate for each Adjustable Rate Mortgage Loan
will be adjustable on each related Adjustment Date and will equal the sum,
rounded upward to the nearest three decimal places, of the Index plus the
related Gross Margin, subject to any related Minimum Rates, Maximum Rates
or any limitations or periodic adjustments, in each case as specified in
the related Mortgage Loan Schedule. No Mortgage Loan is subject to
negative amortization. The Mortgage Notes relating to not more than [ ]%
of the Mortgage Loans in the Adjustable Rate Group, by Original Adjustable
Rate Group Balance or by the Adjustable Rate Group Balance as of the
Closing Date, provide for initial Adjustment Dates that are more than one
year and less than three years from the Cut-off Date;
(xi) With respect to any Adjustable Rate Mortgage Loan, no mortgage
document in the Mortgage File contains any provision permitting or
requiring conversion of the Mortgage Loan to a fixed interest rate nor is
the Mortgage Loan Rate conditioned upon Mortgagor maintaining accounts
with Seller;
(xii) As of the Cut-off Date or Subsequent Cut-off Date, as
appropriate (a) no Mortgage Loan had two or more Monthly Mortgage Payments
past due and not more than [ ]% of the Mortgage Loans (by Cut-off Date
Principal Balance) had one Monthly Payments past due, (b) no Mortgage Loan
has been 60 or more days contractually delinquent more than once during
the 12-month period immediately preceding the Cut-off Date and (c) no
Mortgage Loan has been 90 or more days delinquent in the 12 months
preceding the Cut-off Date;
(xiii) As of the Cut-off Date or Subsequent Cut-off Date, as
appropriate, there is no delinquent tax or assessment lien on any
Mortgaged Property, and, to the best knowledge
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of the Company, each Mortgaged Property is free of damage and is in good
repair and is not affected by hazardous or toxic wastes or substances;
(xiv) There is no offset, right of rescission, counterclaim or
defense, including the defense of usury, with respect to any Mortgage Note
or Mortgage, nor will the operation of any of the terms of the Mortgage
Note or the Mortgage, or the exercise of any right thereunder, render
either the Mortgage Note or the Mortgage unenforceable in whole or in
part, or subject to any right to rescission, set-off, counterclaim or
defense, including the defense of usury, and no such right of rescission,
set-off, counterclaim or defense has been asserted with respect thereto;
(xv) As of the Cut-off Date or Subsequent Cut-off Date, as
appropriate, there is no mechanic's lien or claim for work, labor or
material affecting any Mortgaged Property that is or may be a lien prior
to, or equal to or on a parity with, the lien of the related Mortgage
except those that are insured against by any title insurance policy
referred to in paragraph (xvii) below;
(xvi) To the best of the Seller's knowledge, each Mortgage Loan at
the time it was made complied in all material respects with applicable
local, state and federal laws and regulations, including, without
limitation, the federal Truth-in-Lending Act and other consumer protection
laws, real estate settlement procedure, usury, equal credit opportunity,
disclosure and recording laws;
(xvii) With respect to each Mortgage Loan, a lender's title
insurance policy (issued in standard form by a title insurance company
authorized to transact business in the state where the related Mortgaged
Property is located), in an amount at least equal to the Original
Principal Amount of such Mortgage Loan insuring the mortgagee's interest
under the related Mortgage Loan as the holder of a valid lien of record on
the real property described in the related Mortgage (subject only to
exceptions of the character referred to in paragraph (viii) above), was
effective on the date of the origination of such Mortgage Loan, and, as of
the Closing Date, such policy is in full force and effect and thereafter
such policy shall continue in full force and effect and shall inure to the
benefit of the Certificateholders upon consummation of the transactions
contemplated by this Agreement;
(xviii) As of the Cut-off Date or Subsequent Cut-off Date, as
appropriate, either (a) the improvements upon each Mortgaged Property are
covered by a valid and existing hazard insurance policy (which may be a
blanket policy) with a generally acceptable carrier that provides for fire
and extended coverage representing coverage not less than the least of (a)
the outstanding principal balance of the related Mortgage Loan (together,
in the case of a Junior Mortgage Loan, with the outstanding principal
balance of the Senior Lien), (b) the minimum amount required to compensate
for damage or loss on a replacement cost basis or (c) the full insurable
value of the Mortgaged Property or (b) in the case of a Junior Mortgage
Loan, a policy has been issued by a generally acceptable carrier that will
cover the full Principal Balance of such Junior Mortgage Loan in the event
of a loss covered by a hazard typically insured against by the type of
policy referred to in clause (xviii)(a);
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(xix) If any Mortgaged Property is in an area identified in the
Federal Register by FEMA as having special flood hazards, a flood
insurance policy in a form meeting the requirements of the current
guidelines of the Federal Insurance Administration, if obtainable with
respect to such Mortgaged Property, is in effect with respect to such
Mortgaged Property with a generally acceptable carrier in an amount
representing coverage not less than the least of (A) the outstanding
principal balance of the related Mortgage Loan (together, in the case of a
Junior Mortgage Loan, with the outstanding principal balance of the Senior
Lien), (B) the minimum amount required to compensate for damage or loss on
a replacement cost basis or (C) the maximum amount of insurance that is
available under the Flood Disaster Protection Act of 1973;
(xx) Each Mortgage and Mortgage Note is the legal, valid and
binding obligation of the maker thereof and is enforceable in accordance
with its terms, except only as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity (whether considered in a proceeding or action in
equity or at law), and all parties to each Mortgage Loan had full legal
capacity to execute all documents relating to such Mortgage Loan and
convey the estate therein purported to be conveyed; with respect to each
Mortgage Loan, only one original Mortgage Note exists;
(xxi) The Seller has caused and will cause to be performed any and
all acts required to be performed to preserve the rights and remedies of
the Trustee in any insurance policies applicable to each Mortgage Loan,
including any necessary notifications of insurers, assignments of policies
or interests therein, and establishment of co-insured, joint loss payee
and mortgagee rights in favor of the Trustee;
(xxii) As of the Cut-off Date no more than [ ]% of the Original
Fixed Rate Group Balance is secured by Mortgaged Properties located within
any single zip code area and no more than [ ]% of the Original Adjustable
Rate Group Balance is secured by Mortgaged Properties located within any
single zip code area;
(xxiii) Each original Mortgage has been recorded or is in the
process of being recorded, and all subsequent assignments of the original
Mortgage (other than the assignment from the Seller to the Trustee and any
assignment to the Seller or an affiliate thereof) have been recorded in
the appropriate jurisdictions as to which no Opinion of Counsel was
delivered pursuant to Section 2.01 or 2.02, as applicable, or such
Mortgages and assignments are in the process of being recorded);
(xxiv) The terms of each Mortgage Note and each Mortgage have not
been impaired, altered or modified in any respect, except by a written
instrument that has been recorded, if necessary, to protect the interest
of the Certificateholders and that has been delivered to the Trustee. The
substance of any such alteration or modification is reflected on the
Mortgage Loan Schedule and has been approved by the primary mortgage
guaranty insurer, if any;
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(xxv) The proceeds of each Mortgage Loan have been fully disbursed,
and there is no obligation on the part of the mortgagee to make future
advances thereunder. Any and all requirements as to completion of any
on-site or off-site improvements and as to disbursements of any escrow
funds therefor either have been complied with or are not yet required to
be complied with but will be complied with as and when required. All
costs, fees and expenses incurred in making or closing or recording such
Mortgage Loans were paid;
(xxvi) No Mortgage Note is or has been secured by any collateral,
pledged account or other security other than the lien of the corresponding
Mortgage;
(xxvii) No Mortgage Loan was originated under a buydown plan;
(xxviii) No Mortgage Loan has a shared appreciation feature or other
contingent interest feature;
(xxix) Each Mortgaged Property consists of one or more contiguous
parcels of real property with a residential dwelling erected thereon
(except as described in (iii) above);
(xxx) Each Mortgage Loan contains a provision for the acceleration
of the payment of the unpaid principal balance of such Mortgage Loan in
the event the related Mortgaged Property is sold without the prior consent
of the mortgagee thereunder;
(xxxi) Any advances made to the Mortgagor after the date of
origination of a Mortgage Loan but prior to the Cut-off Date or Subsequent
Cut-off Date, as appropriate have been consolidated with the outstanding
principal amount secured by the related Mortgage, and the secured
principal amount, as consolidated, bears a single interest rate and single
repayment term reflected on the Mortgage Loan Schedule. The consolidated
principal amount as of the Cut-off Date or Subsequent Cut-off Date, as
appropriate, does not exceed the original principal amount of the related
Mortgage Loan and is reflected as the current principal amount of such
Mortgage Loan on the Mortgage Loan Schedule;
(xxxii) To the best knowledge of the Seller, there is no proceeding
pending or threatened for the total or partial condemnation of any
Mortgaged Property, nor is such a proceeding currently occurring;
(xxxiii) To the best knowledge of the Seller, all of the
improvements that were included for the purposes of determining the
Appraised Value of any Mortgaged Property lie wholly within the boundaries
and building restriction lines of such Mortgaged Property, and no
improvements on adjoining properties encroach upon such Mortgaged Property
except those that are identified in the related title insurance policy and
affirmatively insured;
(xxxiv) To the best knowledge of the Seller, no improvement located
on or being part of any Mortgaged Property is in violation of any
applicable zoning law or regulation,
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all inspections, licenses and certificates required to be made or issued
with respect to all occupied portions of each Mortgaged Property and, with
respect to the use and occupancy of the same, including but not limited to
certificates of occupancy and fire underwriting certificates, have been
made or obtained from the appropriate authorities and such Mortgaged
Property is lawfully occupied under applicable law;
(xxxv) With respect to each Mortgage that is a deed of trust, a
trustee, duly qualified under applicable law to serve as such, has been
properly designated and currently so serves and is named in such Mortgage,
and no fees or expenses are or will become payable by the
Certificateholders or the Trust to any trustee under any deed of trust,
except in connection with a trustee's sale after default by the related
Mortgagor;
(xxxvi) With respect to each Junior Mortgage Loan, either (A) no
consent for such Mortgage Loan was required by the holder of the related
Senior Lien prior to the making of such Mortgage Loan or (B) such consent
has been obtained and is contained in the related Mortgage File;
(xxxvii) Each Mortgage contains customary and enforceable provisions
that render the rights and remedies of the holder thereof adequate for the
realization against the related Mortgaged Property of the benefits of the
security, including by trustee's sale and by judicial foreclosure and
there is no homestead or other exemption available to the related
Mortgagor that would materially interfere with the right to sell the
related Mortgaged Property at a trustee's sale or the right to foreclose
upon the related Mortgaged Property;
(xxxviii) There is no default, breach, violation or event of
acceleration existing under any Mortgage or the related Note and no event
that, with the passage of time or with notice and the expiration of any
grace or cure period, would constitute a default, breach, violation or
event of acceleration; and the Seller has not waived any default, breach
violation or event of acceleration;
(xil) No instrument of release or waiver has been executed in
connection with any Mortgage Loan, and no Mortgagor has been released, in
whole or in part, except in connection with an assumption agreement that
has been approved by the primary mortgage guaranty insurer, if any, and
the Financial Guaranty Insurer, and that has been delivered to the
Trustee;
(xl) The maturity date of each Junior Mortgage Loan is at least 12
months prior to the maturity date of the related Senior Lien if such
Senior Lien provides for a balloon payment;
(xli) At least [ ]% of the Mortgage Loans in the Fixed Rate Group
(by Original Fixed Rate Group Balance) and at least [ ]% of the Mortgage
Loans in the Adjustable Rate Group (by Original Adjustable Rate Group
Balance) are secured by Mortgaged Properties that are maintained by the
related Mortgagors as primary residences;
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(xlii) There are no defaults (other than delinquencies) in complying
with the terms of the Mortgage, and all taxes, governmental assessments,
insurance premiums, water, sewer and municipal charges, leasehold payments
or ground rents that previously became due and owing have been paid, or an
escrow of funds has been established in an amount sufficient to pay for
every such item that remains unpaid; the Company has not advanced funds,
or induced, solicited or knowingly received any advance of funds by a
party other than the Mortgagor, directly or indirectly, for the payment of
any amount required by the Mortgage, other than interest accruing from the
date of the Mortgage Note or date of disbursement of the Mortgage
proceeds, whichever is greater, to the date that precedes by one month the
due date of the first installment of principal and interest;
(xliii) To the best of the Seller's knowledge, all parties that have
had any interest in the Mortgage Loan, whether as mortgagee, assignee,
pledgee or otherwise during the period in which they held and disposed of
such interest, were and either are now or, in the case of subclause (1) of
this clause (xliii), will be within 30 days of the Closing Date or
Subsequent Cut-off Date, as appropriate, (1) in compliance with any and
all applicable licensing requirements of the laws of the state wherein the
Mortgaged Property is located, and (2) (A) organized under the laws of
such state, or (B) qualified to do business in such state, or (C) federal
savings and loan associations or national banks having principal offices
in such state, or (D) not doing business in such state so as to require
qualification or licensing;
(xliv) No Mortgage Loan was selected by the Seller for inclusion in
the Trust on any basis intended to adversely affect the Trust;
(xlv) A full appraisal of each Mortgaged Property was performed in
connection with the origination of the related Mortgage Loan, and such
appraisal is the appraisal referred to in determining the Appraised Value
of such Mortgaged Property;
(xlvi) With respect to each Junior Mortgage Loan, the related Senior
Lien requires equal monthly payments or, if such Senior Lien bears an
adjustable interest rate, the monthly payments for such Senior Lien may be
adjusted no more frequently than monthly;
(xlvii) With respect to any Junior Mortgage Loan with a related
Senior Lien that provides for negative amortization or an open-end feature
that permits additional borrowings, the balance of such Senior Lien
reflected on the Mortgage Loan Schedule and used to calculate the Combined
Loan-to-Value Ratio for such Junior Mortgage Loan is based on the maximum
amount of negative amortization, deferred interest or maximum amount of
borrowings permitted under such Senior Lien;
(xlviii) The Seller has not required the Mortgagor to sign a letter
in connection with the origination of any Mortgage Loan in which such
Mortgagor indicates its inability to repay such Mortgage Loan in
accordance with the terms of the related Mortgage Note;
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(xlix) Each Adjustable Rate Mortgage Loan that (i) has a first
Adjustment Date within six months of its origination date was underwritten
or re-underwritten as though such Mortgage Loan would bear a rate of
interest equal to related Index plus the related Gross Margin and (ii) has
a first Adjustment Date more than six months after its origination date
was underwritten or re-underwritten as though such Mortgage Loan would
bear a rate of interest equal to its specified initial interest rate;
(l) As of the Cut-off Date or Subsequent Cut-off Date, as
appropriate, no Mortgage Loan in the Fixed Rate Group or the Adjustable
Rate Group was secured by more than one Mortgaged Property;
(li) With respect to each Adjustable Rate Mortgage Loan, all of the
terms of the Mortgage pertaining to interest rate adjustments, payment
adjustments and adjustments of the outstanding principal balance are
enforceable; such adjustments will not affect the priority of the Mortgage
lien and all of the adjustments have been properly calculated, recorded,
reported and applied in accordance with the Mortgage and applicable law;
(lii) All insurance policies are the valid and binding obligation of
the insurer and contain a standard mortgagee clause naming the originator,
its successors and assigns, as mortgagee. Such insurance policies require
prior notice to the insured of termination or cancellation and no such
notice has been received, each Mortgage obligates the Mortgagor thereunder
to maintain all such insurance at the Mortgagor's cost and expense, and
upon the Mortgagor's failure to do so, authorizes the holder of the
Mortgage to obtain and maintain such insurance at the Mortgagor's cost and
expense and to seek reimbursement therefor from the Mortgagor;
(liii) None of the Mortgage Loans is subject to a plan of bankruptcy
and no Mortgagor has sought protection or relief under any state or
federal bankruptcy or insolvency law during the term of the related
Mortgage;
(liv) Each Mortgage Loan has a Monthly Mortgage Payment due during
the first Collection Period commencing after the calendar month during
which such Mortgage Loan is included in the Trust;
(lv) All Mortgage Loans were underwritten or re-underwritten in
accordance with the underwriting guidelines of the Seller;
(lvi) To the knowledge of the Seller, no misrepresentation,
negligence, fraud or similar occurrence with respect to a Mortgage Loan
has taken place on the part of the Mortgagor, any appraiser, any builder
or developer, or any other party having statutory or common law
liabilities with respect to the origination of the Mortgage Loan or in any
related application for insurance in relation to such Mortgage Loan;
(lvii) To the knowledge of the Seller, certain Mortgage Loans are
secured by Mortgaged Properties upon which are affixed manufactured
housing or modular homes,
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provided that it is the intent and agreement of the parties hereto that
this representation shall be deemed breached if any Mortgage Loan is
determined to be secured by a Mortgaged Property upon which is affixed
manufactured housing or a modular home and such Mortgage Loan is subject
to a foreclosure which results in a Realized Loss; and
(lviii) Mortgage Loans in the Fixed Rate Group representing not less
than [ ]% of the aggregate Principal Balance thereof were assigned a
credit grade of "A-" by the Seller at the time such Mortgage Loans were
originated or acquired, as applicable, by the Seller; Mortgage Loans in
the Fixed Rate Group representing not less than [ ]% of the aggregate
Principal Balance thereof were assigned a credit grade of "B" by the
Seller at the time such Mortgage Loans were originated or acquired, as
applicable, by the Seller; Mortgage Loans in the Fixed Rate Group
representing not less than [ ]% of the aggregate Principal Balance thereof
were assigned a credit grade of "C" by the Seller at the time such
Mortgage Loans were originated or acquired, as applicable, by the Seller;
Mortgage Loans in the Fixed Rate Group representing not more than [ ]% of
the aggregate Principal Balance thereof were assigned a credit grade of
"C-" by the Seller at the time such Mortgage Loans were originated or
acquired, as applicable, by the Seller; and Mortgage Loans in the Fixed
Rate Group representing not more than [ ]% of the aggregate Principal
Balance thereof were assigned a credit grade of "D" by the Seller at the
time such Mortgage Loans were originated or acquired, as applicable, by
the Seller. Mortgage Loans in the Adjustable Rate Group representing not
less than [ ]% of the aggregate Principal Balance thereof were assigned a
credit grade of "A-" by the Seller at the time such Mortgage Loans were
originated or acquired, as applicable, by the Seller; Mortgage Loans in
the Adjustable Rate Group representing not less than [ ]% of the aggregate
Principal Balance thereof were assigned a credit grade of "B" by the
Seller at the time such Mortgage Loans were originated or acquired, as
applicable, by the Seller; Mortgage Loans in the Adjustable Rate Group
representing not less than [ ]% of the aggregate Principal Balance thereof
were assigned a credit grade of "C" by the Seller at the time such
Mortgage Loans were originated or acquired, as applicable, by the Seller;
Mortgage Loans in the Adjustable Rate Group representing not more than
[ ] % of the aggregate Principal Balance thereof were assigned a credit
grade of "C-" by the Seller at the time such Mortgage Loans were
originated or acquired, as applicable, by the Seller; and Mortgage Loans
in the Adjustable Rate Group representing not more than [ ]% of the
aggregate Principal Balance thereof were assigned a credit grade of "D" by
the Seller at the time such Mortgage Loans were originated or acquired, as
applicable, by the Seller. Each credit grade so assigned to any Mortgage
Loan has been determined in accordance with the Seller's internal credit
grading system and not pursuant to any other scale or objective standard.
It is understood and agreed that the representations and warranties set
forth in this Section shall survive the sale and assignment of the Mortgage
Loans to the Trust and the issuance, sale and delivery of the Certificates. Upon
discovery by the Seller, the Servicer or a Responsible Officer of the Trustee of
a breach of any of the foregoing representations and warranties, without regard
to any limitation set forth in such representation or warranty concerning the
knowledge of the Seller as to the facts stated therein, which breach materially
and adversely affects the interests of the
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Certificateholders in the related Mortgage Loan or Mortgage Loans, the party
discovering such breach shall give prompt written notice to the other parties
hereto and to each of the Rating Agencies.
Within 60 days of its discovery or its receipt of notice of such breach,
the Seller shall use all reasonable efforts to cure such breach in all material
respects. Unless, prior to the expiration of such 60-day period, such breach has
been cured in all material respects or otherwise does not exist or continue to
exist, the Seller shall, not later than the Deposit Date in the month following
the related Collection Period in which any such cure period expired, but in all
events within 90 days of the earlier of its discovery or receipt of notice of
breach (or at the election of the Seller, an earlier Collection Period), either
(I) repurchase such Mortgage Loan (or, in the case of any representation and
warranty stated above in terms of minimum or maximum aggregate percentage
amounts, repurchase Mortgage Loans such that, after giving effect to such
repurchase, the related representation and warranty would be complied with)
(including any property acquired in respect thereof and any insurance policy or
insurance proceeds with respect thereto) from the Trust in the same manner and
subject to the same conditions as set forth in Section 2.03 or (II) remove such
Mortgage Loan and substitute in its place a Qualified Replacement Mortgage Loan
(or, in the case of any representation and warranty stated above in terms of
minimum or maximum aggregate percentage amounts, remove such Mortgage Loans and
substitute in their place Qualified Replacement Mortgage Loans such that, after
giving effect to such substitution, the related representation and warranty
would be complied with) in the same manner and subject to the same conditions as
set forth in Section 2.03. Upon making any such repurchase or substitution, the
Seller shall be entitled to receive an instrument of assignment or transfer from
the Trustee, without recourse to the Trustee, to the same extent as set forth in
Section 2.03 with respect to the repurchase of or substitution for Defective
Mortgage Loans under that Section. It is understood and agreed that the
obligation of the Seller to repurchase or substitute any such Defective Mortgage
Loan (or property acquired in respect thereof or insurance policy or current or
future insurance proceeds with respect thereto) shall constitute the sole remedy
against it respecting such breach of the foregoing representations or warranties
available to the Certificateholders or the Trustee, as the case may be, and such
obligation shall survive any resignation or termination of the Company as
Servicer under this Agreement.
Notwithstanding the foregoing, a substitution of a Mortgage Loan by the
Seller for a breach will not be made unless the Trustee receives an Officer's
Certificate certifying that the Qualified Replacement Mortgage Loan conforms to
the requirements of this Agreement and an Opinion of Counsel that such
substitution will not be a "prohibited transaction" as defined in Section
860F(a)(2) of the Code. Any substitution must be effected not later than two
years after the Closing Date, or within such longer period of time as may be
permitted under the REMIC Provisions for substitution of mortgage loans.
Section 2.06. Execution and Authentication of Certificates. The Trustee
shall deliver to or upon the order of the Seller, in exchange for the Mortgage
Loans and the other assets comprising the Trust, simultaneously with the sale,
assignment and transfer to the Trustee of the Mortgage Loans, Certificates duly
executed by the Trustee, on behalf of the Trust, not in its individual capacity
but solely as Trustee, and authenticated by the Trustee, pursuant to Section
6.01, in
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authorized denominations, equaling, 100% of the Percentage Interests in each
Class, and collectively evidencing the entire ownership of the Trust.
Section 2.07. [Reserved].
Section 2.08. Indemnification of the Trust. The Seller shall indemnify the
Trust for any liability incurred thereby as a result of a breach of the
representation and warranty set forth in clause (xvi) of Section 2.05. This
indemnity obligation shall be in addition to any other obligation the Seller may
have in connection with any such breach.
ARTICLE THREE
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS;
CERTIFICATE ACCOUNT
Section 3.01. The Servicer and the Sub-Servicers. (a) Acting directly or
through one or more Sub-Servicers as provided in Section 3.15, the Servicer, as
servicer, shall administer the Mortgage Loans with reasonable care, using that
degree of skill and attention that the Servicer exercises with respect to all
comparable home equity mortgage loans that it services for itself or others. The
duties of the Servicer shall include collecting and posting of all payments,
responding to inquiries of Mortgagors or by federal, state or local government
authorities with respect to the Mortgage Loans, investigating delinquencies,
reporting tax information to Mortgagors in accordance with its customary
practices and accounting for collections and furnishing monthly and annual
statements to the Trustee with respect to distributions and making Monthly
Advances and Servicing Advances pursuant to Section 5.02. The Servicer shall
follow its customary standards, policies and procedures in performing its duties
as Servicer, to the extent not in conflict with the provisions of this
Agreement. Notwithstanding the appointment of any Sub-Servicer, the Servicer
shall remain liable for the performance of all of the servicing obligations and
responsibilities under this Agreement. The Servicer shall maintain all licenses
and qualifications necessary to perform the servicing obligations hereunder in
the jurisdictions in which it services Mortgage Loans. If the Servicer commences
directly to service a material number or principal amount of Mortgage Loans with
related Mortgaged Properties located in any other state, the Servicer will use
its reasonable efforts promptly to obtain, and thereafter to maintain, all
licenses and qualifications necessary to perform its servicing obligations
hereunder in each such state. Each Sub-Servicer shall maintain all licenses and
qualifications necessary to perform its servicing obligations in the states
where the Mortgaged Properties to which the applicable Sub-Servicing Agreement
relates are located. The Servicer shall cooperate with the Trustee and furnish
to the Trustee such information in its possession as may be necessary or
appropriate to enable the Trustee to perform its tax reporting duties hereunder.
The Trustee shall furnish the Servicer with any powers of attorney and other
documents necessary or appropriate to enable the Servicer to carry out its
servicing and administrative duties hereunder.
Without limiting the generality of the foregoing, the Servicer (i) shall
continue, and is hereby authorized and empowered by the Trustee, to execute and
deliver, on behalf of itself, the Certificateholders and the Trustee or any of
them, any and all instruments of satisfaction or
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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 related Mortgaged Properties (ii) may consent to any modification of the
terms of any Mortgage Note not expressly prohibited hereby if the effect of any
such modification will not be to materially and adversely affect the security
afforded by the related Mortgaged Property or to decrease or slow (other than as
permitted by Section 3.02(a)(ii)) the timing of receipt of any payments required
thereunder and (iii) shall not consent to the placing of a lien senior to or on
parity with that of the Mortgage on the related Mortgaged Property. In the event
that notwithstanding the provisions of clause (iii) above the Servicer shall
consent to the placing of a lien senior to or on a parity with that of the
Mortgage on a Mortgaged Property, the Servicer shall purchase on the next
Deposit Date such Mortgage Loan (including any property acquired in respect
thereof and any insurance policy or insurance proceeds with respect thereto)
from the Trust at a price equal to the Purchase Price and deposit such amount in
the Certificate Account on such Deposit Date pursuant to Section 3.02. For
purposes of this Agreement, any such purchase shall be deemed to be a prepayment
of such Mortgage Loan. It is understood and agreed that the obligation of the
Servicer to purchase any Mortgage Loan (or property acquired in respect thereof
or insurance policy or insurance proceeds with respect thereto) pursuant to the
second immediately preceding sentence shall constitute the sole remedy against
it respecting such breach available to the Certificateholders or the Trustee and
such obligation shall survive any resignation or termination of the consenting
Servicer under this Agreement.
The Servicer may ▇▇▇ to enforce or collect on any of the Mortgage Loans or
any insurance policy covering a Mortgage Loan, in its own name if possible, or
on behalf of the Trust. If the Servicer commences a legal proceeding to enforce
a Mortgage Loan or any such insurance policy, the Trustee shall thereupon be
deemed to have automatically assigned the Mortgage Loan or the rights under such
insurance policy to the Servicer for purposes of collection only. If, however,
in any suit or legal proceeding for enforcement, it is held that the Servicer
may not enforce or collect on a Mortgage Loan or any insurance policy covering a
Mortgage Loan on the ground that it is not a real party in interest or a holder
entitled to enforce such Mortgage Loan or such insurance policy, as the case may
be, then the Trustee shall, upon the written request of a Servicing Officer,
furnish the Servicer with such powers of attorney and other documents as are
necessary or appropriate to enable the Servicer to enforce such Mortgage Loan or
insurance policy, as the case may be.
The relationship of the Servicer to the Trustee under this Agreement is
intended by the parties to be that of an independent contractor and not that of
a joint venturer, partner or agent.
(b) The parties intend that each REMIC Pool shall constitute a REMIC,
and that the affairs of each REMIC Pool shall be conducted so as to qualify it
as a REMIC. In furtherance of such intention, the Servicer covenants and agrees
that it shall act as agent (and the Servicer is hereby appointed to act as
agent) on behalf of each REMIC Pool, and that in such capacity it shall: (a) use
its best efforts to conduct the affairs of such REMIC Pool at all times that any
Certificates are outstanding so as to maintain the status thereof as a REMIC
under the REMIC Provisions; (b) not knowingly or intentionally take any action
or omit to take any action that would cause the termination of the REMIC status
of any REMIC Pool or that would subject such REMIC Pool to tax, including the
modification of a qualified mortgage that would subject such REMIC Pool to tax;
(c) exercise reasonable care not to allow such REMIC Pool to receive income from
the performance
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of services or from assets not permitted under the REMIC Provisions to be held
by a REMIC; (d) pay the amount of any federal income tax, including, without
limitation, prohibited transaction taxes, taxes on net income from foreclosure
property, and taxes on certain contributions to a REMIC after the Startup Day,
imposed on any REMIC Pool when and as the same shall be due and payable (but
such obligation shall not prevent the Servicer or any other appropriate Person
from contesting any such tax in appropriate proceedings and shall not prevent
the Servicer from withholding or depositing payment of such tax, if permitted by
law, pending the outcome of such proceedings); and (e) pay the amount of any and
all taxes imposed on any REMIC Pool pursuant to Section 24874 of the California
Revenue and Taxation Code. The Servicer shall not be entitled to reimbursement
for any taxes paid pursuant to this Section.
Section 3.02. Collection of Certain Mortgage Loan Payments; Collection
Account and Certificate Account. (a) The Servicer shall, to the extent such
procedures shall be consistent with this Agreement, follow such collection
procedures as it follows from time to time with respect to home equity mortgage
loans in its servicing portfolio that are comparable to the Mortgage Loans;
provided that the Servicer shall always at least follow collection procedures
that are consistent with or better than standard industry practices. Consistent
with the foregoing, the Servicer may in its discretion (i) waive any assumption
fees, late payment charges, charges for checks returned for insufficient funds,
prepayment fees, if any, or other fees that may be collected in the ordinary
course of servicing the Mortgage Loans, (ii) if a Mortgagor is in default or
about to be in default because of a Mortgagor's financial condition, arrange
with the Mortgagor a schedule for the payment of delinquent payments due on the
related Mortgage Loan, or (iii) modify payments of monthly principal and
interest on any Mortgage Loan becoming subject to the terms of the Relief Act in
accordance with the Servicer's general policies for comparable home equity
mortgage loans subject to such Act.
(b) The Servicer shall establish and maintain, or cause to be
established and maintained, one or more Eligible Accounts that in the aggregate
are the Collection Account. All amounts held in the Collection Account shall be
invested by the depository institution or trust company then maintaining the
account at the written direction of the Servicer in Permitted Investments that
mature not later than the Deposit Date next succeeding the date of investment.
No Permitted Investment shall be sold or disposed of at a gain prior to maturity
unless the Servicer has obtained an Opinion of Counsel that such sale or
disposition will not cause any REMIC Pool to be subject to the tax on income
from prohibited transactions imposed by Code Section 860F(a)(1), or otherwise
subject any REMIC Pool to tax or cause any REMIC Pool to fail to qualify as a
REMIC. The Servicer shall not retain any cash or investment in the Collection
Account for a period in excess of 12 months and cash therein shall be considered
transferred to Certificate Account on a first-in, first-out basis. All net
income and gain realized from any such investment shall be for the benefit of
the Servicer as additional servicing compensation and shall be subject to its
withdrawal or order from time to time. Any losses realized in connection with
any such investment shall be for the account of the Servicer and the Servicer
shall deposit or cause to be deposited the amount of such loss (to the extent
not offset by income from other investments) in the Collection Account
immediately upon the realization of such loss.
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(c) Subject to Section 3.02(d), the Servicer shall deposit in the
Collection Account each of the following payments on and collections in respect
of the Mortgage Loans as soon as practicable, but in no event later than the
close of business on the second Business Day after its receipt thereof:
(i) all payments in respect of or allocable to interest on the
Mortgage Loans (including any net income from REO Properties);
(ii) all Principal Payments;
(iii) all Payments Ahead;
(iv) all Net Liquidation Proceeds; and
(v) all Trust Insurance Proceeds (including, for this purpose, any
amounts required to be credited by the Servicer pursuant to the last
sentence of Section 3.04).
The Servicer shall replace all amounts previously withdrawn from the
Collection Account and applied by the Servicer towards the payment of a Monthly
Advance pursuant to Section 5.02(a) or towards the payment of a Servicing
Advance pursuant to Section 5.02(b) by depositing into the Collection Account on
or prior to the Deposit Date immediately following such withdrawal an amount
equal to the total of all such amounts so applied since the immediately
preceding Deposit Date.
The foregoing requirements respecting deposits to the Collection Account
are exclusive, it being understood that, without limiting the generality of the
foregoing, the Servicer need not deposit in the Collection Account amounts
representing fees, late payment charges, charges for checks returned for
insufficient funds, prepayment fees, if any, or extension or other
administrative charges paid by Mortgagors or amounts received by the Servicer
for the account of Mortgagors for application towards the payment of taxes,
insurance premiums, assessments and similar items. The amounts deposited in the
Collection Account are subject to withdrawal, from time to time, to make
deposits into the Certificate Account pursuant to Section 3.02(e), to pay itself
the Monthly Servicing Fee pursuant to Section 3.08 and to make Servicing
Advances or to reimburse itself for Servicing Advances, as applicable, in either
case in accordance with Section 5.02(b), to make Monthly Advances in accordance
with Section 5.02(a) or to reimburse itself for payments of Monthly Advances to
the extent of recoveries of interest relating to the Mortgage Loans that were
the subject of such Monthly Advances. In addition, if the Servicer deposits in
the Collection Account any amount not required to be so deposited or any amount
in respect of payments by Mortgagors made by checks subsequently returned for
insufficient funds or other reason for non-payment, it may at any time withdraw
such amount from the Collection Account, any provision herein to the contrary
notwithstanding.
(d) Upon such terms as the Rating Agencies may approve, the Servicer may
make the deposits to the Collection Account referred to in Section 3.02(c) on a
later day than the second Business Day after receipt of the amounts required to
be so deposited, which terms and later day shall be specified by the Rating
Agencies and confirmed to the Trustee and the Servicer in writing.
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(e) The Trustee shall establish and maintain the Certificate Account.
The Certificate Account shall be an Eligible Account segregated on the books of
the Trustee and held by the Trustee in trust, and the Certificate Account and
the amounts deposited therein shall not be subject to any claim, liens or
encumbrances of any creditors or depositors of the Trustee or the Company
(whether made directly or indirectly through a liquidator, receiver or trustee
in bankruptcy of the Trustee or the Company). At or before [11:00 a.m. Los
Angeles time] on each Deposit Date, the Servicer shall withdraw from the
Collection Account all amounts on deposit therein that constitute any portion of
Available Funds for a Mortgage Loan Group and the related Distribution Date
(including any amounts therein that are being held for distribution on a
subsequent Distribution Date and are applied toward the Monthly Advance for the
related Distribution Date pursuant to Section 5.02(a)) and remit such amounts to
the Trustee for deposit in the Certificate Account. In addition, any
Compensating Interest and Monthly Advances required to be made by the Servicer
for the related Mortgage Loan Group in respect of the related Distribution Date
and any amounts required to be deposited into the Certificate Account in
connection with a purchase or repurchase of any Mortgage Loans or any shortage
on Mortgage Loans in such Mortgage Loan Group by the Seller or the Servicer
pursuant to Section 2.03, 2.05, 3.01, 3.03, 3.06 or 10.01 or a substitution of a
Qualified Replacement Mortgage Loan pursuant to Section 2.03 or 2.05, shall be
remitted to the Trustee for deposit in the Certificate Account on the applicable
Deposit Date. Any amounts held in the Certificate Account may be invested at the
written direction of the Servicer in Permitted Investments upon the same terms
and conditions as those specified in clause (b) above with respect to the
Collection Account except that such investments shall mature not later than the
Business Day preceding the Distribution Date next succeeding the date of
investment, and in the absence of such direction the Trustee shall invest in
Permitted Investments described in clause (f) of the definition of Permitted
Investments. All net income and gain realized from any such investment shall be
for the benefit of the Servicer as additional servicing compensation and shall
be subject to its withdrawal or order from time to time. Any losses realized in
connection with any such investment shall be for the account of the Servicer and
the Servicer shall deposit or cause to be deposited the amount of such loss (to
the extent not offset by income from other investments) in the Certificate
Account immediately upon the realization of such loss.
Section 3.03. Additional Servicing Responsibilities for the Adjustable
Rate Mortgage Loans. The Servicer shall enforce each Adjustable Rate Mortgage
Loan and shall timely calculate, record, report and apply all Mortgage Loan Rate
adjustments in accordance with the related Mortgage Note. The Servicer's record
shall, at all times, reflect then-current Mortgage Loan Rate and Monthly
Mortgage Payment and the Servicer shall timely notify the Mortgagor of any
changes to the Mortgage Loan Rate and the Monthly Mortgage Payment. If the
Servicer fails to adjust the Mortgage Loan Rate or the Monthly Mortgage Payment
in accordance with the terms of the Mortgage Note for the related Adjustable
Rate Mortgage Loan, or if the Servicer fails to notify the related Mortgagor of
any such adjustment as required under the terms of such Mortgage Note, or if any
liability, claim or defense arises with respect to any Adjustable Rate Mortgage
Loan solely as a result of any such failure, the Servicer shall pay, from its
own funds and without right of reimbursement therefor, any shortage in amounts
collected or collectible on the related Adjustable Rate Mortgage Loan that
results. The Servicer shall deposit any amounts in respect of such
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shortage in the Certificate Account on the Deposit Date with respect to the
related Collection Period.
Section 3.04. Hazard Insurance Policies. The Servicer shall cause to be
maintained for each Mortgage Loan (including Mortgage Loans as to which the
related Mortgaged Property has been acquired by the Trust upon foreclosure, by
deed in lieu of foreclosure or comparable conversion), hazard insurance
(including flood insurance coverage, if obtainable, to the extent such property
is located in a federally designated flood area in such amount as is required
under applicable FEMA guidelines) with extended coverage in an amount that is
not less than the least of (i) the maximum insurable value from time to time of
the improvements that are a part of such property, or (ii) the combined
principal balance of such Mortgage Loan and the principal balance of each
mortgage loan senior to such Mortgage Loan at the time of such foreclosure plus
accrued interest and the good-faith estimate of the Servicer of related
Liquidation Expenses to be incurred in connection therewith; provided, further
that such hazard insurance shall be in an amount not less than such amount as is
necessary to avoid the application of any coinsurance clause contained in the
related hazard insurance policy. Each such hazard insurance policy shall contain
a standard mortgagee clause naming the originator, its successors and assigns,
as mortgagee and shall require prior notice to the insured of termination or
cancellation. The Servicer shall be under no obligation to require that any
Mortgagor maintain earthquake or other additional insurance and shall be under
no obligation itself to maintain any such additional insurance on property
acquired in respect of a Mortgage Loan, other than pursuant to such applicable
laws and regulations as shall at any time be in force and as shall require such
additional insurance. Amounts collected by the Servicer under any such policies
shall be deposited in the Collection Account or Certificate Account, as the case
may be, in accordance with Section 3.02 to the extent that they constitute Net
Liquidation Proceeds or Trust Insurance Proceeds. If the Servicer shall obtain
and maintain a blanket policy, issued by an insurer acceptable to each Rating
Agency, insuring against such hazard losses, it shall conclusively be deemed to
have satisfied its obligations as set forth in the first sentence of this
Section, it being understood and agreed that such policy may contain a
deductible clause that is in form and substance consistent with standard
industry practice, in which case 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, and there shall have been a
loss that would have been covered by such policy, deposit in the Collection
Account in accordance with Section 3.02 the amount not otherwise payable under
the blanket policy because of such deductible clause.
Section 3.05. Enforcement of Due-on-Sale Clauses; Assumption and
Modification Agreements. In any case in which property subject to a Mortgage is
conveyed by the Mortgagor, the Servicer shall enforce any due-on-sale clause
contained in the related Mortgage Note or Mortgage, to the extent permitted by
such Mortgage Note or Mortgage, applicable law and governmental regulations, but
only to the extent that such enforcement will not adversely affect or jeopardize
coverage under any related insurance policy or result in legal action by the
Mortgagor. The Servicer may take or enter into an assumption and modification
agreement from or with the Person to whom such Mortgaged Property has been or is
about to be conveyed, pursuant to which such Person becomes liable under the
related Mortgage Note and the Mortgagor remains liable thereon or, if the Person
to whom such Mortgaged Property has been or is about to be conveyed satisfies
the Servicer's then-current underwriting standards for home equity mortgage
loans similar
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to the Mortgage Loans, and the Servicer in its reasonable judgment finds it
appropriate, is released from liability thereon. If the Trustee is holding the
Mortgage Files, the Servicer shall notify the Trustee that any assumption and
modification agreement has been completed by delivering to the Trustee an
Officer's Certificate certifying that such agreement is in compliance with this
Section and the Servicer shall forward to the Trustee the original of such
assumption and modification agreement. Such assumption and modification
agreement shall, for all purposes, be considered a part of the related Mortgage
File to the same extent as all other documents and instruments constituting a
part thereof. In connection with any such agreement, the Mortgage Loan Rate
shall not be reduced (but may be increased), the Principal Balance of such
Mortgage Loan shall not be changed and the term of such Mortgage Loan will not
be extended beyond the existing term of such Mortgage Loan. Any fee collected by
the Servicer for entering into any such agreement shall be retained by the
Servicer as additional servicing compensation.
Notwithstanding the foregoing paragraph of this Section 3.05 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 reasons of any
assumption of a Mortgage Loan, or transfer of any Mortgaged Property without the
assumption thereof, by operation of law or any assumption or transfer that the
Servicer reasonably believes it may be restricted by law from preventing, for
any reason whatsoever.
Section 3.06. Realization upon Liquidated Mortgage Loans. Subject to the
limitations set forth in this Section 3.06 with respect to Restricted Mortgage
Properties, the Servicer, on behalf of the Trust, shall foreclose upon or
otherwise comparably convert to ownership 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
pursuant to Section 3.02(a); provided that if the Servicer has actual knowledge
or reasonably believes that any Mortgaged Property is affected by hazardous or
toxic wastes or substances, then the Servicer shall not cause the Trust to
acquire title to such Mortgaged Property in a foreclosure or similar proceeding.
In connection with such foreclosure or other conversion, the Servicer shall
follow such practices (including, in the case of any default on a related Senior
Lien, the advancing of funds to correct such default) and procedures as it shall
deem necessary or advisable and as shall be normal and usual in its general
first, second and third lien one- to four-family mortgage loan servicing
activities. The foregoing is subject to the proviso that neither the Servicer
nor the Trustee shall be required to expend its own funds in connection with any
foreclosure or towards the correction of any default on a related Senior Lien or
restoration of any Mortgaged Property unless, in the reasonable judgment of the
Servicer, such foreclosure, correction or restoration will increase Net
Liquidation Proceeds (taking into account any unreimbursed Monthly Advances made
or expected to be made with respect to such Mortgage Loan).
To the extent the Net Liquidation Proceeds derived from any such
foreclosure or conversion exceed the unpaid Principal Balance of the related
Mortgage Loan and accrued interest thereon at the applicable Mortgage Loan Rate
to the related due date during the Collection Period in which such foreclosure
or conversion occurs (net of any related Monthly Advances or Servicing Advances
that were unreimbursed prior to the receipt of such Net Liquidation Proceeds),
such excess shall be paid to the Holder of the Class R Certificate.
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Neither the Trust nor the Trustee on behalf of the Trust shall complete
foreclosure proceedings with respect to any Restricted Mortgage Loan that has
not, at any time after the Cut-off Date, been brought current, or take title to
any Mortgaged Property securing a Restricted Mortgage Loan (each, a "Restricted
Mortgaged Property"), if, as a result of such foreclosure or taking of title,
the aggregate value of the Restricted Mortgaged Properties (computed on the
basis of the outstanding Principal Balance of such Restricted Mortgage Loan
immediately prior to such foreclosure or taking of title) then owned by the
Trust or the Trustee on behalf of the Trust would exceed [ ]% of the aggregate
of the Principal Balances of the Mortgage Loans as of the preceding
Determination Date.
If at any time the Trust or the Trustee on behalf of the Trust holds title
to Restricted Mortgaged Properties that have an aggregate value (computed on the
basis of the outstanding Principal Balance of each related Restricted Mortgage
Loan immediately prior to the time the Trust or the Trustee on behalf of the
Trust acquired title to the related Restricted Mortgaged Property) that exceeds
[ ]% of the aggregate of the Principal Balance of the Mortgage Loans as of the
preceding Determination Date, then the Seller shall, on or prior to the next
succeeding Deposit Date, purchase one or more of such Restricted Mortgaged
Properties at a price equal to the fair market value of the related Restricted
Mortgaged Property (calculated by the Servicer in a manner consistent with the
Servicer's customary practice of making valuation determinations in foreclosure
proceedings relating to residential mortgage loans in its servicing portfolio at
the time of such purchase) so that the aggregate value of such Restricted
Mortgaged Properties (calculated as specified above) then owned by the Trust or
the Trustee on behalf of the Trust after such purchase or purchases does not
exceed [ ]% of the then aggregate of the Principal Balance of the Mortgage
Loans.
Such purchase price shall be deposited in the Certificate Account on the
date of such purchase in the manner described in Section 2.03. For purposes of
this Agreement, any purchase effected in accordance with this paragraph shall be
deemed to be a prepayment of the related Restricted Mortgage Loan. Upon receipt
of the related purchase price and written notification of such deposit signed by
a Servicing Officer, the Trustee shall release or cause to be released to the
Seller the related Mortgage File and other property (including any insurance
policy or related present or future insurance proceeds with respect thereto) and
shall execute and deliver or cause to be executed and delivered such instruments
of transfer or assignment presented to it by the Seller, without recourse, as
shall be necessary to vest in the Seller, all of the legal and beneficial
ownership of each such Restricted Mortgaged Property and the Trustee shall have
no further responsibility with respect to said Mortgage File.
Notwithstanding the foregoing, the Servicer, with the consent of the
Financial Guaranty Insurer, may purchase from the Trust on any Deposit Date any
Mortgage Loan as to which the related Mortgagor has failed to make full Monthly
Mortgage Payments as required under the related Mortgage Note for three
consecutive months at any time following the Cut-off Date and prior to such
Deposit Date at a price equal to the Purchase Price by depositing such amount in
the Certificate Account on such Deposit Date pursuant to Section 3.02; provided,
however, that the aggregate Principal Balances of the Mortgage Loans purchased
by the Servicer pursuant to the
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exercise of the option granted in this sentence shall not exceed 5% of the sum
of the Original Pool Balance and the Prefunding Account Deposit. In addition,
the Servicer, with the consent of the Financial Guaranty Insurer, may purchase
from the Trust on any Deposit Date occurring during the 90-day period following
the Closing Date any Mortgage Loan as to which a Monthly Mortgage Payment
becomes 60 or more days contractually delinquent at any time following the
Cut-off Date and prior to such Deposit Date at a price equal to the Purchase
Price by depositing such amount in the Certificate Account on such Deposit Date
pursuant to Section 3.02; provided, however, that the aggregate Principal
Balances of the Mortgage Loans purchased by the Servicer pursuant to the
exercise of the option granted in this sentence shall not exceed [ ]% of the sum
of the Original Pool Balance and the Prefunding Account Deposit. For purposes of
this Agreement, any purchase effected in accordance with this paragraph shall be
deemed to be a prepayment of each Mortgage Loan so purchased.
In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be issued to the Trustee, or to its nominee, on behalf of the
Certificateholders, and the Servicer shall manage, conserve, protect and operate
each such Mortgaged Property for the Certificateholders solely for the purpose
of its prompt disposition and sale. The Servicer shall use its best efforts to
dispose of each such Mortgaged Property as expeditiously as possible consistent
with the goal of maximizing Net Liquidation Proceeds (taking into account any
unreimbursed Monthly Advances made or expected to be made with respect to such
Mortgage Loan). Neither the Trustee nor the Servicer, acting on behalf of the
Trust, shall provide financing from the Trust to any purchaser of any such
Mortgaged Property.
In the event that the Trust acquires any Mortgaged Property as aforesaid
or otherwise in connection with a default or imminent default on a Mortgage
Loan, such Mortgaged Property shall be disposed of by the Servicer on behalf of
the Trust before the last day of the third calendar year following the year in
which the foreclosure occurred unless (i) the Servicer on behalf of the REMIC
Pool has applied for and received an extension of such three-year period
pursuant to Code Sections 856(e)(3) and 860G(a)(8)(A), in which case the
Servicer shall sell such Mortgaged Property within the applicable extension
period or (ii) the Trustee shall have received an Opinion of Counsel to the
effect that the holding by the Trust of such Mortgaged Property subsequent to
two years after its acquisition will not result in a tax on prohibited
transactions imposed by Code Section 860F(a)(1), or otherwise subject the REMIC
Pool to tax or cause the REMIC Pool to fail to qualify as a REMIC at any time
that any Certificates are outstanding. The Servicer shall further ensure that
the Mortgaged Property is administered so that it constitutes "foreclosure
property" within the meaning of Code Section 860G(a)(8) at all times, that the
sale of such property does not result in the receipt by the REMIC Pool of any
income from non-permitted assets as described in Code Section 860F(a)(2)(B), and
that the REMIC Pool does not derive any "net income from foreclosure property"
within the meaning of Code Section 860G(c)(2) with respect to such property.
Section 3.07. Trustee to Cooperate; Release of Mortgage Files. Upon the
payment in full of the principal balance of any Mortgage Loan, if the Trustee is
holding the Mortgage Files, the Servicer shall notify the Trustee by a
certification in the form of Exhibit E hereto (which certification shall include
a statement to the effect that all amounts received in connection with such
payment which are required to be deposited to the Collection Account pursuant to
Section 3.02
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have been so deposited) of a Servicing Officer. Such notification shall be made
each month at the time that the Servicer delivers its Servicer Remittance Report
to the Trustee pursuant to Section 4.01. Upon any such payment in full, the
Servicer is authorized to procure from such trustee under the Mortgage that
secured the related Mortgage Note a deed of full reconveyance covering the
related Mortgaged Property encumbered by such Mortgage, which deed, except as
otherwise provided in Section 2941(c) of the California Civil Code or other
applicable law, shall be recorded by such trustee in the office of the County
Recorder in which the Mortgage is recorded, or, as the case may be, to procure
from such trustee an instrument of satisfaction or, if the related Mortgagor so
requests, an assignment without recourse, in each case prepared by the Servicer
at its expense and executed by the Trustee, which deed of reconveyance,
instrument of satisfaction or assignment shall be delivered by the Servicer to
the Person entitled thereto, it being understood and agreed that no expenses
incurred in connection with such deed of reconveyance, assignment or instrument
of satisfaction shall be reimbursed from amounts at the time on deposit in the
Collection or Certificate Account. From time to time and as appropriate for the
servicing or foreclosure of any Mortgage Loan, the Trustee shall, upon written
request of the Servicer and delivery to the Trustee of a trust receipt signed by
a Servicing Officer, release the related Mortgage File to the Servicer and shall
execute such documents prepared by the Servicer as shall be necessary to the
prosecution of any such proceedings. Such trust receipt shall obligate the
Servicer to return the Mortgage File to the Trustee when the need therefor by
the Servicer no longer exists unless the Mortgage Loan shall be liquidated, in
which case, upon receipt of a certificate of a Servicing Officer similar to that
herein above specified, the trust receipt shall be released by the Trustee to
the Servicer.
Section 3.08. Servicing Compensation; Payment of Certain Expenses by the
Servicer. On each Deposit Date, the Servicer shall be entitled to receive, by
withdrawal by the Servicer from the Collection Account, out of collections of
interest on the Mortgage Loans in the related Mortgage Loan Group for the
related Collection Period, as servicing compensation for such Collection Period,
the Monthly Servicing Fee for such Mortgage Loan Group. Additional servicing
compensation shall be assumption fees, late payment charges, charges for checks
returned for insufficient funds, prepayment fees, if any, or extension and other
administrative charges received by the Servicer and any earnings on investment
by the Servicer of amounts held in escrow accounts established thereby on behalf
of Mortgagors (any such investment to be made in compliance with applicable
law). The Servicer is obligated to pay Compensating Interest for the related
Mortgage Loan Group out of the related Monthly Servicing Fee on each Deposit
Date, to the extent of the amount of the Monthly Servicing Fee, and shall not be
entitled to reimbursement therefor. The Servicer shall be required to pay all
expenses incurred by it in connection with its activities hereunder (including
payment of the fees and expenses relating to the Annual Independent Public
Accountant's Servicing Report described in Section 3.10, and all other fees and
expenses not otherwise expressly stated hereunder for the account of the
Certificateholders) and shall not be entitled to reimbursement therefor except
as specifically provided herein.
Section 3.09. Annual Statement as to Compliance. (a) The Servicer will
deliver to the Trustee, the Financial Guaranty Insurer and each Rating Agency,
on or before September 30 of each year, beginning with [ ], an Officer's
Certificate of the Servicer substantially in the form set forth in Exhibit C
hereto stating that (a) a review of the activities of the Servicer during the
preceding calendar year (or since the Closing Date in the case of the first such
statement)
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and of its performance under this Agreement has been made under such officer's
supervision and (b) to the best of such officer's knowledge, based on such
review, the Servicer has fulfilled all its material obligations under this
Agreement throughout such year (or since the Closing Date in the case of the
first such statement), or, if there has been a default in the fulfillment of any
such obligation, specifying each such default known to such officer and the
nature and status thereof.
(b) The Servicer shall deliver to the Trustee, with a copy to each
Rating Agency, promptly after having obtained knowledge thereof, but in no event
later than five Business Days thereafter, written notice by means of an
Officer's Certificate of any event that with the giving of notice or the lapse
of time, or both, would become an Event of Default.
Section 3.10. Annual Independent Public Accountants' Servicing Report. On
or before [ ] of each year, beginning with [ ], the Servicer at its expense
shall cause a firm of nationally recognized independent public accountants (who
may also render other services to the Servicer) to furnish a report to the
Trustee, the Financial Guaranty Insurer and each Rating Agency to the effect
that such firm has examined certain documents and records (including the
Servicer Remittance Reports delivered by the Servicer during the period covered
by such reports) relating to the servicing activities of the Servicer (which
would include servicing of Mortgage Loans under this Agreement) for the period
covered by such report, and that such examination (which will have been
conducted substantially in compliance with the Uniform Single Attestation
Program for Mortgage Bankers to the extent that the procedures in such audit
guide are applicable to the servicing obligations set forth in this Agreement),
has disclosed no exceptions or errors in records relating to the servicing
activities of the Servicer, including servicing of Mortgage Loans subject to
this Agreement, that, in the opinion of such firm, are material, except for such
exceptions as shall be set forth in such report.
Section 3.11. Access to Certain Documentation and Information Regarding
the Mortgage Loans. (a) The Servicer shall provide to Certificateholders that
are federally insured savings associations and the FDIC and its supervisory
agents and examiners access to the documentation regarding the Mortgage Loans
required by applicable regulations of the Office of Thrift Supervision, and to
the Trustee all documentation relating to the Mortgage Loans that is in the
possession of the Servicer, such access being afforded without charge but only
upon reasonable request and during normal business hours at the offices of the
Servicer. Nothing in this Section shall derogate from the obligation of the
Servicer to observe any applicable law prohibiting disclosure of information
regarding the Mortgagors and the failure of the Servicer to provide access as
provided in this Section as a result of such obligation shall not constitute a
breach of this Section.
(b) The Servicer shall supply information to the Trustee in such form as
the Trustee shall reasonably request, by the start of the third Business Day
preceding each Distribution Date, as is required in the Trustee's reasonable
judgment to enable the Trustee to make required distributions and to furnish the
certificates, statements and reports to Certificateholders required pursuant to
this Agreement.
Section 3.12. Maintenance of Fidelity Bond and Errors and Omission Policy.
The Servicer shall during the term of its service as Servicer maintain in force
a (a) policy or policies of
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insurance covering errors and omissions in the performance of its obligations as
Servicer hereunder and (b) fidelity bond in respect of its officers, employees
and agents, in each case having coverage amounts that satisfy FNMA or FHLMC
requirements for mortgage loan originators and sellers.
Section 3.13. Notices to the Rating Agencies and the Trustee. In addition
to the other notices required to be given to the Rating Agencies and the Trustee
by the provisions of this Agreement, the Servicer shall give notice to each
Rating Agency, the Financial Guaranty Insurer and the Trustee of (a) any
amendment to this Agreement, (b) the final distribution on the Offered
Certificates, (c) the occurrence of an Event of Default and (d) the repurchase,
purchase or substitution, as applicable, of any Mortgage Loan pursuant to
Section 2.03, 2.05, 3.01 or 3.06 by the Seller or Servicer, as the case may be.
Section 3.14. Reports of Foreclosures and Abandonment of Mortgaged
Properties. Each calendar year beginning in [ ] the Servicer shall make the
reports of foreclosures and abandonments of any Mortgaged Property required by
Code Section 6050J. In order to facilitate this reporting process, the Servicer,
on or before [ ] of each year, shall provide to the Internal Revenue Service and
the Trustee reports relating to each instance occurring during the previous
calendar year in which the Servicer (i) on behalf of the Trustee acquired an
interest in a Mortgaged Property through foreclosure or other comparable
conversion in full or partial satisfaction of a Mortgage Loan, or (ii) knows or
has reason to know that a Mortgaged Property has been abandoned. The reports
from the Servicer shall be in form and substance sufficient to meet the
reporting requirements imposed by such Section 6050J.
Section 3.15. Sub-Servicers and Sub-Servicing Agreements. (a) The Servicer
may enter into Sub-Servicing Agreements for any servicing and administration of
Mortgage Loans with any institution that is in compliance with the laws of each
state necessary to enable it to perform its obligations under such Sub-Servicing
Agreement. The Servicer shall not enter into any Sub-Servicing Agreement that
does not provide for the servicing of the Mortgage Loans specified therein on a
basis consistent with the terms of this Agreement or that otherwise violates the
provisions of this Agreement. The Servicer may enter into, and make amendments
to, any Sub-Servicing Agreement or enter into different forms of Sub-Servicing
Agreements; provided, however, that any such amendments or forms shall be
consistent with and not violate the provisions of this Agreement.
(b) For purposes of this Agreement the Servicer shall be deemed to have
received payments on Mortgage Loans when any Sub-Servicer has received such
payments. With respect to the Servicer's obligations under Section 3.01 to make
deposits in the Collection Account, the Servicer shall be deemed to have made
such deposits when any Sub-Servicer has made such deposits into a Sub-Servicing
Account if permitted by the related Sub-Servicing Agreement.
(c) Any Sub-Servicing Agreement and any other transactions or services
relating to the Mortgage Loans involving a Sub-Servicer shall be deemed to be
between the Sub-Servicer and the Servicer alone and the Trustee shall not be
deemed party thereto and shall have no claims, rights, obligations, duties or
liabilities with respect to any Sub-Servicer, except that the Trustee shall have
such claims or rights that arise as a result of any funds held by a Sub-Servicer
in trust for or on
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behalf of the Trust. Notwithstanding the execution of any Sub-Servicing
Agreement, the Servicer shall not be relieved of any liability hereunder and
shall remain obligated and liable for the servicing and administration of the
Mortgage Loans.
Section 3.16. Prefunding Account. (a) The Trustee will establish and
maintain the Prefunding Account. No later than the Closing Date, the Trustee
will deposit in the Prefunding Account: (i) the Fixed Rate Group Prefunding
Account Deposit from the proceeds of the sale of the Fixed Rate Group
Certificates and (ii) the Adjustable Rate Group Prefunding Account Deposit from
the proceeds of the sale of the Adjustable Rate Group Certificates. Subject to
Section 3.16(d), upon the conveyance of Subsequent Mortgage Loans to the Trust
on any Subsequent Transfer Date, the Seller shall instruct the Trustee to
withdraw from the Prefunding Account (i) an amount equal to the Fixed Rate Group
Subsequent Purchase Price for the Subsequent Mortgage Loans bearing fixed
Mortgage Loan Rates to be included in the Fixed Rate Group and make a
corresponding reduction in the amount of the Fixed Rate Group Prefunding Account
Deposit and (ii) an amount equal to the Adjustable Rate Group Subsequent
Purchase Price for the Subsequent Mortgage Loans bearing adjustable Mortgage
Loan Rates to be included in the Adjustable Rate Group and make a corresponding
reduction in the amount of the Adjustable Rate Group Prefunding Account Deposit,
and to pay such amount to or upon the order of the Seller upon satisfaction of
the conditions set forth in Section 2.02 of this Agreement with respect to such
transfer.
(b) The Prefunding Account will be part of the Trust but not part of any
REMIC Pool. Amounts held in the Prefunding Account shall be invested in
Permitted Investments of the type specified in clause (f) of the definition of
Permitted Investments. The Trustee shall not be liable for any losses on amounts
invested in accordance with the provisions hereof. Any losses realized in
connection with any such investment shall be for the account of the Seller and
the Seller shall deposit the amount of such loss (to the extent not offset by
income from other investments) in the Prefunding Account immediately upon the
realization of such loss. All interest and any other investment earnings on
amounts held in the Prefunding Account shall be taxed to the Seller and for
federal and state income tax purposes the Seller shall be deemed to be the owner
of the Prefunding Account. All interest and any other investment earnings on
amounts held in the Prefunding Account shall be paid by the Trustee to the
Seller on the [ ] Distribution Date.
(c) On the Distribution Date in [ ], any amounts remaining in the
Prefunding Account (i) in respect of the Fixed Rate Group Prefunding Account
Deposit at such time (net of reinvestment earnings payable to the Seller) shall
be deposited at such time into the Certificate Account for distribution as part
of the Fixed Rate Group Principal Distribution Amount on the [ ] Distribution
Date and (ii) in respect of the Adjustable Rate Group Prefunding Account Deposit
at such time (net of reinvestment earnings payable to the Seller) shall be
deposited at such time into the Certificate Account for distribution as part of
the Adjustable Rate Group Principal Distribution Amount on the [ ] Distribution
Date.
(d) The Trustee will establish and maintain the Escrow Account as an
Eligible Account for the benefit of the Adjustable Rate Group Certificateholders
and the Financial Guaranty Insurer. The Trustee shall deposit or cause to be
deposited any Escrowed Amounts withdrawn from the Prefunding Account in respect
of the Mortgage Loans on the related
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Subsequent Transfer Date. Thereafter, (a) 100% of the Escrowed Amounts with
respect to the Fixed Rate Mortgage Loans will be released to the Company upon
completion of the Trustee of its review of the related Subsequent Mortgage Loans
and Mortgage Loan Documents and its determination that the conditions set forth
in Section 2.02 for inclusion of such Mortgage Loans in the Trust have been
satisfied as therein described, (b) [ ]% of the Escrowed Amounts with respect to
the Adjustable Rate Mortgage Loans will be released to the Company upon (i)
completion of the Trustee of its review of the related Subsequent Mortgage Loan
and Mortgage Loan Documents and its determination that the conditions set forth
in Section 2.02 for inclusion of such Mortgage Loans in the Trust have been
satisfied as therein described, (ii) each of S&P and ▇▇▇▇▇'▇ shall have issued
an investment grade "shadow rating" of the Adjustable Rate Group Certificates
(i.e., a rating thereof that does not consider the delivery or effect of the
Financial Guaranty Insurance Policy) and (iii) the Financial Guaranty Insurer
shall have received original copies of all documents and instruments executed by
the parties hereto in form and substance reasonably satisfactory to the
Financial Guaranty Insurer that it has requested of the Seller and (b) the
remaining [ ]% of the Escrowed Amounts with respect to such Adjustable Rate
Group Mortgage Loans will be released to the Company upon receipt by the Trustee
from the Financial Guaranty Insurer of notice that the Financial Guaranty
Insurer has completed its review of the related Subsequent Mortgage Loans and
Mortgage Loan Documents and is satisfied that such Subsequent Mortgage Loan
satisfies the conditions established by the Financial Guaranty Insurer for
inclusion in the Adjustable Rate Group; provided, however, that any amount not
released to the Company as described above will be deposited into the
Certificate Account on [ ], for distribution to the Adjustable Rate Group
Certificateholders as a portion of the Adjustable Rate Group Principal
Distribution Amount on [ ]. The Escrow Account will be an asset of the Trust but
not of any REMIC. Amounts held in the Escrow Account will not be invested in
Permitted Investments or otherwise.
Section 3.17. Capitalized Interest Account. (a) Unless all Subsequent
Mortgage Loans are purchased by the Trust on the Closing Date, the Trustee shall
establish and maintain the Capitalized Interest Account. On the Closing Date,
the Trustee will deposit the Capitalized Interest Account Deposit in the
Capitalized Interest Account or, if all Subsequent Mortgage Loans are purchased
on the Closing Date, in the Certificate Account. The Trustee shall hold the
Fixed Rate Group Capitalized Interest Account Deposit for the benefit of the
Fixed Rate Group Certificateholders and the Adjustable Rate Group Capitalized
Interest Account Deposit for the benefit of the Adjustable Rate Group
Certificateholders. If none or less than all of the Subsequent Mortgage Loans
are transferred to the Trust on the Closing Date, then on the [ ] Deposit Date,
amounts equal to (i) the Fixed Rate Group Capitalized Interest Account Deposit
and (ii) the Adjustable Rate Group Capitalized Interest Account Deposit shall be
withdrawn from the Capitalized Interest Account and deposited into the
Certificate Account in respect of the related Monthly Interest for the Fixed
Rate Group and the Adjustable Rate Group, respectively, for such Distribution
Date. If all of the Subsequent Mortgage Loans are transferred to the Trust on
the Closing Date, then the sum of the Fixed Rate Group Capitalized Interest
Account Deposit and the Adjustable Rate Group Capitalized Interest Account
Deposit will be deposited into the Certificate Account on the Closing Date and
held there until the Distribution Date in [ ]. On such first Distribution Date,
such amounts will be deemed to be available in respect of Monthly Interest for
the Fixed Rate Group or Adjustable Rate Group, as appropriate, and will be
distributable to the Certificateholders.
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Any amounts so deposited in the Certificate Account shall not be invested in
Permitted Investments or otherwise.
(b) The Capitalized Interest Account will be part of the Trust but not
part of any REMIC Pool. Amounts held in the Capitalized Interest Account prior
to the first Deposit Date shall be invested in Permitted Investments of the type
specified in clause (e) of the definition of Permitted Investments, which
Permitted Investments shall mature no later than the Deposit Date in [ ]. The
Trustee shall not be liable for any losses on amounts invested in accordance
with the provisions hereof. All interest and other investment earnings on
amounts held in the Capitalized Interest Account (and any other amounts
remaining on deposit therein in excess of the amounts to be so withdrawn and
deposited into the Certificate Account) shall be paid or released by the Trustee
to the Seller on the [ ] Distribution Date and for federal and state income tax
purposes the Seller shall be deemed to be the owner of the Capitalized Interest
Account. Any losses realized in connection with any such investment shall be for
the account of the Seller and the Seller shall deposit the amount of such loss
(to the extent not offset by income from other investments) in the Capitalized
Interest Account immediately upon the realization of such loss. All amounts
earned on deposit in the Capitalized Interest Account shall be taxed to the
Seller.
Section 3.18. Supplemental Interest Reserve Fund. The Trustee will
establish the Supplemental Interest Reserve Fund on the Closing Date. On the
Closing Date, the Class C Certificateholders will deposit, or cause to be
deposited, into the Supplemental Interest Reserve Fund $[ ]. On each
Distribution Date as to which there is a Class A-1A Supplemental Interest Amount
or a Class A-2A Supplemental Interest Amount, the Trustee has been directed by
the Class C Certificateholders to, and therefor will, deposit into the
Supplemental Interest Reserve Fund the amounts described in Section 5.01(d)
clause (11) with respect to the Fixed Rate Group and clause (7) with respect to
the Adjustable Rate Group, rather than distributing such amounts to the Class C
Certificateholders. On each such Distribution Date, the Trustee shall hold all
such amounts for the benefit of the Adjustable Rate Group Certificateholders,
and will distribute such amounts to the Adjustable Rate Group Certificateholders
pursuant to subclause (ii) of clause Second of Section 5.01(a). For federal and
state income tax purposes, the Class C Certificateholders will be deemed to be
the owners of the Supplemental Interest Reserve Fund except that, to the extent
distributions are to be made therefrom to the Adjustable Rate Group
Certificateholders, such Certificateholders will be deemed to be the owners
thereof. Amounts held in the Supplemental Interest Reserve Fund and not
distributable to the Adjustable Rate Group Certificateholders on any
Distribution Date will be invested by the Trustee in investments designated by
the Class C Certificateholders having maturities on or prior to the next
succeeding Distribution Date on which such amounts will be distributable to the
Adjustable Rate Group Certificateholders. Upon the termination of the Trust, or
the payment in full of each Class of Adjustable Rate Group Certificates, all
amounts remaining on deposit in the Supplemental Interest Reserve Fund will be
released from the lien of the Trust and distributed to the Class C
Certificateholders or their designee. The Supplemental Interest Reserve Fund
will be part of the Trust but not part of any REMIC Pool.
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Section 3.19. Payments on the Financial Guaranty Insurance Policy. (a) The
Trustee will establish and maintain the Policy Payments Account, a separate
special purpose trust account for the benefit of the Adjustable Rate Group
Certificateholders and the Financial Guaranty Insurer. The Trustee shall deposit
or cause to be deposited any Insured Amounts paid under the Financial Guaranty
Insurance Policy in the Policy Payments Accounts and distribute such amounts
only for the purpose of payment to the related Adjustable Rate Group
Certificateholders of the related Insured Amounts and such amounts may not be
used to satisfy any costs, expenses or liabilities of the Servicer, the Trustee
or the Trust. Insured Amounts deposited in the Policy Payments Account shall not
be invested in Permitted Investments or otherwise, and shall be transferred to
the Certificate Account on the related Distribution Date and disbursed by the
Trustee to the related Adjustable Rate Group Certificateholders in accordance
with Section 5.01.
As soon as possible, and in no event later than [ ] on the third Business
Day immediately preceding the related Distribution Date, the Trustee shall
determine whether an Insured Amount is required to be paid under the Financial
Guaranty Insurance Policy with respect to such Distribution Date and, if so,
shall immediately notify the Servicer by telephone, which notice shall be
confirmed in writing by facsimile transmission, of the Trustee's intention so to
file the applicable Notice of Claim. If by the close of business in Los Angeles
on such date an Insured Amount is still required to be paid under the Financial
Guaranty Insurance Policy with respect to such Distribution Date, the Trustee
shall furnish the Financial Guaranty Insurer with a completed Notice of Claim in
respect of such Insured Amount by [ ] on the next succeeding Business Day and
shall provide a copy thereof to the Servicer at or prior to the time such Notice
of Claim is received by the Financial Guaranty Insurer. The Notice of Claim
shall constitute a claim therefor pursuant to the Financial Guaranty Insurance
Policy. In the event any funds are received by the Trustee from the Servicer
prior to the close of business in Los Angeles on the Business Day following the
transmission of a Notice of Claim to the Financial Guaranty Insurer, and such
funds reduce the amount of the Insured Amount to which such Notice of Claim
relates, the Insured Amount to which such Notice of Claim relates shall be
reduced by a corresponding amount, and the Notice of Claim shall be deemed to
have been rescinded to the extent of the reduction of the Insured Amount.
Notification of any such reduction in the Insured Amount shall be given to the
Financial Guaranty Insurer by the Trustee by no later than [ ], on the related
Distribution Date. The Financial Guaranty Insurer shall, pursuant to the
Financial Guaranty Insurance Policy, pay to the Trustee the Insured Amount by [
], on the later of (i) the Business Day following receipt of such Notice of
Claim and (ii) such Distribution Date. The Trustee shall deposit or cause to be
deposited such Insured Amount in the Certificate Account.
(b) Each Adjustable Rate Group Certificateholder shall promptly notify
the Trustee in writing upon the receipt of a court order as described in the
definition of Preference Amount and shall enclose a copy of such order with such
notice to the Trustee. The Trustee shall promptly notify the Financial Guaranty
Insurer upon its receipt of any such court order. If the payment of any portion
of Insured Amount distributable to an Adjustable Rate Group Certificateholder on
any Distribution Date is avoided as a preference pursuant to a final,
nonappealable order under the Bankruptcy Code (the "Order"), the Financial
Guaranty Insurer shall cause such payment to
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be made on the later of (a) the date when due to be paid pursuant to the Order
or (b) the first to occur of (i) the [fourth] Business Day following receipt by
the Financial Guaranty Insurer from the Trustee of (A) a copy of the final
nonappealable order of the court pursuant to the United States Bankruptcy Code
to the effect that the related Certificateholder is required to return
distributions paid on a Certificate held thereby during the term of the
Financial Guaranty Insurance Policy because such payments were avoidable as
preference payments pursuant to an Order, (B) a certificate of such
Certificateholder that the Order has been entered and is not subject to any stay
and (C) an assignment duly executed and delivered by such Certificateholder in
such form as is reasonably required by the Financial Guaranty Insurer and
provided thereto by the Financial Guaranty Insurer, irrevocably assigning to the
Financial Guaranty Insurer all rights and claims of (i) such Certificateholder
relating to or arising under the Certificate held thereby against the debtor
that made such preference payment or otherwise with respect to such preference
payment or (ii) the date of receipt by the Financial Guaranty Insurer from the
Trustee of the items referred to in clauses (A), (B) and (C) above if, at least
[four] Business Days prior to such date of receipt, the Financial Guaranty
Insurer shall have received written notice from the Trustee that such items were
to be delivered on such date and such date was specified in the notice. Such
payment shall be disbursed to the receiver, conservator, debtor-in-possession or
trustee in named in the Order and not to the Trustee or any Adjustable Rate
Group Certificateholder directly (unless an Adjustable Rate Group
Certificateholder has previously paid such amount to the receiver, conservator,
debtor-in-possession or trustee in bankruptcy named in the Order, in which case
such payment shall be disbursed to the Trustee for distribution to such
Certificateholder upon proof of such payment reasonably satisfactory to the
Financial Guaranty Insurer).
(c) The Trustee shall receive, as attorney-in-fact for each Adjustable
Rate Group Certificateholder, any Insured Amount allocable to the Class A-1A or
Class A-2A Certificate held thereby, from the Financial Guaranty Insurer and
disburse the same in accordance with the provisions of Section 5.01. Any portion
of the distributions made by the Trustee in respect of any Accrued Certificate
Interest, Class A-1A Coverage Deficit or Class A-2A Coverage Deficit, Class A-2A
Certificate Principal Balance as of the Class A-2A Financial Scheduled
Distribution Date or other voluntary payment of Realized Losses by the Financial
Guaranty Insurer from proceeds of the Financial Guaranty Insurance Policy shall
not be considered payment by the Trust, nor shall such payments discharge the
obligation of the Trust with respect to such Certificateholders, and the
Financial Guaranty Insurer shall become the owner of such unpaid amounts in
respect of the Adjustable Rate Group Certificates with respect to which they are
made. The Trustee hereby agrees on behalf of each Adjustable Rate Group
Certificateholder for the benefit of the Financial Guaranty Insurer that it
recognizes that: (i) to the extent the Financial Guaranty Insurer pays any
Insured Amounts in respect of the Class A-1A Certificates, either directly or
indirectly (as by paying through the Trustee), to the Class A-1A
Certificateholders, the Financial Guaranty Insurer will be subrogated to the
rights of the Class A-1A Certificateholders with respect to such Insured Amounts
paid in respect of such Certificateholders, shall be deemed to the extent of the
Insured Amounts so paid in respect of such Certificateholders, to be a
registered Class A-1A Certificateholder and shall be entitled to receive all
future distributions on the Class A-1A Certificates until all such Insured
Amounts (together with interest thereon at the Class A-1A Pass-Through Rate from
the date paid until the
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date of reimbursement thereof) have been fully reimbursed; and (ii) to the
extent the Certificate Insurer pays any Insured Amounts in respect of the Class
A-2A Certificates, either directly or indirectly (as by paying through the
Trustee), to the Class A-2A Certificateholders, the Financial Guaranty Insurer
will be subrogated to the rights of the Class A-2A Certificateholders with
respect to such Insured Amounts paid in respect of such Certificateholders,
shall be deemed to the extent of the Insured Amounts so paid in respect of such
Certificateholders, to be a registered Class A-2A Certificateholder and shall be
entitled to receive all future distributions on the Class A-2A Certificates
until all such Insured Amounts (together with interest thereon at the Class A-2A
Pass-Through Rate from the date paid until the date of reimbursement thereof)
have been fully reimbursed, in each case subject to the following paragraph. To
evidence such subrogation, the Trustee shall note the Financial Guaranty
Insurer's rights as subrogee on the registration books maintained by the
Trustee. Except as otherwise described herein, the Financial Guaranty Insurer
shall not acquire any voting rights hereunder as a result of such subrogation.
The effect of the foregoing provisions is that, to the extent of any Insured
Amount made by it on each Distribution Date, the Financial Guaranty Insurer
shall be paid before any other distributions are made to the related Adjustable
Rate Group Certificateholders, in each case subject to the following paragraph.
Notwithstanding the provisions of the preceding paragraph, it is
understood and agreed that the intention of the parties is that the Financial
Guaranty Insurer shall not be entitled to reimbursement on any Distribution Date
for amounts previously paid by it (i) in respect of the Class A-1A Certificates
unless on such Distribution Date the Class A-1A Certificateholders shall also
have received the full amount of the Class A-1A Monthly Interest and the amount
of any Extra Principal Distribution Amount or Realized Losses sufficient to fund
any related Overcollateralization Deficit allocated for distribution to such
Class A-2A Certificateholders for such Distribution Date and (ii) in respect of
the Class A-2A Certificates unless on such Distribution Date the Class A-2A
Certificateholders shall also have received the full amount of the Class A-2A
Monthly Interest and the amount of any Extra Principal Distribution Amount or
Realized Losses sufficient to fund any related Overcollateralization Deficit
allocated for distribution to such Class A-2A Certificateholders for such
Distribution Date, as applicable.
(d) The Trustee shall be entitled to enforce on behalf of the Adjustable
Rate Group Certificateholders the obligations of the Financial Guaranty Insurer
under the Financial Guaranty Insurance Policy. The Class A Certificateholders
are not entitled to institute proceedings directly against the Financial
Guaranty Insurer. Each Adjustable Rate Group Certificateholder, by its purchase
of a Class A-1A or Class A-2 Certificate, the Servicer and the Trustee hereby
agree that the Financial Guaranty 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, the direction
of any appeal of any order relating to such preference claim and the posting of
any surety, supersedeas or performance bond pending any such appeal. In addition
and without limitation of the foregoing, the Financial Guaranty Insurer shall be
subrogated to the rights of the Servicer, the Trustee and each Adjustable rate
Group Certificateholder 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.
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(e) The Trustee shall keep a complete and accurate record of the amount
of interest and principal paid in respect of any Class A-1A or Class A-2A
Certificate from monies received under the Financial Guaranty Insurance Policy.
The Financial Guaranty Insurer shall have the right to inspect such records at
reasonable times during normal business hours upon one Business Day's notice to
the Trustee.
Section 3.20. Rights of the Financial Guaranty Insurer to Exercise Rights
of Adjustable Rate Group Certificateholders. By accepting its Certificate, each
Adjustable Rate Group Certificateholder agrees that unless a Financial Guaranty
Insurer Default exists, the Financial Guaranty Insurer shall have the right to
exercise all rights of the Adjustable Rate Group Certificateholders under this
Agreement without any further consent of the Adjustable Rate Group
Certificateholders, including, without limitation:
(i) the right to direct foreclosures upon Mortgage Loans upon failure of
the Servicer to do so;
(ii) the right to require the Seller to repurchase or substitute for, or
to require the Servicer to purchase, Mortgage Loans pursuant to Sections 2.03
and 2.05; and
(iii) the right to direct the actions of the Trustee during the
continuance of an Event of Default.
In addition, each Adjustable Rate Group Certificateholder agrees that, unless a
Certificate Insurer Default exists, the rights specifically set forth above may
be exercised by the Adjustable Rate Group Certificateholders only with the prior
written consent of the Financial Guaranty Insurer.
Moreover, by accepting its Certificate, each Fixed rate Group
Certificateholder agrees that unless a Financial Guaranty Insurer Default
exists, (i) the Fixed Rate Group Certificateholders may not exercise their
rights under this Agreement to give notices of any breach or to terminate the
rights and obligations of the Servicer with respect to the Fixed Rate Group in
the event of a Servicer Event of Default without the prior consent of the
Financial Guaranty Insurer, (ii) the Financial Guaranty Insurer, rather than
such Certificateholders, will have the right to direct the actions of the
Trustee during the continuance of any Servicer Event of Default, (iii) the
consent of the Financial Guaranty Insurer will be required in order for the
appointment of any successor Servicer to become effective and (iv) the consent
of the Financial Guaranty Insurer will be required in connection with any
amendment of this Agreement.
Section 3.21. Trust and Accounts Held for Benefit of the
Certificateholders and Financial Guaranty Insurer. Provided there does not
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exist a Financial Guaranty Insurer Default, the Trustee shall hold the Trust and
the Mortgage Files for the benefit of the Certificateholders and the Financial
Guaranty Insurer and all references in this Agreement (including, without
limitation, in Sections 2.01, 2.02 and 2.03) and in the Certificates to the
benefit of Holders of the Certificates shall be deemed to include the Financial
Guaranty Insurer. Provided there does not exist a Financial Guaranty Insurer
Default, the Servicer hereby acknowledges and agrees that it shall service and
administer the Mortgage Loans and any REO Properties, and shall maintain the
Collection Account for the benefit of the Certificateholders and for the benefit
of the Financial Guaranty Insurer, and all references in this Agreement to the
benefit of or actions on behalf of the Certificateholders shall be deemed to
include the Financial Guaranty Insurer. All notices, statements, reports,
certificates or opinions required by this Agreement to be sent to any other
party hereto or to the Certificateholders shall also be sent to the Financial
Guaranty Insurer.
ARTICLE FOUR
REMITTANCE REPORT
Section 4.01. Servicer Remittance Report. With respect to each
Distribution Date, not later than the fifth Business Day prior to the related
Deposit Date the Servicer shall deliver to the Trustee a computer-readable
magnetic tape containing the Servicer Remittance Report relating to the Fixed
Rate Group and the Servicer Remittance Report relating to the Adjustable Rate
Group detailing the payments and collections received in respect of the Mortgage
Loans in the related Mortgage Loan Group during the immediately preceding
Collection Period. The computer-readable magnetic tape shall include
loan-by-loan information that specifies account number, borrower name,
outstanding principal balance and activity since the last Distribution Date.
Such tape shall be in the form and have the specifications as may be agreed to
between the Servicer and the Trustee from time to time.
In addition to the foregoing, the Servicer shall provide the Trustee at
the time the tape is delivered to the Trustee a Liquidation Report for the Fixed
Rate Group, with respect to each Mortgage Loan in the Fixed Rate Group that
became a Liquidated Mortgage Loan during the related Collection Period and a
Liquidation Report for the Adjustable Rate Group, with respect to each Mortgage
Loan in the Adjustable Rate Group that became a Liquidated Mortgage Loan during
the related Collection Period, in either case substantially in the form of
Exhibit F hereto.
Section 4.02. Trustee Distribution Date Statement. The Trustee shall, not
later than the Business Day prior to each Deposit Date, furnish by telecopy to
the Servicer, Financial Guaranty Insurer and each Rating Agency a statement
derived from information on the Servicer Remittance Report for each Mortgage
Loan Group and the related Offered Certificates, relating to the next succeeding
Distribution Date:
(a) the total amount of payments in respect of or allocable to
interest on the Mortgage Loans received or deemed to have been received
from the related Mortgagors by the Servicer during such Collection Period
(including any net income from REO Properties received during the related
Collection Period);
(b) the aggregate amount of all Principal Prepayments received
from the related Mortgagors by the Servicer during such Collection Period;
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(c) the aggregate amount of all Principal Payments received or
deemed to have been received from the related Mortgagors by the Servicer
during such Collection Period;
(d) the total amount of Payments Ahead received during the related
Collection Period;
(e) the aggregate of any Trust Insurance Proceeds received by the
Servicer during such Collection Period;
(f) the aggregate of any Net Liquidation Proceeds received by the
Servicer during such Collection Period;
(g) the total amount of Compensating Interest payments to be paid
by the Servicer pursuant to Section 3.08;
(h) the aggregate Purchase Prices for (i) any Defective Mortgage
Loans that the Seller is required to repurchase on the related Deposit
Date pursuant to Section 2.03 or 2.05 and (ii) any Mortgage Loan that the
Servicer is required to purchase on the related Deposit Date pursuant to
Section 3.01 or 3.06;
(i) any amounts required to be deposited by the Seller on the
related Deposit Date in connection with the substitution of a Qualified
Replacement Mortgage Loan pursuant to Section 2.03 or 2.05;
(j) the amount of Monthly Advances to be made by the Servicer
pursuant to Section 5.02(a);
(k) the related Monthly Servicing Fee attributable to the Mortgage
Loans in the related Mortgage Loan Group;
(l) the amount of Monthly Advances reimbursable to the Servicer in
such Collection Period pursuant to Section 5.02(a) and not previously
reimbursed;
(m) the amount of any Servicing Advance made by the Servicer
pursuant to Section 5.02(b) and not previously reimbursed;
(n) the amount of any Interest Shortfall for the related
Distribution Date; and
(o) the number and Principal Balance of Mortgage Loans in each
Mortgage Loan Group that, as of the related Determination Date were (i) 30
or more days contractually delinquent, (ii) 60 or more days contractually
delinquent, (iii) 90 or more days contractually delinquent, (iv) in
foreclosure, (v) as to which the Mortgages has in bankruptcy proceedings
to the knowledge of the Servicer, or (vi) as to which the relate Mortgaged
Property was an REO Property.
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ARTICLE FIVE
PAYMENTS AND STATEMENTS TO
CERTIFICATEHOLDERS
Section 5.01. Distributions. On each Distribution Date, the Trustee shall
distribute to each Certificateholder of record on the related Record Date (other
than as provided in Section 10.01 respecting the final distribution to
Certificateholders if the termination of the Trust is in connection with a
purchase of the assets of the Trust by the Servicer pursuant to Section 10.01)
by check or money order mailed to such Certificateholder at the address
appearing in the Certificate Register, or upon written request by a Holder of a
Certificate, by wire transfer (in the event such Certificateholder owns of
record one or more Certificates that have principal denominations aggregating at
least $[ ] and has given the Trustee, at least five Business Days prior to the
related Record Date, written instruction for making such wire transfer to a bank
account maintained in the United States), or by such other means of payment as
such Certificateholder and the Trustee shall agree, such Certificateholder's
Percentage Interest of the following amounts (to the extent applicable to the
Class of such Holder's Certificate) and in the following orders of priority with
respect to each Mortgage Loan Group. Notwithstanding such priorities, the
aggregate of amounts distributed on all Distribution Dates in reduction of the
Certificate Principal Balance of any Class shall not exceed the Certificate
Principal Balance of such Class as of the Closing Date.
(a) On each Distribution Date interest distributions will be made in the
following order of priority:
First, with respect to the Adjustable Rate Group and related collections
only, if no Financial Guaranty Insurer Default has occurred or is continuing, to
the Financial Guaranty Insurer the amount of any unreimbursed payments of the
Insured Amounts (together with interest thereon at the Class A-1A Pass-Through
Rate or Class A-2A Pass-Through Rate, as specified in Section 3.19(c) if such
amounts remain unpaid from any prior Distribution Date) and any accrued and
unpaid Financial Guaranty Insurer Premium;
Second, (i) to the Fixed Rate Group Class A Certificateholders and
Adjustable Rate Group Certificateholders, Monthly Interest with respect to the
related Mortgage Loan Group on a pro rata basis based on the aggregate amount of
Accrued Certificate Interest to the holders of the Certificate of each such
Class, up to the amount of Accrued Certificate Interest with respect to such
Class plus any outstanding Interest Carry Forward Amount with respect to such
Class, and then (ii) with respect only to the Adjustable Rate Group
Certificates, from amounts deposited in the Supplemental Interest Reserve Fund
on such Distribution Date pursuant to Section 5.01(d), any related Class A-1A
Supplemental Interest Payment Amount and any related Class A-2A Supplemental
Interest Payment Amount on a pro rata basis, based on the amount of any Class
A-1A Supplemental Interest Payment Amount and Class A-2A Supplemental Interest
Payment Amount;
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Third, to the Class M-1F Certificateholders, Monthly Interest with respect
to the Fixed Rate Group then remaining, up to the amount of Accrued Certificate
Interest with respect to such Class;
Fourth, to the Class M-2F Certificateholders, Monthly Interest with
respect to the Fixed Rate Group then remaining, up to the amount of Accrued
Certificate Interest with respect to such Class;
Fifth, to the Class B-1F Certificateholders, Monthly Interest with respect
to the Fixed Rate Group then remaining, up to the amount of Accrued Certificate
Interest with respect to such Class; and
Sixth, any Monthly Excess Cash Flow Amount will be applied as set forth in
Section 5.01(d).
(b) With respect to the Fixed Rate Group and any Distribution Date
before the Stepdown Date, the Fixed Rate Group Certificateholders will be
entitled to receive 100% of the Fixed Rate Group Principal Distribution Amount
for such Distribution Date as follows: first, to the Class A-6F
Certificateholders, the Class A-6F Lockout Distribution Amount, and then to all
Fixed Rate Group Certificateholders, by Class in sequential order until the
Certificate Principal Balance of each such Class has been reduced to zero.
With respect to the Fixed Rate Group and each Distribution Date on or
after the Stepdown Date, the related Certificateholders will be entitled to
receive payments of principal in the order of priority and amounts set forth
below up to the Fixed Rate Group Principal Distribution Amount:
First, the Fixed Rate Group Principal Distribution Amount, not to exceed
the Class A Principal Distribution Amount, shall be distributed to the Class
A-6F Certificateholders up to the Class A-6F Lockout Distribution Amount, and
any remaining amount thereof shall be distributed to the Fixed Rate Class A
Certificateholders, in sequential order by Class, until the Certificate
Principal Balance of each such Class has been reduced to zero;
Second, any remaining Fixed Rate Group Principal Distribution Amount, not
to exceed the Class M-1F Principal Distribution Amount, shall be distributed to
the Class M-1F Certificateholders, until the Certificate Principal Balance
thereof has been reduced to zero;
Third, any remaining Fixed Rate Group Principal Distribution Amount, not
to exceed the related Class M-2F Principal Distribution Amount, shall be
distributed to the Class M-2F Certificateholders, until the Certificate
Principal Balance thereof has been reduced to zero;
Fourth, any remaining Fixed Rate Group Principal Distribution Amount, not
to exceed the related Class B-1F Principal Distribution Amount, shall be
distributed to the Class B-1F Certificateholders, until the Certificate
Principal Balance thereof has been reduced to zero; and
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Fifth, any remaining Fixed Rate Group Principal Distribution Amount shall
be distributed as part of the Monthly Excess Cashflow Amount with respect to
such Mortgage Loan Group as set forth in Section 5.01(d).
On any Distribution Date on which the sum of the Certificate Principal
Balances of the Subordinate Certificates and the related Overcollateralization
Amount is zero, any amounts of principal payable to the Fixed Rate Group Class A
Certificateholders on such Distribution Date shall instead be distributed pro
rata based on the outstanding Certificate Principal Balances of each such Class.
(c) with respect to the Adjustable Rate Group and any Distribution Date,
the Adjustable Rate group Certificateholders will be entitled to receive
payments of principal in the order of priority and amounts set forth below up to
the Adjustable Rate Group Principal Distribution Amount:
First, the Adjustable Rate Group Principal Distribution Amount shall be
distributed to the Class A-1A Certificateholders and Class A-2A
Certificateholders on a pro rata basis, based on the Class A-1A Principal
Percentage and Class A-2A Principal Percentage, respectively until the
Certificate Principal Balances thereof have been reduced to zero;
Second, any remaining Adjustable Rate Group Principal Distribution Amount
shall be distributed as part of the Monthly Excess Cashflow Amount with respect
to such Mortgage Loan Group as set forth in Section 5.01(d).
(d) The Monthly Excess Cashflow Amount with respect to each Mortgage
Loan Group shall be applied in the following order of priority on any
Distribution Date:
Any Monthly Excess Cash Flow Amount with respect to the Fixed Rate
Group shall be applied in the following order of priority on any Distribution
Date:
(1) to fund any Interest Carry Forward Amount for the Fixed Rate
Class A Certificates;
(2) to fund the related Extra Principal Distribution Amount for
such Distribution Date;
(3) to fund any Interest Carry Forward Amount for the Class M-1F
Certificates;
(4) to fund any Class M-1F Realized Loss Amortization Amount;
(5) to fund any Interest Carry Forward Amount for the Class M-2F
Certificates;
(6) to fund any Class M-2F Realized Loss Amortization Amount;
(7) to fund any Interest Carry Forward Amount for the Class B-1F
Certificates;
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(8) to fund any Class B-1F Realized Loss Amortization;
(9) if a Trigger Event has occurred and is continuing, an amount
equal to the excess of the Fixed Rate Group Principal Distribution Amount over
the sum of the Class A Principal Distribution Amount, the Class M-1F Principal
Distribution Amount, the Class M-2F Principal Distribution Amount and the Class
B-1F Principal Distribution Amount will be distributed to the Class B-1F
Certificateholders, Class M-2F Certificateholders and Class M-1F
Certificateholders, in that order, until the Certificate Principal Balance of
the related Class of Certificates has been reduced to zero;
(10) to the Servicer to the extent of any unreimbursed Monthly
Advances or Servicing Advances;
(11) to fund the amounts, if any, described in clauses (1) through
(5) below with respect to the Adjustable Rate Group, to the extent that such
amounts have not been funded in full through the application of any Monthly
Excess Cashflow Amount with respect to the Adjustable Rate Group on such
Distribution Date;
(12) to fund a distribution to Class C Certificateholders of the
Class C Distribution Amount plus any Class C Carryforward Amount; provided that,
pursuant to Section 5.01(e) hereof, on any Distribution Date as to which there
is any unpaid Class A-1A Supplemental Interest Amount or Class A-2A Supplemental
Interest Amount, the Trustee will deposit all such amounts that would otherwise
be distributable to the Class C Certificateholders into the Supplemental
Interest Reserve Fund for application pursuant to clause (ii) of Clause Second
of Section 5.01(a), and such deposit will constitute payment in full of and
satisfaction of all obligations hereunder to distribute such amounts to the
Class C Certificateholders, including for purposes of Section 9.16, and the
Trustee, Servicer and Class C Certificateholders agree hereby appropriately to
report any such deposit as if a corresponding distribution to the Class C
Certificateholders for federal income tax and accounting purposes; and
(13) to fund a distribution to the Class R-III Certificates.
Any Monthly Excess Cash Flow Amount with respect to the Adjustable
Rate Group shall be applied in the following order of priority on any
Distribution Date:
(1) to fund any Interest Carry Forward Amount for the Adjustable
Rate Group Certificates;
(2) If no Financial Guaranty Insurer Default has occurred or is
continuing, to reimburse the Financial Guaranty Insurer for any unreimbursed
Insured Amounts (together with interest thereon at the Class A-1A Pass-Through
Rate or Class A-2A Pass-Through Rate, as specified in Section 3.19(c) if such
amounts remain unpaid from any prior Distribution Date) and any accrued and
unpaid Financial Guaranty Insurer Premium;
(3) to fund the related Extra Principal Distribution for such
Distribution Date;
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(4) to reimburse the Financial Guaranty Insurer for any other
amounts due and owing under the Financial Guaranty Insurance Agreement;
(5) to the Servicer to the extent of any unreimbursed Monthly
Advances or Servicing Advances with respect to the Adjustable Rate Group;
(6) to fund any amounts described in clauses (2), (4), (6) and (8)
above for such Distribution Date and the Fixed Rate Group, to the extent such
amounts have not been funded in full through the application of any Monthly
Excess Cashflow Amount with respect to the Fixed Rate Group on such Distribution
Date; provided that any portion of Monthly Excess Cashflow Amount with respect
to the Adjustable Rate Group Certificates that consists of amounts paid by the
Financial Guaranty Insurer will be excluded from such funding;
(7) to fund a distribution to Class C Certificateholders of the
Class C Distribution Amount plus any Class C Carryforward Amount; provided that,
pursuant to Section 5.01(e) hereof, on any Distribution Date as to which there
is any unpaid Class A-1A Supplemental Interest Payment Amount or Class A-2A
Supplemental Interest Payment Amount, the Trustee will deposit all such amounts
that would otherwise be distributable to the Class C Certificateholders into the
Supplemental Interest Reserve Fund for application pursuant to clause (ii) of
clause Second of Section 5.01(a), and such deposit will constitute payment in
full of and satisfaction of all obligations hereunder to distribute such amounts
to the Class C Certificateholders, including for purposes of Section 9.16, and
the Trustee, Servicer and Class C Certificateholders agree hereby appropriately
to report any such deposit as if a corresponding distribution to the Class C
Certificateholders for federal income tax and accounting purposes; and
(8) to fund a distribution of one or more of the Class R-III
Certificateholders.
(e) By accepting a Class C Certificate, each Class C Certificateholder
hereby agrees to direct the Trustee, and the Trustee hereby is directed, to
deposit into the Supplemental Interest Reserve Fund the amounts described in
Section 5.01(d) clause (12) with respect to the Fixed Rate Group and clause (7)
with respect to the Adjustable Rate Group for the benefit of the Adjustable Rate
Group Certificates on each Distribution Date as to which there is any Class A-1A
Supplemental Interest Amount or Class A-2A Supplemental Interest Payment Amount
rather than distributing such amounts to the Class C Certificateholders. By
accepting a Class C Certificate, each Class C Certificateholder further agrees
that such direction is given for good and valuable consideration, the receipt
and sufficiency of which is acknowledged by such acceptance.
(f) In addition to the foregoing, on each Distribution Date the Trustee
shall include in the distribution (i) to each Class A-1A and Class A-2A
Certificateholder, such Certificateholder's Percentage Interest of any Insured
Amount allocable to Class A-1A or Class A-2A Certificates, as the case may be,
received from the Financial Guaranty Insurer in respect of such Distribution
Date, first to cover any shortfalls in the Monthly Interest available to cover
distributions in respect of Accrued Certificate Interest with respect thereto
for such Distribution Date and then to reduce the Certificate Principal Balances
of the Adjustable Rate Group
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Certificates on a pro rata basis (based on their respective outstanding
Certificate Principal Balances) by an amount equal to the Coverage Deficit with
respect to such Distribution Date.
Notwithstanding any of the foregoing, the aggregate of amounts distributed
on all Distribution Dates in reduction of the Certificate Principal Balance of
any Class of Certificates shall not exceed the Certificate Principal Balance of
such Class as of the Closing Date.
Amounts to be paid to the Financial Guaranty Insurer by the Trustee under
this Agreement will be paid by wire transfer of same day funds.
Section 5.02. Monthly Advances; Servicing Advances. (a) On or before each
Deposit Date, the Servicer will deposit in the Certificate Account in respect of
the Fixed Rate Group and the Adjustable Rate Group, in same day funds, an
amount, if any (a "Monthly Advance"), equal to the sum of (i) with respect to
all Mortgage Loans that are delinquent as of the close of business on the
related Determination Date, the aggregate of the interest portions of each
Monthly Mortgage Payment in respect of the related Mortgage Loan Group due
during the related Collection Period (net of the aggregate of the Monthly
Servicing Fees for each Mortgage Loan Group attributable to such Mortgage
Loans), inclusive of those amounts representing the interest portions of Monthly
Mortgage Payments due during the first Collection Period, plus (ii) with respect
to all Mortgage Loans that are not delinquent Mortgage Loans as of the close of
business on the last day of such Collection Period, an amount equal to the
amount of interest that would accrue yon each such Mortgage Loan at the related
Mortgage Loan Rate (net of the aggregate of the Monthly Servicing Fees for each
Mortgage Loan Group attributable to such Mortgage Loans) in a period of 30 days
minus the number of days from the first day of such Collection Period to the
related due date for such Mortgage Loan during such Collection Period, plus
(iii) with respect to each Mortgaged Property that was acquired in foreclosure
or similar action (each, an "REO Property") during or prior to the related
Collection Period and as to which a final sale did not occur during the related
Collection Period, an amount equal to the excess, if any, of interest on the
Principal Balance of such REO Property at the related Mortgage Interest Rate
(net of the Monthly Servicing Fee attributable to such REO Property) over the
net income from such REO Property transferred to the Collection Account or the
Certificate Account, as the case may be, for such Distribution Date; provided,
however, that in no case will the Servicer be required to make advances with
respect to any period or portion of any Collection Period following the final
due date with respect to any Mortgage Loan. All or a portion of any Monthly
Advance required to be made on a Deposit Date may be paid out of amounts on
deposit in the Collection Account in respect of the related Mortgage Loan Group
that are not required to be deposited on such Deposit Date in the Certificate
Account as any portion of Monthly Interest for such Mortgage Loan Group and the
related Distribution Date; provided, however, that the Servicer shall be
required to replace any such amounts by deposit to the Collection Account on or
before the next Deposit Date and the amount of such deposit shall thereafter be
considered a Monthly Advance for purposes of reimbursement under this Agreement.
The Servicer may recover Monthly Advances, if not theretofore recovered from the
Mortgagor on whose behalf such Monthly Advance was made, from collections on the
related Mortgage Loan, including Liquidation Proceeds, Insurance Proceeds and
such other amounts as may be collected by the Servicer from the Mortgagor or
otherwise relating to the Mortgage Loan or, as provided in
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clause (10) of Section 5.01(d), from amounts in respect of the related Mortgage
Loan Group that would otherwise be distributed to the Class C Certificateholder
on such Distribution Date.
(b) The Servicer shall from time to time during the term of this
Agreement make such Servicing Advances as the Servicer shall deem appropriate or
advisable under the circumstances and are required pursuant to the terms of this
Agreement. Servicing Advances may be paid by the Servicer out of amounts on
deposit in the Collection Account in respect of the related Mortgage Loan Group
from time to time; provided, however, that the Servicer shall be required to
replace any such amounts by deposit to the Collection Account in respect of the
related Mortgage Loan Group on or before the first Deposit Date occurring after
the payment of a Servicing Advance with such amounts, and the amount of such
deposit shall thereafter be considered a Servicing Advance for purposes of
reimbursement under this Agreement. All Servicing Advances made by the Servicer
shall be reimbursable from collections or recoveries relating to the Mortgage
Loans in respect of which such Servicing Advances have been made or, as provided
in clause (10) of Section 5.01(d) with respect to the Adjustable Rate Group
Mortgage Loans, from amounts that would otherwise be distributed to the Class C
Certificateholder on a Distribution Date. Notwithstanding anything herein to the
contrary, no Servicing Advances need by made hereunder if such Servicing Advance
would, if made, constitute a Nonrecoverable Advance.
Section 5.03. Statements to Certificateholders. Concurrently with each
distribution charged to the Certificate Account on a Distribution Date the
Trustee shall forward to the Financial Guaranty Insurer and each Rating Agency
and shall mail to each Holder of a Certificate, a written statement setting
forth the following information with respect to the applicable Class of Offered
Certificates to which such statement (a "Statement to Certificateholders")
relates:
(a) the amount of the distribution with respect to each Class of
Certificates;
(b) the amount of such distributions allocable to principal on the
related Mortgage Loans in each Mortgage Loan Group, separately identifying
the aggregate amount of any Prepayments or other recoveries of principal
included therein;
(c) the amount of such distributions allocable to interest;
(d) the Interest Carry Forward Amount for each Class;
(e) the outstanding Certificate Principal Balance of each Class of
Offered Certificates which will be outstanding after giving effect to any
payment of principal on such Distribution Date;
(f) the aggregate of the Principal Balances of all Mortgage Loans
after giving effect to any payments of principal on such Distribution Date
by Mortgage Loan Group and for the entire Trust, and each Group Factor;
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(g) based upon information furnished by the Sponsor, such
information as may be required by Section 6049(d)(7)(C) of the Code and
the regulations promulgated thereunder to assist the Certificateholders in
computing their market discount;
(h) the total of all amounts paid by the Sponsor and the Servicer
during the related Collection Period in connection with purchases or
repurchases from the Trust of Mortgage Loans and substitutions for
Mortgage Loans of Qualified Replacement Mortgage Loans with respect to
each Mortgage Loan Group and by reason for such purchase;
(i) the weighted average Mortgage Loan Rate of the Mortgage Loans
with respect to each Mortgage Loan Group;
(j) whether a Trigger Event has occurred and, if so, what event;
(k) the Senior Enhancement Percentage;
(l) the amount of any Extra Principal Distribution Amount included
in such distribution;
(m) the related Overcollateralization Amount and Targeted
Overcollateralization Amount for each Mortgage Loan Group and all
delinquency and loss information necessary to calculate the Targeted
Overcollateralization Amount for each Mortgage Loan Group;
(n) the amount, if any, of Insured Amounts distributable to each
Class of Adjustable Rate Group Certificates on such Distribution Date, the
Financial Guaranty Insurer Premium paid on such Distribution Date, and the
aggregate amount of Insured Amounts, interest thereon and previously
unpaid Financial Guaranty Insurer Premiums paid on Such Distribution date
and remaining to be paid on such Distribution date or any future
Distribution Date;
(o) the amount of any Applied Realized Loss Amount, Realized Loss
Amortization Amount and Unpaid Realized Loss Amount for each Class of
Fixed Rate Group Certificates as of the close of such Distribution Date;
and
(p) such other information as the Certificate Insurer may
reasonably request to the extent such information is available to the
Trustee from the Servicer and is produced by the Servicer in the ordinary
course of the Servicer's business.
In the case of information furnished pursuant to subclauses (a), (b)
and (c) above, the amounts shall be expressed as a dollar amount per
Certificate with a $1,000 principal denomination.
Within [90 days] after the end of each calendar year, the Trustee
shall mail such report to [ ] (which report shall include, in addition to
the information contained in reports to others
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hereunder, the total amount of interest on the Mortgage Loans for the
period covered by such report), and to each Person who at any time during
the calendar year was an Offered Certificateholder, a statement for each
Certificateholder containing the information set forth in subclauses (a)
through (c) above, aggregated for such calendar year or, in the case of
each Person who was an Offered Certificateholder for a portion of such
calendar year, setting forth such information for each month thereof for
the portion of the year during which such Person was a Certificateholder.
The Servicer shall provide any other information necessary in order to
report income in respect of the Certificateholders for federal income tax
purposes.
Section 5.04. Applied Realized Loss Amount. On each Distribution Date,
based on the information furnished by the Servicer, the Trustee shall determine
the total Applied Realized Loss Amounts for the Fixed Rate Group for such
Distribution Date. Such Applied Realized Loss Amounts shall be applied by
reducing the Certificate Principal Balance of each Class of Subordinate
Certificates beginning with the Class B-1F Certificates, and then the Class M
Certificates then outstanding with the highest numerical Class designation, in
each case until the respective Certificate Principal Balance thereof is reduced
to zero. Any Applied Realized Loss Amount allocated to a Class of Certificates
shall be allocated among the Certificates of such Class in proportion to their
respective Percentage Interests.
Section 5.05. Financial Guaranty Insurer's Use of Information. The Company
and the Trustee on behalf of Certificateholders and the Trust (the "Trust
Parties") hereby authorize the Financial Guaranty Insurer to include the
information contained in reports provided to the Certificate Insurer hereunder
(the "Information") on Bloomberg, or in other electronic or print information
services. The Trust Parties agree not to commence any actions or proceedings, or
otherwise assert any claims, against the Financial Guaranty Insurer or its
Affiliates or any of the Financial Guaranty Insurer Parties, arising out of, or
related to or in connection with the dissemination and/or use of any information
by the Certificate Insurer as contemplated in this Section, including, but not
limited to, claims based on allegations of inaccurate, incomplete or erroneous
transfer of information by the Financial Guaranty Insurer to Bloomberg or
otherwise (other than in connection with the Financial Guaranty Insurer's gross
negligence or willful misconduct). The Trust Parties waive their rights to
assert any such claims against the Financial Guaranty Insurer Parties and fully
and finally release the Financial Guaranty Insurer Parties from any and all such
claims, demands, obligations, actions and liabilities (other than in connection
with the Financial Guaranty Insurer's gross negligence or willful misconduct).
The Financial Guaranty Insurer makes no representations or warranties, expressed
or implied, of any kind whatsoever with respect to the accuracy, adequacy,
timeliness, completeness, merchantability or fitness for any particular purpose
of any Information in any form or manner. The Financial Guaranty Insurer
reserves the right at any time to withdraw or suspend the dissemination of the
Information by the Financial Guaranty Insurer. The authorizations, covenants and
obligations of the Trust Parties under this section shall be irrevocable and
shall survive the termination of this Agreement.
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ARTICLE SIX
THE CERTIFICATES
Section 6.01. The Certificates. (a) The Certificates of each Class shall
be substantially in the forms set forth with respect thereto in Exhibit A
hereto, respectively, and shall, on original issue, be executed and delivered by
the Trustee on behalf of the Trust, not individually but solely as Trustee to or
upon the order of the Seller concurrently with the sale and assignment to the
Trustee of the Trust.
(b) The Book-Entry Certificates will be evidenced by one or more
certificates, beneficial ownership of which will be held (i) in the case of the
Fixed Rate Group Class A Certificates and the Adjustable Rate Group
Certificates, in minimum dollar denominations of $[ ] and integral multiples of
$1 in excess thereof; and (ii) in the case of the Subordinate Certificates, in
minimum dollar denominations of $[ ] and integral multiples of $1 in excess
thereof. Each of the Class C Certificates shall be issuable with a face amount
expressed as a Percentage Interest not less than [ ]%. Each of the Class R
Certificates shall be issuable solely as a single Class R Certificate evidencing
the entire Percentage Interest of such Class R Certificates.
(c) The Certificates shall be executed by manual or facsimile
signature by the Trustee on behalf of the Trust (not in its individual capacity
but solely as Trustee) by an authorized officer of the Trustee. 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, notwithstanding that such individuals or any of them have
ceased to be so authorized prior to the countersigning and delivery of such
Certificates or did not hold such offices at the date of such Certificate. No
Certificate shall be entitled to any benefit under this Agreement, or be valid
for any purpose, unless such Certificate shall have been manually authenticated
by the Trustee substantially in the form provided for herein, and such signature
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.
Section 6.02. Registration of Transfer and Exchange of Certificates. (a)
The Trustee shall cause to be kept at the Corporate Trust Office a Certificate
Register in which, subject to such reasonable regulations as it may prescribe,
the Trustee shall provide for the registration of Certificates and of transfers
and exchanges of Certificates as herein provided.
Upon surrender for registration of transfer of any Certificate at any
office or agency of the Trustee maintained for such purpose pursuant to the
foregoing paragraph and upon satisfaction of the conditions set forth in Section
6.02(b) and (c), the Trustee shall execute, authenticate and deliver, in the
name of the designated transferee or transferees, one or more new Certificates
of the same Class and of a like aggregate Percentage Interest.
At the option of the Certificateholders, Certificates may be exchanged for
other Certificates of authorized denominations of the same Class and of a like
aggregate Percentage Interest, upon
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surrender of the Certificates to be exchanged at any such office or agency.
Whenever any Certificates are so surrendered for exchange the Trustee shall
execute, authenticate and deliver the Certificates that the Certificateholder
making the exchange is entitled to receive.
Every Certificate presented or surrendered for transfer or exchange shall
(if so required by the Company or the Trustee) be duly endorsed by, or be
accompanied by a written instrument of transfer in form satisfactory to the
Trustee duly executed by the Holder thereof or his attorney duly authorized in
writing.
No service charge shall be made to a Certificateholder for any transfer or
exchange of Certificates, but the Trustee may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of certificates.
All Certificates surrendered for transfer or exchange shall be canceled by
the Trustee in accordance with its standard procedures.
(b) No transfer of a Class R Certificate shall be made unless, as
evidenced by an Opinion of Counsel and Transfer Affidavit delivered to the
Trustee, each in form and substance satisfactory to the Trustee, such transfer
is not subject to registration under the Securities Act or any applicable state
securities laws. Any such Opinion of Counsel and Transfer Affidavit shall not be
obtained at the expense of the Trustee, the Trust, the Seller or the Servicer.
The Holder of a Class R Certificate desiring to effect such transfer shall, and
does hereby agree to, indemnify the Trustee, the Seller and the Servicer against
any liability that may result if the transfer is not so exempt or is not made in
accordance with the Securities Act and such state laws. Neither the Seller, the
Servicer nor the Trustee or the Trust is under an obligation to register the
Class R Certificates under the Securities Act or any state securities law.
The Class R Certificates, this Agreement and related documents may be
amended or supplemented from time to time to modify restrictions on and
procedures for resale and other transfer of such Class R Certificate to reflect
any change in applicable law or regulation (or the interpretation thereof) or
practices relating to the resale or transfers of restricted securities
generally.
No legal or beneficial interest in all or any of the Class R Certificates
may be transferred directly or indirectly to: (i) a Disqualified Organization or
an agent of a Disqualified Organization (including a broker, nominee or
middleman), (ii) to an entity that holds REMIC residual securities as nominee to
facilitate the clearance and settlement of such securities through electronic
book-entry changes in accounts of participating organizations (a "Book-Entry
Nominee"), (iii) an individual, corporation, partnership or other Person unless
such transferee (A) is not a Foreign Person or (B) is a Foreign Person that will
hold such Class R Certificate in connection with the conduct of a trade or
business within the United States and has furnished the transferor and the
Trustee with an effective Internal Revenue Service Form 4224 or (C) is a Foreign
Person that has delivered (at the expense of the Transferee) to both the
transferor and the Trustee an opinion of a nationally recognized tax counsel to
the effect that the transfer of the Class R Certificate to it is in
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accordance with the requirements of the Code and the regulations promulgated
thereunder and that such transfer of the Class R Certificate will not be
disregarded for federal income tax purposes (any such Person who is not covered
by clause (A), (B) or (C) above being referred to herein as a "Non-permitted
Foreign Holder") or (iv) to an ERISA Plan or an entity, including an insurance
company separate account or general account, whose underlying assets include
ERISA Plan assets by reason of an ERISA Plan's investment in the entity or a
Person investing the assets of an ERISA Plan or such an entity, whether as
nominee, trustee, agent or otherwise (such plan, entity or Person, an "ERISA
Prohibited Holder"), and any such purported transfer shall be void and have no
effect.
The Trustee shall not execute, and shall not authenticate and deliver, a
new Class R Certificate in connection with any registration of transfer to a
Person known to a Responsible Officer of the Trustee to be a Disqualified
Organization or agent thereof (including a broker, nominee or middleman), to a
Book-Entry Nominee, a Non-permitted Foreign Holder or an ERISA Prohibited
Holder, and the Trustee shall not accept a surrender for the registration of
transfer or register the transfer of, any Class R Certificate, unless the
transferor shall have provided to the Trustee a Transfer Affidavit substantially
in the form attached as Exhibit D hereto, signed by the transferee, to the
effect that the transferee is not a Disqualified Organization and is not a
nominee for a beneficial owner of the Class R Certificate from which the
transferee has not received a substantially similar affidavit, a Book-Entry
Nominee, a Non-permitted Foreign Holder or an ERISA Prohibited Holder. Such
Transferor Affidavit shall contain (i) the consent of the transferee to any such
amendments of this Agreement as may be required to further effectuate the
foregoing restrictions on transfer of the Class R Certificates to Disqualified
Organizations, Book-Entry Nominees, Non-permitted Foreign Holders or ERISA
Prohibited Holders and (ii) a representation from the transferee that such
transferee does not have the intent or purpose to impede the assessment or
collection of any federal, state or local income taxes legally required to be
paid with respect to the Class R Certificates. Such Transferor Affidavit, if not
executed in connection with the initial issuance of the Class R Certificates,
also shall be accompanied by a Transferor Affidavit, substantially in the form
attached hereto as Exhibit H, signed by the transferor to the effect that as of
the time of the transfer, the transferor has no actual knowledge that such
affidavit is false and that the transferor does not have the intent or purpose
to impede the assessment or collection of any federal, state or local income
taxes legally required to be paid with respect to the Class R Certificate.
Each Class R Certificate shall bear a legend referring to the foregoing
restrictions. Any Person acquiring the Class R Certificate, or beneficial
ownership thereof, agrees to give the Servicer written notice that it is a
"pass-through interest holder" within the meaning of Treasury Regulation Section
1.67-3T(a)(2)(i)(A) immediately upon acquiring the Class R Certificate, or
beneficial ownership thereof, if it is, or is acquiring the Class R Certificate
on behalf of, a "pass-through interest holder."
Upon notice to the Servicer that any legal or beneficial interest in any
Class R Certificate has been transferred, directly or indirectly, to a
Disqualified Organization in contravention of the foregoing restrictions or to a
pass-through entity as defined in the REMIC Provisions an interest of which is
held by a Disqualified Organization, the Servicer agrees to furnish to any
transferor of the
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Class R Certificate or such agent or such pass-through entity such as may be
required to be delivered thereto by the Code as necessary to the application of
Code Section 860E(e) including, but not limited to, the present value of the
total anticipated excess inclusions with respect to the Class R Certificate (or
portion thereof) for periods after such transfer. At the election of the
Servicer, the cost to the Servicer of computing and furnishing such information
may be charged to the transferor or such agent referred to above; provided,
however, that the Servicer shall in no event be excused from furnishing such
information.
(d) No transfer of a Subordinate Certificate or Class C Certificate, or
beneficial interest therein, shall be made unless the Trustee shall have
received a representation from the transferee thereof to the effect that:
(i) such transferee (A) is not an employee benefit plan or
arrangement subject to Section 406 of ERISA or a plan subject to Section
4975 of the Code (a "Plan"), nor a person acting on behalf of a Plan nor
using the assets of a Plan to effect such transfer, or (B) is an insurance
company purchasing a Class B Certificate or Class C Certificate with funds
contained in an "insurance company general account" (as defined in Section
V(e) of Prohibited Transaction Class Exemption 95-60 ("PTCE 95-60"))
satisfying Section III of PTCE 95-60; or
(ii) such transferee is a Plan or a person acting on behalf of a
Plan or using the assets of a Plan to effect such transfer, or is an
insurance company purchasing such Certificate with funds contained in an
insurance company general account, having attached thereto an opinion of
counsel satisfactory to the Trustee, which opinion shall not be an expense
of either the Trustee or the Trust, addressed to the Trustee, the Seller
and the Servicer, to the effect that the purchase or holding of such
Certificate will not result in the assets of the Trust being deemed to be
"plan assets" and subject to the prohibited transaction provisions of
ERISA and the Code and will not subject the Trustee, the Seller or the
Servicer to any obligation in addition to those expressly undertaken in
this Agreement or to any liability.
For purposes of the preceding sentence, with respect to a Subordinate
Certificate that is a Book-Entry Certificate, the representations contained in
clause (i) above shall be deemed to have been made to the Trustee by the
transferee's (including an initial acquiror's) acceptance of such Certificate.
Notwithstanding anything else to the contrary herein, any purported transfer of
a Subordinate Certificate or Class C Certificate, or a beneficial interest
therein, to or on behalf of an employee benefit plan subject to ERISA or to the
Code or a person acting on behalf of a Plan or using the assets of a Plan to
effect such transfer or to an insurance company purchasing with funds from a
general account not exempt pursuant to PTCE 95-60 without the delivery to the
Trustee of an opinion of counsel described in clause (ii) above shall be void
and of no effect.
To the extent permitted under applicable law (including, but not limited
to, ERISA), the Trustee shall be under no liability to any Person for any
registration of transfer of any Subordinate Certificate or Class C Certificate
that is in fact not permitted by Section 6.02(d) or for making any payments due
on such Certificate to the Holder thereof or taking any other action with
respect to
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such Holder under the provisions of the Pooling and Servicing Agreement so long
as the transfer was registered by the Trustee in accordance with the foregoing
requirements.
The Subordinate Certificates and Class C Certificates, this Agreement and
related documents may be amended or supplemented from time to time to modify
restrictions on and procedures for resale and other transfer of such Subordinate
Certificates and Class C Certificates to reflect any change in applicable law or
regulation (or the interpretation thereof) or practices relating to the resale
or transfers of restricted securities generally.
(e) The Book-Entry Certificates shall, subject to Section 6.02(e), at
all times remain registered in the name of the Depository or its nominee and at
all times: (i) registration thereof may not be transferred by the Trustee except
to another Depository; (ii) the Depository shall maintain book-entry records
with respect to the Certificate Owners and with respect to ownership and
transfers of such Certificates; (iii) ownership and transfers of registration of
the Certificates issued in book-entry form on the books of the Depository shall
be governed by applicable rules established by the Depository and the rights of
Certificate Owners with respect to Book-Entry Certificates shall be governed by
applicable law and agreements between such Certificate Owners and the
Depository, Depository Participants, and indirect participating firms; (iv) the
Depository may collect its usual and customary fees, charges and expenses from
its Depository Participants; (v) the Trustee shall deal with the Depository as
the authorized representative of the Certificate Owners of the Book-Entry
Certificates for all purposes including the making of payments due on the
Book-Entry Certificates and exercising the rights of Holders of Book-Entry
Certificates under this Agreement; (vi) the Trustee may rely and shall be fully
protected in relying upon information furnished by the Depository; (vii)
Certificate Owners shall not be entitled to certificates for the Book-Entry
Certificates and (viii) the Trustee may establish a reasonable record date in
connection with solicitations of consents from or voting by holders of
Book-Entry Certificates and give notice to the Depository of such record date.
All transfers by Certificate Owners of Book-Entry Certificates shall be
made in accordance with the procedures established by the Depository Participant
or brokerage firm representing such Certificate Owner. Each Depository
Participant shall only transfer Book-Entry Certificates of Certificate Owners it
represents or of brokerage firms for which it acts as agent in accordance with
the Depository's normal procedures.
(f) If (x)(i) the Company or the Depository advises the Trustee in
writing that the Depository is no longer willing, qualified or able to properly
discharge its responsibilities as Depository, and (ii) the Trustee or the
Company is unable to locate a qualified successor, (y) the Company at its option
advises the Trustee in writing that it elects to terminate the book-entry system
through the Depository or (z) after the occurrence of an Event of Default,
Certificate Owners representing not less than 51% of the aggregate Class A
Certificate Principal Balance of the Book-Entry Certificates together advise the
Trustee and the Depository in writing that the continuation of a book-entry
system through the Depository is no longer in the best interests of the
Certificate Owners, the Trustee shall notify all Certificate Owners, through the
Depository, of the occurrence of any such event and of the availability of
definitive, fully registered Certificates ("Definitive Certificates") to
Certificate Owners requesting the same. Upon surrender to the
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Trustee of such Certificates by the Depository, accompanied by registration
instructions from the Depository for registration, the Trustee shall issue the
Definitive Certificates and the expense of any such issuance shall be reimbursed
by the Trust pursuant to Section 9.05. Neither the Company nor the Trustee shall
be liable for any delay in delivery of such instructions and may conclusively
rely on, and shall be protected in relying on, such instructions. Upon the
issuance of Definitive Certificates all references herein to obligations imposed
upon or to be performed by the Depository shall be deemed applicable with
respect to such Definitive Certificates and the Certificates as
Certificateholders hereunder.
(g) On or prior to the Closing Date, there shall be delivered to the
Depository one certificate for each Class of Book-Entry Certificates registered
in the name of the Depository's nominee, Cede & Co. The face amount of each such
Certificate shall be equal to the Principal Balance thereof. Each Certificate
issued in book-entry form shall bear the following legend:
"Unless this Certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to Issuer or its
agent for registration of transfer, exchange, or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein."
Section 6.03. 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 (b) there is delivered to the Trustee, the Servicer, the Seller
and, in the case of the Adjustable Rate Group Certificates, the Financial
Guaranty 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 and Percentage Interest. Upon the issuance of any new Certificate under
this Section, the Trustee may require the payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in relation thereto and
any other expenses (including the fees and expenses of the Trustee) connected
therewith. Any duplicate Certificate issued pursuant to this Section shall
constitute complete and indefeasible evidence of ownership of the Trust, as if
originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time.
Section 6.04. Persons Deemed Owners. Prior to due presentation of a
Certificate for registration of transfer, the Servicer, the Seller, the Trustee,
the Financial Guaranty Insurer and any of their respective agents may treat the
Person in whose name any Certificate is registered as the owner of such
Certificate for the purpose of receiving distributions pursuant to Section 5.01
and for all other purposes whatsoever, and neither the Servicer, the Seller, the
Trustee or the Financial Guaranty Insurer, nor any of their respective agents
shall be affected by notice to the contrary.
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Section 6.05. Actions of Certificateholders. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Agreement to be given or taken by Certificateholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Certificateholders in person or by agent duly appointed in writing; and
except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Trustee, in
the case of the Adjustable Rate Group Certificates, also to the Financial
Guaranty Insurer, and, when required, to the Seller or the Servicer. Proof of
execution of any such instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Agreement and conclusive in favor of the
Trustee, the Financial guaranty Insurer, the Seller and the Servicer, if made in
the manner provided in this Section.
(b) The fact and date of the execution by any Certificateholder of any
such instrument or writing may be proved in any reasonable manner that the
Trustee deems sufficient.
(c) Any request, demand, authorization, direction, notice, consent,
waiver or other act by a Certificateholder shall bind every Holder of every
Certificate issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof, in respect of anything done, or omitted to be done,
by the Trustee, the Seller, the Servicer or the Financial Guaranty Insurer in
reliance thereon, whether or not notation of such action is made upon such
Certificate.
ARTICLE SEVEN
THE SERVICER AND THE SELLER
Section 7.01. Liability of the Servicer. The Servicer shall be liable in
accordance herewith only to the extent of the obligations specifically imposed
upon and undertaken by the Servicer herein.
Section 7.02. Merger or Consolidation of, or Assumption of the Obligations
of, the Servicer. Any corporation or other entity (i) into which the Servicer
may be merged or consolidated, (ii) that may result from any merger, conversion
or consolidation to which the Servicer shall be a party, or (iii) that may
succeed to all or substantially all of the business of the Servicer, which
corporation or other entity shall, in any case where an assumption shall not be
effected by operation of law, execute an agreement of assumption to perform
every obligation of the Servicer under this Agreement, shall be the successor to
the Servicer under this Agreement without the execution or filing of any
document or any further act by any of the parties to this Agreement; except that
if the Servicer is not the surviving entity, then the surviving entity shall
execute and deliver to the Trustee an agreement of assumption to perform every
obligation of the Servicer hereunder.
Section 7.03. Limitation on Liability of the Servicer and Others. Neither
the Servicer nor any of its directors, officers, employees or agents shall be
under any liability to the Trustee, the Trust or the Certificateholders for any
action taken or for refraining from the taking of any action by the Servicer
pursuant to this Agreement, or for errors in judgment; provided, however,
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that this provision shall not protect the Servicer or any such person against
any liability that would otherwise be imposed by reason of willful misfeasance,
bad faith or negligence in the performance of the duties of the Servicer or by
reason of reckless disregard of the obligations and duties of the Servicer
hereunder. The Servicer and any director, officer, employee or agent of the
Servicer may rely in good faith on any document of any kind prima facie properly
executed and submitted by any Person respecting any matters arising hereunder.
The Servicer shall not be under any obligation to appear in, prosecute or defend
any legal action that is not incidental to its duties to service the Mortgage
Loans in accordance with this Agreement, and that in its opinion may involve it
in any expense or liability.
Section 7.04. Servicer Not to Resign. Subject to the provisions of Section
7.02 regarding the merger or consolidation of the Servicer into or with another
entity, the Servicer shall not resign from the obligations and duties hereby
imposed on it except upon determination that the performance of its duties or
obligations hereunder is no longer permissible under applicable law or
regulation or are in material conflict by reason of applicable law or regulation
with any other activities carried on by it at the date of this Agreement. Any
such determination permitting the resignation of the Servicer pursuant to this
Section shall be evidenced by an Opinion of Counsel to such effect delivered to
the Trustee. No resignation pursuant to this Section 7.04 (a) shall become
effective until the Trustee or a successor servicer shall have assumed the
responsibilities and obligations of the Servicer in accordance with Section 8.02
or (b) shall relieve the Servicer of responsibility for any obligations pursuant
to this Agreement that specifically survive the resignation or termination of
the Servicer. Each of the Rating Agencies shall be given written notice of a
resignation of the Servicer pursuant to this Section.
Section 7.05. Merger or Consolidation of the Seller. Any corporation or
other entity (i) into which the Seller may be merged or consolidated, (ii) that
may result from any merger, conversion or consolidation to which the Seller
shall be a party, or (iii) that may succeed to all or substantially all of the
business of the Seller, which corporation or other entity shall, in any case
where an assumption shall not be effected by operation of law, execute an
agreement of assumption to perform every obligation of the Seller under this
Agreement, shall be the successor to the Seller hereunder without the execution
or filing of any document or any further act by any of the parties to this
Agreement, except that if the Seller in any of the foregoing cases is not the
surviving entity, then the surviving entity shall execute and deliver to the
Trustee an agreement of assumption to perform every obligation of the Seller
hereunder.
Section 7.06. Term To Term Servicing. (a) Upon the occurrence and
continuance of any Event of Default, if the Servicer is not removed as provided
in Section 8.01, the Servicer shall act as servicer under this Agreement,
subject to the continuing right of removal set forth in Section 8.01, in the
case of the Adjustable Rate Group for (a) an initial period commencing on the
date of such Event of Default through the end of the quarter that includes such
date and ends on [ ], [ ], [ ] or [ ], as the case may be, and (b) if the
Servicer receives from the Financial Guaranty Insurer (or Trustee if their shall
exist any Financial Guaranty Insurer Default) at least fifteen days prior to the
end of such term or any subsequent term notice of renewal of its right to act as
Servicer, such term shall be extended for one or more succeeding quarterly
periods thereafter commencing on the last day of the preceding quarterly period
as specified in such
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notice, but any such extension shall be revocable at any time by the Financial
Guaranty Insurer (or Trustee if their shall exist any Financial Guaranty Insurer
Default), but absent delivery of such notice, the Servicer will be removed at
the end of such quarterly term pursuant to Section 8.01.
(b) The Financial Guaranty Insurer agrees to use its best efforts o
inform the Trustee of any materially adverse information regarding the
Servicer's servicing activities that comes to the attention of the Financial
Guaranty Insurer from time to time.
ARTICLE EIGHT
DEFAULT
Section 8.01. Events of Default. If any one of the following events (each
an "Event of Default") shall occur and be continuing:
(a) Any failure by the Servicer to (i) make a Monthly Advance on
any Deposit Date or (ii) deposit in the Collection Account or the
Certificate Account any other amount required to be deposited therein
under this Agreement or failure to pay the Trustee Fee, which failure, in
the case of only clause (ii) hereof, continues unremedied for a period of
five Business Days after the date upon which written notice of such
failure shall have been given to the Servicer by the Trustee or the
Financial Guaranty Insurer or to the Servicer and the Trustee by Holders
of Certificates evidencing Voting Interests represented by all
Certificates aggregating not less than 51%;
(b) Failure on the part of the Servicer duly to observe or perform
in any material respect any other covenants or agreements of the Servicer
set forth in the Certificates or in this Agreement, which failure (i)
materially and adversely affects the Certificateholders and (ii) continues
unremedied for a period of [30] days after the date on which written
notice of such failure (which notice shall refer specifically to this
Section), requiring the same to be remedied, shall have been given to the
Servicer by the Trustee or the Financial Guaranty Insurer, or to the
Servicer and the Trustee by the Holders of Certificates evidencing Voting
Interests represented by all Certificates aggregating not less than 51%;
(c) The entry against the Servicer of a decree or order by a court
or agency or supervisory authority having jurisdiction in the premises for
the appointment of a trustee, conservator, receiver or liquidator in any
insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceedings, or for the winding up or liquidation of its affairs,
and the continuance of any such decree or order unstayed and in effect for
a period of 60 consecutive days;
(d) The consent by the Servicer to the appointment of a trustee,
conservator or receiver or liquidator in any bankruptcy, insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings of or relating to the Servicer or of or relating to
substantially all of its property; or the Servicer shall admit in writing
its inability to pay its
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debts generally as they become due, file a petition to take advantage of
any applicable bankruptcy, insolvency or reorganization statute, make an
assignment for the benefit of its creditors, or voluntarily suspend
payment of its obligations;
(e) For so long as the Seller is the Servicer, failure on the part
of the Seller duly to observe or perform in any material respect any
covenants or agreements of the Seller set forth in the Certificates or in
this Agreement, which failure (i) materially and adversely affects the
Certificateholders and (ii) continues unremedied for a period of [30] days
after the date on which written notice of such failure (which notice shall
refer specifically to this Section), requiring the same to be remedied,
shall have been given to the Servicer by the Trustee or the Financial
Guaranty Insurer, or to the Servicer and the Trustee by the Holders of
Certificates evidencing Voting Interests represented by all Certificates
aggregating not less than 51%;
(f) The occurrence of a material default of the Servicer under
this Agreement or the Insurance and Indemnity Agreement or the occurrence
of a Servicer Delinquency Rate Event, a Servicer Cumulative Loss Rate
Event or a Servicer Rolling Loss Rate Event; or
(g) the Financial Guaranty Insurer shall be obligated to pay any
Insured Amount.
then, and in each and every such case, so long as such Event of Default shall
not have been remedied by the Servicer, either (1) Trustee or (2) with the prior
written consent of the Financial Guaranty Insurer, the Holders of Certificates
evidencing Voting Interests Fixed Rate Group Certificate or Adjustable Rate
Group Certificates aggregating not less than 51%, by notice then given in
writing to the Servicer with a copy to the Trustee, may terminate all of the
rights, responsibilities and obligations of the Servicer as servicer under this
Agreement with respect to the related Mortgage Loan Group, provided that if a
Financial Guaranty Insurer Default has not occurred or is not continuing, any
such termination will not be effective without the prior written consent of the
Financial Guaranty Insurer. On or after the receipt by the Servicer of such
written notice, all authority and power of the Servicer under this Agreement,
whether with respect to the affected Certificates or the Mortgage Loans or
otherwise, shall pass to and be vested in the Trustee pursuant to and under this
Section and, without limitation, the Trustee is hereby authorized and empowered
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 of the
Mortgage Loans and related documents, or otherwise. The Servicer agrees to
cooperate with the Trustee in effecting the termination of its responsibilities
and rights as Servicer hereunder with respect to either or both Mortgage Loan
Groups, including, without limitation, the transfer to the Trustee for the
administration by it of all cash amounts that shall at the time be held by the
Servicer that have been deposited by the Servicer in the Collection Account or
the Certificate Account with respect thereto or thereafter received by the
Servicer with respect to the affected Mortgage Loans.
All reasonable costs and expenses (including attorneys' fees) incurred in
connection with transferring the Mortgage Files to a successor Servicer,
amending this Agreement to reflect the
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appointment of a successor as Servicer pursuant to this Section 8.01 or
otherwise in connection with the assumption by a successor Servicer of the
duties of the predecessor Servicer hereunder shall be paid by the predecessor
Servicer upon presentation of reasonable documentation of such costs and
expenses.
Section 8.02. Trustee to Act; Appointment of Successor. On and after the
time the Servicer receives a notice of full or partial termination pursuant to
Section 8.01, the Trustee shall be the successor in all respects to the Servicer
in its capacity as servicer under this Agreement with respect to the whole Trust
or the affected Mortgage Loan Group, as appropriate 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, including without limitation, the obligation to make Monthly
Advances and to pay Compensating Interest. As compensation therefor, the Trustee
shall be entitled to such compensation as the Servicer would have been entitled
to hereunder if no such notice of termination had been given. Notwithstanding
the foregoing, the Trustee may, if it shall be unwilling so to act, or shall, if
it is legally unable so to act, promptly appoint, or petition a court of
competent jurisdiction to appoint, any established housing and home finance
institution or any institution that regularly services home equity loans that is
then servicing a home equity loan portfolio and having all licenses, permits and
approvals required by applicable law, and having a net worth of not less than
$[ ] as the successor to the Servicer hereunder with respect to the whole Trust
or the affected Mortgage Loan Group, as appropriate, in the assumption of all or
any part of the responsibilities, duties or liabilities of the Servicer
hereunder; provided that any such successor Servicer shall be acceptable to the
Financial Guaranty Insurer, which acceptance shall not be unreasonably withheld
and provided further that the appointment of any such successor Servicer will
not result in the qualification, reduction or withdrawal of the rating assigned
to any Class of related Offered Certificates by any Rating Agency. Pending
appointment of a successor to the Servicer hereunder, unless the Trustee is
prohibited by law from so acting, the Trustee shall 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. The appointment of a successor Servicer shall not affect any
liability of the predecessor Servicer that may have arisen under this Agreement
prior to its termination as Servicer (including without limitation, any amount
for a deductible amount pursuant to the last sentence of Section 3.04), nor
shall any successor Servicer be liable for any acts or omissions of the
predecessor Servicer or for any breach by such Servicer or the Seller of any of
its representations or warranties contained herein or in any related document or
agreement. Each of the Rating Agencies shall be given written notice of the
appointment of a successor Servicer pursuant to this Section.
Section 8.03. Notifications to Certificateholders. Upon any termination or
appointment of a successor to the Servicer pursuant to this Article Eight, the
Trustee shall give prompt written notice thereof to the Financial Guaranty
Insurer and to the Certificateholders at their respective addresses appearing in
the Certificate Register and to each Rating Agency.
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Within [60] days of obtaining actual knowledge of the occurrence of any
Event of Default that remains uncured, the Trustee shall transmit by mail to all
Certificateholders and the Financial Guaranty Insurer notice of such Event of
Default.
Section 8.04. Assumption or Termination of Sub-Servicing Agreements by the
Trustee or any Successor Servicer. Upon the termination of the Servicer as
servicer under this Agreement, the Trustee as successor to the Servicer
hereunder or any other successor to the Servicer hereunder may, subject to the
terms of any related Sub-Servicing Agreement, in its sole and absolute
discretion elect to assume or terminate any Sub-Servicing Agreement then in
force and effect between the Servicer and the Sub-Servicer. Notwithstanding the
foregoing, any termination fee due to a Sub-Servicer because of its termination
by the Trustee hereunder shall be the responsibility of the terminated Servicer
and not the Trustee. Upon the assumption of any Sub-Servicing Agreement, the
Servicer agrees to deliver to the assuming party any and all documents and
records relating to the applicable Sub-Servicing Agreement and an accounting of
amounts collected and held by it and otherwise use its best reasonable efforts
to effectuate the orderly transfer of the Sub-Servicing Agreement.
ARTICLE NINE
THE TRUSTEE
Section 9.01. Duties of the 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, undertakes to perform such duties and only such duties as are
specifically set forth in this Agreement. If an Event of Default of which a
Responsible Officer of the Trustee shall have actual knowledge shall have
occurred (which has not been cured) and subject to the provisions of Section
9.13, 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 man would exercise or use under the circumstances in the conduct of
his own affairs.
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 substantially
conform to the requirements of this Agreement. If any such document or
instrument is found not to conform to the requirements of this Agreement in a
material manner, the Trustee shall, subject to the provisions of Section 9.13,
take such action as it deems appropriate to have the document or instrument
corrected, and if it is not corrected to the Trustee's reasonable satisfaction,
the Trustee will provide notice thereof to the Certificateholders.
No provision of this Agreement shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act or
its own misconduct; provided, however, that:
(a) 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
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determined solely by the express provisions of this Agreement, the Trustee shall
not be liable except for the performance of such duties and obligations as are
specifically set forth in this Agreement, no implied covenants or obligations
shall be read into this Agreement against the Trustee and, in the absence of bad
faith on the part of the Trustee, the Trustee may conclusively rely, as to the
truth of the statements and the correctness of the opinions expressed therein,
upon any certificates, filings or opinions furnished to the Trustee and
conforming to the requirements of this Agreement;
(b) the Trustee shall not be personally liable for an error of
judgment made in good faith by a Responsible Officer of the Trustee, unless it
shall be proved that the Trustee was negligent in ascertaining the pertinent
facts;
(c) the Trustee shall not be personally liable with respect to any
action taken, suffered or omitted to be taken by it in good faith in accordance
with the direction of the Holders of Certificates evidencing Voting Interests
represented by all Certificates (or all affected Certificates, as appropriate)
aggregating not less than 51% 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
(d) the Trustee shall not be charged with knowledge of any failure
by the Servicer to comply with the obligations of the Servicer referred to in
clauses (a) and (b) of Section 8.01 unless a Responsible Officer obtains actual
knowledge of such failure or the Trustee receives written notice of such failure
from the Servicer, the Holders of Certificates evidencing Voting Interests
represented by all Certificates aggregating not less than 51% or he Financial
Guaranty Insurer, as the case may be.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it, and
none of the provisions contained in this Agreement shall in any event require
the Trustee to perform, or be responsible for the manner of performance of, any
of the obligations of the Servicer under this Agreement, except during such
time, if any, as the Trustee shall be the successor to, and be vested with the
rights, duties, powers and privileges of, the Servicer in accordance with the
terms of this Agreement.
Section 9.02. Certain Matters Affecting the Trustee. Except as otherwise
provided in Section 9.01:
(a) The Trustee may rely 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;
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(b) The Trustee may consult with counsel and any advice obtained from
counsel or 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 advice or Opinion of Counsel;
(c) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement, or to institute, conduct or
defend any litigation hereunder or in relation hereto, at the request, order or
direction of any of the Certificateholders or the Financial Guaranty Insurer,
pursuant to the provisions of this Agreement, unless the Person so requesting,
ordering or directing same shall have offered to the Trustee reasonable security
or indemnity against the costs, expenses and liabilities that may be incurred
therein or thereby; the right of the Trustee to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the Trustee
shall not be answerable for other than its negligence or willful misconduct in
the performance of any such act; nothing contained herein shall, however,
relieve the Trustee of the obligations, upon the occurrence of an Event of
Default known to a Responsible Officer of the Trustee (which has not been
cured), to exercise such of the rights and powers vested in it by this
Agreement, subject to the provisions of Section 9.13, and to use the same degree
of care and skill in their exercise as a prudent man would exercise or use under
the circumstances in the conduct of his own affairs;
(d) The Trustee shall not be personally liable for any action taken,
suffered or omitted by it in good faith in accordance with the direction of
Holders of Certificates evidencing Voting Interests representing all
Certificates (or all affected Certificates, as appropriate) aggregating not less
than 51% provided that such action has been approved by the Financial Guaranty
Insurer;
(e) Prior to the occurrence of an Event of Default 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 documents, unless requested in writing
to do so by the Financial Guaranty Insurer or Holders of Certificates evidencing
Voting Interests represented by all Certificates (or all affected Certificates,
as appropriate) aggregating not less than 51% with the consent of the Financial
Guaranty Insurer; provided, however, that if the payment within a reasonable
time to the Trustee of the costs, expenses or liabilities likely to be incurred
by it in the making of such investigation is, in the opinion of the Trustee, not
reasonably assured to the Trustee by the security afforded to it by the terms of
this Agreement, the Trustee may require reasonable indemnity against such cost,
expense or liability as a condition to such proceeding; the reasonable expense
of every such examination shall be paid by the Servicer or, if paid by the
Trustee, shall be reimbursed by the Servicer upon demand; and nothing in this
clause (e) shall derogate from the obligation of the Servicer to observe any
applicable law prohibiting disclosure of information regarding the Mortgagors;
and
(f) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys or a custodian. The Trustee shall not be liable or responsible for the
misconduct of the custodian of the Mortgage Files appointed with due care by the
Trustee hereunder.
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Section 9.03. Trustee Not Liable for Certificates or Mortgage Loans. The
recitals contained herein and in the Certificates (other than the signature and
authentication of the Trustee on the Certificates) shall be taken as the
statements of the Servicer, and the Trustee assumes no responsibility for the
correctness of the same. The Trustee makes no representations as to the validity
or sufficiency of this Agreement or of the Certificates (other than the
signature and authentication of the Trustee on the Certificates and the
signature of the Trustee on this Agreement) or of any Mortgage, Mortgage Loan or
related document. The Trustee shall not be accountable for the use or
application by the Servicer of any of the Certificates or of the proceeds of
such Certificates, or for the use or application of any funds paid to the
Servicer in respect of the Mortgage Loans or deposited in or withdrawn from the
Collection Account by the Servicer.
Section 9.04. 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 Trustee.
Section 9.05. Payment of the Trustee's Fees and Expenses. (a) On or before
each Distribution Date occurring in [ ], beginning with the [ ] Distribution
Date, the Servicer shall pay to the Trustee without any right of reimbursement
from the Trust or otherwise, an amount equal to the Trustee Fee, any reasonable
expenses as agreed to by the Servicer and Trustee (including any fees and
expenses of a co-trustee or separate trustee appointed under Section 9.10) and,
with respect to the [ ] Distribution Date, all loan file review fees, as
compensation for all services rendered by the Trustee (and any such co-trustee
or separate trustee) in the execution of the trusts hereby created and in the
exercise and performance of any of the powers and duties hereunder of the
Trustee (and any such co-trustee or separate trustee). The Trustee Fee and such
expenses and loan file review fees (including any fees and expenses of a
co-trustee or separate trustee appointed under Section 9.10) are an obligation
solely of the Servicer and neither the Trustee nor any co-trustee or separate
trustee appointed hereunder has or will have any lien on the Trust for payment
of any such fees or expenses. It is anticipated that the Servicer will utilize a
portion of the Monthly Servicing Fee for payment of such fees and expenses.
(b) The Trust shall pay or reimburse the Trustee upon its request for
all reasonable expenses, disbursements and advances incurred or made by the
Trustee in accordance with any of the provisions of this Agreement (including
the reasonable compensation and the expenses and disbursements of its counsel
and of all persons not regularly in its employ) except any such expense,
disbursement or advance as may arise from its negligence or bad faith or that is
otherwise reimbursable to the Trustee by the Servicer pursuant to Section
9.05(a) above; provided, however, that the Trustee shall not refuse to perform
any of its duties hereunder solely as a result of the failure of the Trust to
pay or reimburse such expenses, disbursements or advances. The right of the
Trustee to recover such amounts from the Trust shall be subordinate to the
rights of the Financial Guaranty Insurer and the Holders of the Offered
Certificates under this Agreement including, without limitation, to the prior
payment in full of all amounts payable as of any Distribution Date.
(c) The Servicer agrees to indemnify the Trustee and its employees,
officers, directors and agents from, and hold it harmless against, any and all
losses and liabilities, damages, claims or
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expenses (including reasonable attorneys' fees) arising in respect of its acts
or omissions in connection with this Agreement or the Certificates except to the
extent the negligence, bad faith or intentional misconduct of the Trustee
contributes to the loss, liability, damage, claim or expense.
(d) This Section 9.05 shall survive the termination of this Agreement or
the resignation or removal of the Trustee as regards rights accrued prior to
such resignation or removal.
Section 9.06. Eligibility Requirements for the Trustee. The Trustee
hereunder shall at all times be a bank or other depository institution doing
business under the laws of the United States or any state thereof, authorized
under such laws to exercise corporate trust powers, having a combined capital
and surplus of at least $100,000,000 and subject to supervision or examination
by federal or state authority and rated at least BBB by Standard & Poor's and
Baa2 by Moody's. If such corporation 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, the combined capital
and surplus of such corporation 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, the Trustee shall resign immediately in the manner
and with the effect specified in Section 9.07.
Section 9.07. Resignation or Removal of the Trustee. The Trustee may at
any time resign and be discharged from the trusts hereby created by giving
written notice thereof to the Servicer and each Rating Agency. Upon receiving
such notice of resignation, the Servicer shall promptly appoint a successor
trustee satisfying the criteria set forth in Section 9.06 (approved by the
Financial Guaranty Insurer, which approval shall not be unreasonably withheld)
by written instrument original copies of which instrument shall be delivered to
the Financial Guaranty Insurer, the resigning Trustee, the successor trustee and
the Servicer. If no successor trustee shall have been so appointed and having
accepted appointment within [30] days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee.
If at any time the Trustee shall cease to be eligible in accordance with
the provisions of Section 9.06 and shall fail to resign after written request
therefor by the Servicer or Financial Guaranty Insurer, or if at any time the
Trustee shall be legally unable to act, or shall be adjudged a bankrupt or
insolvent, or 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 the Trustee shall fail to perform its obligations under this
Agreement, then the Servicer shall remove the Trustee and appoint a successor
trustee satisfying the criteria set forth in Section 9.06 (approved by the
Financial Guaranty Insurer, which approval shall not be unreasonably withheld)
by written instrument, original copies of which instrument shall be delivered to
the Financial Guaranty Insurer, the Trustee so removed and 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 shall not become
effective until acceptance of appointment
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by the successor trustee as provided in Section 9.08. The provisions of Section
9.05 shall survive any such resignation or removal.
Section 9.08. Successor Trustee. Any successor trustee appointed as
provided in Section 9.07 shall execute, acknowledge and deliver to the Servicer
and to its predecessor Trustee an instrument accepting such appointment
hereunder, and thereupon the resignation or removal of the predecessor Trustee
shall become effective and such successor trustee, without any further act, deed
or conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with like effect as if originally
named as Trustee. The Seller, the Servicer and the predecessor Trustee shall
execute and deliver such instruments and do such other things as may reasonably
be required for fully and certainly vesting and confirming in the successor
Trustee all such rights, powers, duties and obligations.
No successor Trustee shall accept appointment as provided in this Section
unless at the time of such acceptance it shall be eligible under the provisions
of Section 9.06.
Upon acceptance of appointment by a successor trustee as provided in this
Section, the Servicer shall mail notice of the succession of such trustee
hereunder to the Financial Guaranty Insurer and to all Holders of Certificates
at their addresses as shown in the Certificate Register and to each Rating
Agency. If the Servicer fails to mail such notice within [10] days after
acceptance of appointment by the successor trustee, the successor trustee shall
cause such notice to be mailed at the expense of the Servicer.
Section 9.09. Merger or Consolidation of the 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 the business of the Trustee or substantially all of the Trustee's
trust business, shall be the successor of the Trustee hereunder, provided such
corporation shall be eligible under the provisions of Section 9.06, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding.
Section 9.10. 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 or any Mortgaged Property may at the time be located, the Servicer
and the Trustee acting jointly, with the prior written consent of the Financial
Guaranty Insurer, shall have the power and shall execute and deliver all
instruments to appoint one or more Persons approved by the Trustee to act as
co-trustee or co-trustees, jointly with the Trustee, or separate trustee or
separate trustees, of all or any part of the Trust, and to vest in such Person
or Persons, in such capacity and for the benefit of the Certificateholders, such
title to the Trust, or any part thereof, and, subject to the other provisions of
this Section, such powers, duties, obligations, rights, indemnities and trusts
as the Servicer and the Trustee may consider necessary or desirable. If the
Servicer shall not have joined in such appointment within [15] days after the
receipt by it of a request so to do, or in the case an Event of Default shall
have occurred and be continuing, the Trustee alone and with the prior consent of
the Financial Guaranty Insurer shall have the power to make such appointment. No
co-trustee or separate trustee hereunder shall be required to meet the
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terms of eligibility as a successor trustee under Section 9.06 and no notice to
Certificateholders of the appointment of any co-trustee or separate trustee
shall be required under Section 9.08. The Financial Guaranty Insurer and each of
the Rating Agencies shall be given written notice of the appointment of a
co-trustee or a separate trustee pursuant to this Section.
Every separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(a) All rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and exercised
or performed by the Trustee and such separate trustee or co-trustee
jointly (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 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;
(b) No trustee hereunder shall be held personally liable by reason
of any act or omission of any other trustee hereunder; and
(c) The Servicer and the Trustee acting jointly may at any time
accept the resignation of or remove any separate trustee or co-trustee,
except that following the occurrence of an Event of Default that has not
been cured, the Trustee, acting alone may accept the resignation of or
remove any separate or co-trustee.
Any notice, request or other writing given to the Trustee shall be deemed
to have been given to each of 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. 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 copies thereof given to the
Servicer and the Financial Guaranty Insurer.
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.
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No appointment of any separate trustee or co-trustee shall absolve the
Trustee of its duties and obligations under this Agreement.
Section 9.11. Compliance with REMIC Provisions. The Trustee shall at all
times act in such a manner in the performance of its duties hereunder as shall
be necessary to prevent any REMIC Pool from failing to qualify as a REMIC and to
prevent the imposition of a tax on the REMIC Pool. The Trustee shall: (a)
prepare and file, or cause to be prepared and filed, such federal, state and
local income tax and information returns or reports using the calendar year as
the taxable year for the REMIC Pool when and as required by the REMIC Provisions
and other applicable federal, state and local income tax laws, which returns or
reports shall be signed by the Trustee or such other person as may be required
thereby; (b) make an election, on behalf of each REMIC Pool, to be treated as a
REMIC and make the appropriate designations, if applicable, in accordance with
Section 9.16 on the federal income tax return of each REMIC Pool for its first
taxable year, in accordance with the REMIC Provisions; (c) prepare and forward,
or cause to be prepared and forwarded, to the Certificateholders all information
reports, or furnish or cause to be furnished by telephone, mail, publication or
other appropriate method such information, as and when required to be provided
to them in accordance with the Code; (d) exercise reasonable care not to allow
the creation of any "interests" in any REMIC Pool within the meaning of Code
Section 860D(a)(2) other than the interests represented by the REMIC III
Certificates in the case of the REMIC III Pool, the REMIC II Interests in the
case of the REMIC II Pool or the REMIC I Interests in the case of the REMIC I
Pool; and (e) within [30] days of the Startup Day, furnish or cause to be
furnished to the Internal Revenue Service, on Form 8811 or as may otherwise be
required by the Code, the name, title, address, and telephone number of the
person that Certificateholders may contact for tax information relating to their
Certificates (and the Trustee shall act as the representative of each REMIC Pool
for this purpose), together with such additional information as may be required
by such Form, and shall update such information at the time and in the manner
required by the Code. Each Class R Certificateholder shall designate the
Servicer, if permitted by the Code and applicable law, to act as "tax matters
person" for the related REMIC Pool within the meaning of Treasury regulations
Section 1.860F-4(d), and the Servicer is hereby designated as agent of each
Class R Certificateholder for such purpose (or if the Servicer is not so
permitted, the Holder of the related Class R Certificate shall be the tax
matters person in accordance with the REMIC Provisions).
Section 9.12. Trustee May Enforce Claims Without Possession of
Certificates. All rights of action and claims under this Agreement or the
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceedings relating thereto(including in respect of the Financial Guaranty
Insurer's rights of subrogation), and any such proceeding instituted by the
Trustee shall be brought in its own name or in its capacity as Trustee. Any
recovery of judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, be for the ratable benefit of the Certificateholders in respect of
which such judgment has been recovered (or the Financial Guaranty Insurer in
respect of any right or interest as to which the Financial Guaranty Insurer is
subrogated) in accordance with the terms of this Agreement.
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Section 9.13. Exercise of Trustee Powers by Financial Guaranty Insurer and
Certificateholders. The Financial Guaranty Insurer, in the case of the
Adjustable Rate Group Certificate or the Holders of Certificates evidencing
Voting Interests represented by all Certificates aggregating not less than 51%
of the Voting Interests with respect to the Fixed Rate Group Certificates or
Adjustable Rate Group Certificates, as the case may be, in each case with the
consent of the Financial Guaranty Insurer (which consent may not be unreasonably
withheld) may direct the time, method and place of conducting any proceeding
relating to the related Mortgage Loan Group or the Trust, as appropriate, or the
Fixed Rate Group Certificates or Adjustable Rate Group Certificates, as the case
may be, or for any remedy available to the Trustee with respect to the Fixed
Rate Group Certificates or Adjustable Rate Group Certificates, as the case may
be, or exercising any trust or power conferred on the Trustee with respect to
the Fixed Rate Group Certificates or Adjustable Rate Group Certificates, as the
case may be, of the Trust provided that:
(i) such direction shall not be in conflict with any rule of law
or with this Agreement;
(ii) the Trustee shall have been provided with indemnity
satisfactory to it; and
(iii) the Trustee may take any other action deemed proper by the
Trustee that is not inconsistent with such direction; provided, however, that
the Trustee need not take any action that it determines might involve it in
liability or may be unjustly prejudicial to the Holders not so directing.
Section 9.14. Tax Returns. The Trustee shall maintain all information in
its possession as may be required in connection with the preparation of all
federal and, if applicable, state and local income tax and information returns
of each REMIC Pool (including, but not limited to, tax reporting under the REMIC
Provisions for each REMIC Pool, exclusive of the Prefunding Account and the
Capitalized Interest Account), and pursuant to Section 24874 of the California
Revenue and Taxation Code and its successors, and shall prepare, execute and
file as required all such returns. The Trustee shall include in the first
federal income tax return the information required to be included therein under
the REMIC Provisions, including, but not limited to, Treas. Reg.
Section1.860D-I(d)2) and Treas. Reg. Section1.860F-4(b)(2). The Servicer shall
report all required tax information to Mortgagors in accordance with applicable
law.
The Prepayment Assumption (as such term is defined in the Prospectus,
dated as of [ ]) for the Certificates shall be [ ]% HEP with respect to the
Fixed Rate Group Certificates and 27% HEP with respect to the Adjustable Rate
Group Certificates, as described in the Prospectus Supplement dated [ ] relating
to the Offered Certificates.
Section 9.15. Taxpayer Identification Number. The Trustee shall prepare
and file with the Internal Revenue Service, on behalf of each REMIC Pool within
the time period prescribed therefor, an application on IRS Form SS-4 for such
REMIC Pool. The Trustee, upon receipt from the Internal Revenue Service of the
Notice of Taxpayer Identification Number assigned to each REMIC Pool, shall
promptly forward a copy of such notice to the Servicer.
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Section 9.16 Miscellaneous REMIC Provisions.
(i) The Trustee shall elect that REMIC I, REMIC II, and REMIC III shall
be treated as REMICs under Section 860D of the Code, as described in Section
9.11. Any inconsistencies or ambiguities in this Agreement or in the
administration of the Trust shall be resolved in a manner that preserves the
validity of such REMIC elections.
(ii) REMIC I will be evidenced by (y)(A) the Class LT-FM, Class LT-A1F,
Class LT-A2F, Class LT-A3F, Class LT-A4F, Class LT-A5F, Class LT-A6F, Class
LT-M1F, Class LT-M2F, and Class LT-B1F (the "LTF Regular Interests"), and (B)
the Class LT-A1A, Class LT-A2A and Class LT-AM (the "LTA Regular Interests",
and, together with the LTF Regular Interests, the "REMIC I Regular Interests"),
which will be uncertificated and non-transferable and are hereby designated at
the "regular interests" in REMIC I, and (2) the Class R-1 Certificate, which is
hereby designated as the single "residual interest" in REMIC I (the "REMIC I
Regular Interests" and, together with the Class R-1 Certificate, the "REMIC I
Interests"). The REMIC I Regular Interests shall be recorded on the records of
REMIC I as being issued to and held by the Trustee on behalf of REMIC II.
(iii) REMIC II will be evidenced by (y)(A) the Class MT-FM, Class MT-A1F,
Class MT-A2F, Class MT-A3F, Class MT-A4F, Class MT-A5F, Class MT-A6F, Class
MT-M1F, Class MT-M2F, Class MT-B1F and Class MT-FI0 (the "MTF Regular
Interests") and (ii) the Class MT-AM, Class MT-A1A, Class MT-A2A and Class
MT-AIO Certificates (the "MTA Regular Interests" and together with the MTF
Regular Interests, the "REMIC II Regular Interests"), which will be
uncertificated and non-transferable and are hereby designated as the "regular
interests" in REMIC II, and (2) the Class R-2 Certificate, which is hereby
designated as the single "residual interest" in REMIC II (the "REMIC II Regular
Interests and, together with the Class R-2 Certificate, the "REMIC II
Interests"). The REMIC II Regular Interests shall be recorded on the records of
REMIC II as being issued to and held by the Trustee on behalf of REMIC III.
(iv) The Class ▇-▇▇, ▇▇▇▇▇ ▇-▇▇, ▇▇▇▇▇ ▇-▇▇, Class ▇-▇▇, ▇▇▇▇▇ ▇-▇▇,
▇▇▇▇▇ ▇-▇▇, Class M-1F, Class M-2F, Class B-1F, Class A-1A, Class A-2A and Class
C Certificates, consisting of two components (the Class C-F Component and the
Class C-A Component as defined in clause (vii) below), are hereby designated as
"regular interests" with respect to the REMIC III and the Class R-III
Certificate is hereby designated as the single "residual interest" with respect
to the REMIC III. The Class R-III Certificate shall have no pass-through rate
and shall have no principal balance.
(v) REMIC I Interests. The REMIC I Interests will have the following
designations and pass-through rates, and distributions of principal and interest
thereon shall be allocated to the Certificates in the following manner:
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LTF Regular Interests
LTF Regular Interest Initial Balance Pass-Through Rate Corollary REMIC III Certificate
-------------------- --------------- ----------------- -------------------------------
▇▇-▇▇ ▇▇▇▇
▇▇-▇▇▇ A-1F
LT-A2F A-2F
LT-A3F A-3F
LT-A4F A-4F
LT-A5F A-5F
LT-A6F A-6F
LT-M1F M-1F
LT-M2F M-2F
LT-B1F B-1F
Total
(1) The pass-through rate ("Pass-Through Rate") on each of the LTF
Regular Interests shall at any time of determination equal the
weighted average Mortgage Loan Rate in the Fixed Rate Group. If
there are any prepayment interest shortfalls with respect to the
Fixed Rate Group not covered by Compensating Interest for the Fixed
Rate Group, such shortfall will proportionally reduce the interest
accrual on these Certificates.
Except as provided below with respect to the "Fixed Rate Turbo Amount,"
payments of interest from the Fixed Rate Group on any Distribution Date shall be
allocated to the LTF Regular Interests in proportion to their respective
principal balances.
The "Fixed Rate Turbo Amount" means, with respect to any Distribution
Date, the amount of the Extra Principal Distribution Amount for the Fixed Rate
Group for such Distribution Date. On each Distribution Date, an amount of
interest received on the Fixed Rate Group equal to one percent ([ ]%) of the
Fixed Rate Turbo Amount for such Distribution Date shall not be paid as
described above, but instead will be payable as a reduction of the principal
balances of the LT-A1F, LT-A2F, LT-A3F, LT-A4F, LT-A5F, LT-A6F, LT-M1F, LT-M2F,
and LT-B1F Regular Interests in the same manner in which the Fixed Rate Turbo
Amount is allocated to the Corollary REMIC III Certificate for each such REMIC I
Regular Interest. Amounts not paid to the LT-FM Regular Interest as a result of
the preceding sentence shall be accrued and added to the principal of the LT-FM
Regular Interest.
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Principal payments on the Fixed Rate Group shall be allocated (i) [ ]% to
the Class LT-FM, and (ii) [ ]% to the other LTF Regular Interests, apportioned
among such Classes in the same manner in which principal is payable with respect
to the Corollary REMIC III Certificate for each such Class; provided, however,
that any principal payments on the Fixed Rate Group that are attributable to an
Overcollateralization Release Amount with respect to the Fixed Rate Group (other
than any such amount distributed pursuant to clause (9) of Section 5.01(d))
shall be allocated exclusively to the Class LT-FM Regular Interest.
Realized Losses on the Fixed Rate Group shall be applied such that after
all distributions have been made on such Distribution Date each LTF Regular
Interest other than the LT-FM Regular Interest shall have an principal balance
equal to one percent ([ ]%) of the Certificate Principal Balance of its
Corollary REMIC III Certificate, and the LT-FM Regular Interest shall have a
principal balance equal to the excess of the principal balance of the Fixed Rate
Group less the sum of the principal balance of the other LTF Regular Interests.
LTA Regular Interests
LTA Regular Interest Initial Balance Pass-Through Rate Corollary REMIC III Certificate
-------------------- --------------- ----------------- -------------------------------
▇▇-▇▇ ▇▇▇▇
▇▇-▇▇▇ A-1A
LT-A2A A-2A
Total
(1) The pass-through rate ("Pass-Through Rate") on each of the LTA
Regular Interests shall at any time of determination equal the
weighted average Mortgage Loan Rate in the Adjustable Rate Group. If
there are any prepayment interest shortfalls with respect to the
Adjustable Rate Group not covered by Compensating Interest for the
Adjustable Rate Group, such shortfall will proportionally reduce the
interest accrual on these Certificates.
Except as provided below with respect to the"Adjustable Rate Turbo
Amount," payments of interest from the Fixed Rate Group on any Distribution Date
shall be allocated to the LTA Regular Interests in proportion to their
respective principal balances.
The "Adjustable Rate Turbo Amount" means, with respect to any Distribution
Date, the amount of the Extra Principal Distribution Amount for the Adjustable
Rate Group for such Distribution Date. On each Distribution Date, an amount of
interest received on the Adjustable Rate Group equal to one percent ([ ]%) of
the Adjustable Rate Turbo Amount for such Distribution Date shall not be paid as
described above, but instead will be payable as a reduction of the principal
balances of the LT-A1A and LT-A2A Regular Interests in the same manner in which
the Adjustable Rate Turbo Amount is allocated to the Corollary REMIC III
Certificate for each such REMIC I Regular Interest. Amounts not paid to the
LT-AM Regular Interest as a result of the preceding sentence shall be accrued
and added to the principal of the LT-AM Regular Interest.
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Principal payments on the Adjustable Rate Group shall be allocated (i)
[ ]% to the Class LT-AM, and (ii) [ ]% to the other LTA Regular Interests,
apportioned among such Classes in the same manner in which principal is payable
with respect to the Corollary REMIC III Certificate for each such Class;
provided, however, that any principal payments on the Adjustable Rate Group that
are attributable to an Overcollateralization Release Amount with respect to the
Adjustable Rate Group shall be allocated exclusively to the Class LT-AM Regular
Interest.
Realized Losses on the Adjustable Rate Group shall be applied such that
after all distributions have been made on such Distribution Date each LTA
Regular Interest other than the LT-AM Regular Interest shall have an principal
balance equal to one percent ([ ]%) of the Certificate Principal Balance of its
Corollary REMIC III Certificate, and the LT-AM Regular Interest shall have a
principal balance equal to the excess of the principal balance of the Adjustable
Rate Group less the sum of the principal balance of the other LTA Regular
Interests.
On each Distribution Date, available funds, if any, remaining in REMIC I
after payments of interest and principal, as designated above, will be
distributed to the Class R-1 Certificate.
(vi) REMIC II Interests. The REMIC II Interests will have the following
designations and pass-through rates, and distributions of principal and interest
thereon shall be allocated to the REMIC II Interests in the following manner:
MTF Regular Interests
Each MTF Regular Interest shall be considered to have a Corollary REMIC I
Regular Interest and a Corollary REMIC III Certificate as follows:
MTF Regular Interest Corollary REMIC I Regular Interest Corollary REMIC III Certificate
-------------------- ---------------------------------- -------------------------------
MT-FM LT-FM None
MT-A1F LT-A1F A-1F
MT-A2F LT-A2F A-2F
MT-A3F LT-A3F A-3F
MT-A4F LT-A4F A-4F
MT-A5F LT-A5F A-5F
MT-A6F LT-A6F A-6F
MT-M1F LT-M1F M-1F
MT-A2F LT-M2F M-2F
MT-B1F ▇▇-▇▇▇ ▇-▇▇
▇▇▇
▇▇▇
▇▇-▇▇▇ ▇▇▇▇ ▇▇▇▇
The Initial Balance of each MTF Regular Interest other than the MT-FIO
Regular Interest shall equal the Initial Balance of the Corollary REMIC I
Regular Interest for such MTF Regular Interest. The Initial Balance of the
MT-FIO Regular Interest shall equal zero.
The Pass-through Rate on each MTF Regular Interest other than the MT-FM
Regular Interest and the MT-FIO Regular Interest shall equal weighted average
rate payable on the ▇▇-▇▇▇, ▇▇-▇▇▇, LT-A3F, LT-A4F, LT-A5F, LT-A6F, LT-M1F,
LT-M2F and LT-B1F Regular Interests; provided, however, that prior to
calculating such weighted average rate each such LTF Regular Interest shall be
subject to a cap equal to the Pass-Through Rate on the Corollary REMIC III
Certificate with respect to such LTF Regular Interest. The Pass-Through Rate on
the MT-FM Regular Interest shall equal the Pass-Through Rate on the LT-FM
Regular Interest.
The MT-FIO Regular Interest shall be entitled to interest accruing on each
of the ▇▇-▇▇▇, ▇▇-▇▇▇, LT-A3F, LT-A4F, LT-A5F, LT-A6F, LT-M1F, LT-M2F and LT-B1F
Regular Interests in excess of the Pass-Through Rates of the MT-A1F, MT-A2F,
MT-A3F, MT-A4F, MT-A5F, MT-A6F, ▇▇-▇▇▇, ▇▇-▇▇▇ and MT-B1F Regular Interests,
respectively.
Each MTF Regular Interest other than the MT-FIO shall be allocated the
principal payments received on its Corollary REMIC I Regular Interest. Except as
described in the preceding paragraph, each MTF Regular Interest shall be
allocated the interest payments received on its Corollary REMIC I Regular
Interest.
MTA Regular Interests
Each MTA Regular Interest shall be considered to have a Corollary REMIC I
Regular Interest and a Corollary REMIC III Certificate as follows:
MTA Regular Interest Corollary REMIC I Regular Interest Corollary REMIC III Certificate
-------------------- ---------------------------------- -------------------------------
MT-AM ▇▇-▇▇ ▇▇▇▇
▇▇-▇▇▇ ▇▇-▇▇▇ ▇-▇▇
▇▇-▇▇▇ ▇▇-▇▇▇ A-2A
MT-AIO None None
The Initial Balance of each MTA Regular Interest other than the MT-AIO
Regular Interest shall equal the Initial Balance of the Corollary REMIC I
Certificate for such MTA Regular Interest. The Initial Balance of the MT-AIO
Regular Interest shall equal zero.
The Pass-through Rate on each MTA Regular Interest other than the MT-AM
Regular Interest and the MT-AIO Regular Interest shall equal the weighted
average rate payable on the LT-
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A1A and LT-A2A Regular Interests; provided, however, that prior to calculating
such weighted average rate each such LTA Regular Interest shall be subject to a
cap equal to the Pass-Through Rate on the Corollary REMIC III Certificate with
respect to such LTA Regular Interest. The Pass-Through Rate on the MT-AM Regular
Interest shall equal the Pass-Through Rate on the LT-AM Regular Interest.
The MT-AIO shall be entitled to interest accruing on each of the LT-A1A
and LT-A2A Regular Interests in excess of the Pass-Through Rates of the MT-A1A
and MT-A2A Regular Interests, respectively.
Each MTA Regular Interest other than the MT-AIO Regular Interest shall be
allocated the principal payments received on its Corollary REMIC I Regular
Interest. Except as described in the preceding paragraph, each MTA Regular
Interest shall be allocated the interest payments received on its Corollary
REMIC I Regular Interest.
On each Distribution Date, available funds, if any, remaining in REMIC II
after payments of interest and principal, as designated above, will be
distributed to the Class R-2 Certificate.
(vii) REMIC III Interests. The REMIC III Interests will have the following
designations and pass-through rates, and distributions of principal and interest
thereon shall be allocated to the Certificates as follows:
Except as described below with respect to the Class C Certificates,
interest on the MTF Regular Interests shall be allocated among the Class ▇-▇▇,
▇▇▇▇▇ ▇-▇▇, ▇▇▇▇▇ ▇-▇▇, Class ▇-▇▇, ▇▇▇▇▇ ▇-▇▇, ▇▇▇▇▇ ▇-▇▇, Class M-1F, Class
M-2F and Class B-1F Certificates in the same proportion as interest is payable
on such Certificates pursuant to Section 5.01(a). Similarly, except as described
below with respect to the Class C Certificates, interest on the MTA Regular
Interests shall be allocated among the Class A-1A and Class A-2A Certificates in
the same proportion as interest is payable on such Certificates pursuant to
Section 5.01(a).
Principal on the MTF Regular Interests will be allocated to and
apportioned among the Class ▇-▇▇, ▇▇▇▇▇ ▇-▇▇, ▇▇▇▇▇ ▇-▇▇, Class ▇-▇▇, ▇▇▇▇▇
▇-▇▇, ▇▇▇▇▇ ▇-▇▇, Class M-1F, Class M-2F and Class B-1F Certificates in the same
proportion as principal is payable with respect to such Certificates pursuant to
Section 5.01, except that a portion of such principal in an amount equal to the
Overcollateralization Release Amount related to the Fixed Rate Group shall be
allocated to the Class C Certificates until the balance thereof is zero and then
to the Class R-3 Certificate and all principal will be allocated to the Class C
Certificates after the Certificate Principal Balance of the Fixed Rate
Certificates has been reduced to zero until its Certificate Principal Balance is
reduced to zero, and then to the Class R-3 Certificate. Similarly, principal on
the MTA Regular Interests will be allocated to and apportioned among the Class
A-1A and Class A-2A Certificates in the same proportion as principal is payable
with respect to such Certificates pursuant to Section 5.01, except that a
portion of such principal in an amount equal to the Overcollateralization
Release Amount related to the Adjustable Rate Group shall be allocated to the
Class C Certificates until the balance thereof is zero and then to the Class R-3
Certificate and all principal will be allocated to the Class C Certificates
after the Certificate Principal Balance of the Adjustable Rate Certificates has
been
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reduced to zero until its Certificate Principal Balance is reduced to zero, and
then to the Class R-3 Certificate.
The Class C Certificates will consist of two components, the Class C-F
Component and the Class C-A Component, determined as follows:
(A) The "Class C-F Component" shall equal the sum of (1) amounts
payable on the MT-FIO Regular Interest, and (2) with respect to each of the
MT-FM, MT-A1F, MT-A2F, MT-A3F, MT-A4F, MT-A5F, MT-A6F, MT-M1F, MT-M2F AND MT-B1F
Regular Interests, interest payable on such REMIC II Regular Interest in excess
of the product of (i) one hundred (100) times the weighted average coupon of the
MT-FM, MT-A1F, MT-A2F, MT-A3F, MT-A4F, MT-A5F ▇▇-▇▇, ▇▇-▇▇▇, ▇▇-▇▇▇ and MT-B1F
Regular Interests, where the MT-MF Regular Interest is first subject to a cap
equal to 0%, and (ii) the principal balance of such REMIC II Regular Interest.
(B) The "Class C-A Component" shall equal the sum of (1) amounts
payable on the MT-AIO Regular Interest, and (2) with respect to each of the
MT-AM, MT-A1A and MT-A2A Regular Interests, interest payable on such REMIC II
Regular Interest in excess of the product of (i) one hundred (100) times the
weighted average coupon of the ▇▇-▇▇, ▇▇-▇▇▇ and MT-A2A Regular Interests, where
the MT-AM Certificate is subject to a cap equal to 0%, and (ii) the principal
balance of such REMIC II Regular Interest.
On each Distribution Date, to the extent that any Monthly Excess Interest
Amount with respect to a Mortgage Loan Group is applied to cover Carry Forward
Shortfalls on any Certificates and the interest allocable to the related Class C
Component is not otherwise reduced for such amount due to an allocation of
Realized Losses, the related Class C Component shall be reduced.
On each Distribution Date, available funds, if any, remaining in REMIC III
after payments of interest and principal, as designated above, will be
distributed to the Class R-3 Certificate.
(viii) The Startup Day is hereby designated as the "startup day" of each
of REMIC I, REMIC II and REMIC III within the meaning of Section 860G(a)(9) of
the Code. The "latest possible maturity date" for purposes of Treasury
Regulation Section 1.860G-1(a)(4)(iii) for the regular interests are as follows:
with respect to each of the REMIC III Regular Interests, the Final Scheduled
Distribution Date of such Certificates, and with respect to each of the REMIC I
Regular Interests and the REMIC II Regular Interests, [ ].
(ix) The Supplemental Interest Reserve Fund will be part of the Trust
Fund but not part of any REMIC. For federal and state income tax purposes the
Class C Certificateholders shall be deemed to be the owners of the Supplemental
Interest Reserve Fund. Any amounts transferred by a REMIC to the Supplemental
Interest Reserve Fund shall be treated as amounts distributed by such REMIC to
the Class C Certificateholders. Any amounts remaining in the Supplemental
Interest Reserve Fund upon termination of the Trust shall be paid to the Class
A-1A Certificateholders and the Class A-2A Certificateholders on a pro rata
basis, based on the amount of any outstanding Class A-1A Supplemental Interest
Amount or Class A-2A Supplemental Interest Amount, and thereafter to the Class C
Certificateholders.
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ARTICLE TEN
TERMINATION
Section 10.01. Termination Upon Purchase or Liquidation of Mortgage Loans.
Subject to Section 10.02, the respective obligations and responsibilities
hereunder of the Servicer, the Seller and the Trustee (other than the obligation
of the Trustee to make certain payments to Certificateholders after the final
Distribution Date and the obligation of the Seller to send certain notices as
hereinafter set forth) and the Trust created hereby shall terminate with respect
to all Certificates upon the last action required to be taken by the Trustee on
the final Distribution Date pursuant to this Article following the earlier of
(a) the purchase by the Servicer of all Mortgage Loans then remaining in the
Trust and all property acquired in respect of any such Mortgage Loan at a price
equal to the sum of (x) 100% of the Principal Balance of each such Mortgage Loan
(other than any Mortgage Loan as to which title to the underlying Mortgaged
Property has been acquired and whose fair market value is included pursuant to
clause (y) below) as of the final Distribution Date, and (y) the fair market
value of such acquired Mortgaged Property (determined as described below), plus
accrued and unpaid interest at the applicable Mortgage Loan Rate on the
Principal Balance of each such Mortgage Loan (including any Mortgage Loan as to
which title to the underlying Mortgaged Property has been acquired) through the
end of the Collection Period preceding the date of repurchase and the aggregate
amount of unreimbursed Servicing Advances made in respect of any such Mortgage
Loan, less any payments of principal and interest received during such
Collection Period in respect of each such Mortgage Loan, or (b) the final
payment or other liquidation of the Principal Balance of the last Mortgage Loan
remaining in the Trust or the disposition of all property remaining in the Trust
acquired upon foreclosure or deed in lieu of foreclosure of any such Mortgage
Loan; [provided, however, that in no event shall the trust created hereby
continue beyond 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. ▇▇▇▇▇, who are living on the Closing Date]. The fair
market value of Mortgaged Properties pursuant to the foregoing clause (y) shall
be determined by the Servicer as of the close of business on the third Business
Day next preceding the date upon which notice of any such termination is
furnished to Certificateholders pursuant to the third paragraph of this Section
10.01. Such determination shall not be effective unless consented to in writing
by the Financial Guaranty Insurer, which consent shall not be unreasonably
withheld. In the event that the Certificate Insurer does not consent to the fair
market value determined by the Servicer within three business days of receiving
notice of such determination, the Financial Guaranty Insurer and the Servicer
shall appoint a mutually agreed appraiser to make a determination as to such
fair market value whose determination shall be final and binding on the
Financial Guaranty Insurer and the Servicer, the expense of such appraisal being
borne equally by the Servicer and the Certificate Insurer and not being an
expense of the Trust.
The right of the Servicer to purchase all outstanding Mortgage Loans
pursuant to clause (a) above is exercisable only on or after the related
Clean-up Call Date. If such right is exercised, the Servicer shall remit the
purchase price specified in this Section to the Trustee for
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deposit in the Certificate Account pursuant to Section 3.02 (e) on or before the
related Deposit Date and the Trustee, if it has received the Mortgage Files
pursuant to Section 2.01, shall, promptly following remittance of such purchase
price, release to the Servicer the Mortgage Files pertaining to the Mortgage
Loans being purchased and all other documents furnished by the Servicer as are
necessary to transfer the Trustee's interest in the Mortgage Loans to the
Servicer.
Notice of any termination, specifying the Distribution Date (which shall
be a date that would otherwise be a Distribution Date) upon which the related
Certificateholders may surrender their Certificates to the Trustee for payment
of the final distribution and cancellation shall be given promptly by the
Trustee (upon receipt of written directions from the Servicer, if the Servicer
is exercising its right to purchase such assets of the Trust as provided above,
given not later than the [ ] day of the month preceding the month of such final
distribution) by letter to the Certificateholders mailed not earlier than the
first day and not later than the [ ] day of the month of such final distribution
specifying (a) the Distribution Date upon which final distribution of the
related Certificates will be made upon presentation and surrender of the
Certificates at the office or agency of the Trustee therein designated, (b) the
amount of any the final distribution and (c) that the Record Date otherwise
applicable to such Distribution Date is not applicable, distributions being made
only upon presentation and surrender of such Certificates at the office or
agency of the Trustee therein specified. In the event written directions are
delivered by the Servicer to the Trustee as described in the preceding sentence,
the Servicer shall deposit in the Certificate Account on or before the related
Deposit Date for such final distribution in immediately available funds an
amount equal to the purchase price for such assets of the Trust computed as
above provided. Any such deposit by the Servicer shall be in lieu of the deposit
otherwise required to be made in respect of such Distribution Date pursuant to
Section 3.02 and the related distribution thereof to the Certificateholders.
In connection with a termination of the Trust under this Section, the
Trustee shall cause to be distributed to Certificateholders on the final
Distribution Date an amount equal to (i) as to the Fixed Rate Group
Certificates, and upon presentation and surrender of the related Certificates,
in proportion to their respective Percentage Interests the related Aggregate
Certificate Principal Balance, and the Monthly Interest, and/or (ii) as to the
Adjustable Rate Group Certificates, and upon presentation and surrender of the
related Certificates, in proportion to their respective Percentage Interests,
the related Aggregate Certificate Principal Balance and Monthly Interest, (iii)
as to the Financial Guaranty Insurer, any amounts necessary to reimburse the
Financial Guaranty Insurer for any unreimbursed Insured Amounts, together with
interest thereon, and any accrued and unpaid Financial Guaranty Insurer Premium
after application pursuant to clauses (i) and (ii) above and (iv) as to the
Servicer, any additional servicing compensation with respect to such
Distribution Date (other than amounts retained to meet claims) after application
pursuant to the clauses (i) and (ii) above and payment to the Servicer of any
amounts to which it is entitled as reimbursement hereunder and (iv) as to the
Class C Certificateholders and upon presentation and surrender of the Class C
Certificate, any amounts remaining after application pursuant to the preceding
clauses (i) through (iii); provided, however, that if the fair market value of
any acquired property referred to in, or covered by, clause (a)(y) of the first
paragraph of this Section is less than the Principal Balance of the related
Mortgage Loan, then the excess of such Principal Balance over such fair market
value shall be allocated in
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reduction of the amounts otherwise distributable on the final Distribution Date
in the following order of priority: first, to the Holders of the Class R
Certificates, second to the Holders of the Class C Certificate and third to the
Holders of the related Offered Certificates, pro rata based on the Certificate
Principal Balances thereof on such Distribution Date. The distribution on the
final Distribution Date in connection with the purchase by the Servicer of the
assets in the Trust shall be in lieu of the distribution otherwise required to
be made on such Distribution Date in respect of each Class of Certificates. The
Servicer shall provide in writing to the Trustee and the Financial Guaranty
Insurer the information with respect to the amounts so to be paid.
In the event that all of the relevant Certificateholders shall not
surrender their Certificates for final payment and cancellation on or before the
fifth day following such final Distribution Date, the Trustee shall on such date
cause all funds in the Certificate Account not distributed in the final
distribution to Certificateholders to be withdrawn therefrom and credited to the
remaining Certificateholders by holding such funds uninvested in a separate
escrow account for the benefit of such Certificateholders and the Servicer (if
the Servicer exercised its right to purchase the assets of the Trust as provided
above) or the Trustee (in any other case) 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
one year after the second notice all the Certificates shall not have been
surrendered for cancellation, any funds deposited in such escrow account and
remaining unclaimed shall be paid by the Trustee to the Servicer and thereafter
Certificateholders shall look only to the Servicer with respect to any claims in
respect of such funds.
Section 10.02. Additional Termination Requirements. In the event the
Servicer exercises its purchase option as provided in Section 10.01, each
relevant REMIC Pool shall be terminated in accordance with the following
additional requirements, and the Trustee shall receive an Opinion of Counsel to
the effect that the termination of such REMIC Pool (i) will constitute a
"qualified liquidation" of such REMIC Pool within the meaning of Code Section
860F(a)(4)(A), and (ii) will not subject such REMIC Pool to tax or cause such
REMIC Pool to fail to qualify as a REMIC at any time that any Certificates are
outstanding.
(i) Within [ ] days prior to the final Distribution Date set forth
in the notice of intention to purchase the Mortgage Loans of a Mortgage
Loan given by the Servicer under Section 10.01, the Trustee, at the
direction of the Servicer, shall adopt a plan of complete liquidation of
each REMIC Pool being liquidated on behalf of the related REMIC within the
meaning of Code Section 860F(a)(4)(A)(8), which shall be evidenced by such
notice; and
(ii) At or after the time of adoption of such a plan of complete
liquidation and at or prior to the final Distribution Date, the Trustee
shall sell all of the assets of each REMIC Pool being liquidated to the
Servicer for cash at the purchase price specified in Section 10.01 and
shall distribute such cash in the manner specified in Section 10.01.
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ARTICLE ELEVEN
MISCELLANEOUS PROVISIONS
Section 11.01. Amendment. This Agreement may be amended from time to time
by the Servicer, the Seller and the Trustee, without the consent of any of the
Certificateholders but with the prior written consent of the Financial Guaranty
Insurer (which consent shall not be unreasonably withheld), (a) to cure any
error or any ambiguity or to correct or supplement any provisions herein which
may be inconsistent with any other provisions herein; (b) to add to the duties
or obligations of the Servicer hereunder; (c) to maintain or improve any rating
then assigned by any Rating Agency to any of the Certificates; or (d) to add any
other provisions with respect to matters or questions arising under this
Agreement or the Financial Guaranty Insurance Policy, as the case may be
(including specifically amendments or supplements pursuant to the second
paragraph of Section 6.02(b)); (e) to modify, eliminate or add to any of its
provisions to such extent as shall be necessary to maintain the qualification of
any REMIC Pool as a REMIC at all times that any Certificates are outstanding or
to avoid or minimize the risk of the imposition of any tax on any REMIC Pool
pursuant to the Code that would be a claim against such REMIC Pool, provided
that in the case of this clause (e) the Trustee has received an Opinion of
Counsel to the effect that such action is necessary or desirable to maintain
such qualification or to avoid or minimize the risk of the imposition of any
such tax; or (f) to modify, eliminate or add to the provisions of Section
6.02(c) or any other provisions hereof restricting transfer of Class R
Certificates; provided that in all such cases the Trustee has obtained written
confirmation from each Rating Agency that any such modifications to this
Agreement will not result in a qualification, reduction or withdrawal of the
rating assigned to any Class of Offered Certificates by such Rating Agency and
has received an Opinion of Counsel to the effect that any such modifications to
this Agreement do not give rise to a risk that any REMIC Pool or any of the
Certificateholders will be subject to a tax caused by a transfer to a
Disqualified Organization; provided, further, that in all such cases such action
shall not, as evidenced by an Opinion of Counsel, adversely affect in any
material respect the interests of any Certificateholder or the Financial
Guaranty Insurer.
This Agreement may also be amended from time to time by the Servicer, the
Seller and the Trustee, with the consent of the Financial Guaranty Insurer
(which consent shall not be unreasonably withheld) and the Holders of
Certificates evidencing Voting Interests of each Class affected thereby
aggregating not less than 51%, 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 of such
Class; provided, however, that no such amendment shall (a) reduce in any manner
the amount of, or delay the timing of, collections of payments on Mortgage Loans
or distributions which are required to be made on any Certificate without the
consent of the Holder of such Certificate or (b) reduce the aforesaid percentage
of each Class the Holders of which are required to consent to any such
amendment, without the consent of the Holders of all Certificates of such Class
then outstanding.
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Promptly after the execution of any such amendment or consent pursuant to
the next preceding paragraph, the Trustee shall furnish written notification of
the substance of such amendment to each affected Certificateholder 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 or consent, 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 Financial Guaranty Insurer and Certificateholders shall be
subject to such reasonable requirements as the Trustee may prescribe.
Prior to the execution of any amendment to this Agreement the Trustee and
the Financial Guaranty Insurer shall be entitled to receive and rely upon an
Opinion of Counsel stating that the execution of such amendment is authorized or
permitted by this Agreement. The Trustee may, but shall not be obligated to,
enter into any such amendment that affects the Trustee's own rights, duties or
immunities under this Agreement.
Section 11.02. Recordation of Agreement. This Agreement is subject to
recordation in all appropriate public offices for real property records in all
the counties or other comparable jurisdictions in which any or all of the
Mortgaged Properties are situated, and in any other appropriate public recording
office or elsewhere, such recordation to be effected by the Servicer, at its
expense but only upon, determination of the Servicer accompanied by an Opinion
of Counsel to the effect that such recordation is legally required to protect
the Trustee's interest in the Mortgage Loans.
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one and
the same instrument.
Section 11.03. Limitation on Rights of Certificateholders. The death or
incapacity of any Certificateholder shall not operate to terminate this
Agreement, the Trust or any REMIC established pursuant to Section 3.01, nor
entitle such Certificateholder's legal representatives or heirs to claim an
accounting or to take any action or commence any proceeding in any court for a
partition or winding up of the Trust or any REMIC established pursuant to
Section 3.01, nor otherwise affect the rights, obligations and liabilities of
the parties hereto or any of them.
Except as otherwise expressly provided herein, no Certificateholder,
solely by virtue of its status as a Certificateholder, shall have any right to
vote or in any manner otherwise control the operation and management of the
Trust or any REMIC established pursuant to Section 3.01, 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 person by
reason of any action taken by the parties to this Agreement pursuant to any
provision hereof.
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133
No Certificateholder, solely by virtue of its status as a
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 default
and of the continuance thereof, as hereinbefore provided, and unless also the
Holders of Certificates evidencing Voting Interests represented by all
Certificates (or all affected Certificates, as appropriate) aggregating not less
than 51% shall have made written request upon 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 provision of this
Agreement to affect, disturb or prejudice the rights of the Holders of any other
Certificates, or to obtain or seek to obtain priority over or preference to any
other such Holder, or to enforce any right under this Agreement, except in the
manner herein provided and for the equal, ratable and common benefit of all
Certificateholders. For the protection and enforcement of the provisions of this
Section, each and every Certificateholder and the Trustee shall be entitled to
such relief as can be given either at law or in equity.
Section 11.04. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of California (without regard to conflict
of laws principles and the application of the laws of any other jurisdiction),
and the obligations, rights and remedies of the parties hereunder shall be
determined in accordance with such laws.
Section 11.05. Notices. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given when
delivered to (a) in the case of the Seller and the Servicer, at [350 ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇]; (b) in the
case of the Trustee, at the Corporate Trust Office at [3 ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Aames Capital Corporation, Series 199[ ]-
[ ]]; (c) in the case of [ ]; (d) in the case of [Moody's, to ▇▇▇▇▇'▇
Investors Service Inc., ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
Residential Mortgage Pass-Through Monitoring]; (e) in the case of [S&P, to
Standard & Poor's, ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
Mortgage Surveillance Group]; and (f) in the case of the [ ]; or, as to
each party, at such other address as shall be designated by such party in a
written notice to each other party. Any notice required or permitted to be
mailed to a Certificateholder shall be given by first class mail, postage
prepaid, at its address shown in the Certificate Register. Any notice so mailed
within the time prescribed in this Agreement shall be conclusively presumed to
have been duly given, whether or not the Certificateholder receives such notice.
Any notice or other document required to be delivered or mailed by the Trustee
to any Rating Agency shall be given on a best efforts basis and only as a matter
of courtesy and accommodation and the Trustee shall have no liability for
failure to deliver such notice or document to any such Rating Agency.
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Section 11.06. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Certificates
or the rights of the Holders thereof.
Section 11.07. Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Sections 7.02, 7.04 and 7.05, this
Agreement may not be assigned by the Seller or the Servicer without the prior
written consent of the Financial Guaranty Insurer and Holders of Certificates
evidencing not less than [ ]% of the Voting Interests of all Certificates.
Section 11.08. Certificates Nonassessable and Fully Paid. The parties
agree that the Certificateholders shall not be personally liable for obligations
of the Trust, that the beneficial ownership interests represented by the
Certificates shall be nonassessable for any losses or expenses of the Trust or
for any reason whatsoever, and that Certificates upon execution, authentication
and delivery thereof by the Trustee pursuant to Section 2.06 are and shall be
deemed fully paid.
Section 11.09. Third Party Beneficiary; Rating. (a) The Financial Guaranty
Insurer is an intended third-party beneficiary of this Agreement. This Agreement
shall be binding upon and inure to the benefit of the Financial Guaranty
Insurer; provided that, notwithstanding the foregoing, for so long as a
Financial Guaranty Insurer Default is continuing under its obligations under the
Financial Guaranty Insurance Policy, the Adjustable Rate Group
Certificateholders shall succeed to the Financial Guaranty Insurer's rights
hereunder. Without limiting the generality of the foregoing, all covenants and
agreements in this Agreement that expressly confer rights upon the Financial
Guaranty Insurer shall be for the benefit of and run directly to the Financial
Guaranty Insurer, and the Financial Guaranty Insurer shall be entitled to rely
on and enforce such covenants to the same extent as if it were a party to this
Agreement.
(b) In the event the rating of the Financial Guaranty Insurer by any of
the Rating Agencies is reduced to a rating that is below "investment grade" (as
that term is then commonly used), the Servicer shall, at its own expense, seek
to obtain ratings of each Class of Adjustable Rate Group Certificates (apart
from the rating related to the Financial Guaranty Insurance Policy) from such
Rating Agency.
[Signatures follow.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers, all as of the day and year first
above written.
AAMES CAPITAL CORPORATION,
as Seller and Servicer
By: _____________________________________
Name:
Title:
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A.,
as Trustee and not in its
individual capacity
By: _____________________________________
Name:
Title:
▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇ )
) ss.:
County of Los Angeles )
On the day of [ ], before me, a notary public in and for of
the State of California, personally appeared ▇▇▇▇ ▇▇▇▇▇▇, personally known to me
(or proved to me on the basis of satisfactory evidence) to be the person whose
name is subscribed to the within instrument and acknowledged to me that he
executed the same in the capacity or capacities indicated in the within
instrument, and that by his signature on the instrument the person, or the
entity upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
----------------------------------------------
Notary Public
[Notary Seal]
137
State of California )
) ss.:
County of Los Angeles )
On the day of [ ], before me, a notary public in and for of
the State of California, personally appeared ▇▇▇▇▇▇▇ ▇▇▇▇, personally known to
me (or proved to me on the basis of satisfactory evidence) to be the person
whose name is subscribed to the within instrument and acknowledged to me that
she executed the same in the capacity or capacities indicated in the within
instrument, and that by her signature on the instrument the person, or the
entity upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
----------------------------------------------
Notary Public
[Notary Seal]
138
Schedule I
List of Sub-Servicers
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Schedule II
Representations and Warranties With Respect
to Subsequent Mortgage Loans
A. The Seller represents and warrants to the Trustee, the Financial Guaranty
Insurer and the Certificateholders as of any Subsequent Transfer Date (except as
otherwise expressly stated) that as to each Subsequent Mortgage Loan conveyed to
the Trust by it:
(i) no Subsequent Mortgage Loan provides for negative amortization;
(ii) with respect to the Adjustable Rate Group and each Subsequent Mortgage (a)
if such Mortgage Loan has an initial Adjustment Date not more than [ ] from the
date of origination, then the related Mortgage Note provides for a rate cap of [
]% to [ ]% every [ ] months, (b) if such Mortgage Loan has an initial Adjustment
Date of [ ] months, [ ], [ ], [ ], [ ], or [ ] from the date of origination,
then the related Mortgage Note provides for a rate cap as to its first
Adjustment Date of from [ ]% to [ ]% and a rate cap as to each subsequent
Adjustment Date of from [ ]% to [ ]%;
(iii) no Subsequent Mortgage Loan has a Gross Margin less than [ ]%;
(iv) each Subsequent Mortgage Loan will have been serviced by the Servicer or a
Sub-Servicer since origination or purchase by the Servicer;
(v) no Subsequent Mortgage Loan has been originated for the purpose of
facilitating the purchase of real estate owned by the originator; and
(vi) no Subsequent Mortgage Loan will have a Cut-off Date of later than [ ].
B. The Seller represents and warrants to the Trustee, the Financial Guaranty
Insurer and the Certificateholders, that following the purchase of all
Subsequent Mortgage Loans by the Trust and the assignment of such Subsequent
Mortgage Loans to the appropriate Mortgage Loan Group, as of the end of the
Funding Period:
(i) the Mortgage Loans in the Fixed Rate Group (including the Subsequent
Mortgage Loans):
(a) will have a weighted average Mortgage Loan Rate of at least [ ]%;
(b) will have a weighted average original term to stated maturity of not more
than [ ] months;
(c) will have a weighted average Combined Loan-to-Value Ratio of not more than
[ ]% and a weighted average second loan-to-value ratio of not more than [ ]%;
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(d) will have no Mortgage Loan with a Principal Balance less than $[ ] or
greater than $[ ];
(e) will not have in excess of [ ]% by Aggregate Principal Balance of Mortgage
Loans secured by non-owner occupied Mortgaged Properties;
(f) will not have a concentration in a single ZIP code in excess of [ ]% by
Aggregate Principal Balance;
(g) will not have an aggregate concentration in excess of [ ]% by Aggregate
Principal Balance in ZIP codes beginning with the following three digits: [ ];
(h) will not have a concentration in a single State, [other than California,
Florida or New York] in excess of [ ]% by Aggregate Principal Balance;
(i) will not have a concentration in California in excess of [ ]%, in Florida
in excess of [ ]%, in New York in excess of [ ]% by Aggregate Principal Balance;
(j) will not have in excess of [ ]% or 3.75% by Aggregate Principal Balance of
Mortgage Loans secured by Mortgaged Properties that are two family properties or
condominiums (less than four stories), three and four family properties or
condominiums (greater than four stories), respectively, and will have none
secured by mobile homes treated as real estate under applicable state law;
(k) will have at least [ ]% by Aggregate Principal Balance of Mortgage Loans
secured by fee simple interests in detached single family dwelling units
(including units in de minimis planned unit developments);
(l) will have no more than [ ]% by Aggregate Principal Balance Mortgage Loans
that are based on a [ ]-month amortization schedule with balloon payments prior
to month [ ];
(m) will have no more than [ ]% by Aggregate Principal Balance of Mortgage
Loans that are based on a [ ]-month amortization schedule and have a balloon
payment between month [ ]-[ ];
(n) will have no more than [ ]% by Aggregate Principal Balance of Mortgage
Loans that are based on a [ ]-month amortization schedule and have a balloon
payment between month [ ]-[ ]; and
(o) will have no more than [ ]% by Aggregate Principal Balance of Mortgage
Loans that are based on a [ ]-month amortization schedule and have a balloon
payment between month [ ]-[ ];
▇-▇
▇▇▇
(▇) will have no less than [ ]% by Aggregate Principal Balance of Mortgage
Loans that provide for the payment of principal and interest on a level basis to
fully amortize such Mortgage Loan over its stated maturity; and
(q) will have a weighted average term since origination not in excess of [ ]
months.
(ii) the Mortgage Loans in The Adjustable Rate Group (including the Subsequent
Mortgage Loans):
(a) will have a weighted average Mortgage Loan Rate of at least [ ]%;
(b) will have a weighted average original term to stated maturity of not more
than [ ] months;
(c) will have a weighted average Loan-to-Value Ratio of not more than [ ]%;
(d) will have no Mortgage Loan with a Principal Balance less than $[ ] or more
than $[ ];
(e) will have not in excess of [ ]% by Aggregate Principal Balance of Mortgage
Loans secured by non-owner occupied Mortgage Properties;
(f) will not have a concentration in a single ZIP code in excess of [ ]% by
Aggregate Principal Balance;
(g) will not have an aggregate concentration in excess of [ ]% in ZIP codes
beginning with the following three digits:[ ];
(h) will not have a concentration in a single State, [OTHER THAN CALIFORNIA,
FLORIDA OR WASHINGTON] in excess of [ ]% by Aggregate Principal Balance;
(i) will not have a concentration in California in excess of [ ]%, in Florida
in excess of [ ]%, or in Washington in excess of [ ]% by Aggregate Principal
Balance;
(j) will not have in excess of [ ]% or [ ]% by Aggregate Principal Balance
Mortgage Loans secured by Mortgaged Properties that are two family properties or
condominiums (less than four stories) and three and four family properties or
condominiums (greater than four stories), respectively, and none will be secured
by mobile homes or manufactured housing treated as real estate under applicable
state law;
(k) will have at least [ ]% by Aggregate Principal Balance Mortgage Loans
secured by fee simple interests in detached single family dwelling units
(including units in de minimis planned unit developments);
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(l) will have a weighted average margin of at least [ ]%;
(m) will contain no Mortgage Loans that are not based on a [ ]-month
amortization schedule of level payments;
(n) will have a weighted average term since origination not in excess of [ ]
months.
For purposes of this Schedule II, "Aggregate Principal Balance" means the
aggregate of the Principal Balances of the Mortgage Loans (determined as of the
Cut-off Date for the Initial Mortgage Loans and as of the Subsequent Cut-off
Date for the Subsequent Mortgage Loans) in the related Mortgage Loan
Group.
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Schedule III
Schedule of Restricted Mortgage Loans
A-6
144
EXHIBIT A
FORMS OF CERTIFICATES
OMITTED
B-1
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EXHIBIT B
MORTGAGE LOAN SCHEDULE
C-1
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EXHIBIT C
FORM OF ANNUAL STATEMENT AS TO COMPLIANCE
The undersigned, _________________________________, __________________ of
Aames Capital Corporation (the "Servicer"), in its capacity as Servicer under
that certain Pooling and Servicing Agreement dated as of [ ] (the "Pooling and
Servicing Agreement") between Aames Capital Corporation, as Seller and Servicer,
and Bankers Trust Company of California, N.A., as Trustee, does hereby certify
pursuant to Section 3.09 of the Pooling and Servicing Agreement that as of the
[ ] day of [ ]:
(a) a review of the activities of the Servicer for the year ended
[ ] and of its performance under the Pooling and Servicing Agreement
has been made under my supervision, and
(b) to the best of my knowledge, based on such review, the
Servicer has fulfilled all of its material obligations under the
Pooling and Servicing Agreement throughout such year.
IN WITNESS WHEREOF, I have hereunto signed my name as of this [ ] day
of [ ].
-----------------------------------------
Name:
Title:
▇-▇
▇▇▇
▇▇▇▇▇▇▇ ▇
FORM OF AFFIDAVIT PURSUANT TO SECTION 860E(e)(4)
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
STATE OF ___________________________ )
) ss.:
COUNTY OF __________________________ )
[NAME OF OFFICER], being first duly sworn, deposes and says:
1. That he is [Title of Officer] of [Name of Investor] (the
"Investor"), a [savings institution] [corporation] duly organized
and existing under the laws of [the State of ] [the United
States], on behalf of which he makes this affidavit. Capitalized
terms used but not defined herein shall have the meanings ascribed
to such terms in the Agreement as defined in the Class [R-IA] [R-IF]
[R-II] [R-III] (the "Class R Certificate").
2. That the Investor's Taxpayer Identification Number is [ ].
3. That the Investor is not a "Disqualified Organization" within the
meaning of Section 860E(e)(5) of the Internal Revenue Code of 1986, as amended
(the "Code"), or an agent of a Disqualified Organization (including a broker,
nominee or middleman) and will not be a "Disqualified Organization" as of [date
of transfer], and that the Investor is not acquiring a Class R Certificate of
the Aames Mortgage Trust 1997-D Mortgage Loan Pass-Through Certificates, (the
"Class R Certificate") for the account of, or as an agent (including a broker,
nominee or middleman) of any entity as to which the Investor has not received an
affidavit substantially in the form of this affidavit. For these purposes, a
"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 (other than an instrumentality
if all of its activities are subject to tax and a majority of its board of
directors is not selected by such governmental entity), any cooperative
organization furnishing electrical energy or providing telephone service to
persons in rural areas as described in Code Section 1381(a)(2)(c), or any
organization (other than a farmers' cooperative described in Code Section 521)
that is exempt from federal income tax unless such organization is subject to
the tax on unrelated business income imposed by Code Section 511.
4. That the Investor is not (i) an entity that holds Class R
Certificates as nominee to facilitate the clearance and settlement of such Class
R Certificates through electronic book-entry changes in accounts of
participating organizations (a "Book-Entry Nominee"), (ii) an individual,
corporation, partnership or other person unless such transferee (A) is not a
Foreign Person or (B) is a Foreign Person that will hold such Class R
Certificate in connection with the conduct of a trade or business within the
United States and has furnished the transferor and the Trustee with an effective
Internal Revenue Service Form 4224 or (C) is a Foreign Person that has delivered
to both the transferor and the Trustee an opinion of a nationally recognized tax
counsel to the effect
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that the transfer of a Class R Certificate to it is in accordance with the
requirements of the Code and the regulations promulgated thereunder and that
such transfer of a Class R Certificate will not be disregarded for federal
income tax purposes (any such person who is not covered by clause (A), (B) or
(C) above being referred to herein as a "Non-permitted Foreign Holder") or (iii)
a Person that is an employee benefit plan within the meaning of Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended, or any Person
that is an individual retirement account or employee benefit plan, trust or
account subject to Section 4975 of the Code (an "ERISA Plan") or an entity,
including an insurance company separate account or general account, whose
underlying assets include ERISA Plan assets by reason of an ERISA Plan's
investment in the entity or a Person investing the assets of an ERISA Plan or
such an entity, whether as nominee, trustee, agent or otherwise (an "ERISA
Prohibited Holder").
5. That the Investor agrees to any such amendments of the Pooling and
Servicing Agreement as may be required to further effectuate the restrictions on
transfer of the Class R Certificate to such a Disqualified Organization or a
Book-Entry Nominee or a Non-permitted Foreign Holder or an ERISA Prohibited
Holder.
6. That the Investor has no intent or purpose to impede the assessment
or collection of any federal, state or local income taxes legally required to be
paid with respect to the Class R Certificate and will not transfer the Class R
Certificate to any Person that it has reason to believe has the intention to
impede the assessment or collection of such taxes.
7. The Investor has been advised of, understands and acknowledges that
under the Code, a substantial tax would be imposed on a "pass-through entity"
holding a Class R Certificate if at any time during the taxable year of the
pass-through entity a Person that is a Disqualified Organization is the record
holder of an interest in such entity. (For this purpose, a "pass-through entity"
includes a regulated investment company, a real estate investment trust or
common trust fund, a partnership, trust or estate, and certain cooperatives and,
except as may be provided in Treasury Regulations, persons holding interests in
pass through entities as a nominee for another Person). A pass-through entity
shall be relieved of liability for the tax if it had received from such Person
an affidavit (in substantially the same form as this affidavit) that such Person
is not a Disqualified Organization and the entity had no actual knowledge that
the affidavit was false. The Investor will advise the Trustee and the Servicer
if it becomes a pass-through entity or if it is a pass-through entity, if any of
the interest holders are or become Disqualified Persons.
8. The Investor has reviewed the provisions of Section 6.02 of the
Agreement and understands the legal consequences of the acquisition of a Class R
Certificate including, without limitation, the restrictions on subsequent
transfers. The Investor expressly agrees to be bound by and to abide by the
provisions of Section 6.02 of the Agreement, as such Section may be amended from
time to time.
9. The Investor agrees to require an affidavit substantially similar to
this affidavit from any Person to whom the Investor attempts to transfer its
Class R Certificate including any Person with respect to which the Investor is
then acting as nominee, trustee or agent, and in connection with any transfer by
a Person for whom the Investor is acting as nominee, trustee or agent, and
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the Investor will not transfer its Class R Certificate to be transferred to any
Person that the Investor knows is a Disqualified Organization.
10. The Investor is acquiring the Class R Certificate either (i) for its
own account or (ii) as nominee, trustee or agent for another Person and has
attached hereto an affidavit from such Person in substantially the same form as
this affidavit. If clause (ii) of the preceding sentence is applicable, such
Person is not a Disqualified Organization and the Investor has no knowledge that
any such affidavit from such Person is false.
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IN WITNESS WHEREOF, the Investor has caused this instrument to be executed
on its behalf, pursuant to authority of its Board of Directors, by its [Title of
Officer] and its corporate seal to be hereunto attached, attested by its
[Assistant] Secretary, this ____ day of _________, 199_.
[NAME OF INVESTOR]
By:______________________________________
Name:
Title:
Personally appears before me the above-named [Name of Officer], known or
proved to me to be the same person who executed the foregoing instrument and to
be the [Title of Officer] 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 [ ].
-------------------------------------
NOTARY PUBLIC
COUNTY OF _____________
STATE OF _____________________
My Commission expires the ________ day of __________, 19__.
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EXHIBIT E
FORM OF NOTICE REGARDING PAYMENT IN FULL
OF PRINCIPAL BALANCE OF MORTGAGE LOAN
Bankers Trust Company of California, N.A.,
as Trustee
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Attention: Corporate Trust Administration
Re: Mortgage Loan Pass-Through Certificates, Series[ ]-[ ]
Ladies and Gentlemen:
Reference is made to Section 3.07 of the Pooling and Servicing Agreement
dated as of [ ] (the "Pooling and Servicing Agreement") between Aames Capital
Corporation, as Seller and Servicer, and Bankers Trust Company of California,
N.A., as Trustee. All capitalized terms used but not defined herein shall have
the meanings given to such terms in the Pooling and Servicing Agreement.
The undersigned hereby certifies that the Principal Balance of the
Mortgage Loan(s) listed on Schedule A annexed hereto has been paid in full and
that all amounts received in connection with the payment of such Mortgage
Loan(s) that were required to be deposited or credited in the Certificate
Account pursuant to Section 3.02 of the Pooling and Servicing Agreement have
been so deposited or credited.
The undersigned further certifies that he is a Servicing Officer of the
Servicer holding the office set forth beneath his signature and that he is duly
authorized to execute this certificate on behalf of the Servicer.
AAMES CAPITAL CORPORATION
Date: ______________________ By: _____________________________________
Name:
Title:
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EXHIBIT F
FORM OF LIQUIDATION REPORT
1. Type of Liquidation (REO disposition/charge-off/short pay-off)
- Date Last Paid
- Date of Foreclosure
- Date of REO
- Date of REO Disposition
- Property Sale Price; Estimated Market Value at Disposition
2. Liquidation Proceeds
- Principal Prepayment $__________
- Property Sale Proceeds __________
- Insurance Proceeds __________
- Other (itemize) __________
TOTAL $
==========
3. Liquidation Expenses
- Servicing Advances $__________
- Monthly Advances __________
- Contingency Fees __________
- Servicing Fees __________
- Annual Expense Escrow Amount __________
- Supplemental Fee (if any) __________
- Additional Interest (if any) __________
- Monthly Sponsor Fee (if any) __________
TOTAL $
==========
4. Net Liquidation Proceeds* $__________
(Total of Item 2 minus total of Item 3)
5. Accrued and Unpaid Interest on Mortgage Loan $__________
6. Principal Balance of Mortgage Loan $__________
7. Realized Loss on Mortgage Loan $__________
(Item 5 plus Item 6 minus Item 4, with
a Realized Loss resulting only if the total
of this calculation is a positive number)
*Applied first to Item 5 and then to Item 6.
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EXHIBIT G
OFFICER'S CERTIFICATE
I, _____________________, hereby certify that I am the duly elected
_____________________ of Aames Capital Corporation (the "Company") acting as
servicer pursuant to a Pooling and Servicing Agreement dated as of [ ] by and
among the Company and Bankers Trust Company of California, N.A., as Trustee, and
further certify, to the best of my knowledge and after due inquiry that the
following is a summary of the facts and circumstances surrounding the
"charge-off" of any Mortgage Loans during the Collection Period from _____ 1
through _____ 30/31, 199_;
[Insert the following information for each "charged-off" Mortgage Loan]
Loan #
Borrower Name
Property Address
Date of "charge-off"
Original Principal Balance
Outstanding Principal Balance
Mortgage Loan Rate
Accrued Interest at time of "charge off"
Unreimbursed Servicing Advances at time of "charge off" Unreimbursed
Delinquency Advances at time of "charge off" # of days in default at
time of "charge off" Original Appraised Value Current appraised value
based upon "drive by" Amount of outstanding first lien Estimate of
Foreclosure Costs
Broker Fees
Legal Fees
Repair and Miscellaneous Expenses
Projected Marketing Period
Estimate of Loss on Foreclosure and Liquidation
Capitalized terms not otherwise defined herein have the meanings set forth in
the Pooling and Servicing Agreement.
IN WITNESS WHEREOF, I have hereunto signed by name and affixed the seal of
the Servicer.
Dated: ____________________ _____________________________________
Name:
Title:
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EXHIBIT H
FORM OF TRANSFEROR AFFIDAVIT
[LETTERHEAD OF TRANSFEROR]
________________, 199_
Bankers Trust Company of California, N.A.,
as Trustee
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Attention: Corporate Trust Administration
Re: Aames Mortgage Trust [ ]
Mortgage Pass-Through Certificates, Series [ ]
Ladies and Gentlemen:
We have reviewed the attached affidavit of [NAME OF TRANSFEREE] and have
no actual knowledge that such affidavit is not true and has no reason to believe
that the requirements set forth in paragraph 3, paragraph 4(i) or paragraph
4(ii) are not satisfied and have 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 a Class R Certificate.
In addition, we have 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,
-----------------------------------------
By: _____________________________________
Name:
Title:
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EXHIBIT I
FORM OF SUBSEQUENT TRANSFER AGREEMENT
Pursuant to this Subsequent Transfer Agreement, dated as of [ , ] by and
between Aames Capital Corporation (the "Seller") and Bankers Trust Company of
California, N.A., in its capacity as trustee for Aames Mortgage Trust [ ]-[ ]
(the "Trustee"), and pursuant to that certain Pooling and Servicing Agreement,
dated as of [ ] (the "Pooling and Servicing Agreement"), by and between the
Seller, as seller and servicer, and the Trustee, as trustee, the Seller and the
Trustee agree to the sale by the Seller and the purchase by the Trustee of
additional mortgage loans (the "Subsequent Mortgage Loans") to be included in
the Fixed Rate Group or the Adjustable Rate Group as listed on the Mortgage Loan
Schedule attached hereto as Schedule A.
Capitalized terms used and not defined herein shall have their respective
meanings as set forth in the Pooling and Servicing Agreement.
Section 1. Purchase and Conveyance of Subsequent Mortgage Loans.
(a) The Seller does hereby sell, transfer, assign, set over and convey
to the Trustee:
(i) all right, title and interest of such Seller in and to the
Subsequent Mortgage Loans owned by it and listed on Schedule A hereto, including
without limitation, the related Mortgages, Mortgage Files and Mortgage Notes,
and all payments on, and proceeds with respect to, such Subsequent Mortgage
Loans received on and after the Subsequent Cut-off Date except such payments and
proceeds as the Servicer is entitled to retain pursuant to the express
provisions of the Pooling and Servicing Agreement;
(ii) all right, title and interest of such Seller in the Mortgages
on the properties securing the Subsequent Mortgage Loans, including any related
Mortgaged Property acquired by or on behalf of the Trust by foreclosure or deed
in lieu of foreclosure or otherwise;
(iii) all right, title and interest of such Seller in and to any
rights in or proceeds from any insurance policies (including title insurance
policies) covering the Subsequent Mortgage Loans, the related Mortgaged
Properties or Mortgagors and any amounts recovered from third parties in respect
of any Subsequent Mortgage Loans that became Liquidated Mortgage Loans; and
(iv) the proceeds of all of the foregoing.
(b) With respect to each Subsequent Mortgage Loan, the Seller,
contemporaneously with the delivery of this Agreement, has delivered or caused
to be delivered to the Trustee, each item set forth in Section 2.01 of the
Pooling and Servicing Agreement. The transfer to the Trustee by the Seller of
the Subsequent Mortgage Loans identified on the Schedule A hereto
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156
shall be absolute and is intended by the Seller, the Servicer, the Trustee and
the Certificateholders to constitute and to be treated as a sale by the Seller.
(c) The expenses and costs relating to the delivery of the Subsequent
Mortgage Loans, this Agreement and the Pooling and Servicing Agreement shall be
borne by the Seller.
(d) Additional terms of the sale, including the purchase price, are set
forth on Attachments A and B hereto separated by Mortgage Loan Group.
Section 2. Representations and Warranties; Conditions Precedent.
(a) The Seller hereby affirms the representations and warranties set
forth in Section 2.05 of the Pooling and Servicing Agreement that relate to the
Subsequent Mortgage Loans as of the date hereof. The Seller hereby confirms that
each of the conditions set forth in Section 2.02 of the Pooling and Servicing
Agreement (except such conditions that are required to be satisfied as of the
end of the Funding Period) are satisfied as of the date hereof.
(b) All terms and conditions of the Pooling and Servicing Agreement are
hereby ratified and confirmed; provided however, that in the event of any
conflict the provisions of this Agreement shall control over the conflicting
provisions of the Pooling and Servicing Agreement.
Section 3. Recordation of Agreement.
This Agreement is subject to recordation in all appropriate public offices
for real property records in all the counties or other comparable jurisdictions
in which any or all of the Mortgaged Properties are situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected by the Servicer and at its expense in the event such recordation
materially and beneficially affects the interests of Certificateholders.
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one and
the same instrument.
Section 4. Governing Law.
This Agreement shall be construed in accordance with the laws of the State
of California (without regard to conflict of laws principles and the application
of the laws of any other jurisdiction), and the obligations, rights and remedies
of the parties hereunder shall be determined in accordance with such laws.
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Section 5. Successors and Assigns.
This Agreement shall inure to the benefit of and be binding upon the
Seller and the Purchaser and their respective successors and assigns.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers, all as of the day and year first
above written.
AAMES CAPITAL CORPORATION,
as Seller
By: _______________________________
Name:
Title:
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A., as Trustee
for Aames Mortgage Trust [ ]-[ ]
By: _______________________________
Name:
Title:
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EXHIBIT J
FORM OF FINANCIAL GUARANTY INSURANCE POLICY
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EXHIBIT K
FORM OF NOTICE OF CLAIM AND CERTIFICATE
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EXHIBIT L
FORM OF INSURANCE AND INDEMNITY AGREEMENT
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SCHEDULE A
SUBSEQUENT MORTGAGE LOAN SCHEDULE
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