Exhibit 4.1
▇▇▇▇▇▇▇ ▇▇▇▇▇ MORTGAGE INVESTORS, INC.
Depositor
WILSHIRE CREDIT CORPORATION,
Servicer
and
DEUTSCHE BANK NATIONAL TRUST COMPANY
Trustee
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POOLING AND SERVICING AGREEMENT
Dated as of September 1, 2005
----------
▇▇▇▇▇▇▇ ▇▇▇▇▇ MORTGAGE INVESTORS TRUST,
MORTGAGE LOAN ASSET-BACKED CERTIFICATES, SERIES 2005-AR1
TABLE OF CONTENTS
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ARTICLE I DEFINITIONS.................................................... 1
ARTICLE II CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND WARRANTIES.. 43
SECTION 2.01. Conveyance of Mortgage Loans........................... 43
SECTION 2.02. Acceptance by the Trustee of the Mortgage Loans........ 45
SECTION 2.03. Representations, Warranties and Covenants of the
Depositor.............................................. 46
SECTION 2.04. Representations and Warranties of the Servicer......... 50
SECTION 2.05. Substitutions and Repurchases of Mortgage Loans which
are not "Qualified Mortgages".......................... 51
SECTION 2.06. Authentication and Delivery of Certificates............ 52
SECTION 2.07. REMIC Elections........................................ 52
SECTION 2.08. [RESERVED]............................................. 55
SECTION 2.09. Covenants of the Servicer.............................. 55
SECTION 2.10. [RESERVED]............................................. 55
SECTION 2.11. Permitted Activities of the Trust...................... 55
SECTION 2.12. Qualifying Special Purpose Entity...................... 55
ARTICLE III ADMINISTRATION AND SERVICING OF MORTGAGE LOANS............... 55
SECTION 3.01. Servicer to Service Mortgage Loans..................... 55
SECTION 3.02. Servicing and Subservicing; Enforcement of the
Obligations of Servicer................................ 57
SECTION 3.03. Rights of the Depositor and the Trustee in Respect of
the Servicer........................................... 57
SECTION 3.04. Trustee to Act as Servicer............................. 58
SECTION 3.05. Collection of Mortgage Loan Payments; Collection
Account; Certificate Account........................... 58
SECTION 3.06. Collection of Taxes, Assessments and Similar Items;
Escrow Accounts........................................ 61
SECTION 3.07. Access to Certain Documentation and Information
Regarding the Mortgage Loans........................... 62
SECTION 3.08. Permitted Withdrawals from the Collection Account and
Certificate Account.................................... 62
SECTION 3.09. [RESERVED]............................................. 64
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TABLE OF CONTENTS
(continued)
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SECTION 3.10. Maintenance of Hazard Insurance........................ 64
SECTION 3.11. Enforcement of Due-On-Sale Clauses; Assumption
Agreements............................................. 65
SECTION 3.12. Realization Upon Defaulted Mortgage Loans;
Determination of Excess Proceeds; Special Loss
Mitigation............................................. 66
SECTION 3.13. Trustee to Cooperate; Release of Mortgage Files........ 69
SECTION 3.14. Documents, Records and Funds in Possession of Servicer
to be Held for the Trustee............................. 70
SECTION 3.15. Servicing Compensation................................. 70
SECTION 3.16. Access to Certain Documentation........................ 71
SECTION 3.17. Annual Statement as to Compliance...................... 71
SECTION 3.18. Annual Independent Public Accountants' Servicing
Statement; Financial Statements........................ 71
SECTION 3.19. [RESERVED]............................................. 71
SECTION 3.20. Periodic Filings....................................... 71
SECTION 3.21. Annual Certificate by Trustee.......................... 73
SECTION 3.22. Annual Certificate by Servicer......................... 73
SECTION 3.23. Prepayment Charge Reporting Requirements............... 73
SECTION 3.24. Information to the Trustee............................. 74
SECTION 3.25. Indemnification........................................ 74
SECTION 3.26. Nonsolicitation........................................ 75
SECTION 3.27. High Cost Mortgage Loans............................... 75
SECTION 3.28. MI Policies, Claims Under the MI Policies.............. 75
ARTICLE IV DISTRIBUTIONS................................................. 75
SECTION 4.01. Advances............................................... 75
SECTION 4.02. Reduction of Servicing Compensation in Connection with
Prepayment Interest Shortfalls......................... 76
SECTION 4.03. Distributions on the REMIC Interests................... 77
SECTION 4.04. Distributions.......................................... 77
SECTION 4.05. Monthly Statements to Certificateholders............... 82
ARTICLE V THE CERTIFICATES............................................... 85
SECTION 5.01. The Certificates....................................... 85
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TABLE OF CONTENTS
(continued)
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SECTION 5.02. Certificate Register; Registration of Transfer and
Exchange of Certificates............................... 86
SECTION 5.03. Mutilated, Destroyed, Lost or Stolen Certificates...... 90
SECTION 5.04. Persons Deemed Owners.................................. 90
SECTION 5.05. Access to List of Certificateholders' Names and
Addresses.............................................. 90
SECTION 5.06. Book-Entry Certificates................................ 91
SECTION 5.07. Notices to Depository.................................. 91
SECTION 5.08. Definitive Certificates................................ 92
SECTION 5.09. Maintenance of Office or Agency........................ 92
ARTICLE VI THE DEPOSITOR AND THE SERVICER................................ 92
SECTION 6.01. Respective Liabilities of the Depositor and the
Servicer............................................... 92
SECTION 6.02. Merger or Consolidation of the Depositor and the
Servicer............................................... 92
SECTION 6.03. Limitation on Liability of the Depositor, the Servicer
and Others............................................. 93
SECTION 6.04. Limitation on Resignation of Servicer.................. 93
SECTION 6.05. Errors and Omissions Insurance; Fidelity Bonds......... 94
ARTICLE VII DEFAULT; TERMINATION OF SERVICER............................. 94
SECTION 7.01. Events of Default...................................... 94
SECTION 7.02. Trustee to Act; Appointment of Successor............... 95
SECTION 7.03. Notification to Certificateholders..................... 97
ARTICLE VIII CONCERNING The Trustee...................................... 97
SECTION 8.01. Duties of the Trustee.................................. 97
SECTION 8.02. Certain Matters Affecting the Trustee.................. 98
SECTION 8.03. Trustee Not Liable for Certificates or Mortgage Loans.. 99
SECTION 8.04. Trustee May Own Certificates........................... 100
SECTION 8.05. Trustee's Fees and Expenses............................ 100
SECTION 8.06. Indemnification and Expenses of Trustee................ 100
SECTION 8.07. Eligibility Requirements for Trustee................... 101
SECTION 8.08. Resignation and Removal of Trustee..................... 101
SECTION 8.09. Successor Trustee...................................... 102
SECTION 8.10. Merger or Consolidation of Trustee..................... 102
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TABLE OF CONTENTS
(continued)
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SECTION 8.11. Appointment of Co-Trustee or Separate Trustee.......... 102
SECTION 8.12. Tax Matters............................................ 103
ARTICLE IX TERMINATION................................................... 105
SECTION 9.01. Termination upon Liquidation or Repurchase of all
Mortgage Loans......................................... 105
SECTION 9.02. Final Distribution on the Certificates................. 106
SECTION 9.03. Additional Termination Requirements.................... 107
ARTICLE X MISCELLANEOUS PROVISIONS....................................... 109
SECTION 10.01. Amendment.............................................. 109
SECTION 10.02. Counterparts........................................... 110
SECTION 10.03. Governing Law.......................................... 110
SECTION 10.04. Intention of Parties................................... 110
SECTION 10.05. Notices................................................ 111
SECTION 10.06. Severability of Provisions............................. 112
SECTION 10.07. Assignment............................................. 112
SECTION 10.08. Limitation on Rights of Certificateholders............. 113
SECTION 10.09. Inspection and Audit Rights............................ 114
SECTION 10.10. Certificates Nonassessable and Fully Paid.............. 114
SECTION 10.11. Third Party Rights..................................... 114
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EXHIBIT A FORMS OF CERTIFICATES
EXHIBIT B-1 MORTGAGE LOAN SCHEDULE -MORTGAGE POOL
EXHIBIT B-2 MORTGAGE LOAN SCHEDULE - GROUP ONE MORTGAGE LOANS
EXHIBIT B-3 MORTGAGE LOAN SCHEDULE - GROUP TWO MORTGAGE LOANS
EXHIBIT B-4 MORTGAGE LOAN SCHEDULE - GROUP THREE MORTGAGE LOANS
EXHIBIT C [RESERVED]
EXHIBIT D FORM OF CUSTODIAN CERTIFICATION
EXHIBIT E-1 FORM OF TRANSFEREE'S LETTER AND AFFIDAVIT
EXHIBIT E-2 FORM OF TRANSFEROR'S AFFIDAVIT
EXHIBIT F FORM OF TRANSFEROR CERTIFICATE
EXHIBIT G FORM OF INVESTMENT LETTER (ACCREDITED INVESTOR)
EXHIBIT H FORM OF RULE 144A LETTER (QUALIFIED INSTITUTIONAL BUYER)
EXHIBIT I FORM OF REQUEST FOR RELEASE
EXHIBIT J [RESERVED]
EXHIBIT K FORM OF OFFICER'S CERTIFICATE OF TRUSTEE
EXHIBIT L FORM OF OFFICER'S CERTIFICATE OF SERVICER
EXHIBIT M-1 [RESERVED]
EXHIBIT M-2 FORM OF MONTHLY REMITTANCE ADVICE
EXHIBIT N FORM OF AUCTION PROCEDURES
EXHIBIT O FORM OF CAP CONTRACT
EXHIBIT P ONE-MONTH LIBOR CAP TABLE - CAP CONTRACT
POOLING AND SERVICING AGREEMENT (the "Agreement"), dated as of
September 1, 2005, among ▇▇▇▇▇▇▇ ▇▇▇▇▇ MORTGAGE INVESTORS, INC., a Delaware
corporation, as depositor (the "Depositor"), WILSHIRE CREDIT CORPORATION, a
Nevada corporation, as servicer (the "Servicer") and DEUTSCHE BANK NATIONAL
TRUST COMPANY, a national banking association, as trustee (the "Trustee").
The Depositor is the owner of the Trust Fund that is hereby conveyed
to the Trustee in return for the Certificates. The Trust Fund for federal income
tax purposes will consist of (i) two real estate mortgage investment conduits,
(ii) the right to receive payments distributable to the Class P Certificates
pursuant to Section 4.04(b)(i) hereof, (iii) the Cap Contract and the Cap
Contract Account and (iv) the grantor trusts described in Section 2.07 hereof.
The Lower Tier REMIC will consist of all of the assets constituting the Trust
Fund (other than the assets described in clauses (ii), (iii) and (iv) above and
the Lower Tier REMIC Regular Interests) and will be evidenced by the Lower Tier
REMIC Regular Interests (which will be uncertificated and will represent the
"regular interests" in the Lower Tier REMIC) and the Class LTR Interest as the
single "residual interest" in the Lower Tier REMIC. The Trustee will hold the
Lower Tier REMIC Regular Interests. The Upper Tier REMIC will consist of the
Lower Tier REMIC Regular Interests and will be evidenced by the REMIC Regular
Interests (which will represent the "regular interests" in the Upper Tier REMIC)
and the Residual Interest as the single "residual interest" in the Upper Tier
REMIC. The Class R Certificate will represent beneficial ownership of the Class
LTR Interest and the Residual Interest. The "latest possible maturity date" for
federal income tax purposes of all interests created hereby will be the Latest
Possible Maturity Date.
All covenants and agreements made by the Transferor in the Transfer
Agreement, by the Seller in the Sale Agreement and by the Depositor and the
Trustee herein with respect to the Mortgage Loans and the other property
constituting the Trust Fund are for the benefit of the Holders from time to time
of the Certificates.
In consideration of the mutual agreements herein contained, the
Depositor, the Servicer and the Trustee hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
Accepted Servicing Practices: The Servicer's normal servicing practices,
which will conform to the mortgage servicing practices of prudent mortgage
lending institutions which service for their own account mortgage loans of the
same type as the Mortgage Loans in the jurisdictions in which the related
Mortgaged Properties are located.
Accrual Period: With respect to each Class of Certificates and the Lower
Tier REMIC Interests and any Distribution Date, the period commencing on the
immediately preceding Distribution Date (or, in the case of the first
Distribution Date, the Closing Date) and ending on the day immediately preceding
such Distribution Date. All calculations of interest on each Class of
Certificates and the Lower Tier REMIC Interests will be made on the basis of the
actual number of days elapsed in the related Accrual Period and a 360 day year.
Adjustable Rate Mortgage Loan: A Mortgage Loan identified in the Mortgage
Loan Schedule as having a Mortgage Rate that is adjustable.
Adjustment Date: As to each Adjustable Rate Mortgage Loan, each date on
which the related Mortgage Rate is subject to adjustment, as provided in the
related Mortgage Note.
Advance: The aggregate of the advances required to be made by the Servicer
with respect to any Distribution Date pursuant to Section 4.01, the amount of
any such advances being equal to the sum of the aggregate of payments of
principal and interest (net of the Servicing Fee Rate) on the Mortgage Loans
that were due during the applicable Due Period and not received as of the close
of business on the related Determination Date, less the aggregate amount of any
such Delinquent payments that the Servicer has determined would constitute a
Non-Recoverable Advance were an advance to be made with respect thereto;
provided, however, that with respect to any Mortgage Loan that is 150 days
delinquent or more (whether or not the Mortgage Loan has been converted to an
REO Property), there will be no obligation to make advances and, provided
further, however, that with respect to any Mortgage Loan that has been converted
to an REO Property which is less than 150 days delinquent, the obligation to
make Advances shall be limited to payments of interest.
Advance Facility: A financing or other facility as described in Section
10.07.
Advancing Person: The Person to whom the Servicer's rights under this
Agreement to be reimbursed for any Advances or Servicing Advances have been
assigned pursuant to Section 10.07.
Affiliate: With respect to any specified Person, any other Person
controlling, controlled by or under common control with such Person. For the
purposes of this definition, "control" means the power to direct the management
and policies of a Person, directly or indirectly, whether through ownership of
voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
Aggregate Certificate Principal Balance: For any date of determination, the
sum of the Class A-1A Certificate Principal Balance, the Class A-1B Certificate
Principal Balance, the Class A-2 Certificate Principal Balance, the Class A-3A1
Certificate Principal Balance, the Class A-3A2 Certificate Principal Balance,
the Class A-3A3 Certificate Principal Balance, the Class A-3A4 Certificate
Principal Balance, the Class A-3B Certificate Principal Balance, the Class R
Certificate Principal Balance, the Class M-1 Certificate Principal Balance, the
Class M-2 Certificate Principal Balance, the Class B-1 Certificate Principal
Balance, the Class B-2 Certificate Principal Balance, the Class B-3 Certificate
Principal Balance and the Class B-4 Certificate Principal Balance, in each case
as of such date of determination.
Agreement: This Pooling and Servicing Agreement and any and all amendments
or supplements hereto made in accordance with the terms herein.
Ameriquest: Ameriquest Mortgage Company.
Applied Realized Loss Amount: With respect to any Distribution Date, the
amount, if any, by which, the sum of (i) the Aggregate Certificate Principal
Balance and (ii) the Class C Certificate Principal Balance after distributions
of principal on such Distribution Date exceeds the aggregate Stated Principal
Balance of the Mortgage Loans as of such Distribution Date.
Appraised Value: With respect to a Mortgage Loan the proceeds of which were
used to purchase the related Mortgaged Property, the "Appraised Value" of a
Mortgaged Property is the lesser of (1) the appraised value based on an
appraisal made for the Seller by an independent fee appraiser at the time of the
origination of the related Mortgage Loan, and (2) the sales price of such
Mortgaged Property at such
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time of origination. With respect to a Mortgage Loan the proceeds of which were
used to refinance an existing mortgage loan, the "Appraised Value" is the
appraised value of the Mortgaged Property based upon the appraisal obtained at
the time of refinancing.
Assignment of Mortgage: An assignment of the Mortgage, notice of transfer
or equivalent instrument, in recordable form, sufficient under the laws of the
jurisdiction where the related Mortgaged Property is located to reflect of
record the sale and assignment of the Mortgage Loan to the Trustee, which
assignment, notice of transfer or equivalent instrument may, if permitted by
law, be in the form of one or more blanket assignments covering Mortgages
secured by Mortgaged Properties located in the same county.
Auction: The one-time auction conducted by the Trustee, as described in
Section 9.01(b) hereof.
Auction Agent: Any nationally recognized dealer in mortgage securities,
which may include an affiliate of the Seller, chosen by the Trustee and the
Seller in consultation.
Auction Date: The date on which the Auction occurs.
Available Funds Cap: With respect to any Distribution Date, the per annum
rate equal to 12 times the quotient of (x) the total scheduled interest on the
Mortgage Loans based on the Net Mortgage Rates in effect on the related Due
Date, divided by (y) the aggregate principal balance of the Class A, Class M and
Class B Certificates immediately prior to such Distribution Date multiplied by
30 and divided by the actual number of days in the related Accrual Period.
Balloon Loan: A Mortgage Loan having an original term to stated maturity of
approximately 15 years and that provides for level monthly payments of principal
and interest generally based on a 30-year amortization schedule, with a balloon
payment of the remaining outstanding principal balance due on such Mortgage Loan
at its stated maturity.
Book-Entry Certificates: Any of the Certificates that shall be registered
in the name of the Depository or its nominee, the ownership of which is
reflected on the books of the Depository or on the books of a Person maintaining
an account with the Depository (directly, as a "Depository Participant", or
indirectly, as an indirect participant in accordance with the rules of the
Depository and as described in Section 5.06). As of the Closing Date, each of
the Class A, Class M and Class B Certificates constitutes a Class of Book-Entry
Certificates.
Bring Down Letter: That certain letter agreement, dated as of September 29,
2005 between Ameriquest and the Seller.
Business Day: Any day other than (1) a Saturday or a Sunday, or (2) a day
on which banking institutions in the State of California, State of Maryland,
State of Oregon and in the City of New York, New York are authorized or
obligated by law or executive order to be closed.
Cap Contract: An amended confirmation and agreement between the Trustee, on
behalf of the Trust, and the Cap Contract Counterparty.
Cap Contract Account: The separate Eligible Account created and maintained
by the Trustee pursuant to Section 4.04(k) in the name of the Trustee for the
benefit of the Trust Fund and designated "Deutsche Bank National Trust Company,
as Trustee, in trust for registered holders of ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors
Trust, Mortgage Loan Asset-Backed Certificates, Series 2005-AR1." Funds in the
Cap Contract Account shall be held in trust for the Trust Fund for the uses and
purposes set forth in this Agreement.
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Cap Contract Counterparty: The Royal Bank of Scotland plc.
Cap Contract Notional Balance: As of any Distribution Date, the lesser of
(x) the Notional Balance of the Cap Contract for such Distribution Date set
forth in the table in Exhibit P and (y) the outstanding Certificate Principal
Balance of the Class A, Class M and Class B Certificates.
Cap Contract Termination Date: The Distribution Date in May 2009.
Certificate: Any one of the certificates of any Class executed by the
Trustee and authenticated by the Trustee in substantially the forms attached
hereto as Exhibit A.
Certificate Account: The separate Eligible Account created and maintained
by the Trustee pursuant to Section 3.05(e) in the name of the Trustee for the
benefit of the Certificateholders and designated "Deutsche Bank National Trust
Company, as Trustee, in trust for registered holders of ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage
Investors Trust, Mortgage Loan Asset-Backed Certificates, Series 2005-AR1."
Funds in the Certificate Account shall be held in trust for the
Certificateholders for the uses and purposes set forth in this Agreement.
Certificate Group: Any of Certificate Group One, Certificate Group Two or
Certificate Group Three.
Certificate Group One: The Class A-1A, Class A-1B and Class R Certificates.
For purposes of Section 2.07 hereof, Certificate Group One shall be related to
Group One.
Certificate Group Two: The Class A-2 Certificates. For purposes of Section
2.07 hereof, Certificate Group Two shall be related to Group Two.
Certificate Group Three: The Class A-3 Certificates. For purposes of
Section 2.07 hereof, Certificate Group Three shall be related to Group Three.
Certificate Owner: With respect to a Book-Entry Certificate, the Person
that is the beneficial owner of such Book-Entry Certificate.
Certificate Principal Balance: As to any Certificate and as of any
Distribution Date, the Initial Certificate Principal Balance of such Certificate
less the sum of (1) all amounts distributed with respect to such Certificate in
reduction of the Certificate Principal Balance thereof on previous Distribution
Dates pursuant to Section 4.04, and (2) any Applied Realized Loss Amounts
allocated to such Certificate on previous Distribution Dates pursuant to Section
4.04(i). On each Distribution Date, after all distributions of principal on such
Distribution Date, a portion of the Class C Interest Carry Forward Amount in an
amount equal to the excess of the Overcollateralization Amount on such
Distribution Date over the Overcollateralization Amount as of the preceding
Distribution Date (or, in the case of the first Distribution Date, the initial
Overcollateralization Amount (based on the Stated Principal Balance of the
Mortgage Loans as of the Cut-Off Date)) will be added to the aggregate
Certificate Principal Balance of the Class C Certificates (on a pro rata basis).
Notwithstanding the foregoing on any Distribution Date relating to a Due Period
in which a Subsequent Recovery has been received by the Servicer, the
Certificate Principal Balance of any Class of Certificates then outstanding for
which any Applied Realized Loss Amount has been allocated will be increased, in
order of seniority, by an amount equal to the lesser of (i) the Unpaid Realized
Loss Amount for such Class of Certificates and (ii) the total of any Subsequent
Recovery distributed on such date to the Certificateholders (reduced by the
amount of the increase in the Certificate Principal Balance of any more senior
Class of Certificates pursuant to this sentence on such Distribution Date).
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Certificate Register: The register maintained pursuant to Section 5.02
hereof.
Certificateholder or Holder: The Person in whose name a Certificate is
registered in the Certificate Register (initially, Cede & Co., as nominee for
the Depository) in the case of any Class of Regular Certificates or the Class R
Certificate, except that solely for the purpose of giving any consent pursuant
to this Agreement, any Certificate registered in the name of the Depositor or
any Affiliate of the Depositor shall be deemed not to be Outstanding and the
Percentage Interest evidenced thereby shall not be taken into account in
determining whether the requisite amount of Percentage Interests necessary to
effect such consent has been obtained; provided, however, that if any such
Person (including the Depositor) owns 100% of the Percentage Interests evidenced
by a Class of Certificates, such Certificates shall be deemed to be Outstanding
for purposes of any provision hereof that requires the consent of the Holders of
Certificates of a particular Class as a condition to the taking of any action
hereunder. The Trustee is entitled to rely conclusively on a certification of
the Depositor or any Affiliate of the Depositor in determining which
Certificates are registered in the name of an Affiliate of the Depositor.
Class: All Certificates bearing the same Class designation as set forth in
Section 5.01 hereof.
Class A Certificate Principal Balance: For any date of determination, the
sum of the Class A-1A Certificate Principal Balance, the Class A-1B Certificate
Principal Balance, the Class R Certificate Principal Balance, the Class A-2
Certificate Principal Balance, the Class A-3A1 Certificate Principal Balance,
the Class A-3A2 Certificate Principal Balance, the Class A-3A3 Certificate
Principal Balance, the Class A-3A4 Certificate Principal Balance and the Class
A-3B Certificate Principal Balance.
Class A Certificates: Any of the Class A-1A Certificates, the Class A-1B
Certificates, the Class A-2 Certificates, the Class A-3A1 Certificates, the
Class A-3A2 Certificates, the Class A-3A3 Certificates, the Class A-3A4
Certificates, the Class A-3B Certificates and the Class R Certificates.
Class A Principal Distribution Amount: With respect to any Distribution
Date (1) prior to the Stepdown Date or any Distribution Date on which a Stepdown
Trigger Event exists, 100% of the Principal Distribution Amount for such
Distribution Date and (2) on or after the Stepdown Date where a Stepdown Trigger
Event does not exist, the excess of (A) the Class A Certificate Principal
Balance immediately prior to such Distribution Date over (B) the lesser of (i)
56.40% of the Stated Principal Balance of the Mortgage Loans as of the end of
the immediately preceding Due Period and (ii) the excess of the Stated Principal
Balance of the Mortgage Loans as of the end of the immediately preceding Due
Period over the Minimum Required Overcollateralization Amount provided, however,
that in no event will the Class A Principal Distribution Amount with respect to
any Distribution Date exceed the aggregate Certificate Principal Balance of the
Class A Certificates.
Class A Trigger Event: The situation that exists with respect to any
Distribution Date (a) during the period from the Closing Date through the
Distribution Date in September 2008, if the aggregate amount of Realized Losses
incurred from the Cut-off Date through the last day of the related Due Period
(after giving effect to scheduled payments received or advanced on or before the
related Determination Date and Principal Prepayments received during the related
Prepayment Period) divided by the sum of the aggregate Stated Principal Balance
of the Mortgage Loans as of the Cut-off Date exceeds 2.65%, or (b) on any
Distribution Date on or after October 2008, if a Stepdown Trigger Event is in
effect.
Class A-1A Certificate: Any Certificate designated as a "Class A-1A
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class A-1A Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class A-1A Certificates.
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Class A-1A Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class A-1A Pass-Through Rate on
the Class A-1A Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Current
Interest or a Class A-1A Interest Carry Forward Amount that is recovered as a
voidable preference by a trustee in bankruptcy, less any Non-Supported Interest
Shortfall allocated on such Distribution Date to the Class A-1A Certificates.
Class A-1A Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class A-1A Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
A-1A Certificates with respect to interest on such prior Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable law) at the
Class A-1A Pass-Through Rate for the related Accrual Period.
Class A-1A Margin: As of any Distribution Date up to and including the
Initial Optional Termination Date for the Certificates, 0.280% per annum and, as
of any Distribution Date after the Initial Optional Termination Date, 0.560% per
annum.
Class A-1A Pass-Through Rate: For the first Distribution Date, 4.120% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class A-1A Margin, (2) the Available Funds Cap and (3) the Maximum Rate
Cap for such Distribution Date.
Class A-1B Certificate: Any Certificate designated as a "Class A-1B
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class A-1B Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class A-1B Certificates.
Class A-1B Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class A-1B Pass-Through Rate on
the Class A-1B Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Current
Interest or a Class A-1B Interest Carry Forward Amount that is recovered as a
voidable preference by a trustee in bankruptcy, less any Non-Supported Interest
Shortfall allocated on such Distribution Date to the Class A-1B Certificates.
Class A-1B Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class A-1B Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
A-1B Certificates with respect to interest on such prior Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable law) at the
Class A-1B Pass-Through Rate for the related Accrual Period.
Class A-1B Margin: As of any Distribution Date up to and including the
Initial Optional Termination Date for the Certificates, 0.330% per annum and, as
of any Distribution Date after the Initial Optional Termination Date, 0.660% per
annum.
Class A-1B Pass-Through Rate: For the first Distribution Date, 4.170% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class A-1B Margin, (2) the Available Funds Cap and (3) the Maximum Rate
Cap for such Distribution Date.
Class A-2 Certificates: The Class A-2 Certificates.
Class A-2 Certificate: Any Certificate designated as a "Class A-2
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
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Class A-2 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class A-2 Certificates.
Class A-2 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class A-2 Pass-Through Rate on
the Class A-2 Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Current
Interest or a Class A-2 Interest Carry Forward Amount that is recovered as a
voidable preference by a trustee in bankruptcy, less any Non-Supported Interest
Shortfall allocated on such Distribution Date to the Class A-2 Certificates.
Class A-2 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class A-2 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
A-2 Certificates with respect to interest on such prior Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable law) at the
Class A-2A Pass-Through Rate for the related Accrual Period.
Class A-2 Margin: As of any Distribution Date up to and including the
Initial Optional Termination Date for the Certificates, 0.285% per annum and, as
of any Distribution Date after the Initial Optional Termination Date, 0.57% per
annum.
Class A-2 Pass-Through Rate: For the first Distribution Date, 4.125% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class A-2 Margin, (2) the Available Funds Cap and (3) the Maximum Rate
Cap for such Distribution Date.
Class A-3 Certificates: The Class A-3A1, Class A-3A2, Class A-3A3, Class
A-3A4 and Class A-3B Certificates.
Class A-3A Certificates: The Class A-3A1, Class A-3A2, Class A-3A3 and
Class A-3A4 Certificates.
Class A-3A1 Certificates: The Class A-3A1 Certificates.
Class A-3A1 Certificate: Any Certificate designated as a "Class A-3A1
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class A-3A1 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class A-3A1 Certificates.
Class A-3A1 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class A-3A1 Pass-Through Rate
on the Class A-3A1 Certificate Principal Balance as of such Distribution Date
plus the portion of any previous distributions on such Class in respect of
Current Interest or a Class A-3A1 Interest Carry Forward Amount that is
recovered as a voidable preference by a trustee in bankruptcy, less any
Non-Supported Interest Shortfall allocated on such Distribution Date to the
Class A-3A1 Certificates.
Class A-3A1 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class A-3A1 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
A-3A1 Certificates with respect to interest on such prior Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable law) at the
Class A-3A1 Pass-Through Rate for the related Accrual Period.
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Class A-3A1 Margin: As of any Distribution Date up to and including the
Initial Optional Termination Date for the Certificates, 0.100% per annum and, as
of any Distribution Date after the Initial Optional Termination Date, 0.200% per
annum.
Class A-3A1 Pass-Through Rate: For the first Distribution Date, 3.940% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class A-3A1 Margin, (2) the Available Funds Cap and (3) the Maximum
Rate Cap for such Distribution Date.
Class A-3A2 Certificates: The Class A-3A2 Certificates.
Class A-3A2 Certificate: Any Certificate designated as a "Class A-3A2
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class A-3A2 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class A-3A2 Certificates.
Class A-3A2 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class A-3A2 Pass-Through Rate
on the Class A-3A2 Certificate Principal Balance as of such Distribution Date
plus the portion of any previous distributions on such Class in respect of
Current Interest or a Class A-3A2 Interest Carry Forward Amount that is
recovered as a voidable preference by a trustee in bankruptcy, less any
Non-Supported Interest Shortfall allocated on such Distribution Date to the
Class A-3A2 Certificates.
Class A-3A2 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class A-3A2 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
A-3A2 Certificates with respect to interest on such prior Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable law) at the
Class A-3A2 Pass-Through Rate for the related Accrual Period.
Class A-3A2 Margin: As of any Distribution Date up to and including the
Initial Optional Termination Date for the Certificates, 0.157% per annum and, as
of any Distribution Date after the Initial Optional Termination Date, 0.314% per
annum.
Class A-3A2 Pass-Through Rate: For the first Distribution Date, 3.997% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class A-3A2 Margin, (2) the Available Funds Cap and (3) the Maximum
Rate Cap for such Distribution Date.
Class A-3A3 Certificates: The Class A-3A3 Certificates.
Class A-3A3 Certificate: Any Certificate designated as a "Class A-3A3
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class A-3A3 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class A-3A3 Certificates.
Class A-3A3 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class A-3A3 Pass-Through Rate
on the Class A-3A3 Certificate Principal Balance as of such Distribution Date
plus the portion of any previous distributions on such Class in respect of
Current Interest or a Class A-3A3 Interest Carry Forward Amount that is
recovered as a voidable preference by a trustee in bankruptcy, less any
Non-Supported Interest Shortfall allocated on such Distribution Date to the
Class A-3A3 Certificates.
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Class A-3A3 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class A-3A3 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
A-3A3 Certificates with respect to interest on such prior Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable law) at the
Class A-3A3 Pass-Through Rate for the related Accrual Period.
Class A-3A3 Margin: As of any Distribution Date up to and including the
Initial Optional Termination Date for the Certificates, 0.280% per annum and, as
of any Distribution Date after the Initial Optional Termination Date, 0.560% per
annum.
Class A-3A3 Pass-Through Rate: For the first Distribution Date, 4.120% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class A-3A3 Margin, (2) the Available Funds Cap and (3) the Maximum
Rate Cap for such Distribution Date.
Class A-3A4 Certificates: The Class A-3A4 Certificates.
Class A-3A4 Certificate: Any Certificate designated as a "Class A-3A4
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class A-3A4 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class A-3A4 Certificates.
Class A-3A4 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class A-3A4 Pass-Through Rate
on the Class A-3A4 Certificate Principal Balance as of such Distribution Date
plus the portion of any previous distributions on such Class in respect of
Current Interest or a Class A-3A4 Interest Carry Forward Amount that is
recovered as a voidable preference by a trustee in bankruptcy, less any
Non-Supported Interest Shortfall allocated on such Distribution Date to the
Class A-3A4 Certificates.
Class A-3A4 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class A-3A4 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
A-3A4 Certificates with respect to interest on such prior Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable law) at the
Class A-3A4 Pass-Through Rate for the related Accrual Period.
Class A-3A4 Margin: As of any Distribution Date up to and including the
Initial Optional Termination Date for the Certificates, 0.410% per annum and, as
of any Distribution Date after the Initial Optional Termination Date, 0.820% per
annum.
Class A-3A4 Pass-Through Rate: For the first Distribution Date, 4.250% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class A-3A4 Margin, (2) the Available Funds Cap and (3) the Maximum
Rate Cap for such Distribution Date.
Class A-3B Certificates: The Class A-3B Certificates.
Class A-3B Certificate: Any Certificate designated as a "Class A- A-3B
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class A-3B Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class ▇-▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇.
-▇-
▇▇▇▇▇ ▇-▇▇ Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class A- A-3B Pass-Through Rate
on the Class A- A-3B Certificate Principal Balance as of such Distribution Date
plus the portion of any previous distributions on such Class in respect of
Current Interest or a Class A- A-3B Interest Carry Forward Amount that is
recovered as a voidable preference by a trustee in bankruptcy, less any
Non-Supported Interest Shortfall allocated on such Distribution Date to the
Class A- A-3B Certificates.
Class A-3B Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class A- A-3B Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
A- A-3B Certificates with respect to interest on such prior Distribution Dates
and (2) interest on such excess (to the extent permitted by applicable law) at
the Class A- A-3B Pass-Through Rate for the related Accrual Period.
Class A-3B Margin: As of any Distribution Date up to and including the
Initial Optional Termination Date for the Certificates, 0.330% per annum and, as
of any Distribution Date after the Initial Optional Termination Date, 0.660% per
annum.
Class A-3B Pass-Through Rate: For the first Distribution Date, 4.170% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class A- A-3B Margin, (2) the Available Funds Cap and (3) the Maximum
Rate Cap for such Distribution Date.
Class B Certificates: Any of the Class B-1, Class B-2, Class B-3 or Class
B-4 Certificates.
Class B-1 Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans that
have been applied to the reduction of the Certificate Principal Balance of the
Class B-1 Certificates.
Class B-1 Certificate: Any Certificate designated as a "Class B-1
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class B-1 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class B-1 Certificates.
Class B-1 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class B-1 Pass-Through Rate on
the Class B-1 Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Current
Interest or a Class B-1 Interest Carry Forward Amount that is recovered as a
voidable preference by a trustee in bankruptcy, less any Non-Supported Interest
Shortfall allocated on such Distribution Date to the Class B-1 Certificates.
Class B-1 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class B-1 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
B-1 Certificates with respect to interest on such prior Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable law) at the
Class B-1 Pass-Through Rate for the related Accrual Period.
Class B-1 Margin: As of any Distribution Date up to and including the
Initial Optional Termination Date for the Certificates, 1.250% per annum and, as
of any Distribution Date after the Initial Optional Termination Date, 1.875% per
annum.
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Class B-1 Pass-Through Rate: For the first Distribution Date, 5.090% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class B-1 Margin, (2) the Available Funds Cap and (3) the Maximum Rate
Cap for such Distribution Date.
Class B-1 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount
for such Distribution Date if the Class A Certificate Principal Balance, the
Class M-1 Certificate Principal Balance, the Class M-2 Certificate Principal
Balance, have been reduced to zero and a Stepdown Trigger Event exists, or as
long as a Stepdown Trigger Event does not exist, the excess of (1) the sum of
(A) the Class A Certificate Principal Balance (after taking into account
distributions of the Class A Principal Distribution Amount on such Distribution
Date), (B) the Class M-1 Certificate Principal Balance (after taking into
account distributions of the Class M-1 Principal Distribution Amount on such
Distribution Date), (C) the Class M-2 Certificate Principal Balance (after
taking into account distributions of the Class M-2 Principal Distribution Amount
on such Distribution Date), (D) the Class B-1 Certificate Principal Balance
immediately prior to such Distribution Date over (2) the lesser of (A) 85.70% of
the Stated Principal Balance of the Mortgage Loans as of the end of the
immediately preceding Due Period and (B) the excess of the Stated Principal
Balance of the Mortgage Loans as of the end of the immediately preceding Due
Period over the Minimum Required Overcollateralization Amount. Notwithstanding
the foregoing, (E) on any Distribution Date prior to the Stepdown Date on which
the Certificate Principal Balance of each Class of Class A Certificates and
Class M Certificates has been reduced to zero, the Class B-1 Principal
Distribution Amount will equal the lesser of (x) the outstanding Certificate
Principal Balance of the Class B-1 Certificates and (y) 100% of the Principal
Distribution Amount remaining after any distributions on such Class A and Class
M Certificates and (II) in no event will the Class B-1 Principal Distribution
Amount with respect to any Distribution Date exceed the Class B-1 Certificate
Principal Balance.
Class B-1 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class B-1 Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class B-1 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of such Class B-1 Certificates pursuant to the last sentence
of the definition of "Certificate Principal Balance."
Class B-2 Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans that
have been applied to the reduction of the Certificate Principal Balance of the
Class B-2 Certificates.
Class B-2 Certificate: Any Certificate designated as a "Class B-2
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class B-2 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class B-2 Certificates.
Class B-2 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class B-2 Pass-Through Rate on
the Class B-2 Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Current
Interest or a Class B-2 Interest Carry Forward Amount that is recovered as a
voidable preference by a trustee in bankruptcy, less any Non-Supported Interest
Shortfall allocated on such Distribution Date to the Class B-2 Certificates.
Class B-2 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class B-2 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
B-2 Certificates with respect to interest on such prior Distribution Dates and
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(2) interest on such excess (to the extent permitted by applicable law) at the
Class B-2 Pass-Through Rate for the related Accrual Period.
Class B-2 Margin: As of any Distribution Date up to and including the
Initial Optional Termination Date for the Certificates, 1.450% per annum and, as
of any Distribution Date after the Initial Optional Termination Date, 2.175% per
annum.
Class B-2 Pass-Through Rate: For the first Distribution Date, 5.290% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class B-2 Margin, (2) the Available Funds Cap and (3) the Maximum Rate
Cap for such Distribution Date.
Class B-2 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount
for such Distribution Date if the Class A Certificate Principal Balance, the
Class M-1 Certificate Principal Balance, the Class M-2 Certificate Principal
Balance, and the Class B-1 Certificate Principal Balance have been reduced to
zero and a Stepdown Trigger Event exists, or as long as a Stepdown Trigger Event
does not exist, the excess of (1) the sum of (A) the Class A Certificate
Principal Balance (after taking into account distributions of the Class A
Principal Distribution Amount on such Distribution Date), (B) the Class M-1
Certificate Principal Balance (after taking into account distributions of the
Class M-1 Principal Distribution Amount on such Distribution Date), (C) the
Class M-2 Certificate Principal Balance (after taking into account distributions
of the Class M-2 Principal Distribution Amount on such Distribution Date), (D)
the Class B-1 Certificate Principal Balance (after taking into account
distributions of the Class B-1 Principal Distribution Amount on such
Distribution Date) and (I) the Class B-2 Certificate Principal Balance
immediately prior to such Distribution Date over (2) the lesser of (A) 87.60% of
the Stated Principal Balance of the Mortgage Loans as of the end of the
immediately preceding Due Period and (B) the excess of the Stated Principal
Balance of the Mortgage Loans as of the end of the immediately preceding Due
Period over the Minimum Required Overcollateralization Amount. Notwithstanding
the foregoing, (E) on any Distribution Date prior to the Stepdown Date on which
the Certificate Principal Balance of each Class of Class A, Class M and Class
B-1 Certificates has been reduced to zero, the Class B-2 Principal Distribution
Amount will equal the lesser of (x) the outstanding Certificate Principal
Balance of the Class B-2 Certificates and (y) 100% of the Principal Distribution
Amount remaining after any distributions on such Class A, Class M and Class B-1
Certificates and (II) in no event will the Class B-2 Principal Distribution
Amount with respect to any Distribution Date exceed the Class B-2 Certificate
Principal Balance.
Class B-2 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class B-2 Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class B-2 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of such Class B-2 Certificates pursuant to the last sentence
of the definition of "Certificate Principal Balance."
Class B-3 Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans that
have been applied to the reduction of the Certificate Principal Balance of the
Class B-3 Certificates.
Class B-3 Certificate: Any Certificate designated as a "Class B-3
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class B-3 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class B-3 Certificates.
Class B-3 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class B-3 Pass-Through Rate on
the Class B-3 Certificate Principal Balance as of
-12-
such Distribution Date plus the portion of any previous distributions on such
Class in respect of Current Interest or a Class B-3 Interest Carry Forward
Amount that is recovered as a voidable preference by a trustee in bankruptcy,
less any Non-Supported Interest Shortfall allocated on such Distribution Date to
the Class B-3 Certificates.
Class B-3 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class B-3 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
B-3 Certificates with respect to interest on such prior Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable law) at the
Class B-3 Pass-Through Rate for the related Accrual Period.
Class B-3 Margin: As of any Distribution Date up to and including the
Initial Optional Termination Date for the Certificates, 1.800% per annum and, as
of any Distribution Date after the Initial Optional Termination Date, 2.700% per
annum.
Class B-3 Pass-Through Rate: For the first Distribution Date, 5.640% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class B-3 Margin, (2) the Available Funds Cap and (3) the Maximum Rate
Cap for such Distribution Date.
Class B-3 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount
for such Distribution Date if the Class A Certificate Principal Balance, the
Class M-1 Certificate Principal Balance, the Class M-2 Certificate Principal
Balance, the Class B-1 Certificate Principal Balance and the Class B-2
Certificate Principal Balance have been reduced to zero and a Stepdown Trigger
Event exists, or as long as a Stepdown Trigger Event does not exist, the excess
of (1) the sum of (A) the Class A Certificate Principal Balance (after taking
into account distributions of the Class A Principal Distribution Amount on such
Distribution Date), (B) the Class M-1 Certificate Principal Balance (after
taking into account distributions of the Class M-1 Principal Distribution Amount
on such Distribution Date), (C) the Class M-2 Certificate Principal Balance
(after taking into account distributions of the Class M-2 Principal Distribution
Amount on such Distribution Date), (D) the Class B-1 Certificate Principal
Balance (after taking into account distributions of the Class B-1 Principal
Distribution Amount on such Distribution Date), (E) the Class B-2 Certificate
Principal Balance (after taking into account distributions of the Class B-2
Principal Distribution Amount on such Distribution Date) and (F) the Class B-3
Certificate Principal Balance (after taking into account distributions of the
Class B-3 Principal Distribution Amount on such Distribution Date) over (2) the
lesser of (A) 89.60% of the Stated Principal Balance of the Mortgage Loans as of
the end of the immediately preceding Due Period and (B) the excess of the Stated
Principal Balance of the Mortgage Loans as of the end of the immediately
preceding Due Period over the Minimum Required Overcollateralization Amount.
Notwithstanding the foregoing, (I) on any Distribution Date prior to the
Stepdown Date on which the Certificate Principal Balance of each Class of Class
A, Class M, Class B-1 and Class B-2 Certificates has been reduced to zero, the
Class B-3 Principal Distribution Amount will equal the lesser of (x) the
outstanding Certificate Principal Balance of the Class B-3 Certificates and (y)
100% of the Principal Distribution Amount remaining after any distributions on
such Class A, Class M, Class B-1 and Class B-2 Certificates and (II) in no event
will the Class B-3 Principal Distribution Amount with respect to any
Distribution Date exceed the Class B-3 Certificate Principal Balance.
Class B-3 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class B-3 Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class B-3 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of such Class B-3 Certificates pursuant to the last sentence
of the definition of "Certificate Principal Balance."
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Class B-4 Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans that
have been applied to the reduction of the Certificate Principal Balance of the
Class B-4 Certificates.
Class B-4 Certificate: Any Certificate designated as a "Class B-4
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class B-4 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class B-4 Certificates.
Class B-4 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class B-4 Pass-Through Rate on
the Class B-4 Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Current
Interest or a Class B-4 Interest Carry Forward Amount that is recovered as a
voidable preference by a trustee in bankruptcy, less any Non-Supported Interest
Shortfall allocated on such Distribution Date to the Class B-4 Certificates.
Class B-4 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class B-4 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
B-4 Certificates with respect to interest on such prior Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable law) at the
Class B-4 Pass-Through Rate for the related Accrual Period.
Class B-4 Margin: As of any Distribution Date up to and including the
Initial Optional Termination Date for the Certificates, 3.500% per annum and, as
of any Distribution Date after the Initial Optional Termination Date, 5.250% per
annum.
Class B-4 Pass-Through Rate: For the first Distribution Date, 7.340% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class B-4 Margin, (2) the Available Funds Cap and (3) the Maximum Rate
Cap for such Distribution Date.
Class B-4 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount
for such Distribution Date if the Class A Certificate Principal Balance, the
Class M-1 Certificate Principal Balance, the Class M-2 Certificate Principal
Balance, the Class B-1 Certificate Principal Balance and the Class B-2
Certificate Principal Balance have been reduced to zero and a Stepdown Trigger
Event exists, or as long as a Stepdown Trigger Event does not exist, the excess
of (1) the sum of (A) the Class A Certificate Principal Balance (after taking
into account distributions of the Class A Principal Distribution Amount on such
Distribution Date), (B) the Class M-1 Certificate Principal Balance (after
taking into account distributions of the Class M-1 Principal Distribution Amount
on such Distribution Date), (C) the Class M-2 Certificate Principal Balance
(after taking into account distributions of the Class M-2 Principal Distribution
Amount on such Distribution Date), (D) the Class B-1 Certificate Principal
Balance (after taking into account distributions of the Class B-1 Principal
Distribution Amount on such Distribution Date), (E) the Class B-2 Certificate
Principal Balance (after taking into account distributions of the Class B-2
Principal Distribution Amount on such Distribution Date) and (F) the Class B-4
Certificate Principal Balance (after taking into account distributions of the
Class B-4 Principal Distribution Amount on such Distribution Date) over (2) the
lesser of (A) 91.70% of the Stated Principal Balance of the Mortgage Loans as of
the end of the immediately preceding Due Period and (B) the excess of the Stated
Principal Balance of the Mortgage Loans as of the end of the immediately
preceding Due Period over the Minimum Required Overcollateralization Amount.
Notwithstanding the foregoing, (I) on any Distribution Date prior to the
Stepdown Date on which the Certificate Principal Balance of each Class of Class
A, Class M, Class B-1 and Class B-2 Certificates has been reduced to zero, the
Class B-4 Principal Distribution Amount will equal the lesser of (x) the
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outstanding Certificate Principal Balance of the Class B-4 Certificates and (y)
100% of the Principal Distribution Amount remaining after any distributions on
such Class A, Class M, Class B-1 and Class B-2 Certificates and (II) in no event
will the Class B-4 Principal Distribution Amount with respect to any
Distribution Date exceed the Class B-4 Certificate Principal Balance.
Class B-4 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class B-4 Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class B-4 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of such Class B-3 Certificates pursuant to the last sentence
of the definition of "Certificate Principal Balance."
Class C Applied Realized Loss Amount: As of any Distribution Date, the sum
of all Applied Realized Loss Amounts with respect to the Mortgage Loans which
have been applied to the reduction of the Certificate Principal Balance of the
Class C Certificates.
Class C Certificate: Any Certificate designated as a "Class C Certificate"
on the face thereof, in the form of Exhibit A hereto, representing the right to
distributions as set forth herein.
Class C Certificate Principal Balance: As of any date of determination, the
aggregate Certificate Principal Balance of the Class C Certificates.
Class C Current Interest: As of any Distribution Date, the interest accrued
during the related Accrual Period at the Class C Distributable Interest Rate on
a notional amount equal to the aggregate principal balance of the Lower Tier
REMIC Regular Interests immediately prior to such Distribution Date, plus the
interest portion of any previous distributions on such Class that is recovered
as a voidable preference by a trustee in bankruptcy, less any Non-Supported
Interest Shortfall allocated on such Distribution Date to the Class C
Certificates.
Class C Distributable Interest Rate: The excess, if any, of (a) the
weighted average of the interest rates on the Lower Tier REMIC Regular Interests
over (b) two times the weighted average of the interest rates on the Lower Tier
REMIC Regular Interests (treating for purposes of this clause (b) the interest
rate on each of the Lower Tier REMIC Marker Classes as being capped at the
interest rate of its Related Certificates and treating the Class LTX Interest as
being capped at zero). The averages described in the preceding sentence shall be
weighted on the basis of the respective principal balances of the Lower Tier
REMIC Regular Interests immediately prior to any date of determination.
Class C Interest Carry Forward Amount: As of any Distribution Date, the
excess of (A) the Class C Current Interest with respect to prior Distribution
Dates over (B) the amount actually distributed to the Class C Certificates with
respect to interest on such prior Distribution Dates or added to the aggregate
Certificate Principal Balance of the Class C Certificates.
Class C Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class C Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class C Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of such Class C Certificates pursuant to the last sentence of
the definition of "Certificate Principal Balance."
Class LTA-1A Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/2 of the initial principal
balance of its Related Certificates and an interest rate equal to the Net Rate.
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Class LTA-1B Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/2 of the initial principal
balance of its Related Certificate and an interest rate equal to the Net Rate.
Class LTA-2 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/2 of the initial principal
balance of its Related Certificate and an interest rate equal to the Net Rate.
Class LTA-3A1 Interest: An uncertificated regular interest in the Lower
Tier REMIC with an initial principal balance equal to 1/2 of the initial
principal balance of its Related Certificate and an interest rate equal to the
Net Rate.
Class LTA-3A2 Interest: An uncertificated regular interest in the Lower
Tier REMIC with an initial principal balance equal to 1/2 of the initial
principal balance of its Related Certificate and an interest rate equal to the
Net Rate.
Class LTA-3A3 Interest: An uncertificated regular interest in the Lower
Tier REMIC with an initial principal balance equal to 1/2 of the initial
principal balance of its Related Certificate and an interest rate equal to the
Net Rate.
Class LTA-3A4 Interest: An uncertificated regular interest in the Lower
Tier REMIC with an initial principal balance equal to 1/2 of the initial
principal balance of its Related Certificate and an interest rate equal to the
Net Rate.
Class LTA-3B Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/2 of the initial principal
balance of its Related Certificate and an interest rate equal to the Net Rate.
Class LTB-1 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/2 of the initial principal
balance of its Related Certificate and an interest rate equal to the Net Rate.
Class LTB-2 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/2 of the initial principal
balance of its Related Certificate and an interest rate equal to the Net Rate.
Class LTB-3 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/2 of the initial principal
balance of its Related Certificate and an interest rate equal to the Net Rate.
Class LTB-4 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/2 of the initial principal
balance of its Related Certificate and an interest rate equal to the Net Rate.
Class LTM-1 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/2 of the initial principal
balance of its Related Certificate and an interest rate equal to the Net Rate.
Class LTM-2 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/2 of the initial principal
balance of its Related Certificate and an interest rate equal to the Net Rate.
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Class LTR Interest: The sole class of "residual interest" in the Lower Tier
REMIC.
Class LTX Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to the excess of (i) the aggregate
Cut-off Date Principal Balance of the Mortgage Loans over (ii) the aggregate
initial principal balance of the Lower Tier REMIC Marker Classes and an interest
rate equal to the Net Rate.
Class M Certificates: Any of the Class M-1 and Class M-2 Certificates.
Class M-1 Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans that
have been applied to the reduction of the Certificate Principal Balance of the
Class M-1 Certificates.
Class M-1 Certificate: Any Certificate designated as a "Class M-1
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class M-1 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class M-1 Certificates.
Class M-1 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class M-1 Pass-Through Rate on
the Class M-1 Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Current
Interest or Class M-1 Interest Carry Forward Amount that is recovered as a
voidable preference by a trustee in bankruptcy, less any Non-Supported Interest
Shortfall allocated on such Distribution Date to the Class M-1 Certificates.
Class M-1 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class M-1 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
M-1 Certificates with respect to interest on such prior Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable law) at the
Class M-1 Pass-Through Rate for the related Accrual Period.
Class M-1 Margin: As of any Distribution Date up to and including the
Initial Optional Termination Date for the Certificates, 0.500% per annum and, as
of any Distribution Date after the Initial Optional Termination Date, 0.750% per
annum.
Class M-1 Pass-Through Rate: For the first Distribution Date, 4.340% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class M-1 Margin, (2) the Available Funds Cap and (3) the Maximum Rate
Cap for such Distribution Date.
Class M-1 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount
for such Distribution Date if the Class A Certificate Principal Balance has been
reduced to zero and a Stepdown Trigger Event exists, or as long as a Stepdown
Trigger Event does not exist, the excess of (1) the sum of (A) the Class A
Certificate Principal Balance (after taking into account distributions of the
Class A Principal Distribution Amount on such Distribution Date) and (B) the
Class M-1 Certificate Principal Balance immediately prior to such Distribution
Date over (2) the lesser of (A) 70.50% of the Stated Principal Balances of the
Mortgage Loans as of the end of the immediately preceding Due Period and (B) the
excess of the Stated Principal Balances for the Mortgage Loans as of the end of
the immediately preceding Due Period over the Minimum Required
Overcollateralization Amount. Notwithstanding the foregoing, (I) on any
Distribution Date prior to the Stepdown Date on which the Certificate Principal
Balance of each Class of Class A Certificates has been reduced to zero, the
Class M-1 Principal Distribution Amount will equal the
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lesser of (x) the outstanding Certificate Principal Balance of the Class M-1
Certificates and (y) 100% of the Principal Distribution Amount remaining after
any distributions on such Class A Certificates and (II) in no event will the
Class M-1 Principal Distribution Amount with respect to any Distribution Date
exceed the Class M-1 Certificate Principal Balance.
Class M-1 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class M-1 Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class M-1 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of such Class M-1 Certificates pursuant to the last sentence
of the definition of "Certificate Principal Balance."
Class M-2 Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans that
have been applied to the reduction of the Certificate Principal Balance of the
Class M-2 Certificates.
Class M-2 Certificate: Any Certificate designated as a "Class M-2
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class M-2 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class M-2 Certificates.
Class M-2 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class M-2 Pass-Through Rate on
the Class M-2 Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Current
Interest or Class M-2 Interest Carry Forward Amount that is recovered as a
voidable preference by a trustee in bankruptcy, less any Non-Supported Interest
Shortfall allocated on such Distribution Date to the Class M-2 Certificates.
Class M-2 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class M-2 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
M-2 Certificates with respect to interest on such prior Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable law) at the
Class M-2 Pass-Through Rate for the related Accrual Period.
Class M-2 Margin: As of any Distribution Date up to and including the
Initial Optional Termination Date for the Certificates, 0.670% per annum and, as
of any Distribution Date after the Initial Optional Termination Date, 1.005% per
annum.
Class M-2 Pass-Through Rate: For the first Distribution Date, 4.510% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class M-2 Margin, (2) the Available Funds Cap and (3) the Maximum Rate
Cap for such Distribution Date.
Class M-2 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount
for such Distribution Date if the Class A Certificate Principal Balance and the
Class M-1 Certificate Principal Balance have been reduced to zero and a Stepdown
Trigger Event exists, or as long as a Stepdown Trigger Event does not exist, the
excess of (1) the sum of (A) the Class A Certificate Principal Balance (after
taking into account distributions of the Class A Principal Distribution Amount
on such Distribution Date), (B) the Class M-1 Certificate Principal Balance
(after taking into account distributions of the Class M-1 Principal Distribution
Amount on such Distribution Date) and (C) the Class M-2 Certificate Principal
Balance immediately prior to such Distribution Date over (2) the lesser of (A)
81.00% of the Stated Principal Balances of the Mortgage Loans as of the end of
the immediately preceding Due Period and (B) the excess of the Stated Principal
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Balances of the Mortgage Loans as of the end of the immediately preceding Due
Period over the Minimum Required Overcollateralization Amount. Notwithstanding
the foregoing, (I) on any Distribution Date prior to the Stepdown Date on which
the Certificate Principal Balance of each Class of Class A Certificates and the
Class M-1 Certificates has been reduced to zero, the Class M-2 Principal
Distribution Amount will equal the lesser of (x) the outstanding Certificate
Principal Balance of the Class M-2 Certificates and (y) 100% of the Principal
Distribution Amount remaining after any distributions on such Class A and Class
M-1 Certificates and (II) in no event will the Class M-2 Principal Distribution
Amount with respect to any Distribution Date exceed the Class M-2 Certificate
Principal Balance.
Class M-2 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class M-2 Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class M-2 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of such Class M-2 Certificates pursuant to the last sentence
of the definition of "Certificate Principal Balance."
Class P Certificate: Any Certificate designated as a Class P Certificate on
the face thereof, executed by the Trustee and authenticated by the Trustee in
substantially the form set forth in Exhibit A, representing the right to
distributions as set forth herein.
Class R Certificate: The Class R Certificate executed by the Trustee and
authenticated by the Trustee in substantially the form set forth in Exhibit A.
Class R Certificate Principal Balance: As of any date of determination, the
aggregate Certificate Principal Balance of the Class R Certificate.
Class R Current Interest: As of any Distribution Date, the interest accrued
during the related Accrual Period at the Class R Pass-Through Rate on the Class
R Certificate Principal Balance as of such Distribution Date plus the portion of
any previous distributions on such Class in respect of Current Interest or a
Class R Interest Carry Forward Amount that is recovered as a voidable preference
by a trustee in bankruptcy, less any Non-Supported Interest Shortfall allocated
on such Distribution Date to the Class R Certificate.
Class R Interest Carry Forward Amount: As of any Distribution Date, the sum
of (1) the excess of (A) the Class R Current Interest with respect to prior
Distribution Dates over (B) the amount actually distributed to the Class R
Certificate with respect to interest on such prior Distribution Dates and (2)
interest on such excess (to the extent permitted by applicable law) at the Class
R Pass-Through Rate for the related Accrual Period.
Class R Margin: As of any Distribution Date up to and including the Initial
Optional Termination Date for the Certificates, 0.280% per annum and, as of any
Distribution Date after the Initial Optional Termination Date, 0.560% per annum.
Class R Pass-Through Rate: For the first Distribution Date, 4.120% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class R Margin, (2) the Available Funds Cap and (3) the Maximum Rate
Cap for such Distribution Date.
Closing Date: September 29, 2005.
Code: The Internal Revenue Code of 1986, including any successor or
amendatory provisions.
Collection Account: The separate Eligible Account created and initially
maintained by the Servicer pursuant to Section 3.05(d) in the name of the
Trustee for the benefit of the Certificateholders
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and designated "Wilshire Credit Corporation, as servicer for Deutsche Bank
National Trust Company, as Trustee, in trust for registered holders of ▇▇▇▇▇▇▇
▇▇▇▇▇ Mortgage Investors Trust, Mortgage Loan Asset-Backed Certificates, Series
2005-AR1". Funds in the Collection Account shall be held in trust for the
Certificateholders for the uses and purposes set forth in this Agreement.
Compensating Interest: With respect to any Mortgage Loan and any
Distribution Date, an amount equal to the portion of any Prepayment Interest
Shortfalls required to be deposited in the Collection Account by the Servicer
pursuant to Section 4.02 hereof.
Condemnation Proceeds: All awards or settlements in respect of a Mortgaged
Property, whether permanent or temporary, partial or entire, by exercise of the
power of eminent domain or condemnation, to the extent not required to be
released either to a Mortgagor in accordance with the terms of the related
mortgage loan documents or to the holder of a senior lien on the Mortgaged
Property.
Corporate Trust Office: With respect to the Trustee, the principal
corporate trust office of the Trustee at which at any particular time its
corporate trust business shall be administered, which office at the date of
execution of this Agreement is located at ▇▇▇▇ ▇▇▇▇ ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Trust Administration - ML05A1.
Current Interest: Any of the Class A Current Interest, the Class R Current
Interest, the Class M-1 Current Interest, the Class M-2 Current Interest, the
Class B-1 Current Interest, the Class B-2 Current Interest, the Class B-3
Current Interest and the Class B-4 Current Interest.
Cut-off Date: September 1, 2005.
Cut-off Date Principal Balance: As to any Mortgage Loan, the unpaid
principal balance thereof as of the close of business on the calendar day
immediately preceding the Cut-off Date after application of all payments of
principal due on or prior to the Cut-off Date, whether or not received, and all
Principal Prepayments received prior to the Cut-off Date, but without giving
effect to any installments of principal received in respect of Due Dates on and
after the Cut-off Date.
Definitive Certificates: As defined in Section 5.06.
Deleted Mortgage Loan: A Mortgage Loan replaced or to be replaced by a
Replacement Mortgage Loan.
Delinquent: A Mortgage Loan is "delinquent" if any payment due thereon is
not made pursuant to the terms of such Mortgage Loan by the close of business on
the day such payment is scheduled to be due. A Mortgage Loan is "30 days
delinquent" if such payment has not been received by the close of business on
the corresponding day of the month immediately succeeding the month in which
such payment was due, or, if there is no such corresponding day (e.g., as when a
30-day month follows a 31-day month in which a payment was due on the 31st day
of such month), then on the last day of such immediately succeeding month. With
respect to any Mortgage Loan due on any day other than the first day of the
month, such Mortgage Loan shall be deemed to be due on the first day of the
immediately succeeding month. Similarly for "60 days delinquent," "90 days
delinquent" and so on.
Denomination: With respect to each Certificate, the amount set forth on the
face thereof as the "Initial Principal Balance of this Certificate."
Depositor: ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors, Inc., a Delaware corporation,
or any successor in interest.
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Depository: The initial Depository shall be The Depository Trust Company
("DTC"), the nominee of which is Cede & Co., or any other organization
registered as a "clearing agency" pursuant to Section 17A of the Securities
Exchange Act of 1934, as amended. The Depository shall initially be the
registered Holder of the Book-Entry Certificates. The Depository shall at all
times be a "clearing corporation" as defined in Section 8-102(3) of the Uniform
Commercial Code of the State of New York.
Depository Agreement: With respect to Classes of Book-Entry Certificates,
the agreement between the Trustee and the initial Depository.
Depository Participant: A broker, dealer, bank or other financial
institution or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
Designated Transaction: A transaction in which the assets underlying the
Certificates consist of single-family residential, multi-family residential,
home equity, manufactured housing and/or commercial mortgage obligations that
are secured by single-family residential, multi-family residential, commercial
real property or leasehold interests therein.
Determination Date: With respect to any Distribution Date, the 15th day of
the month of such Distribution Date or, if such 15th day is not a Business Day,
the immediately preceding Business Day.
Disqualified Organization: (1) the United States, any state or political
subdivision thereof, any foreign government, any international organization, or
any agency or instrumentality of any of the foregoing, (2) any organization
(other than a cooperative described in Section 521 of the Code) which is exempt
from tax under Chapter 1 of Subtitle A of the Code unless such organization is
subject to the tax imposed by Section 511 of the Code and (3) any organization
described in Section 1381(a)(2)(C) of the Code.
Distribution Date: The 25th day of each calendar month after the initial
issuance of the Certificates, or if such 25th day is not a Business Day, the
next succeeding Business Day, commencing in October 2005.
Due Date: With respect to any Distribution Date and any Mortgage Loan, the
day during the related Due Period on which a Scheduled Payment is due.
Due Period: With respect to any Distribution Date, the period beginning on
the second day of the calendar month preceding the calendar month in which such
Distribution Date occurs and ending on the first day of the month in which such
Distribution Date occurs.
Eligible Account: An account that is (i) maintained with a depository
institution the long-term unsecured debt obligations of which are rated by each
Rating Agency in one of its two highest rating categories, or (ii) maintained
with the corporate trust department of a bank which (A) has a rating of at least
Baa3 or P-3 by ▇▇▇▇▇'▇ and (B) is either the Depositor or the corporate trust
department of a national bank or banking corporation which has a rating of at
least A-1 by S&P or F1 by Fitch, or (iii) an account or accounts the deposits in
which are fully insured by the FDIC, or (iv) an account or accounts, acceptable
to each Rating Agency without reduction or withdrawal of the rating of any Class
of Certificates, as evidenced in writing, by a depository institution in which
such accounts are insured by the FDIC (to the limit established by the FDIC),
the uninsured deposits in which accounts are otherwise secured such that, as
evidenced by an Opinion of Counsel delivered to and acceptable to the Trustee
and each Rating Agency, the Certificateholders have a claim with respect to the
funds in such account and a perfected first security interest against any
collateral (which shall be limited to Permitted Investments) securing such funds
that is superior to claims of any other depositors or creditors of the
depository
-21-
institution with which such account is maintained, or (v) maintained at an
eligible institution whose commercial paper, short-term debt or other short-term
deposits are rated at least A-1+ by S&P and F-1+ by Fitch, or (vi) maintained
with a federal or state chartered depository institution the deposits in which
are insured by the FDIC to the applicable limits and the short-term unsecured
debt obligations of which (or, in the case of a depository institution that is a
subsidiary of a holding company, the short-term unsecured debt obligations of
such holding company) are rated A-1 by S&P or Prime-1 by ▇▇▇▇▇'▇ at the time any
deposits are held on deposit therein, or (vii) otherwise acceptable to each
Rating Agency, as evidenced by a letter from each Rating Agency to the Trustee.
ERISA: The Employee Retirement Income Security Act of 1974, including any
successor or amendatory provisions.
ERISA-Qualifying Underwriting: A best efforts or firm commitment
underwriting or private placement that would satisfy the requirements of
Prohibited Transaction Exemption 90-29, Exemption Application No. D-8012, 55
Fed. Reg. 21459 (1990), as amended, granted to the Underwriter by the United
States Department of Labor (or any other applicable underwriter's exemption
granted by the United States Department of Labor), except, in relevant part, for
the requirement that the certificates have received a rating at the time of
acquisition that is in one of the three (or four, in the case of a "designated
transaction") highest generic rating categories by at least one of the Rating
Agencies.
ERISA Restricted Certificates: The Class C Certificates, Class P
Certificates, and Class R Certificate and any other Certificate, unless the
acquisition and holding of such other Certificate is covered by and exempt under
any applicable underwriter's exemption granted by the United States Department
of Labor.
Event of Default: As defined in Section 7.01 hereof.
Excess Interest: On any Distribution Date, for the Class A, Class M and
Class B Certificates, the excess, if any, of (1) the amount of interest such
Class of Certificates is entitled to receive on such Distribution Date at its
Pass-Through Rate over (2) the amount of interest such Class of Certificates
would have been entitled to receive on such Distribution Date had the
Pass-Through Rate for such Class been the REMIC Pass-Through Rate.
Excess Proceeds: With respect to any Liquidated Loan, any Liquidation
Proceeds that are in excess of the sum of (1) the unpaid principal balance of
such Liquidated Loan as of the date of such liquidation plus (2) interest at the
Mortgage Rate from the Due Date as to which interest was last paid or advanced
to Certificateholders (and not reimbursed to the Servicer) up to the Due Date in
the month in which such Liquidation Proceeds are required to be distributed on
the unpaid principal balance of such Liquidated Loan outstanding during each Due
Period as to which such interest was not paid or advanced.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Extra Principal Distribution Amount: With respect to any Distribution Date,
(1) prior to the Stepdown Date, the excess of (A) the sum of (i) the Aggregate
Certificate Principal Balance immediately preceding such Distribution Date
reduced by the Principal Funds with respect to such Distribution Date and (ii)
$45,993,605 over (B) the Pool Stated Principal Balance of the Mortgage Loans as
of such Distribution Date and (2) on and after the Stepdown Date, (A) the sum of
(x) the Aggregate Certificate Principal Balance immediately preceding such
Distribution Date, reduced by the Principal Funds with respect to such
Distribution Date and (y) the greater of (a) the sum of 8.30% of the Pool Stated
Principal Balance of the Mortgage Loans and (b) the Minimum Required
Overcollateralization Amount less (B) the Pool Stated Principal Balance of the
Mortgage Loans as of such Distribution Date; provided, however, that if on any
Distribution Date a Stepdown Trigger Event is in effect, the Extra Principal
Distribution
-22-
Amount will not be reduced to the applicable percentage of the then-current Pool
Stated Principal Balance of the Mortgage Loans (and will remain fixed at the
applicable percentage of the aggregate Stated Principal Balance of the Mortgage
Loans as of the Due Date immediately prior to the Stepdown Trigger Event) until
the next Distribution Date on which the Stepdown Trigger Event is not in effect.
▇▇▇▇▇▇ Mae: A federally chartered and privately owned corporation organized
and existing under the Federal National Mortgage Association Charter Act, or any
successor thereto.
FDIC: The Federal Deposit Insurance Corporation, or any successor thereto.
Fitch: Fitch, Inc., or any successor in interest.
Fixed Rate Mortgage Loan: A Mortgage Loan identified in the Mortgage Loan
Schedule as having a Mortgage Rate which is fixed.
Floating Rate Certificate Carryover: With respect to a Distribution Date,
in the event that the Pass-Through Rate for a class of the Class A, Class M or
Class B Certificates is based upon the Available Funds Cap, the excess of (1)
the amount of interest that such class would have been entitled to receive on
such Distribution Date had the Pass-Through Rate for that class not been
calculated based on the Available Funds Cap, up to but not exceeding the greater
of (a) the Maximum Rate Cap or (b) the sum of (i) the Available Funds Cap and
(ii) the product of (A) a fraction, the numerator of which is 360 and the
denominator of which is the actual number of days in the related Accrual Period
and (B) the quotient obtained by dividing (I) an amount equal to the proceeds,
if any, payable under the Cap Contract with respect to such Distribution Date by
(II) the aggregate Certificate Principal Balance of each of the Classes of
Certificates to which the Cap Contract relates for such Distribution Date over
(2) the amount of interest such class was entitled to receive on such
Distribution Date based on the Available Funds Cap together with (A) the unpaid
portion of any such excess from prior Distribution Dates (and interest accrued
thereon at the then applicable Pass-Through Rate for such class, without giving
effect to the Available Funds Cap) and (B) any amount previously distributed
with respect to Floating Rate Certificate Carryover for such class that is
recovered as a voidable preference by a trustee in bankruptcy.
▇▇▇▇▇▇▇ Mac: A corporate instrumentality of the United States created and
existing under Title III of the Emergency Home Finance Act of 1970, as amended,
or any successor thereto.
Fremont: Fremont Investment & Loan, or its successor in interest.
Grantor Trusts: The grantor trusts described in Section 2.07 hereof.
Gross Margin: The percentage set forth in the related Mortgage Note for
each of the Adjustable Rate Mortgage Loans which is to be added to the
applicable index for use in determining the Mortgage Rate on each Adjustment
Date and which is set forth in the Mortgage Loan Schedule for each Adjustable
Rate Mortgage Loan.
Group One: The portion of the Mortgage Pool identified as "Group One" in
the Prospectus Supplement.
Group One Mortgage Loan: Any Mortgage Loan identified in the Group One
Mortgage Loan Schedule attached hereto as Exhibit B-2.
Group One Principal Distribution Amount: As of any Distribution Date, the
amount equal to the lesser of (i) the aggregate Certificate Principal Balance of
the Class A-1A, Class A-1B and Class R Certificates and (ii) the Group One
Principal Distribution Percentage of the Class A Principal Distribution
-23-
Amount; provided, however, that (A) on and after the Distribution Date on which
the Certificate Principal Balance of the Class A-2 Certificates is reduced to
zero, the Group Two Principal Distribution Percentage of the Class A Principal
Distribution Amount in excess of the amount necessary to reduce the Certificate
Principal Balance of the Class A-2 Certificates to zero will be applied pro rata
to increase the Group One Principal Distribution Amount (so long as any of the
Class A-1A, Class A-1B and Class R Certificates are outstanding) and the Group
Three Principal Distribution Amount (so long as any of the Class A-3
Certificates are outstanding) in proportion to the Group One Principal
Distribution Percentage or the Group Three Principal Distribution Percentage, as
applicable, and (B) on and after the Distribution Date on which the Certificate
Principal Balance of each of the Class A-3 Certificates is reduced to zero, the
Group Three Principal Distribution Percentage of the Class A Principal
Distribution Amount in excess of the amount necessary to reduce the Certificate
Principal Balance of the Class A-3 Certificates to zero will be applied pro rata
to increase the Group One Principal Distribution Amount (so long as any of the
Class A-1A, Class A-1B and Class R Certificates are outstanding) and the Group
Two Principal Distribution Amount (so long as the Class A-2 Certificates are
outstanding) in proportion to the Group One Principal Distribution Percentage or
the Group Two Principal Distribution Percentage, as applicable.
Group One Principal Distribution Percentage: With respect to any
Distribution Date, a fraction expressed as a percentage, the numerator of which
is the amount of Principal Funds with respect to such Distribution Date received
with respect to Group One Mortgage Loans, and the denominator of which is the
amount of all Principal Funds with respect to such Distribution Date received on
all the Mortgage Loans.
Group Two: The portion of the Mortgage Pool identified as "Group Two" in
the Prospectus Supplement.
Group Two Mortgage Loan: Any Mortgage Loan identified in the Group Two
Mortgage Loan Schedule attached hereto as Exhibit B-3.
Group Two Principal Distribution Amount: As of any Distribution Date, the
amount equal to the lesser of (i) the aggregate Certificate Principal Balance of
the Class A-2 Certificates and (ii) the Group Two Principal Distribution
Percentage of the Class A Principal Distribution Amount; provided, however, that
(A) on and after the Distribution Date on which the Certificate Principal
Balance of each of the Class A-1A, Class A-1B and Class R Certificates is
reduced to zero, the Group One Principal Distribution Percentage of the Class A
Principal Distribution Amount in excess of the amount necessary to reduce the
Certificate Principal Balance of the Class A-1A, Class A-1B and Class R
Certificates to zero will be applied pro rata to increase the Group Two
Principal Distribution Amount (so long as the Class A-2 Certificates are
outstanding) and the Group Three Principal Distribution Amount (so long as any
of the Class A-3 Certificates are outstanding) in proportion to the Group Two
Principal Distribution Percentage or the Group Three Principal Distribution
Percentage, as applicable, and (B) on and after the Distribution Date on which
the Certificate Principal Balance of each of the Class A-3 Certificates is
reduced to zero, the Group Three Principal Distribution Percentage of the Class
A Principal Distribution Amount in excess of the amount necessary to reduce the
Certificate Principal Balance of the Class A-3 Certificates to zero will be
applied pro rata to increase the Group One Principal Distribution Amount (so
long as any of the Class A-1A, Class A-1B and Class R Certificates are
outstanding) and the Group Two Principal Distribution Amount (so long as the
Class A-2 Certificates are outstanding) in proportion to the Group One Principal
Distribution Percentage or the Group Two Principal Distribution Percentage, as
applicable.
Group Two Principal Distribution Percentage: With respect to any
Distribution Date, a fraction expressed as a percentage, the numerator of which
is the amount of Principal Funds with respect to such Distribution Date received
with respect to Group Two Mortgage Loans, and the denominator of which is
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the amount of all Principal Funds with respect to such Distribution Date
received on all the Mortgage Loans.
Group Three: The portion of the Mortgage Pool identified as "Group Three"
in the Prospectus Supplement.
Group Three Mortgage Loan: Any Mortgage Loan identified in the Group Three
Mortgage Loan Schedule attached hereto as Exhibit B-3.
Group Three Principal Distribution Amount: As of any Distribution Date, the
amount equal to the lesser of (i) the aggregate Certificate Principal Balance of
the Class A-3 Certificates and (ii) the Group Three Principal Distribution
Percentage of the Class A Principal Distribution Amount; provided, however, that
(A) on and after the Distribution Date on which the Certificate Principal
Balance of each of the Class A-1A, Class A-1B and Class R Certificates is
reduced to zero, the Group One Principal Distribution Percentage of the Class A
Principal Distribution Amount in excess of the amount necessary to reduce the
Certificate Principal Balance of the Class A-1A, Class A-1B and Class R
Certificates to zero will be applied pro rata to increase the Group Two
Principal Distribution Amount (so long as the Class A-2 Certificates are
outstanding) and the Group Three Principal Distribution Amount (so long as any
of the Class A-3 Certificates are outstanding) in proportion to the Group Two
Principal Distribution Percentage or the Group Three Principal Distribution
Percentage, as applicable, and (B) on and after the Distribution Date on which
the Certificate Principal Balance of each of the Class A-2 Certificates is
reduced to zero, the Group Two Principal Distribution Percentage of the Class A
Principal Distribution Amount in excess of the amount necessary to reduce the
Certificate Principal Balance of the Class A-2 Certificates to zero will be
applied pro rata to increase the Group One Principal Distribution Amount (so
long as any of the Class A-1A, Class A-1B and Class R Certificates are
outstanding) and the Group Three Principal Distribution Amount (so long as any
of the Class A-3 Certificates are outstanding) in proportion to the Group One
Principal Distribution Percentage or the Group Three Principal Distribution
Percentage, as applicable.
Group Three Principal Distribution Percentage: With respect to any
Distribution Date, a fraction expressed as a percentage, the numerator of which
is the amount of Principal Funds with respect to such Distribution Date received
with respect to Group Three Mortgage Loans, and the denominator of which is the
amount of all Principal Funds with respect to such Distribution Date received on
all the Mortgage Loans.
Indenture: An indenture relating to the issuance of NIM Notes.
Initial Adjustment Date: As to any Adjustable Rate Mortgage Loan, the first
Adjustment Date following the origination of such Mortgage Loan.
Initial Certificate Principal Balance: With respect to any Class A, Class
M, Class B or Class C or Certificate, the Certificate Principal Balance of such
Certificate or any predecessor Certificate on the Closing Date as set forth in
Section 5.01 hereof.
Initial Mortgage Rate: As to each Mortgage Loan, the Mortgage Rate in
effect prior to the Initial Adjustment Date.
Initial Optional Termination Date: The Distribution Date on which the
aggregate Stated Principal Balance of the Mortgage Loans is equal to or less
than 10% of the aggregate Stated Principal Balance of the Mortgage Loans as of
the Cut-off Date.
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Insurance Policy: With respect to any Mortgage Loan included in the Trust
Fund, any insurance policy, including all riders and endorsements thereto in
effect with respect to such Mortgage Loan, including any replacement policy or
policies for any insurance policies, including, without limitation, the MI
Policies.
Insurance Proceeds: Proceeds paid in respect of the Mortgage Loans pursuant
to any Insurance Policy or any other insurance policy covering a Mortgage Loan,
to the extent such proceeds are payable to the mortgagee under the Mortgage, the
Servicer or the Trustee under the deed of trust and are not applied to the
restoration of the related Mortgaged Property or released to the Mortgagor in
accordance with the procedures that the Servicer would follow in servicing
mortgage loans held for its own account, in each case other than any amount
included in such Insurance Proceeds in respect of Insured Expenses.
Insured Expenses: Expenses covered by an Insurance Policy or any other
insurance policy with respect to the Mortgage Loans.
Interest Carry Forward Amount: Any of the Class A-1A Interest Carry Forward
Amount, the Class A-1B Interest Carry Forward Amount, the Class A-2 Interest
Carry Forward Amount, the Class A-3A1 Interest Carry Forward Amount, the Class
A-3A2 Interest Carry Forward Amount, the Class A-3A3 Interest Carry Forward
Amount, the Class A-3A4 Interest Carry Forward Amount, the Class A-3B Interest
Carry Forward Amount, the Class R Interest Carry Forward Amount, the Class M-1
Interest Carry Forward Amount, the Class M-2 Interest Carry Forward Amount, the
Class B-1 Interest Carry Forward Amount, the Class B-2 Interest Carry Forward
Amount, the Class B-3 Interest Carry Forward Amount, the Class B-4 Interest
Carry Forward Amount or the Class C Interest Carry Forward Amount, as the case
may be.
Interest Determination Date: With respect to the Certificates, the second
LIBOR Business Day preceding the commencement of such Accrual Period.
Interest Funds: With respect to any Distribution Date, the sum, without
duplication, of (1) all scheduled interest due during the related Due Period and
received before the related Servicer Remittance Date or advanced on or before
the related Servicer Remittance Date less the Servicing Fee, (2) all Advances
relating to interest with respect to the Mortgage Loans, (3) all Compensating
Interest with respect to the Mortgage Loans, (4) Liquidation Proceeds with
respect to the Mortgage Loans (to the extent such Liquidation Proceeds relate to
interest) collected during the related Prepayment Period, (5) all proceeds of
any purchase pursuant to Section 2.02 or 2.03 during the related Prepayment
Period or pursuant to Section 9.01 not later than the related Determination Date
(to the extent that such proceeds relate to interest) less the Servicing Fee and
(6) all Prepayment Charges received with respect to the Mortgage Loans during
the related Prepayment Period, less (A) all Non-Recoverable Advances relating to
interest and (B) other amounts reimbursable to the Servicer and the Trustee
pursuant to this Agreement.
Latest Possible Maturity Date: The latest maturity date for any Mortgage
Loan in the Trust Fund plus one year.
LIBOR Business Day: Any day on which banks in the City of London, England
and New York City, U.S.A. are open and conducting transactions in foreign
currency and exchange.
Liquidated Loan: With respect to any Distribution Date, a defaulted
Mortgage Loan that either (a) has been liquidated through deed-in-lieu of
foreclosure, foreclosure sale, trustee's sale or other realization as provided
by applicable law governing the real property subject to the related Mortgage
and any security agreements and as to which the Servicer has certified (in
accordance with Section 3.12) in the related Prepayment Period that it has
received all amounts it expects to receive in connection with such liquidation
or (b) is not a first lien Mortgage Loan and is delinquent 180 days or longer,
the Servicer
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has certified in a certificate of an officer of the Servicer delivered to the
Depositor and the Trustee that it does not believe that there is a reasonable
likelihood that any further net proceeds will be received or recovered with
respect to such Mortgage Loan.
Liquidation Proceeds: Amounts, including Condemnation Proceeds and
Insurance Proceeds, received in connection with the partial or complete
liquidation of Mortgage Loans, whether through trustee's sale, foreclosure sale,
sale by the Servicer pursuant to this Agreement or otherwise or amounts received
in connection with any condemnation or partial release of a Mortgaged Property
and any other proceeds received in connection with an REO Property, less the sum
of related unreimbursed Advances, Servicing Fees, Servicing Advances and any
other expenses related to such Mortgage Loan.
Losses: Any losses, claims, damages, liabilities or expenses collectively.
Lower Tier REMIC: As described in the Preliminary Statement and Section
2.07.
Lower Tier REMIC Interests: Each of the Class LTA-1A Interest, the Class
LTA-1B Interest, the Class LTA-2 Interest, the Class LTA-3A1 Interest, the Class
LTA-3A2 Interest, the Class LTA-3A3 Interest, the Class LTA-3A4 Interest, the
Class LTA-3B Interest, the Class LTM-1 Interest, the Class LTM-2 Interest, the
Class LTB-1 Interest, the Class LTB-2 Interest, the Class LTB-3 Interest, the
Class LTB-4 Interest, the Class LTX Interest and the Class LTR Interest.
Lower Tier REMIC Marker Classes: Each of the classes of Lower Tier REMIC
Regular Interests other than the Class LTX Interest.
Lower Tier REMIC Regular Interests: Each of the Lower Tier REMIC Interests
other than the Class LTR Interest.
Maximum Mortgage Rate: With respect to each Adjustable Rate Mortgage Loan,
the maximum rate of interest set forth as such in the related Mortgage Note and
with respect to each Fixed Rate Mortgage Loan, the rate of interest set forth in
the related Mortgage Note.
Maximum Rate Cap: With respect to any Distribution Date, the per annum rate
equal to 12 times the quotient of (x) the aggregate scheduled interest that
would have been due on the Mortgage Loans during the related Due Period had the
Adjustable Rate Mortgage Loans provided for interest at their maximum lifetime
Net Mortgage Rates and the Fixed Rate Mortgage Loans provided for interest at
their Net Mortgage Rates, divided by (y) the aggregate Stated Principal Balance
of the Mortgage Loans as of the preceding Distribution Date (or in the case of
the first Distribution Date, as of the Cut-off Date) multiplied by 30 and
divided by the actual number of days in the related Accrual Period.
MERS: Mortgage Electronic Registration Systems, Inc., a corporation
organized and existing under the laws of the State of Delaware, or any successor
thereto.
MERS Loan: Any Mortgage Loan registered with MERS on the MERS System.
MERS System: The system of recording transfers of mortgage electronically
maintained by MERS.
MI Insurer Fee: The amount payable to the MI Insurer on each Distribution
Date, which amount shall equal one-twelfth of the product of (i) the MI Insurer
Fee Rate and (ii) the Stated Principal Balance of the applicable MI Mortgage
Loan (or the related REO Property) as of the first day of the related Due
Period.
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MI Insurer Fee Rate: With respect to each MI Mortgage Loan, the rate
specified for such MI Mortgage Loan on the schedule attached to the MI Policy,
plus a rate computed so that the MI Insurer Fee would make the MI Insurer whole
for any taxes imposed on the MI Insurer by the States of Kentucky or West
Virginia with respect to MI Mortgage Loans located in such States.
MI Insurer: Mortgage Guaranty Insurance Corporation, or its successor in
interest.
MI Mortgage Loans: The list of Mortgage Loans insured by the MI Insurers
attached hereto as Exhibit B-4.
MI Policy: The MI Insurer primary private mortgage Insurance Policy No.
04-690-5-1348 and all endorsements thereto, dated September 29, 2005, which is
attached hereto as Exhibit J-2.
Minimum Mortgage Rate: With respect to each Adjustable Rate Mortgage Loan,
the minimum rate of interest set forth as such in the related Mortgage Note.
Minimum Required Overcollateralization Amount: An amount equal to the
product of (x) 0.50% and (y) the Stated Principal Balance of the Mortgage Loans
as of the Cut-off Date.
MIN: The loan number for any MERS Loan.
MOM Loan: Any Mortgage Loan as to which MERS is acting as mortgagee, solely
as nominee for the originator of such Mortgage Loan and its successors and
assigns.
Monthly Statement: The statement delivered to the Certificateholders
pursuant to Section 4.05.
Moody's: ▇▇▇▇▇'▇ Investors Service, Inc. or any successor in interest.
Mortgage: With respect to a Mortgage Loan, the mortgage, deed of trust or
other instrument creating a first lien or a first priority ownership interest in
an estate in fee simple in real property securing a Mortgage Note.
Mortgage File: The mortgage documents listed in Section 2.01 hereof
pertaining to a particular Mortgage Loan and any additional documents delivered
to the Trustee to be added to the Mortgage File pursuant to this Agreement.
Mortgage Group: Any of Group One, Group Two or Group Three.
Mortgage Loans: Such of the mortgage loans transferred and assigned to the
Trustee pursuant to the provisions hereof as from time to time are held as a
part of the Trust Fund (including any REO Property), the mortgage loans so held
being identified in the Mortgage Loan Schedule, notwithstanding foreclosure or
other acquisition of title of the related Mortgaged Property. Any mortgage loan
that was intended by the parties hereto to be transferred to the Trust Fund as
indicated by such Mortgage Loan Schedule which is in fact not so transferred for
any reason shall continue to be a Mortgage Loan hereunder until the Purchase
Price with respect thereto has been paid to the Trust Fund.
Mortgage Loan Schedule: The lists of Mortgage Loans (as from time to time
amended by the Trustee to reflect the deletion of Deleted Mortgage Loans and the
addition of Replacement Mortgage Loans pursuant to the provisions of this
Agreement) transferred to the Trustee as part of the Trust Fund and from time to
time subject to this Agreement, attached hereto as Exhibits ▇-▇, ▇-▇, ▇-▇ and
B-4, setting forth the following information with respect to each Mortgage Loan:
(i) the loan number;
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(ii) borrower name and address;
(iii) the unpaid principal balance of the Mortgage Loans;
(iv) the Initial Mortgage Rate;
(v) the original maturity date and the months remaining before
maturity date;
(vi) the original principal balance;
(vii) the Cut-off Date Principal Balance;
(viii) the first payment due date of the Mortgage Loan;
(ix) the Loan-to-Value Ratio at origination;
(x) a code indicating whether the residential dwelling at the time of
origination was represented to be owner-occupied;
(xi) a code indicating the property type;
(xii) with respect to each Adjustable Rate Mortgage Loan;
(A) the frequency of each Adjustment Date;
(B) the next Adjustment Date;
(C) the Maximum Mortgage Rate;
(D) the Minimum Mortgage Rate;
(E) the Mortgage Rate as of the Cut-off Date;
(F) the related Periodic Rate Cap;
(G) the Gross Margin;
(xiii) location of the related Mortgaged Property;
(xiv) a code indicating whether a Prepayment Charge is applicable and,
if so,
(A) the period during which such Prepayment Charge is in effect;
(B) the amount of such Prepayment Charge;
(C) any limitations or other conditions on the enforceability of
such Prepayment Charge; and
(D) any other information pertaining to the Prepayment Charge
specified in the related Mortgage Note;
(xv) the Credit Score and date obtained;
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(xvi) a code indicating whether such loan is a MI Mortgage Loan;
(xvii) the MI Insurer Fee Rate; and
(xviii) the coverage percentage under the MI Policy.
Mortgage Note: The original executed note or other evidence of indebtedness
evidencing the indebtedness of a Mortgagor under a Mortgage Loan and all
amendments, modifications and attachments thereto.
Mortgage Pool: The aggregate of the Mortgage Loans identified in the
Mortgage Loan Schedule set out on Exhibit B-1.
Mortgaged Property: The underlying property securing a Mortgage Loan.
Mortgage Rate: The annual rate of interest borne by a Mortgage Note from
time to time.
Mortgagor: The obligor on a Mortgage Note.
Net Mortgage Rate: As to each Mortgage Loan, and at any time, the per annum
rate equal to the then current Mortgage Rate less (1) the Servicing Fee Rate and
(2) the MI Insurer Fee Rate, if applicable.
Net Rate: With respect to any Distribution Date, the product of (x) the
weighted average Net Mortgage Rate for the Mortgage Loans calculated based on
the respective Net Mortgage Rates and the Stated Principal Balances of such
Mortgage Loans as of the preceding Distribution Date (or, in the case of the
first Distribution Date, as of the Cut-off Date) and (y) a fraction, the
numerator of which is 30 and the denominator of which is the actual number of
days in the related Accrual Period.
NIM Notes: The notes to be issued pursuant to the Indenture.
Non-Recoverable Advance: Any portion of an Advance previously made or
proposed to be made by the Servicer that, in the good faith judgment of the
Servicer, will not or, in the case of a current delinquency, would not, be
ultimately recoverable by the Servicer from the related Mortgagor, related
Liquidation Proceeds or otherwise related to the Mortgage Loans.
Non-Recoverable Servicing Advance: Any portion of a Servicing Advance
previously made or proposed to be made by the Servicer that, in the good faith
judgment of the Servicer, will not or, in the case of a current Servicing
Advance, would not, be ultimately recoverable by the Servicer from the related
Mortgagor, related Liquidation Proceeds or otherwise related to the Mortgage
Loans.
Non-Supported Interest Shortfall: As defined in Section 4.02.
Offered Certificates: The Class A-1A, Class ▇-▇▇, ▇▇▇▇▇ ▇-▇, Class A-3A1,
Class A-3A2, Class A-3A3, Class A-3A4, Class ▇-▇▇, ▇▇▇▇▇ ▇-▇, Class M-2, Class
B-1, Class B-2, Class B-3, Class B-4 and Class R Certificates.
Officer's Certificate: A certificate (1) signed by the Chairman of the
Board, the Vice Chairman of the Board, the President, a vice president (however
denominated), an Assistant Vice President, the Treasurer, the Secretary, or one
of the assistant treasurers or assistant secretaries of the Depositor, the
Servicer or the Trustee (or any other officer customarily performing functions
similar to those performed by any of the above designated officers and also to
whom, with respect to a particular matter, such matter is referred because of
such officer's knowledge of and familiarity with a particular subject) or (2),
if
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provided for in this Agreement, signed by a Servicing Officer, as the case may
be, and delivered to the Depositor, the Servicer or the Trustee, as the case may
be, as required by this Agreement.
One-Month LIBOR: With respect to any Accrual Period, the rate determined by
the Trustee on the related Interest Determination Date on the basis of (a) the
offered rates for one-month United States dollar deposits, as such rates appear
on Telerate page 3750, as of 11:00 a.m. (London time) on such Interest
Determination Date or (b) if such rate does not appear on Telerate Page 3750 as
of 11:00 a.m. (London time), the offered rates of the Reference Banks for
one-month United States dollar deposits, as such rates appear on the Reuters
Screen LIBO Page, as of 11:00 a.m. (London time) on such Interest Determination
Date. If One-Month LIBOR is determined pursuant to clause (b) above, on each
Interest Determination Date, One-Month LIBOR for the related Accrual Period will
be established by the Trustee as follows:
(i) If on such Interest Determination Date two or more Reference
Banks provide such offered quotations, One-Month LIBOR for the
related Accrual Period shall be the arithmetic mean of such
offered quotations (rounded upwards if necessary to the nearest
whole multiple of 0.03125%).
(ii) If on such Interest Determination Date fewer than two Reference
Banks provide such offered quotations, One-Month LIBOR for the
related Accrual Period shall be the higher of (i) One-Month LIBOR
as determined on the previous Interest Determination Date and
(ii) the Reserve Interest Rate.
Opinion of Counsel: A written opinion of counsel, who may be counsel for
the Depositor or the Servicer, reasonably acceptable to each addressee of such
opinion; provided, however, that with respect to Section 6.04 or 10.01, or the
interpretation or application of the REMIC Provisions, such counsel must (1) in
fact be independent of the Depositor or the Servicer, (2) not have any direct
financial interest in the Depositor or the Servicer or in any affiliate of
either and (3) not be connected with the Depositor or the Servicer as an
officer, employee, promoter, underwriter, trustee, partner, director or person
performing similar functions.
Optional Termination: The termination of the Trust Fund hereunder pursuant
to clause (b) of Section 9.01 hereof.
Optional Termination Amount: The repurchase price received by the Trustee
in connection with any repurchase of all of the Mortgage Loans pursuant to
Section 9.01.
Optional Termination Price: On any date after the Initial Optional
Termination Date, an amount equal to the sum of (A) the aggregate Stated
Principal Balance of each Mortgage Loan (other than any Mortgage Loan that has
become an REO Property) as of the Distribution Date on which the proceeds of the
Optional Termination are distributed to the Certificateholders, plus accrued
interest thereon at the applicable Mortgage Rate as of the Due Date preceding
the Distribution Date on which the proceeds of the Optional Termination are
distributed to Certificateholders and the fair market value of any REO Property,
plus accrued interest thereon as of the Distribution Date on which the proceeds
of the Optional Termination are distributed to Certificateholders, (B) any
unreimbursed out-of-pocket costs and expenses owed to the Trustee (including any
amounts incurred by the Trustee in connection with conducting the Auction) or
the Servicer and any unpaid or unreimbursed Servicing Fees, Advances and
Servicing Advances, (C) any unreimbursed costs, penalties and/or damages
incurred by the Trust Fund in connection with any violation relating to any of
the Mortgage Loans of any predatory or abusive lending law and (D) in the event
an Auction has been conducted, all reasonable fees and expenses incurred by the
Trustee with respect to such Auction.
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OTS: The Office of Thrift Supervision.
Outstanding: With respect to the Certificates as of any date of
determination, all Certificates theretofore executed and authenticated under
this Agreement except: (1) Certificates theretofore canceled by the Trustee or
delivered to the Trustee for cancellation; and (2) Certificates in exchange for
which or in lieu of which other Certificates have been executed by the Trustee
and delivered by the Trustee pursuant to this Agreement.
Outstanding Mortgage Loan: As of any Distribution Date, a Mortgage Loan
with a Stated Principal Balance greater than zero that was not the subject of a
Principal Prepayment in full, and that did not become a Liquidated Loan, prior
to the end of the related Due Period.
Overcollateralization Amount: As of any date of determination, the excess
of (1) the Stated Principal Balance of the Mortgage Loans over (2) the
Certificate Principal Balance of the Certificates (other than the Class P
Certificates and the Class C Certificates).
Ownership Interest: As to any Certificate, any ownership interest in such
Certificate including any interest in such Certificate as the Holder thereof and
any other interest therein, whether direct or indirect, legal or beneficial.
Pass-Through Rate: With respect to any Class of Certificates, the
corresponding Pass-Through Rate for such Class of Certificates.
Percentage Interest: With respect to:
(i) any Class, the percentage interest in the undivided beneficial
ownership interest evidenced by such Class which shall be equal
to the Certificate Principal Balance of such Class divided by the
aggregate Certificate Principal Balance of all Classes; and
(ii) any Certificate, the Percentage Interest evidenced thereby of the
related Class shall equal the percentage obtained by dividing the
Denomination of such Certificate by the aggregate of the
Denominations of all Certificates of such Class; except that in
the case of any Class P Certificates, the Percentage Interest
with respect to such Certificate shown on the face of such
Certificate.
Periodic Rate Cap: As to each Adjustable Rate Mortgage Loan and the related
Mortgage Note, the provision therein that limits permissible increases and
decreases in the Mortgage Rate on any Adjustment Date.
Permitted Activities: The primary activities of the trust created pursuant
to this Agreement which shall be:
(i) holding Mortgage Loans transferred from the Depositor and other
assets of the Trust Fund, including the Cap Contract and any
credit enhancement and passive derivative financial instruments
that pertain to beneficial interests issued or sold to parties
other than the Depositor, its Affiliates, or its agents;
(ii) issuing Certificates and other interests in the assets of the
Trust Fund;
(iii) receiving collections on the Mortgage Loans and making payments
on such Certificates and interests in accordance with the terms
of this Agreement; and
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(iv) engaging in other activities that are necessary or incidental to
accomplish these limited purposes, which activities cannot be
contrary to the status of the Trust Fund as a qualified special
purpose entity under existing accounting literature.
Permitted Investments: At any time, any one or more of the following
obligations and securities:
(i) obligations of the United States or any agency thereof, provided
such obligations are backed by the full faith and credit of the
United States;
(ii) general obligations of or obligations guaranteed by any state of
the United States or the District of Columbia receiving the
highest long-term debt rating of each Rating Agency rating the
Certificates;
(iii) commercial or finance company paper, other than commercial or
finance company paper issued by the Depositor, the Trustee or any
of its Affiliates, which is then receiving the highest commercial
or finance company paper rating of each such Rating Agency;
(iv) certificates of deposit, demand or time deposits, or bankers'
acceptances (other than banker's acceptances issued by the
Trustee or any of its Affiliates) issued by any depository
institution or trust company incorporated under the laws of the
United States or of any state thereof and subject to supervision
and examination by federal and/or state banking authorities,
provided that the commercial paper and/or long term unsecured
debt obligations of such depository institution or trust company
are then rated one of the two highest long-term and the highest
short-term ratings of each such Rating Agency for such
securities;
(v) demand or time deposits or certificates of deposit issued by any
bank or trust company or savings institution to the extent that
such deposits are fully insured by the FDIC;
(vi) guaranteed reinvestment agreements issued by any bank, insurance
company or other corporation rated in the two highest long-term
or the highest short-term ratings of each Rating Agency
containing, at the time of the issuance of such agreements, such
terms and conditions as will not result in the downgrading or
withdrawal of the rating then assigned to the Certificates by any
such Rating Agency as evidenced by a letter from each Rating
Agency;
(vii) repurchase obligations with respect to any security described in
clauses (i) and (ii) above, in either case entered into with a
depository institution or trust company (acting as principal)
described in clause (v) above;
(viii) securities (other than stripped bonds, stripped coupons or
instruments sold at a purchase price in excess of 115% of the
face amount thereof) bearing interest or sold at a discount
issued by any corporation, other than the Trustee or any of its
Affiliates, incorporated under the laws of the United States or
any state thereof which, at the time of such investment, have one
of the two highest long term ratings of each Rating Agency;
(ix) interests in any money market fund (including those managed or
advised by the Trustee or its affiliates) which at the date of
acquisition of the interests in such
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fund and throughout the time such interests are held in such fund
has the highest applicable long term rating by each Rating Agency
rating such fund, if so rated; and
(x) short term investment funds sponsored by any trust company or
national banking association incorporated under the laws of the
United States or any state thereof, other than the Trustee or any
of its Affiliates, which on the date of acquisition has been
rated by each such Rating Agency in their respective highest
applicable rating category;
provided, that no such instrument shall be a Permitted Investment if such
instrument (i) evidences the right to receive interest only payments with
respect to the obligations underlying such instrument, (ii) is purchased at a
premium or above par or (iii) is purchased at a deep discount; provided,
further, that no such instrument shall be a Permitted Investment (A) if such
instrument evidences principal and interest payments derived from obligations
underlying such instrument and the interest payments with respect to such
instrument provide a yield to maturity of greater than 120% of the yield to
maturity at par of such underlying obligations, or (B) if it may be redeemed at
a price below the purchase price (the foregoing clause (B) not to apply to
investments in units of money market funds pursuant to clause (ix) above); and
provided, further, (I) that no amount beneficially owned by any REMIC
(including, without limitation, any amounts collected by the Servicer but not
yet deposited in the Collection Account) may be invested in investments (other
than money market funds) treated as equity interests for Federal income tax
purposes, unless the Servicer shall receive an Opinion of Counsel, at the
expense of the party requesting that such investment be made, to the effect that
such investment will not adversely affect the status of the any REMIC provided
for herein as a REMIC under the Code or result in imposition of a tax on the
Trust Fund or any REMIC provided for herein and (II) each such investment must
be a "permitted investment" within the meaning of Section 860G(a)(5) of the
Code. Permitted Investments that are subject to prepayment or call may not be
purchased at a price in excess of par.
Permitted Transferee: Any Person other than (i) the United States, any
State or political subdivision thereof, or any agency or instrumentality of any
of the foregoing, (ii) a foreign government, International Organization or any
agency or instrumentality of either of the foregoing, (iii) an organization
(except certain farmers' cooperatives described in Section 521 of the Code) that
is exempt from tax imposed by Chapter 1 of the Code (including the tax imposed
by Section 511 of the Code on unrelated business taxable income) on any excess
inclusions (as defined in Section 860E(c)(1) of the Code) with respect to a
Class R Certificate, (iv) rural electric and telephone cooperatives described in
Section 1381(a)(2)(C) of the Code, and (v) a Person that is not a citizen or
resident of the United States, a corporation or partnership (or other entity
treated as a corporation or partnership for United States federal income tax
purposes) created or organized in or under the laws of the United States or any
State thereof or the District of Columbia or an estate whose income from sources
without the United States is includable in gross income for United States
federal income tax purposes regardless of its connection with the conduct of a
trade or business within the United States, or a trust if a court within the
United States is able to exercise primary supervision over the administration of
the trust and one or more United States persons have authority to control all
substantial decisions of the trust, unless, in the case of this clause (v), such
Person has furnished the transferor and the Trustee with a duly completed
Internal Revenue Service Form W-8ECI or applicable successor form. The terms
"United States," "State" and "International Organization" shall have the
meanings set forth in Section 7701 of the Code. A corporation will not be
treated as an instrumentality of the United States or of any State thereof for
these purposes if all of its activities are subject to tax and, with the
exception of the Federal Home Loan Mortgage Corporation, a majority of its board
of directors is not selected by such government unit.
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Person: Any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization or government, or any agency or political subdivision thereof.
Pool Stated Principal Balance: As to any Distribution Date, the aggregate
of the Stated Principal Balances, as of such Distribution Date, of the Mortgage
Loans that were Outstanding Mortgage Loans as of such date.
Prepayment Assumption: A rate or rates of prepayment, as described in the
Prospectus Supplement in the definition of "Modeling Assumptions," relating to
the Offered Certificates.
Prepayment Charges: Any prepayment premium or charge payable by a Mortgagor
in connection with any Principal Prepayment on a Mortgage Loan pursuant to the
terms of the related Mortgage Note or Mortgage, as applicable.
Prepayment Interest Excess: With respect to any Servicer Remittance Date,
for each Mortgage Loan that was the subject of a Principal Prepayment in full
during the portion of the related Prepayment Period occurring between the first
day of the calendar month in which such Servicer Remittance Date occurs and the
last day of the related Prepayment Period, an amount equal to interest (to the
extent received) at the applicable Net Mortgage Rate on the amount of such
Principal Prepayment for the number of days commencing on the first day of the
calendar month in which such Servicer Remittance Date occurs and ending on the
date on which such Principal Prepayment is so applied.
Prepayment Interest Shortfall: With respect to any Distribution Date, for
each Mortgage Loan that was the subject of a Principal Prepayment in full (other
than a Principal Prepayment in full resulting from the purchase of a Mortgage
Loan pursuant to Section 2.02, 2.03 or 9.01 hereof and other than a Principal
Prepayment in full on a Mortgage Loan received during the period from and
including the first day to and including the 14th day of the month of such
Distribution Date), the amount, if any, by which (i) one month's interest at the
applicable Net Mortgage Rate on the Stated Principal Balance of such Mortgage
Loan as of the preceding Distribution Date exceeds (ii) the amount of interest
paid or collected in connection with such Principal Prepayment.
Prepayment Period: As to any Distribution Date, the period beginning with
the 15th day of the calendar month preceding the month in which such
Distribution Date occurs (or in the case of the first Distribution Date,
beginning with the Cut-off Date) and ending on the 14th day of the month in
which such Distribution Date occurs.
Principal Distribution Amount: With respect to each Distribution Date, the
sum of (i) the Principal Funds for such Distribution Date and (ii) any Extra
Principal Distribution Amount for such Distribution Date.
Principal Funds: With respect to the Mortgage Loans and any Distribution
Date, the sum, without duplication, of (1) the scheduled principal due during
the related Due Period and received before the related Servicer Remittance Date
or advanced on or before the related Servicer Remittance Date, (2) prepayments
collected in the related Prepayment Period, (3) the Stated Principal Balance of
each Mortgage Loan that was purchased by the Depositor or the Servicer during
the related Prepayment Period or, in the case of a purchase pursuant to Section
9.01, on the Business Day prior to such Distribution Date, (4) the amount, if
any, by which the aggregate unpaid principal balance of any Replacement Mortgage
Loan is less than the aggregate unpaid principal of the related Deleted Mortgage
Loans delivered by the Seller in connection with a substitution of a Mortgage
Loan pursuant to Section 2.03(c), (5) all Liquidation Proceeds collected during
the related Prepayment Period (to the extent such Liquidation Proceeds relate to
principal), (6) all Subsequent Recoveries received during the related Due
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Period and (7) all other collections and recoveries in respect of principal
during the related Prepayment Period less (A) all Non-Recoverable Advances
relating to principal with respect to the Mortgage Loans and (B) other amounts
reimbursable to the Servicer and the Trustee pursuant to this Agreement and
allocable to principal.
Principal Prepayment: Any Mortgagor payment or other recovery of (or
proceeds with respect to) principal on a Mortgage Loan (including Mortgage Loans
purchased or repurchased under Sections 2.02, 2.03, 3.12 and 9.01 hereof) that
is received or recovered in advance of its scheduled Due Date and is not
accompanied by an amount as to interest representing scheduled interest due on
any date or dates in any month or months subsequent to the month of prepayment.
Partial Principal Prepayments shall be applied by the Servicer in accordance
with the terms of the related Mortgage Note.
Prospectus Supplement: The Prospectus Supplement dated August 27, 2005
relating to the public offering of the Offered Certificates.
PUD: A Planned Unit Development.
Purchase Price: With respect to any Mortgage Loan required to be
repurchased by the Seller or the Transferor pursuant to Section 2.02 or 2.03
hereof or purchased by the Servicer pursuant to Section 3.12(c) hereof, an
amount equal to the sum of (i) 100% of the unpaid principal balance of the
Mortgage Loan as of the date of such purchase together with any unreimbursed
Servicing Advances, (ii) accrued interest thereon at the applicable Mortgage
Rate from (a) the date through which interest was last paid by the Mortgagor to
(b) the Due Date in the month in which the Purchase Price is to be distributed
to Certificateholders and (iii) any unreimbursed costs, penalties and/or damages
incurred by the Trust Fund in connection with any violation relating to such
Mortgage Loan of any predatory or abusive lending law.
Rating Agency: Either of S&P or ▇▇▇▇▇'▇. If any such organization or its
successor is no longer in existence, "Rating Agency" shall be a nationally
recognized statistical rating organization, or other comparable Person,
designated by the Depositor, notice of which designation shall be given to the
Trustee. References herein to a given rating category of a Rating Agency shall
mean such rating category without giving effect to any modifiers.
Realized Loss: With respect to (1) a Liquidated Loan, the amount, if any,
by which the Stated Principal Balance and accrued interest thereon at the Net
Mortgage Rate exceeds the amount actually recovered by the Servicer with respect
thereto (net of reimbursement of Advances and Servicing Advances) at the time
such Mortgage Loan became a Liquidated Loan or (2) with respect to a Mortgage
Loan which is not a Liquidated Loan, any amount of principal that the Mortgagor
is no longer legally required to pay (except for the extinguishment of debt that
results from the exercise of remedies due to default by the Mortgagor).
Record Date: With respect to any Distribution Date, the close of business
on the last Business Day of the month preceding the month in which the
applicable Distribution Date occurs (or, in the case of the first Distribution
Date, the Closing Date).
Reference Banks: Barclays Bank PLC, JPMorgan Chase Bank, N.A., Citibank,
N.A. and NatWest, N.A.; provided that if any of the foregoing banks are not
suitable to serve as a Reference Bank, then any leading banks selected by the
Trustee (in consultation with the Depositor) which are engaged in transactions
in Eurodollar deposits in the international Eurocurrency market (i) with an
established place of business in London, England and (ii) whose quotations
appear on the Reuters Screen LIBO Page on the relevant Interest Determination
Date.
Regular Certificate: Any one of the Class A, Class M and Class B
Certificates.
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Regulation S: Regulation S promulgated under the Securities Act or any
successor provision thereto, in each case as the same may be amended from time
to time; and all references to any rule, section or subsection of, or definition
or term contained in, Regulation S means such rule, section, subsection,
definition or term, as the case may be, or any successor thereto, in each case
as the same may be amended from time to time.
Related Certificates: With respect to the Class LTA-1A Interest, the Class
A-1A and Class R Certificates. With respect to the Class LTA-1B Interest, the
Class A-1B Certificates. With respect to the Class LTA-2 Interest, the Class A-2
Certificates. With respect to the Class LTA-3A1 Interest, the Class A-3A1
Certificates. With respect to the Class LTA-3A2 Interest, the Class A-3A2
Certificates. With respect to the Class LTA-3A3 Interest, the Class A-3A3
Certificates. With respect to the Class LTA-3A4 Interest, the Class A-3A4
Certificates. With respect to the Class LTA-3B Interest, the Class A-3B
Certificates. With respect to the Class LTM-1 Interest, the Class M-1
Certificates. With respect to the Class LTM-2 Interest, the Class M-2
Certificates. With respect to the Class LTB-1 Interest, the Class B-1
Certificates. With respect to the Class LTB-2 Interest, the Class B-2
Certificates. With respect to the Class LTB-3 Interest, the Class B-3
Certificates. With respect to the Class LTB-4 Interest, the Class B-4
Certificates.
Relief Act: The Servicemembers Civil Relief Act or any similar state or
local law.
Relief Act Shortfall: With respect to any Distribution Date and any
Mortgage Loan, any reduction in the amount of interest or principal collectible
on such Mortgage Loan for the most recently ended calendar month as a result of
the application of the Relief Act.
REMIC: A "real estate mortgage investment conduit" within the meaning of
section 860D of the Code. References herein to "the REMICs" or "a REMIC" shall
mean any of (or, as the context requires, all of) the Lower Tier REMIC and the
Upper Tier REMIC.
REMIC Pass-Through Rate: The Pass-Through Rate for a Class of Related
Certificates calculated by replacing "Available Funds Cap" in such definition
with "Net Rate."
REMIC Provisions: Provisions of the federal income tax law relating to real
estate mortgage investment conduits, which appear at sections 860A through 860G
of Subchapter M of Chapter 1 of the Code, and related provisions, and proposed,
temporary and final regulations and published rulings, notices and announcements
promulgated thereunder, as the foregoing may be in effect from time to time as
well as provisions of applicable state laws.
REMIC Regular Interests: (i) any of the rights under any of the
Certificates (other than the Class P Certificates, the Class R Certificate and
the Class C Certificates) other than the rights in interest rate cap contracts
described in Section 2.07 and (ii) the Uncertificated Class C Interest.
Remittance Report: As defined in Section 4.04(j) hereof.
REO Property: A Mortgaged Property acquired by the Servicer through
foreclosure or deed-in-lieu of foreclosure in connection with a defaulted
Mortgage Loan.
Replacement Mortgage Loan: A Mortgage Loan substituted by the Depositor for
a Deleted Mortgage Loan, which must, on the date of such substitution, as
confirmed in a Request for Release, substantially in the form of Exhibit I (1)
have a Stated Principal Balance, after deduction of the principal portion of the
Scheduled Payment due in the month of substitution, not in excess of, and not
less than 90% of the Stated Principal Balance of the Deleted Mortgage Loan; (2)
with respect to any Fixed Rate Mortgage Loan, have a Mortgage Rate not less than
or no more than 1% per annum higher than the
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Mortgage Rate of the Deleted Mortgage Loan and, with respect to any Adjustable
Rate Mortgage Loan: (A) have a Maximum Mortgage Rate no more than 1% per annum
higher or lower than the Maximum Mortgage Rate of the Deleted Mortgage Loan; (B)
have a Minimum Mortgage Rate no more than 1% per annum higher or lower than the
Minimum Mortgage Rate of the Deleted Mortgage Loan; (C) have the same index and
Periodic Rate Cap as that of the Deleted Mortgage Loan and a Gross Margin not
more than 1% per annum higher or lower than that of the Deleted Mortgage Loan;
(D) not permit conversion of the related Mortgage Rate to a fixed Mortgage Rate
and (F) currently be accruing interest at a rate not more than 1% per annum
higher or lower than that of the Deleted Mortgage Loan; (3) have a similar or
higher FICO score or credit grade than that of the Deleted Mortgage Loan; (4)
have a Loan-to-Value Ratio no higher than that of the Deleted Mortgage Loan; (5)
have a remaining term to maturity no greater than (and not more than one year
less than) that of the Deleted Mortgage Loan; (6) provide for a Prepayment
Charge on terms substantially similar to those of the Prepayment Charge, if any,
of the Deleted Mortgage Loan; (7) have the same lien priority as the Deleted
Mortgage Loan; (8) constitute the same occupancy type as the Deleted Mortgage
Loan; and (9) comply with each representation and warranty set forth in Section
2.03 hereof.
Request for Release: The Request for Release of Documents submitted by the
Servicer to the Trustee (or its custodian), substantially in the form of Exhibit
I hereto.
Required Insurance Policy: With respect to any Mortgage Loan, any insurance
policy that is required to be maintained from time to time under this Agreement,
including, without limitation, in the case of the MI Mortgage Loans, the MI
Policy.
Required Percentage: As of any Distribution Date, the quotient of (1) the
excess of (A) the Stated Principal Balances of the Mortgage Loans as of such
Distribution Date, over (B) the Certificate Principal Balance of the most senior
Class of Certificates outstanding, prior to giving effect to distributions to be
made on such Distribution Date and (2) the Stated Principal Balance of the
Mortgage Loans as of such Distribution Date.
Reserve Interest Rate: With respect to any Interest Determination Date, the
rate per annum that the Trustee determines to be (1) the arithmetic mean
(rounded upwards if necessary to the nearest whole multiple of 0.03125%) of the
one-month United States dollar lending rates which New York City banks selected
by the Trustee (in consultation with the Depositor) are quoting on the relevant
Interest Determination Date to the principal London offices of leading banks in
the London interbank market or (2) in the event that the Trustee can determine
no such arithmetic mean, the lowest one-month United States dollar lending rate
which New York City banks selected by the Trustee (in consultation with the
Depositor) are quoting on such Interest Determination Date to leading European
banks.
Residual Interest: An interest in the Upper Tier REMIC that is entitled to
all distributions of principal and interest on the Class R Certificate other
than distributions in respect of the Class LTR Interest and distributions to the
extent attributable to an interest rate in excess of the Net Rate.
Responsible Officer: When used with respect to the Servicer, any officer of
the Servicer with direct responsibility for the administration of this Agreement
and also means any other officer to whom, with respect to a particular matter,
such matter is referred because of such officer's knowledge of and familiarity
with the particular subject. When used with respect to the Trustee, any Managing
Director, any Director, Vice President, any Assistant Vice President, any
Associate, any Assistant Secretary, or any other officer of the Trustee
customarily performing functions similar to those performed by any of the above
designated officers who at such time shall be officers to whom, with respect to
a particular matter, the matter is referred because of the officer's knowledge
of and familiarity with the particular subject and who has direct responsibility
for the administration of this Agreement.
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Reuters Screen LIBO Page: The display designated as page "LIBO" on the
Reuters Monitor Money Rates Service (or such other page as may replace such LIBO
page on that service for the purpose of displaying London interbank offered
rates of major banks.
S&P: Standard & Poor's, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., or
any successor in interest.
Sale Agreement: The Mortgage Loan Sale and Assignment Agreement dated as of
September 1, 2005 between the Depositor and the Seller.
Scheduled Payment: The scheduled monthly payment on a Mortgage Loan due on
any Due Date allocable to principal and/or interest on such Mortgage Loan.
Section 302 Requirements: Any rules or regulations promulgated pursuant to
the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 (as such may be amended from time to time).
Securities Act: The Securities Act of 1933, as amended.
Seller: ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Lending Inc., a Delaware corporation, or its
successors in interest.
Servicer: Wilshire Credit Corporation, a Nevada corporation, or its
successor in interest.
Servicer Advance Date: As to any Distribution Date, the related Servicer
Remittance Date.
Servicer Remittance Date: With respect to any Distribution Date, the later
of (x) the date that is two Business Days after the 15th day of the month in
which the related Distribution Date occurs and (y) the 18th day (or if such day
is not a Business Day, the next preceding Business Day) of the month in which
such Distribution Date occurs.
Servicing Advances: All customary, reasonable and necessary "out of pocket"
costs and expenses incurred in the performance by the Servicer of its servicing
obligations hereunder, including, but not limited to, the cost of (1) the
preservation, inspection, restoration and protection of a Mortgaged Property,
including without limitation advances in respect of real estate taxes and
assessments, (2) any collection, enforcement or judicial proceedings, including
without limitation foreclosures, collections and liquidations, (3) the
conservation, management, sale and liquidation of any REO Property (4) executing
and recording instruments of satisfaction, deeds of reconveyance, substitutions
of trustees on deeds of trust or Assignments of Mortgage to the extent not
otherwise recovered from the related Mortgagors or payable under this Agreement,
(5) correcting errors of prior servicers; tax tracking; title research; flood
certification and lender paid mortgage insurance, (6) obtaining or correcting
any legal documentation required to be included in the Mortgage Files and
reasonably necessary for the Servicer to perform its obligations under this
Agreement and (7) compliance with the obligations under Sections 3.01 and 3.10.
Servicing Fee: As to each Mortgage Loan and any Distribution Date, an
amount equal to the product of (x) the Servicing Fee Rate and (y) the Stated
Principal Balance of such Mortgage Loan as of the preceding Distribution Date
or, in the event of any payment of interest that accompanies a Principal
Prepayment in full made by the Mortgagor, interest at the Servicing Fee Rate on
the Stated Principal Balance of such Mortgage Loan as of the preceding
Distribution Date for the period covered by such payment of interest.
Servicing Fee Rate: 0.50% per annum.
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Servicing Officer: Any officer of the Servicer involved in, or responsible
for, the administration and servicing of the Mortgage Loans whose name and
facsimile signature appear on a list of servicing officers furnished to the
Trustee by the Servicer on the Closing Date pursuant to this Agreement, as such
lists may from time to time be amended.
Servicing Transfer Costs: In the event that the Servicer does not reimburse
the Trustee under this Agreement, all costs associated with the transfer of
servicing from the predecessor Servicer, including, without limitation, any
costs or expenses associated with the termination of the predecessor Servicer,
the appointment of a successor servicer, the complete transfer of all servicing
data and the completion, correction or manipulation of such servicing data as
may be required by the Trustee or any successor servicer to correct any errors
or insufficiencies in the servicing data or otherwise to enable the Trustee or
successor servicer to service the Mortgage Loans properly and effectively.
SFAS 140: Statement of Financial Accounting Standard No. 140, Accounting
for Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities dated September 2000, published by the Financial Accounting
Standards Board of the Financial Accounting Foundation.
Startup Day: As defined in Section 2.07 hereof.
Stated Principal Balance: With respect to any Mortgage Loan or related REO
Property (1) as of the Cut-off Date, the Cut-off Date Principal Balance thereof,
and (2) as of any Distribution Date, such Cut-off Date Principal Balance, minus
the sum of (A) the principal portion of the Scheduled Payments (x) due with
respect to such Mortgage Loan during each Due Period ending prior to such
Distribution Date and (y) that were received by the Servicer as of the close of
business on the Determination Date related to such Distribution Date or with
respect to which Advances were made on the Servicer Advance Date prior to such
Distribution Date and (B) all Principal Prepayments with respect to such
Mortgage Loan received on or prior to the last day of the related Prepayment
Period, and all Liquidation Proceeds to the extent applied by the Servicer as
recoveries of principal in accordance with Section 3.12 with respect to such
Mortgage Loan, that were received by the Servicer as of the close of business on
the last day of the related Due Period. Notwithstanding the foregoing, the
Stated Principal Balance of a Liquidated Loan shall be deemed to be zero.
Stepdown Date: The later to occur of (1) the Distribution Date in October
2008 or (2) the first Distribution Date on which (A) the Class A Certificate
Principal Balance (reduced by the Principal Funds with respect to such
Distribution Date) is less than or equal to (B) 56.40% of the Stated Principal
Balances of the Mortgage Loans as of such Distribution Date.
Stepdown Required Loss Percentage: For any Distribution Date, the
applicable percentage for such Distribution Date set forth in the following
table:
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DISTRIBUTION DATE OCCURRING IN STEPDOWN REQUIRED LOSS PERCENTAGE
------------------------------ ---------------------------------
October 2008 - September 2009 2.65% with respect to October 2008,
plus an additional 1/12th of 1.45%
for each month thereafter
October 2009 - September 2010 4.10% with respect to October 2009,
plus an additional 1/12th of 1.20%
for each month thereafter
October 2010 - September 2011 5.25% with respect to October 2010,
plus an additional 1/12th of 0.75%
for each month thereafter
October 2011 and thereafter 5.50%
Stepdown Trigger Event: With respect to the Certificates on or after the
Stepdown Date, a Distribution Date on which (1) the quotient of (A) the
aggregate Stated Principal Balance of all Mortgage Loans which are 60 or more
days Delinquent measured on a rolling three month basis (including, for the
purposes of this calculation, Mortgage Loans in foreclosure and REO Properties)
and (B) the Stated Principal Balance of the Mortgage Loans as of the last day of
the preceding calendar month, equals or exceeds the product of (i) 39.00% and
(ii) the Required Percentage or (2) the quotient (expressed as a percentage) of
(A) the aggregate Realized Losses incurred from the Cut-off Date through the
last day of the calendar month preceding such Distribution Date and (B) the
aggregate principal balance of the Mortgage Loans as of the Cut-off Date exceeds
the Stepdown Required Loss Percentage.
Subordinated Certificates: The Class M and Class B Certificates.
Subsequent Recovery: Any amount received on a Mortgage Loan (net of amounts
reimbursed to the Servicer related to Liquidated Mortgage Loans) subsequent to
such Mortgage Loan being determined to be a Liquidated Mortgage Loan.
Subservicing Agreement: As defined in Section 3.02(a).
Substitution Adjustment Amount: The meaning ascribed to such term pursuant
to Section 2.03(c).
Tax Matters Person: The Person designated as "tax matters person" in the
manner provided under Treasury regulation Section 1.860F-4(d) and Treasury
regulation Section 301.6231(a)(7)-1.
Transfer: Any direct or indirect transfer or sale of any Ownership Interest
in a Certificate.
Transfer Agreement: The Mortgage Loan Purchase and Interim Servicing
Agreement dated as of June 24, 2005, between ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Lending,
Inc., as purchaser and Ameriquest, as seller and interim servicer, as
supplemented by the Bring Down Letter.
Transferor: Ameriquest.
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Trust Fund: The corpus of the trust (the "▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors
Trust, Series 2005-AR1") created hereunder consisting of (i) the Mortgage Loans
and all interest and principal received on or with respect thereto on and after
the Cut-off Date to the extent not applied in computing the Cut-off Date
Principal Balance thereof, exclusive of interest not required to be deposited in
the Collection Account; (ii) the Collection Account and the Certificate Account
and all amounts deposited therein pursuant to the applicable provisions of this
Agreement; (iii) property that secured a Mortgage Loan and has been acquired by
foreclosure, deed in lieu of foreclosure or otherwise; (iv) the mortgagee's
rights under the Insurance Policies with respect to the Mortgage Loans,
including, without limitation, the MI Policy; (v) all proceeds of the
conversion, voluntary or involuntary, of any of the foregoing into cash or other
liquid property; and (vi) the Cap Contract and Cap Contract Account.
Trustee: Deutsche Bank National Trust Company, a national banking
association, not in its individual capacity, but solely in its capacity as
trustee for the benefit of the Certificateholders under this Agreement, and any
successor thereto, and any corporation or national banking association resulting
from or surviving any consolidation or merger to which it or its successors may
be a party and any successor trustee as may from time to time be serving as
successor trustee hereunder.
Uncertificated Class C Interest: An uncertificated interest having (i) the
same rights to payments as the Class C Certificates, other than the rights to
payments of amounts with respect to the Cap Contract, and (ii) the rights to the
payments treated as distributed to the Class C Certificates under Section
2.07(d), provided, however, that such interest shall have no obligation to make
any payments treated as paid by the Class C Certificates pursuant to interest
rate cap agreements under Section 2.07(d).
United States Person: (i) A citizen or resident of the United States, (ii)
a corporation, partnership or other entity treated as a corporation or
partnership for federal income tax purposes organized in or under the laws of
the United States or any state thereof or the District of Columbia (unless, in
the case of a partnership, Treasury regulations provide otherwise), (iii) an
estate the income of which is includible in gross income for United States tax
purposes regardless of its source or (iv) a trust if a court within the United
States is able to exercise primary supervision over the administration of the
trust and one or more United States persons have authority to control all
substantial decisions of the trust. Notwithstanding the preceding sentence, to
the extent provided in Treasury regulations, certain trusts in existence on
August 20, 1996, and treated as United States persons prior to such date, that
elect to continue to be treated as United States persons will also be United
States Persons.
Unpaid Realized Loss Amount: The Class M-1 Unpaid Realized Loss Amount,
Class M-2 Unpaid Realized Loss Amount, Class B-1 Unpaid Realized Loss Amount,
Class B-2 Unpaid Realized Loss Amount, Class B-3 Unpaid Realized Loss Amount,
Class B-4 Unpaid Realized Loss Amount and Class C Unpaid Realized Loss Amount,
collectively.
Upper Tier REMIC: As described in the Preliminary Statement and Section
2.07.
USAP Report: A report in compliance with the Uniform Single Attestation
Program for Mortgage Bankers delivered in accordance with Section 3.18.
Voting Rights: The portion of the voting rights of all the Certificates
that is allocated to any of the Certificates for purposes of the voting
provisions hereunder. Voting Rights allocated to each Class of Certificates
shall be allocated as follows: (1) 98% to the Class A, Class M and Class B
Certificates, with the allocation among such Certificates to be in proportion to
the Class Certificate Principal Balance of each Class relative to the Class
Certificate Principal Balance of all other Classes and (2) each Class of the
Class C and Class P will be allocated 1% of the Voting Rights Certificates.
Voting Rights will be allocated among the Certificates of each such Class in
accordance with their respective Percentage Interests.
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ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
REPRESENTATIONS AND WARRANTIES
SECTION 2.01. Conveyance of Mortgage Loans.
The Depositor, concurrently with the execution and delivery hereof,
does hereby sell, transfer, assign, set over and convey to the Trustee without
recourse all the right, title and interest of the Depositor in and to the assets
of the Trust Fund. Such assignment includes all interest and principal received
on or with respect to the Mortgage Loans on or after the Cut-off Date (other
than Scheduled Payments due on the Mortgage Loans on or before the Cut-off
Date).
The parties hereto agree and understand that it is not intended that
any Mortgage Loan be included in the Trust that is, without limitation, a
"High-Cost Home Loan" as defined by the Home Ownership and Equity Protection Act
of 1994 or any other applicable anti-predatory lending laws, including but not
limited to (i) a "High-Cost Home Loan" as defined in the New Jersey Home
Ownership Act effective November 27, 2003; (ii) a "High-Cost Home Loan" as
defined in the New Mexico Home Loan Protection Act effective January 1, 2004;
(iii) a "High-Cost Home Loan" as defined in the Massachusetts Predatory Home
Loan Practices Act effective November 7, 2004 or (iv) a "High-Cost Home Loan" as
defined by the Indiana High Cost Home Loan Law effective January 1, 2005.
In connection with such assignment, the Depositor does hereby deliver
to, and deposit with, the Trustee, the following documents or instruments with
respect to each Mortgage Loan:
(A) The Original Mortgage Note endorsed in blank or, "Pay to the order
of Deutsche Bank National Trust Company, as trustee, without recourse"
together with all riders thereto. The Mortgage Note shall include all
intervening endorsements showing a complete chain of the title from the
originator to [______________].
(B) Except as provided below and for each Mortgage Loan that is not a
MERS Loan, the original recorded Mortgage together with all riders thereto,
with evidence of recording thereon, or, if the original Mortgage has not
yet been returned from the recording office, a copy of the original
Mortgage together with all riders thereto certified to be a true copy of
the original of the Mortgage that has been delivered for recording in the
appropriate recording office of the jurisdiction in which the Mortgaged
Property is located and in the case of each MERS Loan, the original
Mortgage together with all riders thereto, noting the presence of the MIN
of the Loan and either language indicating that the Mortgage Loan is a MOM
Loan or if the Mortgage Loan was not a MOM Loan at origination, the
original Mortgage and the assignment thereof to MERS, with evidence of
recording indicated thereon, or a copy of the Mortgage certified by the
public recording office in which such Mortgage has been recorded.
(C) In the case of each Mortgage Loan that is not a MERS Loan, the
original Assignment of each Mortgage, endorsed either in blank or, to
"Deutsche Bank National Trust Company, as trustee."
(D) The original policy of title insurance (or a preliminary title
report, commitment or binder if the original title insurance policy has not
been received from the title insurance company).
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(E) Originals of any intervening assignments of the Mortgage, with
evidence of recording thereon or, if the original intervening assignment
has not yet been returned from the recording office, a copy of such
assignment certified to be a true copy of the original of the assignment
which has been sent for recording in the appropriate jurisdiction in which
the Mortgaged Property is located.
(F) Originals of all assumption and modification agreements, if any.
(G) If in connection with any Mortgage Loan, the Depositor cannot
deliver the Mortgage, Assignments of Mortgage or assumption, consolidation
or modification, as the case may be, with evidence of recording thereon, if
applicable, concurrently with the execution and delivery of this Agreement
solely because of a delay caused by the public recording office where such
Mortgage, Assignments of Mortgage or assumption, consolidation or
modification, as the case may be, has been delivered for recordation, the
Depositor shall deliver or cause to be delivered to the Trustee written
notice stating that such Mortgage or assumption, consolidation or
modification, as the case may be, has been delivered to the appropriate
public recording office for recordation. Thereafter, the Depositor shall
deliver or cause to be delivered to the Trustee such Mortgage, Assignments
of Mortgage or assumption, consolidation or modification, as the case may
be, with evidence of recording indicated thereon, if applicable, upon
receipt thereof from the public recording office. To the extent any
required endorsement is not contained on a Mortgage Note or an Assignment
of Mortgage, the Depositor shall make or cause such endorsement to be made.
(H) With respect to any Mortgage Loan, none of the Depositor, the
Servicer or the Trustee shall be obligated to cause to be recorded the
Assignment of Mortgage referred to in this Section 2.01. In the event an
Assignment of Mortgage is not recorded, the Servicer shall have no
liability for its failure to receive and act on notices related to such
Assignment of Mortgage.
The ownership of each Mortgage Note, the Mortgage and the contents of
the related Mortgage File is vested in the Trustee on behalf of the
Certificateholders. Neither the Depositor nor the Servicer shall take any action
inconsistent with such ownership and shall not claim any ownership interest
therein. The Depositor and the Servicer shall respond to any third party
inquiries with respect to ownership of the Mortgage Loans by stating that such
ownership is held by the Trustee on behalf of the Certificateholders. Mortgage
documents relating to the Mortgage Loans not delivered to the Trustee are and
shall be held in trust by the Servicer, for the benefit of the Trustee as the
owner thereof, and the Servicer's possession of the contents of each Mortgage
File so retained is for the sole purpose of servicing the related Mortgage Loan,
and such retention and possession by the Servicer is in a custodial capacity
only. The Depositor agrees to take no action inconsistent with the Trustee's
ownership of the Mortgage Loans, to promptly indicate to all inquiring parties
that the Mortgage Loans have been sold and to claim no ownership interest in the
Mortgage Loans.
It is the intention of this Agreement that the conveyance of the
Depositor's right, title and interest in and to the Trust Fund pursuant to this
Agreement shall constitute a purchase and sale and not a loan. If a conveyance
of Mortgage Loans from the Seller to the Depositor is characterized as a pledge
and not a sale, then the Depositor shall be deemed to have transferred to the
Trustee all of the Depositor's right, title and interest in, to and under the
obligations of the Seller deemed to be secured by said pledge; and it is the
intention of this Agreement that the Depositor shall also be deemed to have
granted to the Trustee a first priority security interest in all of the
Depositor's right, title, and interest in, to and under the obligations of the
Seller to the Depositor deemed to be secured by said pledge. If the conveyance
of the Mortgage Loans from the Depositor to the Trustee is characterized as a
pledge, it is the intention of this Agreement that this Agreement shall
constitute a security agreement under applicable law, and that the
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Depositor shall be deemed to have granted to the Trustee a first priority
security interest in all of the Depositor's right, title and interest in, to and
under the Mortgage Loans, all payments of principal of or interest on such
Mortgage Loans, all other rights relating to and payments made in respect of the
Trust Fund, and all proceeds of any thereof. If the trust created by this
Agreement terminates prior to the satisfaction of the claims of any Person in
any Certificates, the security interest created hereby shall continue in full
force and effect and the Trustee shall be deemed to be the collateral agent for
the benefit of such Person.
In addition to the conveyance made in the first paragraph of this
Section 2.01, the Depositor does hereby convey, assign and set over to the
Trustee for the benefit of the Certificateholders its rights and interests under
the Sale Agreement, including the Depositor's right, title and interest in the
representations and warranties contained in the Sale Agreement and the benefit
of the repurchase obligations and the obligation of the Seller contained in the
Sale Agreement to take, at the request of the Depositor or the Trustee, all
action on its part which is reasonably necessary to ensure the enforceability of
a Mortgage Loan. The Trustee hereby accepts such assignment, and shall be
entitled to exercise all rights of the Depositor under the Sale Agreement as if,
for such purpose, it were the Depositor. The foregoing sale, transfer,
assignment, set-over, deposit and conveyance does not and is not intended to
result in creation or assumption by the Trustee of any obligation of the
Depositor, the Seller, or any other Person in connection with the Mortgage Loans
or any other agreement or instrument relating thereto.
SECTION 2.02. Acceptance by the Trustee of the Mortgage Loans.
Except as set forth in the exception report delivered
contemporaneously herewith (the "Exception Report"), the Trustee acknowledges
receipt of the Mortgage Note for each Mortgage Loan and delivery of a Mortgage
File (but does not acknowledge receipt of all documents required to be included
in such Mortgage File) with respect to each Mortgage Loan and declares that it
holds and will hold such documents and any other documents constituting a part
of the Mortgage Files delivered to it in trust for the use and benefit of all
present and future Certificateholders. The Depositor will cause the Seller to
repurchase any Mortgage Loan to which a material exception was taken in the
Exception Report unless such exception is cured to the satisfaction of the
Trustee within 45 Business Days of the Closing Date.
The Trustee acknowledges receipt of the Cap Contract (the form of which is
attached hereto), the Transfer Agreement, the Bring Down Letter and the Sale
Agreement.
The Trustee agrees, for the benefit of Certificateholders, to review
each Mortgage File delivered to it within 60 days after the Closing Date to
ascertain and to certify, within 70 days of the Closing Date, to the Depositor
and the Servicer that all documents required by Section 2.01 (A)-(B), (C) (if
applicable), and (D)-(E), and the documents if actually received by it, under
Section 2.01(F), have been executed and received, and that such documents relate
to the Mortgage Loans identified in Exhibit B-1 that have been conveyed to it.
The Trustee shall have no obligation to verify whether the documents under
Section 2.01(F) exist. If the Trustee finds any document or documents
constituting a part of a Mortgage File to be missing or defective (that is,
mutilated, damaged, defaced or unexecuted) in any material respect, the Trustee
shall promptly (and in any event within no more than five Business Days) after
such finding so notify the Servicer, the Seller and the Depositor. In addition,
the Trustee shall also notify the Servicer, the Seller and the Depositor if the
original Mortgage with evidence of recording thereon with respect to a Mortgage
Loan is not received within 70 days of the Closing Date; if it has not been
received because of a delay caused by the public recording office where such
Mortgage has been delivered for recordation, the Depositor shall deliver or
cause to be delivered to the Trustee written notice stating that such Mortgage
has been delivered to the
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appropriate public recording office for recordation and thereafter the Depositor
shall deliver or cause to be delivered such Mortgage with evidence of recording
thereon upon receipt thereof from the public recording office. The Trustee shall
request that the Seller correct or cure such omission, defect or other
irregularity, or substitute a Mortgage Loan pursuant to the provisions of
Section 2.03, within 90 days from the date the Seller was notified of such
omission or defect and, if the Seller does not correct or cure such omission or
defect within such period, that the Seller purchase such Mortgage Loan from the
Trust Fund within 90 days from the date the Trustee notified the Seller of such
omission, defect or other irregularity at the Purchase Price of such Mortgage
Loan. The Purchase Price for any Mortgage Loan purchased pursuant to this
Section 2.02 shall be paid to the Servicer and deposited by the Servicer in the
Certificate Account or Collection Account, as appropriate, promptly upon
receipt, and, upon receipt by the Trustee of written notification of such
deposit signed by a Servicing Officer, the Trustee, upon receipt of a Request
for Release, shall promptly release to the Seller the related Mortgage File and
the Trustee shall execute and deliver such instruments of transfer or
assignment, without recourse, as shall be requested by the Seller and necessary
to vest in the Seller or its designee, as the case may be, any Mortgage Loan
released pursuant hereto, and the Trustee shall have no further responsibility
with regard to such Mortgage Loan. It is understood and agreed that the
obligation of the Seller to purchase, cure or substitute any Mortgage Loan as to
which a material defect in or omission of a constituent document exists shall
constitute the sole remedy respecting such defect or omission available to the
Trustee on behalf of Certificateholders. The preceding sentence shall not,
however, limit any remedies available to the Certificateholders, the Depositor
or the Trustee pursuant to the Sale Agreement, the Transfer Agreement and the
Bring-Down Letter. The Trustee shall be under no duty or obligation to inspect,
review and examine such documents, instruments, certificates or other papers to
determine that they are genuine, enforceable, recordable, duly authorized,
sufficient, legal, valid or appropriate to the represented purpose, or that they
have actually been recorded, or that they are other than what they purport to be
on their face. The Servicer and the Trustee shall keep confidential the name of
each Mortgagor except as required by this Agreement and the Servicer and the
Trustee shall not solicit any such Mortgagor for the purpose of refinancing the
related Mortgage Loan; notwithstanding anything herein to the contrary, the
foregoing shall not be construed to prohibit (i) disclosure of any and all
information that is or becomes publicly known, or information obtained by the
Trustee from sources other than the other parties hereto, (ii) disclosure of any
and all information (A) if required to do so by any applicable law, rule or
regulation, (B) to any government agency or regulatory body having or claiming
authority to regulate or oversee any aspects of the Trustee's business or that
of its affiliates, (C) pursuant to any subpoena, civil investigation demand or
similar demand or request of any court, regulatory authority, arbitrator or
arbitration to which Trustee or any affiliate or an officer, director, employer
or shareholder thereof is a party or (D) to any affiliate, independent or
internal auditor, agent, employee or attorney of the Trustee having a need to
know the same, provided that the Trustee advises such recipient of the
confidential nature of the information being disclosed, or (iii) any other
disclosure authorized by the Depositor.
Within 70 days of the Closing Date, the Trustee (or its custodian)
shall deliver to the Depositor and the Servicer the Trustee's Certification,
substantially in the form of Exhibit D attached hereto, evidencing the
completeness of the Mortgage Files, with any exceptions noted thereto.
SECTION 2.03. Representations, Warranties and Covenants of the
Depositor.
(a) The Depositor hereby represents and warrants to the Servicer and
the Trustee as follows, as of the date hereof:
(i) The Depositor is duly organized and is validly existing as a
corporation in good standing under the laws of the State of Delaware and
has full power and authority (corporate and other) necessary to own or hold
its properties and to conduct its business as now conducted by it and to
enter into and perform its obligations under this Agreement and the Sale
Agreement.
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(ii) The Depositor has the full corporate power and authority to
execute, deliver and perform, and to enter into and consummate the
transactions contemplated by, this Agreement and the Sale Agreement and has
duly authorized, by all necessary corporate action on its part, the
execution, delivery and performance of this Agreement and the Sale
Agreement; and this Agreement and the Sale Agreement, assuming the due
authorization, execution and delivery hereof by the other parties hereto,
constitutes a legal, valid and binding obligation of the Depositor,
enforceable against the Depositor in accordance with its terms, subject, as
to enforceability, to (i) bankruptcy, insolvency, reorganization,
moratorium and other similar laws affecting creditors' rights generally and
(ii) general principles of equity, regardless of whether enforcement is
sought in a proceeding in equity or at law.
(iii) The execution and delivery of this Agreement and the Sale
Agreement by the Depositor, the consummation of the transactions
contemplated by this Agreement and the Sale Agreement, and the fulfillment
of or compliance with the terms hereof are in the ordinary course of
business of the Depositor and will not (A) result in a material breach of
any term or provision of the charter or by-laws of the Depositor or (B)
materially conflict with, result in a violation or acceleration of, or
result in a material default under, the terms of any other material
agreement or instrument to which the Depositor is a party or by which it
may be bound or (C) constitute a material violation of any statute, order
or regulation applicable to the Depositor of any court, regulatory body,
administrative agency or governmental body having jurisdiction over the
Depositor; and the Depositor is not in breach or violation of any material
indenture or other material agreement or instrument, or in violation of any
statute, order or regulation of any court, regulatory body, administrative
agency or governmental body having jurisdiction over it which breach or
violation may materially impair the Depositor's ability to perform or meet
any of its obligations under this Agreement.
(iv) No litigation is pending, or, to the best of the Depositor's
knowledge, threatened, against the Depositor that would materially and
adversely affect the execution, delivery or enforceability of this
Agreement and the Sale Agreement or the ability of the Depositor to perform
its obligations under this Agreement and the Sale Agreement in accordance
with the terms hereof.
(v) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Depositor of, or compliance by the Depositor with, this
Agreement and the Sale Agreement or the consummation of the transactions
contemplated hereby, or if any such consent, approval, authorization or
order is required, the Depositor has obtained the same. The Depositor
hereby represents and warrants to the Trustee with respect to each Mortgage
Loan as of the Closing Date, and following the transfer of the Mortgage
Loans to it by the Seller, the Depositor had good title to the Mortgage
Loans and the Mortgage Notes were subject to no offsets, claims, liens,
mortgage, pledge, charge, security interest, defenses or counterclaims.
(b) The representations and warranties of the Transferor with respect
to the Mortgage Loans contained in the Transfer Agreement were made as of the
date of the Transfer Agreement and brought forward to the Closing Date or such
earlier date as set forth and pursuant to the Bring Down Letter. The
representations and warranties of the Transferor with respect to the Mortgage
Loans contained in the Bring Down Letter were made as of the Closing Date. The
representations and warranties of the Seller with respect to the Mortgage Loans
contained in the Sale Agreement were made as of the Closing Date. To the extent
that any fact, condition or event with respect to a Mortgage Loan constitutes a
breach of both (i) a representation or warranty of the Transferor under the
Transfer Agreement and (ii) a representation or warranty of the Seller under the
Sale Agreement, the only right or
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remedy of the Trustee or of any Certificateholder shall be the Trustee's right
to enforce the obligations of the Transferor under any applicable representation
or warranty made by it. The Trustee acknowledges that the Seller shall have no
obligation or liability with respect to any breach of a representation or
warranty made by it with respect to the Mortgage Loans if the fact, condition or
event constituting such breach also constitutes a breach of a representation or
warranty made by the Transferor in the Transfer Agreement, without regard to
whether the Transferor fulfills its contractual obligations in respect of such
representation or warranty. The Trustee also acknowledges that the Seller shall
have no obligation or liability with respect to any breach of a representation
or warranty made solely by the Transferor with respect to the Mortgage Loans,
without regard to whether the Transferor fulfills its contractual obligations in
respect of such representation or warranty. The Trustee further acknowledges
that the Depositor shall have no obligation or liability with respect to any
breach of any representation or warranty with respect to the Mortgage Loans
(except as set forth in Section 2.03(a)(v)) under any circumstances.
In addition to the representations and warranties of the Transferor in
the Transfer Agreement that were brought forward to the Closing Date pursuant to
the Bring Down Letter, with respect to each Mortgage Loan, the Transferor made
certain additional covenants regarding such Mortgage Loan, as set forth in the
Transfer Agreement. With respect to any breach of such additional covenants that
materially and adversely affects the interests of the Certificateholders in such
Mortgage Loan, the Seller shall (1) use reasonable efforts to enforce such
covenant against the Transferor and (2) if the Seller successfully enforces any
obligation of the Transferor to repurchase such Mortgage Loan, the Seller shall
repurchase such Mortgage Loan in accordance with this Section 2.03. If the
Seller does not successfully enforce the obligation, if any, of the Transferor
to repurchase a Mortgage Loan with respect to any breach of any such additional
covenants, the Seller shall have no obligation or right to repurchase or cure
such Mortgage Loan.
(c) Upon discovery by any of the Depositor, the Servicer or the
Trustee of a breach of any of such representations and warranties that adversely
and materially affects the value of the related Mortgage Loan, Prepayment
Charges or the interests of the Certificateholders, the party discovering such
breach shall give prompt written notice to the other parties. Within 90 days of
the discovery of such breach of any representation or warranty, the Transferor
or the Seller, as applicable, shall either (a) cure such breach in all material
respects, (b) repurchase such Mortgage Loan or any property acquired in respect
thereof from the Trustee at the Purchase Price or (c) within the two year period
following the Closing Date, substitute a Replacement Mortgage Loan for the
affected Mortgage Loan. In the event of discovery of a breach of any
representation and warranty of the Transferor or the Seller, the Trustee's
rights shall be enforced under the Transfer Agreement or the Sale Agreement for
the benefit of Certificateholders. In the event of a breach of the
representations and warranties with respect to the Mortgage Loans set forth in
the Transfer Agreement, the Trustee shall enforce the right of the Trust Fund to
be indemnified for such breach of representation and warranty. In the event that
such breach relates solely to the unenforceability of a Prepayment Charge,
amounts received in respect of such indemnity up to the amount of such
Prepayment Charge shall be distributed pursuant to Section 4.04(b)(i). As
provided in the Sale Agreement, if the Seller substitutes for a Mortgage Loan
for which there is a breach of any representations and warranties in the Sale
Agreement which adversely and materially affects the value of such Mortgage Loan
and such substitute mortgage loan is not a Replacement Mortgage Loan, under the
terms of the Sale Agreement, the Seller will, in exchange for such substitute
Mortgage Loan, (i) provide the applicable Purchase Price for the affected
Mortgage Loan or (ii) within two years of the Closing Date, substitute such
affected Mortgage Loan with a Replacement Mortgage Loan. Any such substitution
shall not be effected prior to the additional delivery to the Trustee of a
Request for Release substantially in the form of Exhibit I and shall not be
effected unless it is within two years of the Startup Day. The Seller
indemnifies and holds the Trust Fund, the Trustee, the Depositor, the Servicer
and each Certificateholder harmless against any and all taxes, claims, losses,
penalties, fines, forfeitures, reasonable legal fees and related costs,
judgments, and any other costs, fees and expenses that the Trust Fund, the
Trustee, the
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Depositor, the Servicer and any Certificateholder may sustain in connection with
any actions of the Seller relating to a repurchase of a Mortgage Loan other than
in compliance with the terms of this Section 2.03 and the Sale Agreement, to the
extent that any such action causes (i) any federal or state tax to be imposed on
the Trust Fund or any REMIC provided for herein, including without limitation,
any federal tax imposed on "prohibited transactions" under Section 860F(a)(1) of
the Code or on "contributions after the startup day" under Section 860G(d)(1) of
the Code, or (ii) any REMIC created hereunder to fail to qualify as a REMIC at
any time that any Certificate is outstanding. In furtherance of the foregoing,
if the Seller is not a member of MERS and repurchases a Mortgage Loan which is
registered on the MERS System, the Seller, at its own expense and without any
right of reimbursement, shall cause MERS to execute and deliver an assignment of
the Mortgage in recordable form to transfer the Mortgage from MERS to the Seller
and shall cause such Mortgage to be removed from registration on the MERS System
in accordance with MERS' rules and regulations.
With respect to any Mortgage Loan repurchased by the Depositor
pursuant to this Agreement, by the Seller pursuant to the Sale Agreement or by
the Transferor pursuant to the Transfer Agreement, the principal portion of the
funds received by the Servicer in respect of such repurchase of a Mortgage Loan
will be considered a Principal Prepayment and shall be deposited in the
Certificate Account pursuant to Section 3.05 and the Servicer shall notify the
Trustee of its receipt of the same. The Trustee, upon the Servicer's receipt of
the full amount of the Purchase Price for a Deleted Mortgage Loan, or upon
receipt of the Mortgage File for a Replacement Mortgage Loan substituted for a
Deleted Mortgage Loan, shall release or cause to be released and reassign to the
Depositor, the Seller or the Transferor, as applicable, the related Mortgage
File for the Deleted Mortgage Loan and shall execute and deliver such
instruments of transfer or assignment, in each case without recourse,
representation or warranty, as shall be necessary to vest in such party or its
designee or assignee title to any Deleted Mortgage Loan released pursuant
hereto, free and clear of all security interests, liens and other encumbrances
created by this Agreement, which instruments shall be prepared by the Depositor,
the Seller or the Transferor and the Trustee shall have no further
responsibility with respect to the Mortgage File relating to such Deleted
Mortgage Loan.
With respect to each Replacement Mortgage Loan to be delivered to the
Trustee (or its custodian) pursuant to the terms of this Article II in exchange
for a Deleted Mortgage Loan: (i) the Seller must deliver to the Trustee (or its
custodian) the Mortgage File for the Replacement Mortgage Loan containing the
documents set forth in Section 2.01 along with a written certification
certifying as to the Mortgage Loan satisfying all requirements under the
definition of Replacement Mortgage Loan and the delivery of such Mortgage File
and containing the granting language set forth in Section 2.01; and (ii) the
Depositor will be deemed to have made, with respect to such Replacement Mortgage
Loan, each of the representations and warranties made by it with respect to the
related Deleted Mortgage Loan. The Trustee (or its custodian) shall review the
Mortgage File with respect to each Replacement Mortgage Loan and certify to the
Depositor that all documents required by Section 2.01(A), (B), (C) (if
applicable), (D), and (E) have been executed and received.
For any month in which the Seller substitutes one or more Replacement
Mortgage Loans for one or more Deleted Mortgage Loans, the Seller will determine
the amount (if any) by which the aggregate principal balance of all such
Replacement Mortgage Loans as of the date of substitution and the aggregate
Prepayment Charges with respect to such Replacement Mortgage Loans is less than
the aggregate Stated Principal Balance (after application of the principal
portion of the Scheduled Payment due in the month of substitution) and aggregate
Prepayment Charges of all such Deleted Mortgage Loans. An amount equal to the
aggregate of the deficiencies described in the preceding sentence (such amount,
the "Substitution Adjustment Amount") plus an amount equal to any unreimbursed
costs, penalties and/or damages incurred by the Trust Fund in connection with
any violation relating to such Deleted Mortgage Loan of any predatory or abusive
lending law shall be remitted by the Seller to the Servicer for deposit
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into the Certificate Account on the Determination Date for the Distribution Date
relating to the Prepayment Period during which the related Mortgage Loan became
required to be purchased or replaced hereunder.
Notwithstanding any other provision of this Agreement, the right to
substitute Mortgage Loans pursuant to this Article II shall be subject to the
additional limitations that no substitution of a Replacement Mortgage Loan for a
Deleted Mortgage Loan shall be made unless the Trustee shall have received an
Opinion of Counsel (at the expense of the party seeking to make the
substitution) that, under current law, such substitution will not (A) affect
adversely the status of any REMIC established hereunder as a REMIC, or of the
related "regular interests" as "regular interests" in any such REMIC, or (B)
cause any such REMIC to engage in a "prohibited transaction" or prohibited
contribution pursuant to the REMIC Provisions.
The Trustee shall amend the Mortgage Loan Schedule to reflect the
removal of such Deleted Mortgage Loan from the terms of this Agreement and the
substitution of the Replacement Mortgage Loan or Replacement Mortgage Loans.
Upon such substitution by the Seller, such Replacement Mortgage Loan or
Replacement Mortgage Loans shall constitute part of the Mortgage Pool and shall
be subject in all respects to the terms of this Agreement and the Sale
Agreement, including all applicable representations and warranties thereof
included in the Sale Agreement as of the date of substitution.
(d) It is understood and agreed that the representations, warranties
and indemnification (i) set forth in this Section 2.03, (ii) of the Seller and
the Depositor set forth in the Sale Agreement and assigned to the Trustee by the
Depositor hereunder and (iii) of the Transferor, assigned by the Seller to the
Depositor pursuant to the Sale Agreement and assigned to the Trustee by the
Depositor hereunder shall each survive delivery of the Mortgage Files and the
Assignment of Mortgage of each Mortgage Loan to the Trustee and shall continue
throughout the term of this Agreement.
(e) The Depositor shall deliver a copy of the Mortgage Loan Schedule
to the Servicer on the Closing Date.
SECTION 2.04. Representations and Warranties of the Servicer.
The Servicer hereby represents and warrants to the Depositor and
the Trustee as follows, as of the date hereof:
(i) The Servicer is duly organized and is validly existing as a
corporation in good standing under the laws of the State of Nevada and is duly
authorized and qualified to transact any and all business contemplated by this
Agreement to be conducted by the Servicer in any state in which a Mortgaged
Property is located or is otherwise not required under applicable law to effect
such qualification and, in any event, is in compliance with the doing business
laws of any such state, to the extent necessary to ensure its ability to enforce
each Mortgage Loan, to service the Mortgage Loans in accordance with the terms
of this Agreement and to perform any of its other obligations under this
Agreement in accordance with the terms hereof.
(ii) The Servicer has the corporate power and authority to
service each Mortgage Loan, and to execute, deliver and perform, and to enter
into and consummate the transactions contemplated by this Agreement and has duly
authorized by all necessary corporate action on the part of the Servicer the
execution, delivery and performance of this Agreement; and this Agreement,
assuming the due authorization, execution and delivery hereof by the other
parties hereto, constitutes a legal, valid and binding obligation of the
Servicer, enforceable against the Servicer in accordance with its terms,
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except that (a) the enforceability hereof may be limited by bankruptcy,
insolvency, moratorium, receivership and other similar laws relating to
creditors' rights generally and (b) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding
hereunder may be brought.
(iii) The execution and delivery of this Agreement by the
Servicer, the servicing of the Mortgage Loans under this Agreement, the
consummation of any other of the transactions contemplated by this Agreement,
and the fulfillment of or compliance with the terms hereof are in the ordinary
course of business of the Servicer and will not (A) result in a material breach
of any term or provision of the charter or by-laws of the Servicer or (B)
materially conflict with, result in a material breach, violation or acceleration
of, or result in a material default under, the terms of any other material
agreement or instrument to which the Servicer is a party or by which it may be
bound, or (C) constitute a material violation of any statute, order or
regulation applicable to the Servicer of any court, regulatory body,
administrative agency or governmental body having jurisdiction over the
Servicer; and the Servicer is not in breach or violation of any material
indenture or other material agreement or instrument, or in violation of any
statute, order or regulation of any court, regulatory body, administrative
agency or governmental body having jurisdiction over it which breach or
violation may materially impair the Servicer's ability to perform or meet any of
its obligations under this Agreement.
(iv) The Servicer is an approved servicer of mortgage loans for
▇▇▇▇▇▇ ▇▇▇ and is an approved servicer of mortgage loans for ▇▇▇▇▇▇▇ Mac.
(v) Except as previously disclosed to the Depositor in the
Prospectus Supplement, no litigation is pending or, to the best of the
Servicer's knowledge, threatened, against the Servicer that would materially and
adversely affect the execution, delivery or enforceability of this Agreement or
the ability of the Servicer to service the Mortgage Loans or to perform any of
its other obligations under this Agreement in accordance with the terms hereof.
(vi) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Servicer of, or compliance by the Servicer with, this
Agreement or the consummation of the transactions contemplated hereby, or if any
such consent, approval, authorization or order is required, the Servicer has
obtained the same.
(vii) The Servicer has fully furnished and will fully furnish
(for the period it serviced the Mortgage Loans), in accordance with the Fair
Credit Reporting Act and its implementing regulations, accurate and complete
information (e.g., favorable and unfavorable) on its borrower credit files to
Equifax, Experian and Trans Union Credit Information Company on a monthly basis.
SECTION 2.05. Substitutions and Repurchases of Mortgage Loans which
are not "Qualified Mortgages".
Upon discovery by the Depositor, the Servicer or the Trustee that any
Mortgage Loan does not constitute a "qualified mortgage" within the meaning of
section 860G(a)(3) of the Code, the party discovering such fact shall promptly
(and in any event within 5 Business Days of discovery) give written notice
thereof to the other parties. In connection therewith, the Depositor shall, at
the Depositor's option, either (i) substitute, if the conditions in Section
2.03(c) with respect to substitutions are satisfied, a Replacement Mortgage Loan
for the affected Mortgage Loan, or (ii) repurchase the affected Mortgage Loan
within 90 days of such discovery in the same manner as it would a Mortgage Loan
for a breach of representation or warranty contained in Section 2.03. The
Trustee, upon the written direction of the Depositor, shall reconvey to the
Depositor the Mortgage Loan to be released pursuant hereto in the same
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manner, and on the same terms and conditions, as it would a Mortgage Loan
repurchased for breach of a representation or warranty contained in Section
2.03.
SECTION 2.06. Authentication and Delivery of Certificates.
The Trustee acknowledges the transfer and assignment to it of the
Trust Fund and, concurrently with such transfer and assignment, the Trustee has
caused to be authenticated and delivered to or upon the order of the Depositor,
in exchange for the Mortgage Loans, Certificates duly authenticated by the
Trustee in authorized denominations evidencing ownership of the entire Trust
Fund. The Trustee agrees to hold the Trust Fund and exercise the rights referred
to above for the benefit of all present and future Holders of the Certificates
and to perform its duties set forth in this Agreement in accordance with the
provisions hereof.
SECTION 2.07. REMIC Elections.
(a) The Depositor hereby instructs and authorizes the Trustee to make
an appropriate election to treat each of the Upper Tier REMIC and the Lower Tier
REMIC as a REMIC. The Trustee shall sign the returns providing for such
elections and such other tax or information returns which are required to be
signed by the Trustee under applicable law. This Agreement shall be construed so
as to carry out the intention of the parties that each of the Upper Tier REMIC
and the Lower Tier REMIC be treated as a REMIC at all times prior to the date on
which the Trust Fund is terminated.
(b) The Preliminary Statement sets forth the designations and "latest
possible maturity date" for federal income tax purposes of all interests created
hereby. The "Startup Day" for purposes of the REMIC Provisions shall be the
Closing Date. Each REMIC's fiscal year shall be the calendar year.
The Lower Tier REMIC shall consist of all of the assets of the Trust
Fund (other than (i) amounts distributable to the Class P Certificates pursuant
to Section 4.04(b)(i) hereof, (ii) the interests issued by the Lower Tier REMIC,
(iii) the grantor trusts described in Section 2.07 hereof and (iv) the Cap
Contract and Cap Contract Account). The Lower Tier REMIC shall issue the Lower
Tier REMIC Regular Interests which shall be designated as regular interests of
such REMIC and shall issue the Class LTR Interest that shall be designated as
the sole class of residual interest in the Lower Tier REMIC. Each of the Lower
Tier REMIC Regular Interests shall have the characteristics set forth in its
definition.
The assets of the Upper Tier REMIC shall be the Lower Tier REMIC
Regular Interests. The REMIC Regular Interests shall be designated as the
regular interests in the Upper Tier REMIC and the Residual Interest shall be
designated as the sole class of residual interest in the Upper Tier REMIC. For
federal income tax purposes, the pass-through rate on each REMIC Regular
Interest (other than the Uncertificated Class C Interest) and on the sole class
of residual interest in the Upper Tier REMIC shall be subject to a cap equal to
the Net Rate.
The beneficial ownership of the Class LTR Interest and the Residual
Interest shall be represented by the Class R Certificate. The Class LTR Interest
shall not have a principal balance or bear interest.
(c) The "tax matters person" with respect to each REMIC for purposes
of the REMIC Provisions shall be the beneficial owner of the Class R
Certificate; provided, however, that the Holder of a Class R Certificate, by its
acceptance thereof, irrevocably appoints the Trustee as its agent and
attorney-in-fact to act as "tax matters
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person" with respect to each REMIC for purposes of the REMIC Provisions. If
there is more than one beneficial owner of the Class R Certificate, the "tax
matters person" shall be the Person with the greatest percentage interest in the
Class R Certificate and, if there is more than one such Person, shall be
determined under Treasury regulation Section 1.860F-4(d) and Treasury regulation
Section 301.6231(a)(7)-1.
(d) It is intended that the rights of each Class of the Class A, Class
M and Class B Certificates to receive payments in respect of Excess Interest
shall be treated as a right in interest rate cap contracts written by the Class
C Certificateholders in favor of the holders of each Class of the Class A, Class
M and Class B Certificates and such shall be accounted for as property held
separate and apart from the regular interests in the Upper Tier REMIC held by
the holders of the Class A (other than the Class R Certificate), Class M and
Class B Certificates and the residual interest in the Upper Tier REMIC held by
the holder of the Class R Certificate. For information reporting requirements,
the rights of the Class A, Class M and Class B Certificates to receive payments
in respect of Excess Interest shall be assumed to have zero value or a de
minimis value. This provision is intended to satisfy the requirements of
Treasury Regulations Section 1.860G-2(i) for the treatment of property rights
coupled with REMIC interests to be separately respected and shall be interpreted
consistently with such regulation. On each Distribution Date, to the extent that
any of the Class A, Class M and Class B Certificates receive payments in respect
of Excess Interest, such amounts, to the extent not derived from payments on the
Cap Contract, will be treated as distributed by the Upper Tier REMIC to the
Class C Certificates pro rata in payment of the amounts specified in Section
4.04(g) and then paid to the relevant Class of Certificates pursuant to the
related interest rate cap agreement.
(e) The parties intend that the portion of the Trust Fund consisting
of the Uncertificated Class C Interest, the Cap Contract, the Cap Contract
Account and the obligation of the holders of the Class C Certificates to pay
amounts in respect of Excess Interest to the holders of the Class A, Class M and
Class B Certificates shall be treated as a "grantor trust" under the Code, and
the provisions hereof shall be interpreted consistently with this intention. In
furtherance of such intention, the Trustee shall (i) furnish or cause to be
furnished to the holders of the Class C Certificates information regarding their
allocable share, if any, of the income with respect to such grantor trust, (ii)
file or cause to be filed with the Internal Revenue Service Form 1041 (together
with any necessary attachments) and such other forms as may be applicable and
(iii) comply with such information reporting obligations with respect to
payments from such grantor trust to the holders of Class A, Class M, Class B and
Class C Certificates as may be applicable under the Code.
(f) The parties intend that the portion of the Trust Fund consisting
of the right to receive payments distributable to the Class P Certificates
pursuant to Section 4.04(b)(i) hereof shall be treated as a "grantor trust"
under the Code, and the provisions hereof shall be interpreted consistently with
this intention. In furtherance of such intention, the Trustee shall (i) furnish
or cause to be furnished to the holders of the Class P Certificates information
regarding their allocable share of the income with respect to such grantor trust
and (ii) file or cause to be filed with the Internal Revenue Service Form 1041
(together with any necessary attachments) and such other forms as may be
applicable.
(g) [RESERVED]
(h) All payments of principal and interest at the Net Mortgage Rate on
each of the Mortgage Loans (other than payments distributable to the Class P
Certificates pursuant to Section 4.04(b)(i) hereof) received from the Mortgage
Loans shall be paid to the Lower Tier REMIC Regular Interests until the
principal balance of all such interests have been reduced to zero and any losses
allocated to such interests have been reimbursed. Any excess amounts shall be
distributed to the Class LTR Interest. On each Distribution Date, an amount
equal to 50% of the increase in the Overcollateralization Amount shall be
payable as a reduction of the principal amounts of the Lower Tier REMIC Marker
Classes (with such amount allocated among the Lower Tier REMIC Marker Classes so
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that each Lower Tier REMIC Marker Class will have its principal reduced by an
amount equal to 50% of any increase in the Overcollateralization Amount that
results in a reduction in the principal balance of its Related Certificates) and
will be accrued and added to the principal balance of the Class LTX Interest.
All payments of scheduled principal and prepayments of principal on the Mortgage
Loans shall be allocated 50% to the Class LTX Interest and 50% to the Lower Tier
REMIC Marker Classes (with principal payments allocated to each of the Lower
Tier REMIC Marker Classes in an amount equal to 50% of the principal amounts
distributed to the Related Certificates in reduction of their principal
amounts). Notwithstanding the preceding sentence, an amount equal to the
principal payments that result in a reduction in the Overcollateralization
Amount shall be treated as payable entirely to the Class LTX Interest. Realized
Losses that are allocated to the Certificates shall be applied to the Lower Tier
REMIC Marker Classes and the Class LTX Interest so that after all distributions
have been made on each Distribution Date (i) the principal balance of each of
the Lower Tier REMIC Marker Classes is equal to 50% of the principal balance of
the Related Certificates and (ii) the principal balance of the Class LTX
Interest is equal to the sum of (x) 50% of the aggregate Stated Principal
Balance of the Mortgage Loans and (y) 50% of the Overcollateralization Amount.
Each Lower Tier REMIC Marker Class shall be entitled to receive an amount equal
to 50% of all amounts distributed to the Related Certificates in respect of
unreimbursed amounts of Realized Losses. The Class LTX Interest shall be
entitled to receive all other amounts distributed to the Certificates in respect
of unreimbursed amounts of Realized Losses.
If on any Distribution Date the Certificate Principal Balance of any
Class of Certificates is increased pursuant to the last sentence of the
definition of "Certificate Principal Balance", then there shall be an equivalent
increase in the principal amounts of the Lower Tier REMIC Regular Interests,
with such increase allocated (before the making of distributions and the
allocation of losses on the Lower Tier REMIC Regular Interests on such
Distribution Date) among the Lower Tier REMIC Regular Interests so that (i) each
of the Lower Tier Marker Classes has a principal balance equal to 50% of the
principal balance of the Related Certificates, (ii) the Class LTX Interest has a
principal balance equal to the sum of (x) 50% of the aggregate Stated Principal
Balance of the Mortgage Loans and (y) 50% of the Overcollateralization Amount.
(i) In the event that any REMIC provided for herein fails to qualify
as a REMIC, loses its status as a REMIC or incurs federal, state or local taxes
as a result of a prohibited transaction or prohibited contribution under the
REMIC Provisions due to the negligent performance by the Servicer of its duties
and obligations set forth herein, the Servicer shall indemnify the Trustee and
the Trust Fund against any and all Losses resulting from such negligence;
provided, however, that the Servicer shall not be liable for any such Losses
attributable to the action or inaction of the Trustee, the Depositor or the
Holder of a Class R Certificate, as applicable, nor for any such Losses
resulting from misinformation provided by the Trustee or the Holder of such
Class R Certificate on which the Servicer has relied. The foregoing shall not be
deemed to limit or restrict the rights and remedies of the Holder of such Class
R Certificate now or hereafter existing at law or in equity. Notwithstanding the
foregoing, however, in no event shall the Servicer have any liability (1) for
any action or omission that is taken in accordance with and in compliance with
the express terms of, or which is expressly permitted by the terms of, this
Agreement, (2) for any Losses other than those arising out of a negligent
performance by the Servicer of its duties and obligations set forth herein, and
(3) for any special or consequential damages to Certificateholders (in addition
to payment of principal and interest on the Certificates).
(j) In the event that any REMIC provided for herein fails to qualify
as a REMIC, loses its status as a REMIC, or incurs federal, state or local taxes
as a result of a prohibited transaction or prohibited contribution under the
REMIC Provisions due to the negligent performance by the Trustee of its duties
and obligations set forth herein, the Trustee shall indemnify the Trust Fund
against any and all Losses resulting from such negligence; provided, however,
that the Trustee shall not be liable for any such Losses attributable to the
action or inaction of the Servicer, the Depositor or the Holder of a Class R
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Certificate, as applicable, nor for any such Losses resulting from
misinformation provided by the Holder of such Class R Certificate on which the
Trustee has relied. The foregoing shall not be deemed to limit or restrict the
rights and remedies of the Holder of such Class R Certificate now or hereafter
existing at law or in equity. Notwithstanding the foregoing, however, in no
event shall the Trustee have any liability (1) for any action or omission that
is taken in accordance with and in compliance with the express terms of, or
which is expressly permitted by the terms of, this Agreement, (2) for any Losses
other than those arising out of a negligent performance by the Trustee of its
duties and obligations set forth herein, and (3) for any special or
consequential damages to Certificateholders (in addition to payment of principal
and interest on the Certificates).
SECTION 2.08. [RESERVED]
SECTION 2.09. Covenants of the Servicer.
The Servicer hereby covenants to each of the other parties to this
Agreement as follows:
(a) the Servicer shall comply in the performance of its obligations
under this Agreement with all reasonable rules and requirements of the insurer
under each Required Insurance Policy;
(b) no written information, certificate of an officer, statement
furnished in writing or written report delivered to the Depositor or the
Trustee, any affiliate of the Depositor or the Trustee and prepared by the
Servicer pursuant to this Agreement will be inaccurate in any material respect,
provided, however, that the Servicer shall not be responsible for inaccurate
information provided to it by third parties.
SECTION 2.10. [RESERVED]
SECTION 2.11. Permitted Activities of the Trust.
The Trust is created for the object and purpose of engaging in the
Permitted Activities. In furtherance of the foregoing, the Trustee is hereby
authorized and directed to execute and deliver on behalf of the Trust, and to
perform the duties and obligations of the Trustee under, the Cap Contract and
any other agreement or instrument related thereto, in each case in such form as
the Depositor shall direct or shall approve, the execution and delivery of any
such agreement by the Depositor to be conclusive evidence of its approval
thereof
SECTION 2.12. Qualifying Special Purpose Entity.
For purposes of SFAS 140, the parties hereto intend that the Trust
Fund shall be treated as a "qualifying special purpose entity" as such term is
used in SFAS 140 and any successor rule thereto and its power and authority as
stated in Section 2.11 of this Agreement shall be limited in accordance with
paragraph 35 or SFAS 140.
ARTICLE III
ADMINISTRATION AND SERVICING
OF MORTGAGE LOANS
SECTION 3.01. Servicer to Service Mortgage Loans.
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For and on behalf of the Certificateholders, the Servicer shall
service and administer the Mortgage Loans in accordance with Accepted Servicing
Practices. In connection with such servicing and administration, the Servicer
shall have full power and authority, acting alone and/or through subservicers as
provided in Section 3.02 hereof, to do or cause to be done any and all things
that it may deem necessary or desirable in connection with such servicing and
administration, including but not limited to, the power and authority, subject
to the terms hereof (i) to execute and deliver, on behalf of the
Certificateholders and the Trustee, customary consents or waivers and other
instruments and documents, (ii) to consent to transfers of any Mortgaged
Property and assumptions of the Mortgage Notes and related Mortgages (but only
in the manner provided in this Agreement), (iii) to collect any Insurance
Proceeds and other Liquidation Proceeds and (iv) subject to Section 3.12(a), to
effectuate foreclosure or other conversion of the ownership of the Mortgaged
Property securing any Mortgage Loan; provided that, subject to Section 6.03, the
Servicer shall not take any action that is inconsistent with or prejudices the
interests of the Trust Fund or the Certificateholders in any Mortgage Loan
serviced by it under this Agreement or the rights and interests of the other
parties to this Agreement except as otherwise required by this Agreement or by
law. Notwithstanding anything in this Agreement to the contrary, the Servicer
shall not make or permit any modification, waiver or amendment of any term of
any Mortgage Loan that would cause any of the REMICs provided for herein to fail
to qualify as a REMIC or result in the imposition of any tax under Section
860G(a) or 860G(d) of the Code. The Servicer shall represent and protect the
interest of the Trust Fund in the same manner as it currently protects its own
interest in mortgage loans in its own portfolio in any claim, proceeding or
litigation regarding a Mortgage Loan, but in any case not in any manner that is
a lesser standard than that provided in the first sentence of this Section 3.01.
Without limiting the generality of the foregoing, the Servicer, in its own name
or in the name of the Depositor and the Trustee, is hereby authorized and
empowered by the Depositor and the Trustee, when the Servicer believes it
appropriate in its reasonable judgment, to execute and deliver, on behalf of the
Trustee, the Depositor, the Certificateholders or any of them, any and all
instruments of satisfaction or cancellation, or of partial or full release or
discharge, subordinations and all other comparable instruments, with respect to
the Mortgage Loans, and with respect to the Mortgaged Properties held for the
benefit of the Certificateholders. The Servicer shall prepare and deliver to the
Depositor and/or the Trustee such documents requiring execution and delivery by
any or all of them as are necessary or appropriate to enable the Servicer to
service and administer the Mortgage Loans, to the extent that the Servicer is
not permitted to execute and deliver such documents pursuant to the preceding
sentence. Upon receipt of such documents, the Depositor and/or the Trustee shall
execute such documents and deliver them to the Servicer. For purposes of this
Section 3.01, the Trustee hereby grants to the Servicer a limited power of
attorney to execute and file any and all documents necessary to fulfill the
obligations of the Servicer under this Section 3.01.
The Servicer shall not be required to make any Servicing Advance with
respect to a Mortgage Loan that is 150 days or more delinquent.
The Servicer shall deliver a list of Servicing Officers to the Trustee
by the Closing Date.
The Servicer shall deliver to the MI Insurer all reports required by
the MI Insurer that are reasonably available to the Servicer.
The Servicer will transmit full-file credit reporting data for each
Mortgage Loan pursuant to ▇▇▇▇▇▇ ▇▇▇ Guide Announcement 97-02 and that for each
Mortgage Loan, the Servicer agrees that it shall report one of the following
statuses each month as follows: current, delinquent (30-, 60-, 90-days, etc.),
foreclosed or charged-off.
The Servicer further is authorized and empowered by the Trustee, on
behalf of the Certificateholders and the Trustee, in its own name or in the name
of the Sub-Servicer, when the Servicer
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or the Sub-Servicer, as the case may be, believes it is appropriate in its best
judgment to register any Mortgage Loan on the MERS System, or cause the removal
from the registration of any Mortgage Loan on the MERS System, to execute and
deliver, on behalf of the Trustee and the Certificateholders or any of them, any
and all instruments of assignment and other comparable instruments with respect
to such assignment or re-recording of a Mortgage in the name of MERS, solely as
nominee for the Trustee and its successors and assigns. Any reasonable expenses
incurred in connection with the actions described in the preceding sentence or
as a result of MERS discontinuing or becoming unable to continue operations in
connection with the MERS System, shall be subject to withdrawal by the Servicer
from the Collection Account.
SECTION 3.02. Servicing and Subservicing; Enforcement of the
Obligations of Servicer.
(a) The Servicer may arrange for the subservicing of any Mortgage Loan
by a subservicer, which may be an affiliate (each, a "subservicer") pursuant to
a subservicing agreement (each, a "Subservicing Agreement") including, at the
Servicer's option, if requested to do so by the Holder of the Class C
Certificate; provided, however, that (i) such subservicing arrangement and the
terms of the related subservicing agreement must provide for the servicing of
such Mortgage Loans in a manner consistent with the servicing arrangements
contemplated hereunder and (ii) that such agreement would not result in a
withdrawal or downgrading by any Rating Agency of the ratings of any
Certificates evidenced by a letter to that effect delivered by each Rating
Agency to the Depositor. Notwithstanding the provisions of any subservicing
agreement, any of the provisions of this Agreement relating to agreements or
arrangements between the Servicer and a subservicer or reference to actions
taken through a subservicer or otherwise, the Servicer shall remain obligated
and liable to the Depositor, the Trustee and the Certificateholders for the
servicing and administration of the Mortgage Loans in accordance with the
provisions of this Agreement without diminution of such obligation or liability
by virtue of such subservicing agreements or arrangements or by virtue of
indemnification from the subservicer and to the same extent and under the same
terms and conditions as if the Servicer alone were servicing and administering
the Mortgage Loans. Every subservicing agreement entered into by the Servicer
shall contain a provision giving any successor servicer the option to terminate
such agreement in the event a successor servicer is appointed. All actions of
the each subservicer performed pursuant to the related subservicing agreement
shall be performed as an agent of the Servicer with the same force and effect as
if performed directly by the Servicer. The Servicer shall deliver to the Trustee
copies of all subservicing agreements. The Trustee shall have no obligations,
duties or liabilities with respect to a subservicer, including without
limitation, any obligation, duty or liability to monitor such subservicer or to
pay a subservicer's fees and expenses.
(b) For purposes of this Agreement, the Servicer shall be deemed to
have received any collections, recoveries or payments with respect to the
Mortgage Loans that are received by a subservicer regardless of whether such
payments are remitted by the subservicer to the Servicer.
SECTION 3.03. Rights of the Depositor and the Trustee in Respect of
the Servicer.
Neither the Trustee nor the Depositor shall have any responsibility or
liability for any action or failure to act by the Servicer, and neither of them
is obligated to supervise the performance of the Servicer hereunder or
otherwise.
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SECTION 3.04. Trustee to Act as Servicer.
Subject to Sections 6.04 and 7.02, in the event that the Servicer
shall for any reason no longer be the Servicer hereunder (including by reason of
an Event of Default), the Trustee or its designee shall, within a period of time
not to exceed ninety (90) days from the date of notice of termination or
resignation, thereupon assume all of the rights and obligations of the Servicer
hereunder arising thereafter (except that the Trustee shall not be (i) liable
for losses of the Servicer pursuant to Section 3.10 hereof or any acts or
omissions of such predecessor Servicer hereunder, (ii) obligated to make
Advances or Servicing Advances if it is prohibited from doing so by applicable
law, (iii) obligated to effectuate repurchases or substitutions of Mortgage
Loans hereunder, including pursuant to Section 2.02 or 2.03 hereof, (iv)
responsible for any expenses of the Servicer pursuant to Section 2.03 or (v)
deemed to have made any representations and warranties hereunder, including
pursuant to Section 2.04 or the first paragraph of Section 6.02 hereof;
provided, however that the Trustee (subject to clause (ii) above) or its
designee, in its capacity as the successor servicer, shall immediately assume
the terminated or resigning Servicer's obligation to make Advances and Servicing
Advances). No such termination or resignation shall affect any obligation of the
Servicer to pay amounts owed under this Agreement and to perform its duties
under this Agreement until its successor assumes all of its rights and
obligations hereunder. If the Servicer shall for any reason no longer be the
Servicer (including by reason of any Event of Default), the Trustee (or any
other successor servicer) may, at its option, succeed to any rights and
obligations of the Servicer under any subservicing agreement in accordance with
the terms thereof; provided, however, that the Trustee (or any other successor
servicer) shall not incur any liability or have any obligations in its capacity
as servicer under a subservicing agreement arising prior to the date of such
succession unless it expressly elects to succeed to the rights and obligations
of the Servicer thereunder; and the Servicer shall not thereby be relieved of
any liability or obligations under the subservicing agreement arising prior to
the date of such succession. To the extent any costs or expenses, including
without limitation Servicing Transfer Costs incurred by the Trustee in
connection with this Section 3.04, are not paid by the Servicer unless the
Servicer is the Trustee, pursuant to this Agreement within 30 days of the date
of the Trustee's invoice thereof, such amounts shall be payable out of the
Certificate Account; provided that if the Servicer has been terminated by reason
of an Event of Default, the terminated Servicer shall reimburse the Trust Fund
for any such expense incurred by the Trust Fund upon receipt of a reasonably
detailed invoice evidencing such expenses. If the Trustee is unwilling or unable
to act as servicer, the Trustee shall seek to appoint a successor servicer that
is eligible in accordance with the criteria specified this Agreement.
The Servicer shall, upon request of the Trustee, but at the expense of
the Servicer if the Servicer has been terminated by reason of an Event of
Default, deliver to the assuming party all documents and records relating to
each subservicing agreement and the Mortgage Loans then being serviced and
otherwise use its best efforts to effect the orderly and efficient transfer of
the subservicing agreement to the assuming party.
SECTION 3.05. Collection of Mortgage Loan Payments; Collection
Account; Certificate Account.
(a) The Servicer shall make reasonable efforts in accordance with
Accepted Servicing Practices to collect all payments called for under the terms
and provisions of the Mortgage Loans to the extent such procedures shall be
consistent with this Agreement and the terms and provisions of any related
Required Insurance Policy. Consistent with the foregoing, the Servicer may in
its discretion (i) waive any late payment charge or, if applicable, any default
interest charge, or (ii) subject to Section 3.01, extend the due dates for
payments due on a Mortgage Note for a period not greater than 180 days;
provided, however, that any extension pursuant to clause (ii) above shall not
affect the amortization schedule of any Mortgage Loan for purposes of any
computation hereunder, except as provided below. In
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the event of any such arrangement pursuant to clause (ii) above, subject to
Section 4.01, the Servicer shall make any Advances on the related Mortgage Loan
during the scheduled period in accordance with the amortization schedule of such
Mortgage Loan without modification thereof by reason of such arrangements.
Notwithstanding the foregoing, in the event that any Mortgage Loan is in default
or, in the judgment of the Servicer, such default is reasonably foreseeable, the
Servicer, consistent with the standards set forth in Section 3.01, may also
waive, modify or vary any term of such Mortgage Loan (including modifications
that would change the Mortgage Rate, forgive the payment of principal or
interest or extend the final maturity date of such Mortgage Loan), accept
payment from the related Mortgagor of an amount less than the Stated Principal
Balance in final satisfaction of such Mortgage Loan, or consent to the
postponement of strict compliance with any such term or otherwise grant
indulgence to any Mortgagor (any and all such waivers, modifications, variances,
forgiveness of principal or interest, postponements, or indulgences collectively
referred to herein as "forbearance"), provided, however, that in determining
which course of action permitted by this sentence it shall pursue, the Servicer
shall adhere to the standards of Section 3.01. The Servicer's analysis
supporting any forbearance and the conclusion that any forbearance meets the
standards of Section 3.01 shall be reflected in writing in the Mortgage File.
(b) The Servicer will not waive any Prepayment Charge or portion
thereof unless, (i) the enforceability thereof shall have been limited by
bankruptcy, insolvency, moratorium, receivership or other similar laws relating
to creditors' rights generally or is otherwise prohibited by law, or (ii) the
collectability thereof shall have been limited due to acceleration in connection
with a foreclosure or other involuntary payment, or (iii) the Servicer has not
been provided with information sufficient to enable it to collect the Prepayment
Charge, or (iv) in the Servicer's reasonable judgment as described in Section
3.01 hereof, (x) such waiver relates to a default or a reasonably foreseeable
default and (y) such waiver would maximize recovery of total proceeds taking
into account the value of such Prepayment Charge and related Mortgage Loan, or
(v) the collection of such Prepayment Charge or portion thereof, or of a similar
type of Prepayment Charge, would be considered "predatory" or "illegal" pursuant
to written guidance published by any applicable federal, state or local
regulatory authority having jurisdiction over such matters or has been
challenged by any such authority, or (vi) there is a certificated class action
in which a similar type of prepayment charge is being challenged. Except as
provided in the preceding sentence, in no event will the Servicer waive a
Prepayment Charge in connection with a refinancing of a Mortgage Loan that is
not related to a default or a reasonably foreseeable default. If the Servicer
waives or does not collect all or a portion of a Prepayment Charge relating to a
Principal Prepayment in full or in part due to any action or omission of the
Servicer, other than as provided above, the Servicer shall deposit the amount of
such Prepayment Charge (or such portion thereof as had been waived for deposit)
into the Collection Account for distribution in accordance with the terms of
this Agreement.
(c) The Servicer shall not be required to institute or join in
litigation with respect to collection of any payment (whether under a Mortgage,
Mortgage Note or otherwise or against any public or governmental authority with
respect to a taking or condemnation) if it reasonably believes that enforcing
the provision of the Mortgage or other instrument pursuant to which such payment
is required is prohibited by applicable law.
(d) The Servicer shall establish and initially maintain, on behalf of
the Certificateholders, the Collection Account. The Servicer shall deposit into
the Collection Account daily, within two Business Days of receipt thereof, in
immediately available funds, the following payments and collections received or
made by it on and after the Cut-Off Date with respect to the Mortgage Loans:
(i) all payments on account of principal, including Principal
Prepayments, on the Mortgage Loans, other than principal due on the Mortgage
Loans on or prior to the Cut-off Date;
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(ii) all payments on account of interest on the Mortgage Loans
net of the related Servicing Fee permitted under Section 3.15, other than (x)
interest due on the Mortgage Loans on or prior to the Cut-off Date and (y)
Prepayment Interest Excess;
(iii) all Liquidation Proceeds, other than proceeds to be applied
to the restoration or repair of the Mortgaged Property or released to the
Mortgagor in accordance with the Servicer's normal servicing procedures;
(iv) all Subsequent Recoveries;
(v) all Compensating Interest;
(vi) any amount required to be deposited by the Servicer pursuant
to Section 3.05(g) in connection with any losses on Permitted Investments;
(vii) any amounts required to be deposited by the Servicer
pursuant to Section 3.10 hereof;
(viii) all Advances made by the Servicer pursuant to Section
4.01;
(ix) all Prepayment Charges; and
(x) any other amounts required to be deposited hereunder.
The foregoing requirements for remittance by the Servicer into the
Collection Account shall be exclusive, it being understood and agreed that,
without limiting the generality of the foregoing, late payment charges,
insufficient funds charges and payments in the nature of assumption fees (i.e.
fees related to the assumption of a Mortgage Loan upon the purchase of the
related Mortgaged Property and other similar ancillary fees (other than
Prepayment Charges)) if collected, and any Prepayment Interest Excess need not
be remitted by the Servicer. Rather, such fees and charges may be retained by
the Servicer as additional servicing compensation. In the event that the
Servicer shall remit any amount not required to be remitted and not otherwise
subject to withdrawal pursuant to Section 3.08 hereof, it may at any time
withdraw or direct the Trustee, or such other institution maintaining the
Collection Account, to withdraw such amount from the Collection Account, any
provision herein to the contrary notwithstanding. The Servicer shall maintain
adequate records with respect to all withdrawals made pursuant to this Section.
All funds deposited in the Collection Account shall be held in trust for the
Certificateholders until withdrawn in accordance with Section 3.08. In no event
shall the Trustee incur liability for withdrawals from the Collection Account at
the direction of the Servicer.
The Servicer shall give notice to the Trustee of the location of the
Collection Account maintained by it when established and prior to any change
thereof. Not later than twenty days after each Distribution Date, the Servicer
shall forward to the Trustee and the Depositor the most current available bank
statement for the Collection Account. Copies of such statement shall be provided
by the Trustee to any Certificateholder and to any Person identified to the
Trustee as a prospective transferee of a Certificate, upon request at the
expense of the requesting party, provided such statement is delivered by the
Servicer to the Trustee.
(e) The Trustee shall establish and maintain, on behalf of the
Certificateholders, the Certificate Account. The Trustee shall, promptly upon
receipt, deposit or cause to be deposited in the Certificate Account and retain
therein the following:
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(i) the aggregate amount withdrawn by the Servicer from the
Collection Account and required to be deposited in the Certificate Account;
(ii) the Purchase Price and any Substitution Adjustment Amount;
(iii) any amount required to be deposited by the Trustee pursuant
to Section 3.05(f) in connection with any losses on Permitted Investments; and
(iv) the Optional Termination Amount paid by the winning bidder
at the Auction or by the Servicer pursuant to Section 9.01.
Any amounts received by the Trustee prior to 1:00 p.m. New York City
time that are required to be deposited in the Certificate Account by the
Servicer shall be held uninvested. The foregoing requirements for remittance by
the Servicer and deposit by the Servicer into the Certificate Account shall be
exclusive. If the Servicer fails to remit any funds due by the time designated
herein, the Servicer shall pay to the Trustee, for its own account, interest
accrued on such funds at the then current prime rate as set forth in The Wall
Street Journal from and including the applicable due date, to but excluding the
day such funds are paid to the Trustee. In the event that the Servicer shall
remit any amount not required to be remitted and not otherwise subject to
withdrawal pursuant to Section 3.08 hereof, it may at any time cause the Trustee
to withdraw such amount from the Certificate Account, any provision herein to
the contrary notwithstanding. All funds deposited in the Certificate Account
shall be held by the Trustee in trust for the Certificateholders until disbursed
in accordance with this Agreement or withdrawn in accordance with Section 3.08.
In no event shall the Trustee incur liability for withdrawals from the
Certificate Account at the direction of the Servicer. The Trustee shall give
notice to the Servicer of the location of the Certificate Account maintained by
it when established and prior to any change thereof.
(f) Each institution that maintains the Collection Account shall
invest the funds in each such account as directed by the Servicer in writing, in
Permitted Investments, which shall mature not later than the Business Day
preceding the related Servicer Remittance Date (except that if such Permitted
Investment is an obligation of the institution that maintains such Collection
Account or is otherwise immediately available, then such Permitted Investment
shall mature not later than the Servicer Remittance Date) and shall not be sold
or disposed of prior to its maturity. All such Permitted Investments shall be
made in the name of the Trustee, for the benefit of the Certificateholders. All
income and gain net of any losses realized from amounts on deposit in the
Collection Account shall be for the benefit of the Servicer as servicing
compensation and shall be remitted to it monthly as provided herein. The amount
of any losses incurred in the Collection Account in respect of any such
investments shall be deposited by the Servicer in the Collection Account out of
the Servicer's own funds immediately as realized. Funds in the Certificate
Account shall remain uninvested and the Trustee shall direct each institution
that maintains the Certificate Account to hold the funds in a non-interest
bearing account.
SECTION 3.06. Collection of Taxes, Assessments and Similar Items;
Escrow Accounts.
To the extent required by the related Mortgage Note, the Servicer
shall establish and maintain one or more accounts (each, an "Escrow Account")
and deposit and retain therein all collections from the Mortgagors (or advances
by the Servicer) for the payment of taxes, assessments, hazard insurance
premiums or comparable items for the account of the Mortgagors. Nothing herein
shall require the Servicer to compel a Mortgagor to establish an Escrow Account
in violation of applicable law.
Withdrawals of amounts so collected from the Escrow Accounts may be
made only to effect timely payment of taxes, assessments, hazard insurance
premiums, condominium or PUD association dues, or comparable items, to reimburse
the Servicer out of related collections for any
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payments made pursuant to Sections 3.01 hereof (with respect to taxes and
assessments and insurance premiums) and 3.10 hereof (with respect to hazard
insurance), to refund to any Mortgagors any sums as may be determined to be
overages, to pay interest, if required by law or the terms of the related
Mortgage or Mortgage Note, to Mortgagors on balances in the Escrow Account or to
clear and terminate the Escrow Account at the termination of this Agreement in
accordance with Section 9.01 hereof. The Escrow Accounts shall not be a part of
the Trust Fund.
SECTION 3.07. Access to Certain Documentation and Information
Regarding the Mortgage Loans.
Upon reasonable advance notice in writing if required by federal
regulation, the Servicer will provide to each Certificateholder that is a
savings and loan association, bank or insurance company certain reports and
reasonable access to information and documentation regarding the Mortgage Loans
sufficient to permit such Certificateholder to comply with applicable
regulations of the OTS or other regulatory authorities with respect to
investment in the Certificates; provided, that the Servicer shall be entitled to
be reimbursed by each such Certificateholder for actual expenses incurred by the
Servicer in providing such reports and access.
The Servicer may from time to time provide the Depositor, and any
Person designated by the Depositor, with reports and information regarding the
Mortgage Loans, including without limitation information requested by the
Depositor or an originator of the Mortgage Loans for required institutional risk
control.
In addition, with respect to each MI Mortgage Loan that is subject to
a modification, the Servicer shall provide the MI Insurer with written notice of
such modification, which shall include the nature of such modification.
SECTION 3.08. Permitted Withdrawals from the Collection Account and
Certificate Account.
(a) The Servicer may from time to time, make withdrawals from the
Collection Account for the following purposes:
(i) to pay to the Servicer (to the extent not previously paid to
or withheld by the Servicer), as servicing compensation in accordance with
Section 3.15, that portion of any payment of interest that equals the Servicing
Fee for the period with respect to which such interest payment was made, and, as
additional servicing compensation, those other amounts set forth in Section
3.15;
(ii) to reimburse the Servicer for Advances made by it (or to
reimburse the Advance Financing Person for Advances made by it) with respect to
the Mortgage Loans, such right of reimbursement pursuant to this subclause (ii)
being limited to amounts received on particular Mortgage Loan(s) (including, for
this purpose, Liquidation Proceeds) that represent late recoveries of payments
of principal and/or interest on such particular Mortgage Loan(s) in respect of
which any such Advance was made;
(iii) to reimburse the Servicer for any Non-Recoverable Advance
previously made and any Non-Recoverable Servicing Advances previously made to
the extent that, in the case of Non-Recoverable Servicing Advances,
reimbursement therefor constitutes "unanticipated expenses" within the meaning
of Treasury Regulation Section 1.860G-1(b)(3)(ii);
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(iv) to pay to the Servicer earnings on or investment income with
respect to funds in or credited to the Collection Account;
(v) to reimburse the Servicer from Insurance Proceeds for Insured
Expenses covered by the related Insurance Policy;
(vi) to pay any obligations under the MI Policy;
(vii) to pay to the Servicer any unpaid Servicing Fees and to
reimburse it for any unreimbursed Servicing Advances (to the extent that
reimbursement for Servicing Advances would constitute an "unanticipated expense"
within the meaning of Treasury Regulation Section 1.860-1(b)(3)(ii)), the
Servicer's right to reimbursement of Servicing Advances pursuant to this
subclause (vi) with respect to any Mortgage Loan being limited to amounts
received on particular Mortgage Loan(s)(including, for this purpose, Liquidation
Proceeds and purchase and repurchase proceeds) that represent late recoveries of
the payments for which such advances were made pursuant to Section 3.01 or
Section 3.06;
(viii) to pay to the Servicer any unpaid Servicing Fees for any
Mortgage Loan upon such Mortgage Loan being charged off and upon termination of
the obligations of the Servicer.
(ix) to pay to the Depositor or the Servicer, as applicable, with
respect to each Mortgage Loan or property acquired in respect thereof that has
been purchased pursuant to Section 2.02, 2.03 or 3.12, all amounts received
thereon and not taken into account in determining the related Stated Principal
Balance of such repurchased Mortgage Loan;
(x) to reimburse the Servicer or the Depositor for expenses
incurred by either of them in connection with the Mortgage Loans or Certificates
and reimbursable pursuant to Section 3.04, Section 3.25 or Section 6.03 hereof
provided that reimbursement therefor would constitute "unanticipated" expenses
within the meaning of Treasury Regulation Section 1.860G-1(b)(3)(ii);
(xi) to reimburse the Trustee for enforcement expenses reasonably
incurred in respect of a breach or defect giving rise to the purchase obligation
in Section 2.03 that were incurred in the Purchase Price of the Mortgage Loans
including any expenses arising out of the enforcement of the purchase
obligation; provided that any such expenses will be reimbursable under this
subclause (xi) only to the that such expenses would constitute "unanticipated
expenses" within the meaning of Treasury Regulation Section 1.860G-1(b)(3)(ii)
if paid by one of the REMICs provided for herein;
(xii) [RESERVED]
(xiii) to withdraw pursuant to Section 3.05 any amount deposited
in the Collection Account and not required to be deposited therein; and
(xiv) to clear and terminate the Collection Account upon
termination of this Agreement pursuant to Section 9.01 hereof.
In addition, no later than 2:00 p.m. Eastern Time on the Servicer
Remittance Date, the Servicer shall cause to be withdrawn from the Collection
Account the Interest Funds and the Principal Funds, to the extent on deposit,
and such amount shall be deposited in the Certificate Account; provided,
however, if the Trustee does not receive such Interest Funds and Principal Funds
by 2:00 p.m. Eastern Time, such Interest Funds and Principal Funds shall be
deposited in the Certificate Account on the next Business Day. In the event such
funds are not deposited by 2:00 p.m. Eastern Time on the Servicer
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Remittance Date, the Servicer shall pay, out of its own funds, interest on such
amount at a rate equal to the then current "prime rate" (as published by the
Wall Street Journal) for each date or part thereof until such amount is paid in
full.
The Servicer shall keep and maintain separate accounting, on a
Mortgage Loan by Mortgage Loan basis, for the purpose of justifying any
withdrawal from the Collection Account.
The Servicer shall provide written notification to the Trustee on or
prior to the next succeeding Servicer Remittance Date upon making any
withdrawals from the Collection Account pursuant to subclauses (iii) and (vii)
above.
Unless otherwise specified, any amounts reimbursable to the Servicer
or the Trustee from amounts on deposit in the Collection Account or the
Certificate Accounts shall be deemed to come from first, Interest Funds, and
thereafter, Principal Funds for the related Distribution Date.
(b) The Trustee shall withdraw funds from the Certificate Account for
distribution to the Certificateholders in the manner specified in this Agreement
(and shall withhold from the amounts so withdrawn, the amount of any taxes that
it is authorized to retain pursuant to this Agreement). In addition, prior to
making such distributions to the Certificateholders the Trustee may from time to
time make withdrawals from the Certificate Account for the following purposes:
(i) to withdraw pursuant to Section 3.05 any amount deposited in
the Certificate Account and not required to be deposited therein;
(ii) to clear and terminate the Certificate Account upon
termination of the Agreement pursuant to Section 9.01 hereof (after paying all
amounts necessary to the Trustee or the Servicer in connection with any such
termination);
(iii) to reimburse the Trustee for any fees, expenses and
indemnification reimbursable pursuant to this Agreement, including without
limitation Sections 3.04, 6.03, 8.05 and 8.06 hereof;
(iv) to pay to the Trustee earnings on or investment income with
respect to funds in or credited to the Certificate Account; and
(v) to pay to the MI Insurer, the MI Insurer Fee.
SECTION 3.09. [RESERVED]
SECTION 3.10. Maintenance of Hazard Insurance.
The Servicer shall cause to be maintained, for each Mortgage Loan
secured by a first lien, fire and hazard insurance with extended coverage in an
amount, to the extent permitted by applicable law, that is at least equal to the
lesser of (i) the replacement value of the improvements that are part of such
Mortgaged Property and (ii) the greater of (a) the outstanding principal balance
of the Mortgage Loan and (b) an amount such that the proceeds of such policy
shall be sufficient to prevent the related Mortgagor and/or mortgagee from
becoming a co-insurer. Each such policy of standard hazard insurance shall
contain, or have an accompanying endorsement that contains, a standard mortgagee
clause. The Servicer shall also cause flood insurance to be maintained on
property acquired upon foreclosure or deed in lieu of foreclosure of any
Mortgage Loan, to the extent described below. Pursuant to Section 3.05 hereof,
any amounts collected by the Servicer under any such policies (other than the
amounts to be applied to the
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restoration or repair of the related Mortgaged Property or property thus
acquired or amounts released to the Mortgagor in accordance with the Servicer's
normal servicing procedures) shall be deposited in the Collection Account. Any
cost incurred by the Servicer in maintaining any such insurance shall not, for
the purpose of calculating monthly distributions to the Certificateholders or
remittances to the Trustee for their benefit, be added to the principal balance
of the Mortgage Loan, notwithstanding that the terms of the Mortgage Loan so
permit. Such costs shall be recoverable by the Servicer as a Servicing Advance
to the extent provided in Section 3.08(a)(vii) hereof. It is understood and
agreed that no earthquake or other additional insurance is to be required of any
Mortgagor or maintained on property acquired in respect of a Mortgage other than
pursuant to such applicable laws and regulations as shall at any time be in
force and as shall require such additional insurance. If the Mortgaged Property
with respect to a Mortgage Loan secured by a first lien is located at the time
of origination of the Mortgage Loan in a federally designated special flood
hazard area and such area is participating in the national flood insurance
program, the Servicer shall cause flood insurance to be maintained with respect
to such Mortgage Loan. Such flood insurance shall be in an amount equal to the
lesser of (i) the original principal balance of the related Mortgage Loan, (ii)
the replacement value of the improvements that are part of such Mortgaged
Property, or (iii) the maximum amount of such insurance available for the
related Mortgaged Property under the Flood Disaster Protection Act of 1973, as
amended.
In the event that the Servicer shall obtain and maintain a blanket
policy insuring against hazard losses on all of the Mortgage Loans, it shall
conclusively be deemed to have satisfied its obligations as set forth in the
first sentence of this Section 3.10, it being understood and agreed that such
policy may contain a deductible clause on terms substantially equivalent to
those commercially available and maintained by comparable servicers. If such
policy contains a deductible clause, the Servicer shall, in the event that there
shall not have been maintained on the related Mortgaged Property a policy
complying with the first sentence of this Section 3.10, and there shall have
been a loss that would have been covered by such policy, deposit in the
Collection Account the amount not otherwise payable under the blanket policy
because of such deductible clause. In connection with its activities as servicer
of the Mortgage Loans, the Servicer agrees to present, on behalf of itself, the
Depositor and the Trustee for the benefit of the Certificateholders, claims
under any such blanket policy.
SECTION 3.11. Enforcement of Due-On-Sale Clauses; Assumption
Agreements.
When a Mortgaged Property has been or is about to be conveyed by the
Mortgagor, the Servicer shall, except as set forth below, to the extent it has
knowledge of such conveyance or prospective conveyance, exercise its rights to
accelerate the maturity of the related Mortgage Loan under any "due-on-sale"
clause contained in the related Mortgage or Mortgage Note; provided, however,
that the Servicer shall not exercise any such right if the "due-on-sale" clause,
in the reasonable belief of the Servicer, is not enforceable under applicable
law; provided, further, that the Servicer shall not take any action in relation
to the enforcement of any "due-on-sale" clause which would adversely affect or
jeopardize coverage under any Required Insurance Policy. An Opinion of Counsel
at the expense of the Servicer (which the expense shall constitute a Servicing
Advance) delivered to the Trustee and the Depositor shall conclusively establish
the reasonableness of the Servicer's belief that any "due-on-sale" clause is not
enforceable under applicable law, but which shall not be required. In such
event, the Servicer shall make reasonable efforts to enter into an assumption
and modification agreement with the Person to whom such property has been or is
about to be conveyed, pursuant to which such Person becomes liable under the
Mortgage Note and, unless prohibited by applicable law or the Mortgage, the
Mortgagor remains liable thereon. If the foregoing is not permitted under
applicable law, the Servicer is authorized to enter into a substitution of
liability agreement with such Person, pursuant to which the original Mortgagor
is released from liability and such Person is substituted as Mortgagor and
becomes liable under the Note. In addition to the foregoing, the Servicer shall
not be required to enforce any "due-on-sale" clause if in the reasonable
judgment of the Servicer, entering into an assumption and modification agreement
with a Person to whom
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such property shall be conveyed and releasing the original Mortgagor from
liability would be in the best interests of the Certificateholders. The Mortgage
Loan, as assumed, shall conform in all respects to the requirements,
representations and warranties of this Agreement. The Servicer shall notify the
Trustee that any such assumption or substitution agreement has been completed by
forwarding to the Trustee the original copy of such assumption or substitution
agreement (indicating the Mortgage File to which it relates) which copy shall be
added by the Trustee to the related Mortgage File and which shall, for all
purposes, be considered a part of such Mortgage File to the same extent as all
other documents and instruments constituting a part thereof. The Servicer shall
be responsible for recording any such assumption or substitution agreements. In
connection with any such assumption or substitution agreement, the Monthly
Payment on the related Mortgage Loan shall not be changed but shall remain as in
effect immediately prior to the assumption or substitution, the stated maturity
or outstanding principal amount of such Mortgage Loan shall not be changed nor
shall any required monthly payments of principal or interest be deferred or
forgiven. Any fee collected by the Servicer for consenting to any such
conveyance or entering into an assumption or substitution agreement shall be
retained by or paid to the Servicer as additional servicing compensation.
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Servicer shall not be deemed to be in default, breach or any
other violation of its obligations hereunder by reason of any assumption of a
Mortgage Loan by operation of law or any assumption which the Servicer may be
restricted by law from preventing, for any reason whatsoever.
SECTION 3.12. Realization Upon Defaulted Mortgage Loans; Determination
of Excess Proceeds; Special Loss Mitigation.
(a) The Servicer shall use reasonable efforts consistent with the
servicing standard set forth in Section 3.01 to foreclose upon or otherwise
comparably convert the ownership of properties securing such of the Mortgage
Loans as come into and continue in default and as to which no satisfactory
arrangements can be made for collection of Delinquent payments. In connection
with such foreclosure or other conversion, the Servicer shall follow such
practices and procedures as it shall deem necessary or advisable and as shall be
normal and usual in its general mortgage servicing activities and the
requirements of the insurer under any Required Insurance Policy; provided,
however, that the Servicer shall not be required to expend its own funds in
connection with the restoration of any property that shall have suffered damage
due to an uninsured cause unless it shall determine (i) that such restoration
will increase the proceeds of liquidation of the Mortgage Loan after
reimbursement to itself of such expenses and (ii) that such expenses will be
recoverable to it through Liquidation Proceeds (respecting which it shall have
priority for purposes of withdrawals from the Collection Account pursuant to
Section 3.08 hereof). The Servicer shall be responsible for all other costs and
expenses incurred by it in any such proceedings; provided, however, that it
shall be entitled to reimbursement thereof from the proceeds of liquidation of
the related Mortgaged Property, as contemplated in Section 3.08 hereof. Any
Mortgage Loan that is charged off may be sold to the majority Certificateholder
of the Class C Certificates, at its option, at its fair market value after the
time period specified in (d) below. If the Servicer has knowledge that a
Mortgaged Property that the Servicer is contemplating acquiring in foreclosure
or by deed-in-lieu of foreclosure is located within a one-mile radius of any
site with environmental or hazardous waste risks known to the Servicer, the
Servicer will, prior to acquiring the Mortgaged Property, consider such risks
and only take action in accordance with Accepted Servicing Practices.
With respect to any REO Property, the deed or certificate of sale
shall be taken in the name of the Trustee or its nominee. Pursuant to its
efforts to sell such REO Property, the Servicer shall either itself or through
an agent selected by the Servicer protect and conserve such REO Property in the
same manner and to such extent as is customary in the locality where such REO
Property is located and may, incident to its conservation and protection of the
interests of the Certificateholders, rent the same, or
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any part thereof, as the Servicer deems to be in the best interest of the
Servicer and the Certificateholders for the period prior to the sale of such REO
Property. The Servicer or an affiliate may receive usual and customary real
estate referral fees for real estate brokers in connection with the listing and
disposition of REO Property. The Servicer shall prepare a statement with respect
to each REO Property that has been rented showing the aggregate rental income
received and all expenses incurred in connection with the management and
maintenance of such REO Property at such times as is necessary to enable the
Servicer to comply with the reporting requirements of the REMIC Provisions. The
net monthly rental income, if any, from such REO Property shall be deposited in
the Collection Account no later than the close of business on each Determination
Date. The Servicer shall perform the tax reporting and withholding related to
foreclosures, abandonments and cancellation of indebtedness income as specified
by Sections 1445, 6050J and 6050P of the Code by preparing and filing such tax
and information returns, as may be required.
In the event that the Trust Fund acquires any Mortgaged Property as
aforesaid or otherwise in connection with a default or imminent default on a
Mortgage Loan, the Servicer shall dispose of such Mortgaged Property prior to
the expiration of three years from the end of the year of its acquisition by the
Trust Fund or, at the expense of the Trust Fund, obtain, in accordance with
applicable procedures for obtaining an automatic extension of the grace period,
more than 60 days prior to the day on which such three-year period would
otherwise expire, an extension of the three-year grace period, in which case
such property must be disposed of prior to the end of such extension, unless the
Trustee shall have been supplied with an Opinion of Counsel (such Opinion of
Counsel not to be an expense of the Trustee), to the effect that the holding by
the Trust Fund of such Mortgaged Property subsequent to such three-year period
or extension will not result in the imposition of taxes on "prohibited
transactions" of the Trust Fund or any of the REMICs provided for herein as
defined in section 860F of the Code or cause any of the REMICs provided for
herein to fail to qualify as a REMIC at any time that any Certificates are
outstanding, in which case the Trust Fund may continue to hold such Mortgaged
Property (subject to any conditions contained in such Opinion of Counsel).
Notwithstanding any other provision of this Agreement, no Mortgaged Property
acquired by the Trust Fund shall be held, rented (or allowed to continue to be
rented) or otherwise used for the production of income by or on behalf of the
Trust Fund in such a manner or pursuant to any terms that would (i) cause such
Mortgaged Property to fail to qualify as "foreclosure property" within the
meaning of section 860G(a)(8) of the Code or (ii) subject the Trust Fund or any
REMIC provided for herein to the imposition of any federal, state or local
income taxes on the income earned from such Mortgaged under section 860G(c) of
the Code or otherwise, unless the Servicer or the Depositor has agreed to
indemnify and hold harmless the Trustee and the Trust Fund with respect to the
imposition of any such taxes.
The decision of the Servicer to foreclose on a defaulted Mortgage Loan
shall be subject to a determination by the Servicer that the proceeds of such
foreclosure would exceed the costs and expenses of bringing such a proceeding.
The income earned from the management of any Mortgaged Properties acquired
through foreclosure or other judicial proceeding, net of reimbursement to the
Servicer for expenses incurred (including any property or other taxes) in
connection with such management and net of unreimbursed Servicing Fees,
Advances, Servicing Advances and any management fee paid or to be paid with
respect to the management of such Mortgaged Property, shall be applied to the
payment of principal of, and interest on, the related defaulted Mortgage Loans
(with interest accruing as though such Mortgage Loans were still current) and
all such income shall be deemed, for all purposes in this Agreement, to be
payments on account of principal and interest on the related Mortgage Notes and
shall be deposited into the Collection Account. To the extent the income
received during a Prepayment Period is in excess of the amount attributable to
amortizing principal and accrued interest at the related Mortgage Rate on the
related Mortgage Loan, such excess shall be considered to be a partial Principal
Prepayment for all purposes hereof.
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The Liquidation Proceeds from any liquidation of a Mortgage Loan, net
of any payment to the Servicer as provided above, shall be deposited in the
Collection Account on the next succeeding Determination Date following receipt
thereof for distribution on the related Distribution Date.
The proceeds of any Liquidated Loan, as well as any recovery resulting
from a partial collection of Liquidation Proceeds will be applied as between the
parties in the following order of priority: first, to reimburse the Servicer for
any related Servicing Advances and unpaid Servicing Fees, pursuant to Section
3.08(a)(vi) or this Section 3.12; second, to reimburse the Servicer for any
unreimbursed Advances, pursuant to Section 3.08(a)(ii) or this Section 3.12;
third, to accrued and unpaid interest (to the extent no Advance has been made
for such amount) on the Mortgage Loan, at the Net Mortgage Rate to the Due Date
occurring in the month in which such amounts are required to be distributed;
fourth, as a recovery of principal of the Mortgage Loan; and fifth, to any
Prepayment Charges.
The proceeds of any net income from an REO Property, will be applied
as between the parties in the following order of priority: first, to reimburse
the Servicer for any related unreimbursed Servicing Advances and Servicing Fees,
pursuant to Section 3.08(a)(vi) or this Section 3.12; second, to reimburse the
Servicer for any unreimbursed Advances, pursuant to Section 3.08(a)(ii) or this
Section 3.12; third, as a recovery of principal; and fourth, to accrued and
unpaid interest (to the extent no Advance has been made for such amount) on the
related REO Property, at the applicable Net Mortgage Rate to the Due Date
occurring in the month in which such amounts are required to be distributed.
(b) On each Determination Date, the Servicer shall determine the
respective aggregate amounts of Excess Proceeds, if any, that occurred in the
related Prepayment Period.
(c) The Servicer, in its sole discretion, shall have the right to
elect (by written notice sent to the Trustee) to purchase for its own account
from the Trust Fund any Mortgage Loan that is 91 days or more Delinquent at a
price equal to the Purchase Price. The Purchase Price for any Mortgage Loan
purchased hereunder shall be delivered to the Trustee for deposit to the
Certificate Account and the Trustee (or its custodian), upon receipt of such
confirmation of deposit and a Request for Release from the Servicer in the form
of Exhibit I hereto, shall release or cause to be released to the Servicer the
related Mortgage File and shall execute and deliver such instruments of transfer
or assignment prepared by the Servicer, in each case without recourse, as shall
be necessary to vest in the Servicer any Mortgage Loan released pursuant hereto
and the Servicer shall succeed to all the Trustee's right, title and interest in
and to such Mortgage Loan and all security and documents related thereto. Such
assignment shall be an assignment outright and not for security. The Servicer
shall thereupon own such Mortgage Loan, and all security and documents, free of
any further obligation to the Certificateholders with respect thereto.
(d) With respect to such of the Mortgage Loans as come into and
continue in default, the Servicer will decide, in its reasonable business
judgment, whether to (i) foreclose upon the Mortgaged Properties securing those
Mortgage Loans pursuant to Section 3.12(a), (ii) write off the unpaid principal
balance of the Mortgage Loans as bad debt (provided that the Servicer has
determined that no net recovery is possible through foreclosure proceedings or
other liquidation of the related Mortgaged Property), (iii) take a deed in lieu
of foreclosure, (iv) accept a short sale or short refinance; (v) arrange for a
repayment plan, or (vi) agree to a modification of such Mortgage Loan. As to any
Mortgage Loan that becomes 120 days delinquent, the Servicer will be required to
obtain a broker's price opinion, the cost of which will be reimbursable as a
Servicing Advance. After obtaining the broker's price opinion, the Servicer will
determine, in its reasonable business judgment, whether a net recovery is
possible through foreclosure proceedings or other liquidation of the related
Mortgage Property. If the Servicer determines that no such recovery is possible,
it must charge off the related Mortgage Loan at the time it becomes 180 days
delinquent. Once a Mortgage Loan has been charged off, the Servicer will
discontinue making
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Advances, the Servicer will not be entitled to Servicing Fees (except as
provided below) with respect to such Mortgage Loan, and the Mortgage Loan will
be treated as a Liquidated Mortgage Loan. If the Servicer determines that such
net recovery is possible through foreclosure proceedings or other liquidation of
the related Mortgaged Property on a Mortgage Loan that becomes 180 days
delinquent, the Servicer may continue making Advances, and the Servicer will be
required to notify the Trustee of such decision.
SECTION 3.13. Trustee to Cooperate; Release of Mortgage Files.
Upon the payment in full of any Mortgage Loan, or the receipt by the
Servicer of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Servicer will promptly notify the Trustee or
its designee by delivering a Request for Release substantially in the form of
Exhibit I. Upon receipt of a copy of such request, the Trustee or its designee
shall within four (4) Business Days release and send the related Mortgage File
to the Servicer and the cost of the delivery may be charged to the Servicer by
the Trustee, and the Servicer is authorized to cause the removal from the
registration on the MERS System of any such Mortgage if applicable, and the
Servicer, on behalf of the Trustee shall execute and deliver the request for
reconveyance, deed of reconveyance or release or satisfaction of mortgage or
such instrument releasing the lien of the Mortgage together with the Mortgage
Note with written evidence of cancellation thereon. Expenses incurred in
connection with any instrument of satisfaction or deed of reconveyance shall be
chargeable to the Mortgagor to the extent permitted by law, and otherwise to the
Trust Fund to the extent such expenses constitute "unanticipated expenses"
within the meaning of Treasury Regulations Section 1.860G-(1)(b)(3)(ii). From
time to time and as shall be appropriate for the servicing or foreclosure of any
Mortgage Loan, including for such purpose, collection under any policy of flood
insurance, any fidelity bond or errors or omissions policy, or for the purposes
of effecting a partial release of any Mortgaged Property from the lien of the
Mortgage or the making of any corrections to the Mortgage Note or the Mortgage
or any of the other documents included in the Mortgage File, the Trustee or its
designee shall, upon delivery to the Trustee or its designee of a Request for
Release in the form of Exhibit I signed by a Servicing Officer, release and send
the Mortgage File to the Servicer, the cost of which delivery may be charged to
the Servicer by the Trustee. Subject to the further limitations set forth below,
the Servicer shall cause the Mortgage File or documents so released to be
returned to the Trustee or its designee when the need therefor by the Servicer
no longer exists, unless the Mortgage Loan is liquidated and the proceeds
thereof are deposited in the Collection Account.
Each Request for Release may be delivered to the Trustee or its
designee (i) via mail or courier, (ii) via facsimile or (iii) by such other
means, including, without limitation, electronic or computer readable medium, as
the Servicer and the Trustee or its designee shall mutually agree. The Trustee
or its designee shall promptly release the related Mortgage File(s) within five
(5) Business Days of receipt of a properly completed Request for Release
pursuant to clauses (i), (ii) or (iii) above. Receipt of a properly completed
Request for Release shall be authorization to the Trustee or its designee to
release such Mortgage Files, provided the Trustee or its designee has determined
that such Request for Release has been executed, with respect to clauses (i) or
(ii) above, or approved, with respect to clause (iii) above, by an authorized
Servicing Officer of the Servicer, and so long as the Trustee or its designee
complies with its duties and obligations under the agreement. If the Trustee or
its designee is unable to release the Mortgage Files within the period
previously specified, the Trustee or its designee shall immediately notify the
Servicer indicating the reason for such delay. If the Servicer is required to
pay penalties or damages due to the Trustee or its designee's negligent failure
to release the related Mortgage File or the Trustee or its designee's negligent
failure to execute and release documents in a timely manner, such amounts shall
be Servicer Advances.
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On each day that the Servicer remits to the Trustee or its designee
Requests for Releases pursuant to clauses (ii) or (iii) above, the Servicer
shall also submit to the Trustee or its designee a summary of the total number
of such Requests for Releases requested on such day by the same method as
described in such clauses (ii) and (iii).
If the Servicer at any time seeks to initiate a foreclosure proceeding
in respect of any Mortgaged Property as authorized by this Agreement, the
Servicer may deliver or cause to be delivered to the Trustee or its designee,
for signature, as appropriate or on behalf of the Trustee, execute any court
pleadings, requests for trustee's sale or other documents necessary to
effectuate such foreclosure or any legal action brought to obtain judgment
against the Mortgagor on the Mortgage Note or the Mortgage or to obtain a
deficiency judgment or to enforce any other remedies or rights provided by the
Mortgage Note or the Mortgage or otherwise available at law or in equity.
Notwithstanding the foregoing, the Servicer shall cause possession of any
Mortgage File or of the documents therein that shall have been released by the
Trustee or its designee to be returned to the Trustee promptly after possession
thereof shall have been released by the Trustee or its designee unless (i) the
Mortgage Loan has been liquidated and the Liquidation Proceeds relating to the
Mortgage Loan have been deposited in the Collection Account, and the Servicer
shall have delivered to the Trustee or its designee a Request for Release in the
form of Exhibit I or (ii) the Mortgage File or document shall have been
delivered to an attorney or to a public trustee or other public official as
required by law for purposes of initiating or pursuing legal action or other
proceedings for the foreclosure of the Mortgaged Property and the Servicer shall
have delivered to the Trustee or its designee an Officer's Certificate of a
Servicing Officer certifying as to the name and address of the Person to which
the Mortgage File or the documents therein were delivered and the purpose or
purposes of such delivery.
SECTION 3.14. Documents, Records and Funds in Possession of Servicer
to be Held for the Trustee.
All Mortgage Files and funds collected or held by, or under the
control of, the Servicer in respect of any Mortgage Loans, whether from the
collection of principal and interest payments or from Liquidation Proceeds,
including but not limited to, any funds on deposit in the Collection Account,
shall be held by the Servicer for and on behalf of the Trustee and shall be and
remain the sole and exclusive property of the Trust Fund, subject to the
applicable provisions of this Agreement. The Servicer also agrees that it shall
not create, incur or subject any Mortgage File or any funds that are deposited
in the Collection Account, the Certificate Account or in any Escrow Account, or
any funds that otherwise are or may become due or payable to the Trustee for the
benefit of the Certificateholders, to any claim, lien, security interest,
judgment, levy, writ of attachment or other encumbrance, or assert by legal
action or otherwise any claim or right of set off against any Mortgage File or
any funds collected on, or in connection with, a Mortgage Loan, except, however,
that the Servicer shall be entitled to set off against and deduct from any such
funds any amounts that are properly due and payable to the Servicer under this
Agreement.
SECTION 3.15. Servicing Compensation.
As compensation for its activities hereunder, the Servicer shall be
entitled to retain or withdraw from the Collection Account out of each payment
of interest on a Mortgage Loan included in the Trust Fund an amount equal to
interest at the applicable Servicing Fee Rate on the Stated Principal Balance of
the related Mortgage Loan as of the immediately preceding Distribution Date.
Additional servicing compensation in the form of any Excess Proceeds,
late payment fees, assumption fees (i.e. fees related to the assumption of a
Mortgage Loan upon the purchase of the related Mortgaged Property) and similar
fees payable by the Mortgagor, Prepayment Interest Excess, and
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all income and gain net of any losses realized from Permitted Investments in the
Collection Account shall be retained by the Servicer to the extent not required
to be deposited in the Collection Account pursuant to Sections 3.05, or 3.12(a)
hereof. The Servicer shall be required to pay all expenses incurred by it in
connection with its servicing activities hereunder and shall not be entitled to
reimbursement therefor except as specifically provided in this Agreement. In no
event shall the Trustee be liable for any Servicing Fee or for any differential
between the Servicing Fee and the amount necessary to induce a successor
servicer to act as successor servicer under this Agreement.
SECTION 3.16. Access to Certain Documentation.
The Servicer shall provide to the OTS and the FDIC and to comparable
regulatory authorities supervising Holders of the Certificates and the examiners
and supervisory agents of the OTS, the FDIC and such other authorities, access
to the documentation regarding the Mortgage Loans required by applicable
regulations of the OTS and the FDIC. Such access shall be afforded without
charge, but only upon reasonable and prior written request and during normal
business hours at the offices of the Servicer designated by it provided, that
the Servicer shall be entitled to be reimbursed by each such Certificateholder
for actual expenses incurred by the Servicer in providing such reports and
access. Nothing in this Section shall limit the obligation of the Servicer to
observe any applicable law prohibiting disclosure of information regarding the
Mortgagors and the failure of the Servicer to provide access as provided in this
Section as a result of such obligation shall not constitute a breach of this
Section.
SECTION 3.17. Annual Statement as to Compliance.
Pursuant to this Agreement, the Servicer shall deliver to the
Depositor and the Trustee on or before March 15 of each year beginning in 2006,
(or such other date as to which the Depositor gives the Servicer at least 30
days prior notice) in order to remain in compliance with the Section 302
Requirements, an Officer's Certificate stating, as to each signatory thereof,
that (i) a review of the activities of the Servicer during the preceding
calendar year and of performance under this Agreement or a similar agreement has
been made under such officer's supervision, and (ii) to the best of such
officers' knowledge, based on such review, the Servicer has fulfilled all of its
obligations under this Agreement throughout such year, or, if there has been a
default in the fulfillment of any such obligation, specifying each such default
known to such officers and the nature and status thereof. The Servicer shall
forward a copy of each such statement received by it to each Rating Agency.
Copies of such statement shall be provided by the Trustee to any
Certificateholder upon written request at the Certificateholder's expense,
provided such statement has been delivered by the Servicer to the Trustee.
SECTION 3.18. Annual Independent Public Accountants' Servicing
Statement; Financial Statements.
On or before March 15 of each year, beginning in 2006 or such other
date in order to remain in compliance with the Section 302 Requirements, the
Servicer at its expense shall cause a nationally recognized firm of independent
public accountants (who may also render other services to the Servicer or any
Affiliate thereof) that is a member of the American Institute of Certified
Public Accountants to furnish a USAP Report to the Trustee and the Depositor.
Copies of the USAP Report shall be provided by the Trustee to any
Certificateholder upon request at the Certificateholder's expense, provided such
report has been delivered by the Servicer to the Trustee.
SECTION 3.19. [RESERVED]
SECTION 3.20. Periodic Filings.
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(a) As part of the Form 10-K required to be filed pursuant to the
terms of this Agreement, the Trustee shall include the accountants report
delivered pursuant to Section 3.18 as well as the Officer's Certificate
delivered by the Servicer pursuant to Section 3.17 relating to the Servicer's
performance of its obligations under this Agreement and any significant
deficiencies relating to the Servicer's compliance set forth in the report of
the Servicer's certified independent accountants described above.
(b) The Depositor shall prepare and file the initial report on Form
8-K. The Trustee shall prepare for filing, and execute (other than the Form
10-Ks and the Certification), on behalf of the Trust Fund, and file with the
Securities and Exchange Commission, (i) within 15 days after each Distribution
Date in each month, each Monthly Statement on Form 8-K under the Exchange Act
executed by the Trustee and (ii) on or before March 31 of each year beginning in
2006 or such other date in order to remain in compliance with the Section 302
Requirements, a Form 10-K under the Exchange Act executed by the Servicer,
including any certification (the "Certification") required by the Section 302
Requirements. The Certification shall be executed by a senior officer of the
Servicer. Upon such filing with the Securities and Exchange Commission, the
Trustee shall promptly deliver to the Depositor a copy of any such executed
filing. Prior to making any such filings, the Trustee shall comply with the
provisions set forth in this Section. If permitted by applicable law and unless
the Depositor otherwise directs, the Trustee shall file a Form 15 under the
Exchange Act on or before January 30, 2006 or as soon as it is able to do so
pursuant to applicable law. The Depositor hereby grants to the Trustee a limited
power of attorney to execute (other than the Form 10-Ks and the Certification)
and file each such document on behalf of the Depositor. Such power of attorney
shall continue until either the earlier of (i) receipt by the Trustee from the
Depositor of written termination of such power of attorney and (ii) the
termination of the Trust Fund. The Depositor agrees to promptly furnish to the
Trustee, from time to time upon request, such further information, reports, and
financial statements within its control related to this Agreement and the
Mortgage Loans as the Trustee reasonably deems appropriate to prepare and file
such Forms 8-K and 10-K with the Commission. The Trustee shall have no
responsibility to file any items other than those specified in this Section.
(c) The obligations set forth in paragraphs (a) and (b) of this
Section shall only apply with respect to periods for which the Trustee is
obligated to file Form 8-Ks and 10-Ks pursuant to paragraph (b) of this Section.
In the event a Form 15 is properly filed pursuant to paragraph (b) of this
Section, there shall be no further obligations under paragraphs (a) and (b) of
this Section commencing with the fiscal year in which the Form 15 is filed
(other than the obligations in paragraphs (a) and (b) of this Section to be
performed in such fiscal year that relate back to the prior fiscal year).
(d) The Trustee shall prepare such Form 10-K and provide the Depositor
and Servicer with such Form 10-K not later than March 20th of each year, subject
to this Section 3.20(c). Following its receipt thereof, the Servicer shall
execute such Form 10-K and provide the original of such Form 10-K to the Trustee
not later than March 25th (or, if the applicable March 25th is not a Business
Day, the next succeeding Business Day) of each year; provided, however, that if
the filing of such Form 10-K shall be required to occur on a date earlier than
March 30th of each year as may be required by the Exchange Act and the Rules and
Regulations of the Securities and Exchange Commission, then the time periods for
preparation and execution of such Form 10-K set forth in this sentence shall be
adjusted accordingly. The Trustee shall have no liability with respect to any
failure to properly prepare or file such periodic reports resulting from or
relating to the Trustee's inability or failure to obtain any information not
resulting from its own negligence or willful misconduct.
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SECTION 3.21. Annual Certificate by Trustee.
(a) On or before March 15 of each year (commencing in 2006), an
officer of the Trustee shall execute and deliver an Officer's Certificate,
signed by a Responsible Officer of the Trustee or any officer to whom that
officer reports, to the Depositor for the benefit of the Depositor and its
officers, directors and affiliates, certifying as to the matters described in
the Officer's Certificate attached hereto as Exhibit K; provided, however, that
the Trustee shall not undertake an analysis of the accountant's report attached
as an exhibit to the Form 10-K.
(b) The Trustee shall indemnify and hold harmless the Depositor and
its officers, directors, agents and affiliates from and against any losses,
damages, penalties, fines, forfeitures, reasonable legal fees and related costs,
judgments and other costs and expenses arising out of or based upon a breach by
the Trustee or any of its officers, directors, agents or affiliates of its
obligations under this Section 3.21, any material misstatement or omission in
the Officer's Certificate required under this Section or the gross negligence,
bad faith or willful misconduct of the Trustee in connection therewith. If the
indemnification provided for herein is unavailable or insufficient to hold
harmless the Depositor, then the Trustee agrees that it shall contribute to the
amount paid or payable by the Depositor as a result of the losses, claims,
damages or liabilities of the Depositor in such proportion as is appropriate to
reflect the relative fault and relative benefit of the Trustee on the one hand
and of the Depositor on the other in connection with a breach of the Trustee's
obligations under this Section 3.21, any material misstatement or omission in
the Officer's Certificate required under this Section or the Trustee's gross
negligence, bad faith or willful misconduct in connection therewith.
SECTION 3.22. Annual Certificate by Servicer.
(a) Within 15 days prior to the date on which a Form 10-K is required
to be filed with a Certification by the Servicer, the Servicer shall execute and
deliver an Officer's Certificate in the form of Exhibit L attached hereto,
signed by the senior officer in charge of servicing of the Servicer or any
officer to whom that officer reports, to the Trustee and Depositor for the
benefit of the Trustee and Depositor and their respective officers, directors
and affiliates.
(b) The Servicer shall indemnify and hold harmless the Trustee and the
Depositor and their respective officers, directors, agents and affiliates from
and against any losses, damages, penalties, fines, forfeitures, reasonable legal
fees and related costs, judgments and other costs and expenses arising out of or
based upon a breach by the Servicer or any of its officers, directors, agents or
affiliates of its obligations under Section 3.17, Section 3.18 and this Section
3.22, any material misstatement or omission in the Officer's Certificate
required under this Section or the negligence, bad faith or willful misconduct
of the Servicer in connection therewith. If the indemnification provided for
herein is unavailable or insufficient to hold harmless the Depositor, then the
Servicer agrees that it shall contribute to the amount paid or payable by the
Trustee and the Depositor as a result of the losses, claims, damages or
liabilities of the Depositor in such proportion as is appropriate to reflect the
relative fault of the Depositor on the one hand and the Servicer on the other in
connection with a breach of the Servicer's obligations under this Section 3.22,
any material misstatement or omission in the Officer's Certificate required
under this Section or the Servicer's negligence, bad faith or willful misconduct
in connection therewith.
SECTION 3.23. Prepayment Charge Reporting Requirements.
Promptly after each Distribution Date, the Servicer shall provide to
the Depositor and the Trustee the following information with regard to each
Mortgage Loan that has prepaid during the related Prepayment Period:
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(i) loan number;
(ii) current Mortgage Rate;
(iii) current principal balance;
(iv) original principal balance;
(v) Prepayment Charge amount due; and
(vi) Prepayment Charge amount collected.
SECTION 3.24. Information to the Trustee.
Two Business Days after the 15th day of each month, but not later than the
18th day of each month, the Servicer shall furnish to the Trustee a delinquency
report, as mutually agreed upon by the Servicer and the Seller, and a monthly
remittance advice in the form set forth in Exhibit M-2 (or such other form or
forms as the Trustee and the Servicer may from time to time agree) for the
period ending on the last Business Day of the preceding month; provided,
however, that in the event the 18th day is not a Business Day, the
aforementioned reports shall be furnished by the Servicer to the Trustee on the
next Business Day; and provided, further, that in the event there are three
non-Business Days preceding the 18th day, the Servicer will (a) furnish to the
Trustee, on or before the 18th day of the month, the aforementioned reports,
which will not include information arising from the related Prepayment Period,
and (b) furnish to the Trustee, by 3:00 P.M., Eastern Time, on the next
succeeding Business Day after the 18th day, a cumulative version of the
aforementioned reports which includes such information arising from the related
Prepayment Period. The Trustee shall have no obligation or duty to review,
verify or recalculate the information provided by the Servicer in such reports.
SECTION 3.25. Indemnification.
The Servicer shall indemnify the Seller, the Trust Fund, the Trustee,
the Depositor and their officers, directors, employees and agents and hold each
of them harmless against any and all claims, losses, damages, penalties, fines,
forfeitures, reasonable and necessary legal fees and related costs, judgments,
and any other costs, fees and expenses that any of such parties may sustain in
any way related to the failure of the Servicer to perform its duties including,
without limitation, its duties under Sections 3.17 and 3.18 and service the
Mortgage Loans in compliance with the terms of this agreement by reason of
negligence, willful misfeasance or bad faith of the Servicer in the performance
of its duties or by reason of reckless disregard of its obligations and duties
hereunder. The Servicer promptly shall notify the Seller, the Trustee and the
Depositor or any other relevant party if a claim is made by a third party with
respect to such party and this Agreement or the Mortgage Loans and, if subject
to this indemnification obligation, assume (with the prior written consent of
the indemnified party, which consent shall not be unreasonably withheld or
delayed) the defense of any such claim and pay all expenses in connection
therewith, including counsel fees, and promptly pay, discharge and satisfy any
judgment or decree which may be entered against it or any of such parties in
respect of such claim. The Servicer shall provide the Depositor and the Trustee
with a written report of all expenses and advances incurred by the Servicer
pursuant to this Section 3.25, and the Servicer shall promptly reimburse itself
from the assets of the Trust Fund in the Collection Account for all amounts
advanced by it pursuant to the preceding sentence except when and to the extent
a determination has been made that the claim in any way relates to the gross
negligence, bad faith or willful misconduct of the Servicer. The provisions of
this paragraph shall survive the termination of this Agreement and the payment
of the outstanding Certificates.
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SECTION 3.26. Nonsolicitation.
For as long as the Servicer services the Mortgage Loans, the Servicer
covenants that it will not, and that it will ensure that its affiliates and
agents will not, directly solicit or provide information for any other party to
solicit for prepayment or refinancing of any of the Mortgage Loans by the
related Mortgagors. It is understood that the promotions undertaken by the
Servicer which are directed to the general public at large, or certain segments
thereof, shall not constitute solicitation as that term is used in this Section
3.26.
SECTION 3.27. High Cost Mortgage Loans.
In the event that the Servicer reasonably determines that a Mortgage
Loan may be a "high cost mortgage loan", "high cost home", "covered", "high
cost", "high risk home", "predatory" or similarly classified loan under any
applicable state, federal or local law, the Servicer may notify the Depositor
and Trustee thereof; the Servicer may terminate its servicing thereof; and such
determination shall be deemed to materially and adversely affect the interests
of the Certificateholders in such Mortgage Loan and the Seller will repurchase
the Mortgage Loan within a 30 day period from the date of the notice in the
manner described in Section 2.05.
SECTION 3.28. MI Policies, Claims Under the MI Policies.
(a) Notwithstanding anything to the contrary elsewhere in this
Agreement, the Servicer shall not agree to any modification or assumption of a
MI Mortgage Loan or take any other action with respect to an MI Mortgage Loan
that could result in denial of coverage under the MI Policy. The Servicer shall
notify the MI Insurer that the Trustee, on behalf of the Certificateholders, is
the "Insured," as that term is defined in the related MI Policy, of each MI
Mortgage Loan insured by the MI Insurer; provided, that such designation is made
solely for the purpose of entitling the Trust Fund to receive payments for
claims under the MI Policy and the Trustee shall not, except as provided herein,
be deemed to assume the obligations of the "Insured" thereunder. The Servicer
shall, on behalf of the Trustee, prepare and file on a timely basis with the MI
Insurer, with a copy to the Trustee, all claims that may be made under the MI
Policy with respect to the MI Mortgage Loans. Consistent with all rights and
obligations hereunder, the Servicer shall take all actions required under the MI
Policy as a condition to the payment of any such claim. Any amount received from
the MI Insurer with respect to any MI Mortgage Loan shall be deposited by the
Servicer, no later than two Business Days following receipt thereof, into the
Collection Account.
ARTICLE IV
DISTRIBUTIONS
SECTION 4.01. Advances.
(a) Subject to the conditions of this Article IV, the Servicer, as
required below, shall make an Advance and deposit such Advance in the Collection
Account. Each such Advance shall be remitted to the Collection Account no later
than 4:00 p.m. Eastern Time on the Servicer Advance Date in immediately
available funds. The Servicer shall be obligated to make any such Advance only
to the extent that such advance would not be a Non-Recoverable Advance. If the
Servicer shall have determined that it has made a Non-Recoverable Advance or
that a proposed Advance or a lesser portion of such Advance would constitute a
Non-Recoverable Advance, the Servicer shall deliver (i) to the Trustee for the
benefit of the Certificateholders, funds constituting the remaining portion of
such Advance, if applicable, and (ii) to the Depositor, each Rating Agency and
the Trustee an Officer's
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Certificate setting forth the basis for such determination. The Servicer may, in
its sole discretion, make an Advance with respect to the principal portion of
the final Scheduled Payment on a Balloon Loan, but the Servicer is under no
obligation to do so; provided, however, that nothing in this sentence shall
affect the Servicer's obligation under this Section 4.01 to Advance the interest
portion of the final Scheduled Payment with respect to a Balloon Loan as if such
Balloon Loan were a fully amortizing Mortgage Loan. If a Mortgagor does not pay
its final Scheduled Payment on a Balloon Loan when due, the Servicer shall
Advance (unless it determines in its good faith judgment that such amounts would
constitute a Non-Recoverable Advance) a full month of interest (net of the
Servicing Fee) on the Stated Principal Balance thereof each month until its
Stated Principal Balance is reduced to zero.
In lieu of making all or a portion of such Advance from its own funds,
the Servicer may (i) cause to be made an appropriate entry in its records
relating to the Collection Account that any amount held for future distribution
has been used by the Servicer in discharge of its obligation to make any such
Advance and (ii) transfer such funds from the Collection Account to the
Certificate Account. In addition, the Servicer shall have the right to reimburse
itself for any such Advance from amounts held from time to time in the
Collection Account to the extent such amounts are not then required to be
distributed. Any funds so applied and transferred pursuant to the previous two
sentences shall be replaced by the Servicer by deposit in the Collection Account
no later than the close of business on the Servicer Advance Date on which such
funds are required to be distributed pursuant to this Agreement. The Servicer
shall be entitled to be reimbursed from the Collection Account for all Advances
of its own funds made pursuant to this Section as provided in Section 3.08. The
obligation to make Advances with respect to any Mortgage Loan shall continue
until the earlier of (i) such Mortgage Loan is paid in full, (ii) the related
Mortgaged Property or related REO Property has been liquidated or until the
purchase or repurchase thereof (or substitution therefor) from the Trust Fund
pursuant to any applicable provision of this Agreement, except as otherwise
provided in this Section 4.01, (iii) the Servicer determines in its good faith
judgment that such amounts would constitute a Non-Recoverable Advance as
provided in the preceding paragraph or (iv) the date on which such Mortgage Loan
becomes 150 days delinquent as set forth below.
(b) Notwithstanding anything in this Agreement to the contrary
(including, but not limited to, Sections 3.01 and 4.01(a) hereof), no Advance or
Servicing Advance shall be required to be made hereunder by the Servicer if such
Advance or Servicing Advance would, if made, constitute a Non-Recoverable
Advance or a Non-Recoverable Servicing Advance. The determination by the
Servicer that it has made a Non-Recoverable Advance or a Non-Recoverable
Servicing Advance or that any proposed Advance or Servicing Advance, if made,
would constitute a Non-Recoverable Advance or a Non-Recoverable Servicing
Advance, respectively, shall be evidenced by an Officer's Certificate of the
Servicer delivered to the Depositor and the Trustee. In addition, the Servicer
shall not be required to advance any Relief Act Shortfalls.
(c) Notwithstanding the foregoing, the Servicer shall not be required
to make any Advances for any Mortgage Loan after such Mortgage Loan becomes 150
days delinquent. The Servicer shall identify such delinquent Mortgage Loans in
the Servicer Statement referenced in Section 3.24. In addition, the Servicer
shall provide the Trustee with an Officer's Certificate listing such delinquent
Mortgage Loans and certifying that such loans are 150 days or more delinquent.
SECTION 4.02. Reduction of Servicing Compensation in Connection with
Prepayment Interest Shortfalls.
In the event that any Mortgage Loan is the subject of a Prepayment
Interest Shortfall, the Servicer shall, from amounts in respect of the Servicing
Fee for such Distribution Date, deposit into the Collection Account, as a
reduction of the Servicing Fee for such Distribution Date, no later than the
Servicer Advance Date immediately preceding such Distribution Date, an amount up
to the Prepayment
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Interest Shortfall; provided that the amount so deposited with respect to any
Distribution Date shall be limited to the product of (x) one twelfth of 0.25%
per annum and (y) the aggregate Stated Principal Balance of the Mortgage Loans.
In case of such deposit, the Servicer shall not be entitled to any recovery or
reimbursement from the Depositor, the Trustee, the Trust Fund or the
Certificateholders. With respect to any Distribution Date, to the extent that
the Prepayment Interest Shortfall exceeds Compensating Interest (such excess, a
"Non-Supported Interest Shortfall"), such Non-Supported Interest Shortfall shall
reduce the Current Interest with respect to each Class of Certificates, pro rata
based upon the amount of interest each such Class would otherwise be entitled to
receive on such Distribution Date. Notwithstanding the foregoing, there shall be
no reduction of the Servicing Fee in connection with Prepayment Interest
Shortfalls related to the Relief Act and the Servicer shall not be obligated to
pay Compensating Interest with respect to Prepayment Interest Shortfalls related
to the Relief Act.
SECTION 4.03. Distributions on the REMIC Interests.
On each Distribution Date, amounts on deposit in the Certificate
Account shall be treated for federal income tax purposes as applied to
distributions on the interests in the Lower Tier REMIC in an amount sufficient
to make the distributions on the respective Certificates on such Distribution
Date in accordance with the provisions of Section 4.04.
SECTION 4.04. Distributions.
(a) On each Distribution Date, prior to any distributions to the
Certificateholders, the Trustee shall pay to the MI Insurer, the MI Insurer Fee
for such Distribution Date from Interest Funds then on deposit in the
Certificate Account.
(b) On each Distribution Date, the Trustee shall make the following
distributions from the Certificate Account of an amount equal to the remaining
Interest Funds in the following order of priority:
(i) to the Class P Certificates, an amount equal to any
Prepayment Charges collected on the Mortgage Loans during the related Prepayment
Period and all amounts paid by the Servicer or the Seller in respect of
Prepayment Charges pursuant to this Agreement or the Sale Agreement, as
applicable, and all amounts received in respect of any indemnification paid as a
result of a Prepayment Charge being unenforceable in breach of the
representations and warranties set forth in the Sale Agreement for the related
Prepayment Period;
(ii) to each class of the Class A Certificates, the Current
Interest and any Interest Carry Forward Amount with respect to such Class;
provided, however, if such amount is not sufficient to make a full distribution
of the Current Interest and any Interest Carry Forward Amount with respect to
the Class A Certificates, such amount will be distributed pro rata among each
Class of the Class A Certificates based on the ratio of (x) the Current Interest
and Interest Carry Forward Amount for each class of the Class A Certificates to
(y) the total amount of Current Interest and any Interest Carry Forward Amount
for the Class A Certificates;
(iii) to the Class M-1 Certificates, the Class M-1 Current
Interest and any Class M-1 Interest Carry Forward Amount;
(iv) to the Class M-2 Certificates, the Class M-2 Current
Interest and any Class M-2 Interest Carry Forward Amount;
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(v) to the Class B-1 Certificates, the Class B-1 Current Interest
and any Class B-1 Interest Carry Forward Amount;
(vi) to the Class B-2 Certificates, the Class B-2 Current
Interest and any Class B-2 Interest Carry Forward Amount;
(vii) to the Class B-3 Certificates, the Class B-3 Current
Interest and any Class B-3 Interest Carry Forward Amount;
(viii) to the Class B-4 Certificates, the Class B-4 Current
Interest and any Class B-4 Interest Carry Forward Amount; and
(ix) any remainder pursuant to Section 4.04(f) hereof.
On each Distribution Date, subject to the proviso in (ii) above,
Interest Funds received on the Group One Mortgage Loans will be deemed to be
distributed to the Class R, Class A-1A and Class A-1B Certificates, Interest
Funds received on the Group Two Mortgage Loans will be deemed to be distributed
to the Class A-2 Certificates and Interest Funds received on the Group Three
Mortgage Loans will be deemed to be distributed to the Class A-3A1, Class A-3A2,
Class A-3A3, Class A-3A4 and Class A-3B Certificates, in each case, until the
related Current Interest and Interest Carry Forward Amount of each such class of
Certificates for such Distribution Date has been paid in full. Thereafter,
Interest Funds not required for such distributions are available to be applied
if necessary, to the class or classes of Certificates that are not related to
such group of Mortgage Loans
(c) [RESERVED]
(d) On each Distribution Date, the Trustee shall, to the extent of
funds then available, make the following distributions from the Certificate
Account of an amount equal to the Principal Distribution Amount in the following
order of priority, and each such distribution shall be made only after all
distributions pursuant to Section 4.04(b) above shall have been made until such
amount shall have been fully distributed for such Distribution Date:
(i) to the Class A Certificates, the Class A Principal
Distribution Amount will be distributed as follows:
(A) the Group One Principal Distribution Amount will be
distributed as follows: (1) if no Class A Trigger Event has occurred,
the Group One Principal Distribution Amount will be distributed as
follows: first, to the Class R Certificate until its Certificate
Principal Balance has been reduced to zero, and second, pro rata to
the Class A-1A and Class A-1B Certificates, based on their relative
Certificate Principal Balances, until the Certificate Principal
Balance of each such class has been reduced to zero and (2) if a Class
A Trigger Event has occurred, the Group One Principal Distribution
Amount will be distributed sequentially to the Class R, Class A-1A and
Class A-1B Certificates, until the Certificate Principal Balance of
each such class has been reduced to zero; and
(B) the Group Two Principal Distribution Amount will be
distributed to the Class A-2 Certificates until the Certificate
Principal Balance of the Class A-2 Certificates has been reduced to
zero;
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(C) the Group Three Principal Distribution Amount will be
distributed as follows: (1) if no Class A Trigger Event has occurred,
pro rata to the Class A-3A and Class A-3B Certificates until the
Certificate Principal Balance of each such class has been reduced to
zero and (2) if a Class A Trigger Event has occurred, sequentially to
the Class A-3A and Class A-3B Certificates. Principal allocated to the
Class A-3A Certificates will be distributed to the Class A-3A1
Certificates until the Certificate Principal Balance thereof has been
reduced to zero, then to the Class A-3A2 Certificates until the
Certificate Principal Balance thereof has been reduced to zero, then
to the Class A-3A3 Certificates until the Certificate Principal
Balance thereof has been reduced to zero and then to the Class A-3A4
Certificates until the Certificate Principal Balance thereof has been
reduced to zero; provided, however, that on and after the Distribution
Date on which the aggregate Certificate Principal Balance of the Class
M, Class B and Class C Certificates have been reduced to zero, any
amounts allocated to the Class A-3A Certificates will be distributed
pro rata to the Class A-3A1, Class A-3A2, Class A-3A3 and Class A-3A4
Certificates;
(ii) to the Class M-1 Certificates, the Class M-1 Principal
Distribution Amount;
(iii) to the Class M-2 Certificates, the Class M-2 Principal
Distribution Amount;
(iv) to the Class B-1 Certificates, the Class B-1 Principal
Distribution Amount;
(v) to the Class B-2 Certificates, the Class B-2 Principal
Distribution Amount;
(vi) to the Class B-3 Certificates, the Class B-3 Principal
Distribution Amount;
(vii) to the Class B-4 Certificates, the Class B-4 Principal
Distribution Amount; and
(viii) any remainder pursuant to Section 4.04(f) hereof.
(e) [RESERVED]
(f) On each Distribution Date, the Trustee shall, to the extent of
funds then available, make the following distributions up to the following
amounts from the Certificate Account of the remainders pursuant to Section
4.04(b)(ix) and (d)(viii) hereof and each such distribution shall be made only
after all distributions pursuant to Sections 4.04(b) and (d) above shall have
been made until such remainders shall have been fully distributed for such
Distribution Date:
(i) for distribution as part of the Principal Distribution
Amount, the Extra Principal Distribution Amount;
(ii) to the Class M-1 Certificates, the Class M-1 Unpaid Realized
Loss Amount;
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(iii) to the Class M-2 Certificates, the Class M-2 Unpaid
Realized Loss Amount;
(iv) to the Class B-1 Certificates, the Class B-1 Unpaid Realized
Loss Amount;
(v) to the Class B-2 Certificates, the Class B-2 Unpaid Realized
Loss Amount;
(vi) to the Class B-3 Certificates, the Class B-3 Unpaid Realized
Loss Amount;
(vii) to the Class B-4 Certificates, the Class B-4 Unpaid
Realized Loss Amount;
(viii) to the Class A, Class M and Class B Certificates, on a pro
rata basis, based upon outstanding Floating Rate Certificate Carryover for each
such Class, the Floating Rate Certificate Carryover for each Class; and
(ix) the remainder pursuant to Section 4.04(g) hereof.
(g) on each Distribution Date, the Trustee shall allocate the
remainders pursuant to Section 4.04(f)(ix) as follows:
(i) to the Class C Certificates in the following order of
priority, (I) the Class C Current Interest, (II) the Class C Interest Carry
Forward Amount, (III) as principal on the Class C Certificate until the
Certificate Principal Balance of the Class C Certificates has been reduced to
zero and (IV) the Class C Unpaid Realized Loss Amount; and
(ii) the remainder pursuant to Section 4.04(h) hereof.
(h) On each Distribution Date, the Trustee shall allocate the
remainder pursuant to Section 4.04(g)(ii) hereof (i) to the Trustee to reimburse
amounts or pay indemnification amounts owing to the Trustee from the Trust Fund
pursuant to Section 8.06 and (ii) to the Class R Certificate and such
distributions shall be made only after all preceding distributions shall have
been made until such remainder shall have been fully distributed.
(i) On each Distribution Date, after giving effect to distributions on
such Distribution Date, the Trustee shall allocate the Applied Realized Loss
Amount for the Certificates to reduce the Certificate Principal Balances of the
Class C Certificates and the Subordinated Certificates in the following order of
priority:
(i) to the Class C Certificates, until the Class C Certificate
Principal Balance is reduced to zero;
(ii) to the Class B-4 Certificates until the Class B-4
Certificate Principal Balance is reduced to zero;
(iii) to the Class B-3 Certificates until the Class B-3
Certificate Principal Balance is reduced to zero;
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(iv) to the Class B-2 Certificates until the Class B-2
Certificate Principal Balance is reduced to zero;
(v) to the Class B-1 Certificates until the Class B-1 Certificate
Principal Balance is reduced to zero;
(vi) to the Class M-2 Certificates until the Class M-2
Certificate Principal Balance is reduced to zero; and
(vii) to the Class M-1 Certificates until the Class M-1
Certificate Principal Balance is reduced to zero.
(j) Subject to Section 9.02 hereof respecting the final distribution,
on each Distribution Date the Trustee shall make distributions to each
Certificateholder of record on the preceding Record Date either by wire transfer
in immediately available funds to the account of such holder at a bank or other
entity having appropriate facilities therefor, if such Holder has so notified
the Trustee at least five (5) Business Days prior to the related Record Date or,
if not, by check mailed by first class mail to such Certificateholder at the
address of such holder appearing in the Certificate Register. Notwithstanding
the foregoing, but subject to Section 9.02 hereof respecting the final
distribution, distributions with respect to Certificates registered in the name
of a Depository shall be made to such Depository in immediately available funds.
In accordance with this Agreement, the Servicer shall prepare and
deliver a report (the "Remittance Report") to the Trustee in the form of a
computer readable magnetic tape (or by such other electronic means as the
Servicer and the Trustee may agree from time to time) containing such data and
information as to permit the Trustee to prepare the Monthly Statement to
Certificateholders and make the required distributions for the related
Distribution Date. The Trustee will prepare the Monthly Report based solely upon
the information received from the Servicer. The Trustee shall have no obligation
or duty to review, recalculate or verify information in the Remittance Report.
(k) The Trustee is hereby directed by the Depositor to execute the Cap
Contract on behalf of the Trust Fund in the form presented to it by the
Depositor and shall have no responsibility for the contents, adequacy or
sufficiency of the Cap Contract, including, without limitation, the
representations and warranties contained therein. Any funds payable by the
Trustee under the Cap Contract at closing shall be paid by the Depositor.
Notwithstanding anything to the contrary contained herein or in the Cap
Contract, the Trustee shall not be required to make any payments to the
counterparty under the Cap Contract. Any payments received under the terms of
the Cap Contract will be available to pay the holders of the Offered
Certificates up to the amount of any Floating Rate Certificate Carryover
remaining after the application of Section 4.04(f)(viii) on such Distribution
Date; provided, however, that payments received on the Cap Contract will not be
used to pay any Floating Rate Certificate Carryover that results from a failure
to allocate Applied Realized Loss Amounts to the Class A Certificates. Any
amounts in the Cap Contract Account on any Distribution Date in excess of
amounts required, subject to the restrictions set forth in the preceding
sentence, to pay outstanding Floating Rate Certificate Carryovers on such
Distribution Date will be distributed to the holders of the Class C
Certificates. Payments from the Cap Contract Account in respect of the Floating
Rate Certificate Carryovers shall, subject to the limitations set forth in the
second preceding sentence of this Section 4.04(k), be paid to the Class A, Class
M and Class B Certificates in accordance with the provisions of Section
4.04(f)(viii) hereof.
For any Distribution Date on which there is a payment under the Cap
Contract based on a notional balance in excess of the aggregate Certificate
Principal Balance of the Offered Certificates, the
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amount representing such excess payment, to the extent not otherwise used to pay
Floating Rate Certificate Carryovers, shall not be an asset of the Trust Fund
and, instead, shall be paid into and distributed out of a separate trust created
by this Agreement for the benefit of the Class C Certificates and shall be
distributed to the Class C Certificates.
(i) On or prior to the Cap Contract Termination Date, amounts, if
any, received by the Trustee for the benefit of the Trust Fund in respect of the
Cap Contract shall be deposited by the Trustee into the Cap Contract Account.
With respect to any Distribution Date on or prior to the Cap Contract
Termination Date, the amount, if any, payable by the Cap Contract Counterparty
under the Cap Contract will equal the product of (i) the excess of (x) One-Month
LIBOR (as determined by the Cap Contract Counterparty and subject to a cap equal
to the rate with respect to such Distribution Date as shown under the heading
"Upper Collar" in the Cap Table), over (y) the rate with respect to such
Distribution Date as shown under the heading "Lower Collar" in the Cap Table,
(ii) an amount equal to the Cap Contract Notional Balance and (iii) the number
of days in such Accrual Period, divided by 360.
(ii) Amounts on deposit in the Cap Contract Account will remain
uninvested pending distribution to Certificateholders.
(iii) The Cap Contract is scheduled to remain in effect until the
Cap Contract Termination Date and will be subject to early termination only in
limited circumstances. Such circumstances include certain insolvency or
bankruptcy events in relation to the Cap Contract Counterparty (after a grace
period of three Local Business Days, as defined in the Cap Contract, after
notice of such failure is received by the Cap Contract Counterparty) to make a
payment due under the Cap Contract, the failure by the Cap Contract Counterparty
(after a cure period of 20 days after notice of such failure is received) to
perform any other agreement made by it under the Cap Contract, the termination
of the Trust Fund and the Cap Contract becoming illegal or subject to certain
kinds of taxation.
SECTION 4.05. Monthly Statements to Certificateholders.
(a) Not later than each Distribution Date based solely on information
provided by the Servicer, the Trustee shall prepare and make available on its
website located at ▇▇▇▇▇://▇▇▇.▇▇▇.▇▇.▇▇▇/▇▇▇▇ to each Holder of a Class of
Certificates of the Trust Fund, the Servicer, the Rating Agencies and the
Depositor a statement setting forth for the Certificates:
(i) the amount of the related distribution to Holders of each
Class allocable to principal, separately identifying (A) the aggregate amount of
any Principal Prepayments included therein, (B) the aggregate of all scheduled
payments of principal included therein, (C) the Extra Principal Distribution
Amount, if any, and (D) the aggregate amount of Prepayment Charges, if any;
(ii) the amount of such distribution to Holders of each Class
allocable to interest, together with any Non-Supported Interest Shortfalls
allocated to each Class;
(iii) any Interest Carryforward Amount for each Class of the
Offered Certificates;
(iv) the Class Certificate Principal Balance of each Class after
giving effect (i) to all distributions allocable to principal on such
Distribution Date and (ii) the allocation of any Applied Realized Loss Amounts
for such Distribution Date;
(v) the Pool Stated Principal Balance for such Distribution Date;
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(vi) the amount of the Servicing Fee paid to or retained by the
Servicer, and any amounts constituting reimbursement or indemnification of the
Servicer;
(vii) the Pass-Through Rate for each Class of Certificates for
such Distribution Date;
(viii) the amount of Advances included in the distribution on
such Distribution Date;
(ix) the cumulative amount of (A) Realized Losses and (B) Applied
Realized Loss Amounts to date, in the aggregate and with respect to Group One
Mortgage Loans, Group Two Mortgage Loans and Group Three Mortgage Loans;
(x) the amount of (A) Realized Losses and (B) Applied Realized
Loss Amounts with respect to such Distribution Date, in the aggregate and with
respect to Group One Mortgage Loans, Group Two Mortgage Loans and Group Three
Mortgage Loans;
(xi) the number and aggregate principal amounts of Mortgage Loans
(A) Delinquent (exclusive of Mortgage Loans in foreclosure) (1) 31 to 60 days,
(2) 61 to 90 days, (3) 91 or more days, and (B) in foreclosure and Delinquent
(1) 31 to 60 days, (2) 61 to 90 days, (3) 91 or more days, in each case as of
the close of business on the last day of the calendar month preceding such
Distribution Date, in the aggregate and with respect to Group One Mortgage
Loans, Group Two Mortgage Loans and Group Three Mortgage Loans;
(xii) the total number and principal balance of any REO
Properties as of the close of business on the last day of the calendar month
preceding such Distribution Date, in the aggregate and with respect to Group One
Mortgage Loans, Group Two Mortgage Loans and Group Three Mortgage Loans;
(xiii) the aggregate Stated Principal Balance of all Liquidated
Loans as of the preceding Distribution Date, in the aggregate and with respect
to Group One Mortgage Loans, Group Two Mortgage Loans and Group Three Mortgage
Loans;
(xiv) whether a Stepdown Trigger Event or Class A Trigger Event
has occurred and is in effect;
(xv) with respect to each Class of Certificates, any Interest
Carry Forward Amount with respect to such Distribution Date for each such Class,
any Interest Carry Forward Amount paid for each such Class and any remaining
Interest Carry Forward Amount for each such Class;
(xvi) with respect to each Class of Certificates, any Floating
Rate Certificate Carryover with respect to such Distribution Date for each such
Class, any Floating Rate Certificate Carryover paid for each such Class and any
remaining Floating Rate Certificate Carryover for each such Class;
(xvii) the number and Stated Principal Balance (as of the
preceding Distribution Date) of any Mortgage Loans which were purchased or
repurchased during the preceding Due Period and since the Cut-off Date;
(xviii) the number of Mortgage Loans for which Prepayment Charges
were received during the related Prepayment Period and, for each such Mortgage
Loan, the amount of
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Prepayment Charges received during the related Prepayment Period and in the
aggregate of such amounts for all such Mortgage Loans since the Cut-off Date;
(xix) as of each Distribution Date, the amount, if any, to be
deposited in the Certificate Account pursuant to the Cap Contract as described
in Section 4.04(k) and the amount thereof to be paid to the Class A, Class M and
Class B Certificates described in Section 4.04(k) hereof;
(xx) the amount and purpose of any withdrawal from the Collection
Account pursuant to Section 3.08(a)(v);
(xxi) the amount of any payments to each Class of Certificates
that are treated as payments received in respect of a REMIC Regular Interest or
REMIC "residual interest" and the amount of any payments to each Class of
Certificates that are not treated as payments received in respect of a REMIC
Regular Interest or REMIC "residual interest";
(xxii) the amount of the MI Insurer Fee paid to the MI Insurer;
(xxiii) the number and aggregate Stated Principal Balance of
Mortgage Loans covered by the MI Policy as of the end of the related Due Period;
and
(xxiv) (A) the amount of any claims paid by the MI Insurer
pursuant to the MI Policy with respect to principal, (B) the amount of any
claims paid by the MI Insurer pursuant to the MI Policy with respect to
interest, and (C) solely to the extent provided by the Servicer, the amount of
any claims made under the MI Policy and the amount of any claims rejected under
the MI Policy, each as of such Distribution Date.
(b) The Trustee will make the Monthly Statement (and, at its option,
any additional files containing the same information in an alternative format)
available each month to Certificateholders, other parties to this Agreement and
any other interested parties via the Trustee's Internet website. The Trustee's
Internet website shall initially be located at ▇▇▇▇▇://▇▇▇.▇▇▇.▇▇.▇▇▇/▇▇▇▇.
Assistance in using the website can be obtained by calling the Trustee's
customer service desk at (▇▇▇) ▇▇▇-▇▇▇▇. Parties that are unable to use the
website are entitled to have a paper copy mailed to them via first class mail by
calling the customer service desk and indicating such. The Trustee shall have
the right to change the way the monthly statements to Certificateholders are
distributed in order to make such distribution more convenient and/or more
accessible to the above parties and the Trustee shall provide timely and
adequate notification to all above parties regarding any such changes.
The Trustee shall also be entitled to rely on but shall not be
responsible for the content or accuracy of any information provided by third
parties for purposes of preparing the monthly statement and may affix thereto
any disclaimer it deems appropriate in its reasonable discretion (without
suggesting liability on the part of any other party hereto).
As a condition to access the Trustee's internet website, the Trustee
may require registration and the acceptance of a disclaimer. The Trustee will
not be liable for the dissemination of information in accordance with this
Agreement.
(c) Reserved;
(d) If so requested in writing within a reasonable period of time
after the end of each calendar year, the Trustee shall make available on its
website or cause to be furnished to each Person who at any time during the
calendar year was a Certificateholder of record, a statement containing the
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information set forth in clauses (a)(i) and (a)(ii) of this Section 4.05
aggregated for such calendar year or applicable portion thereof during which
such Person was a Certificateholder. Such obligation of the Trustee shall be
deemed to have been satisfied to the extent that substantially comparable
information shall be provided by the Trustee pursuant to any requirements of the
Code as are from time to time in effect.
(e) Upon filing with the Internal Revenue Service, the Trustee shall
furnish to the Holders of the Class R Certificate the Form 1066 and each Form
1066Q and shall respond promptly and, if necessary, with the cooperation of the
Servicer, to written requests made not more frequently than quarterly by any
Holder of Class R Certificate with respect to the following matters: The
original projected principal and interest cash flows on the Closing Date on each
Class of regular and residual interests created hereunder and on the Mortgage
Loans, based on the Prepayment Assumption;
(i) The projected remaining principal and interest cash flows as
of the end of any calendar quarter with respect to each Class of regular and
residual interests created hereunder and the Mortgage Loans, based on the
Prepayment Assumption;
(ii) The Prepayment Assumption and any interest rate assumptions
used in determining the projected principal and interest cash flows described
above;
(iii) The original issue discount (or, in the case of the
Mortgage Loans, market discount) or premium accrued or amortized through the end
of such calendar quarter with respect to each Class of regular or residual
interests created hereunder and to the Mortgage Loans, together with each
constant yield to maturity used in computing the same;
(iv) The treatment of losses realized with respect to the
Mortgage Loans or the regular interests created hereunder, including the timing
and amount of any cancellation of indebtedness income of the REMICs with respect
to such regular interests or bad debt deductions claimed with respect to the
Mortgage Loans;
(v) The amount and timing of any non-interest expenses of the
REMICs; and
(vi) Any taxes (including penalties and interest) imposed on the
REMICs, including, without limitation, taxes on "prohibited transactions,"
"contributions" or "net income from foreclosure property" or state or local
income or franchise taxes.
The information pursuant to clauses (i), (ii), (iii) and (iv) above
shall be provided by the Depositor pursuant to Section 8.12.
ARTICLE V
THE CERTIFICATES
SECTION 5.01. The Certificates.
The Certificates shall be substantially in the forms attached hereto
as exhibits. The Certificates shall be issuable in registered form, in the
minimum dollar denominations, integral dollar multiples in excess thereof
(except that one Certificate of each Class may be issued in a different amount
which must be in excess of the applicable minimum dollar denomination) and
aggregate dollar denominations as set forth in the following table:
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Minimum Integral Multiples in Original Certificate
Class Denomination Excess of Minimum Principal Balance
----- ------------ --------------------- --------------------
A-1A $25,000.00 $1.00 $225,973,000
A-1B $25,000.00 $1.00 $ 25,108,000
A-2 $25,000.00 $1.00 $250,727,000
A-3A1 $25,000.00 $1.00 $127,769,000
A-3A2 $25,000.00 $1.00 $ 65,091,000
A-3A3 $25,000.00 $1.00 $115,400,000
A-3A4 $25,000.00 $1.00 $ 20,119,000
A-3B $25,000.00 $1.00 $ 36,487,000
M-1 $25,000.00 $1.00 $ 78,133,000
M-2 $25,000.00 $1.00 $ 58,184,000
B-1 $25,000.00 $1.00 $ 26,044,000
B-2 $25,000.00 $1.00 $ 10,528,000
B-3 $25,000.00 $1.00 $ 11,082,000
B-4 $25,000.00 $1.00 $ 11,636,000
C (1) (1) 100%
R $ 100.00 N/A $ 100
P (2) (2) (2)
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(1) The Class C Certificates shall not have minimum dollar denominations or
certificate notional amounts and shall be issued in a minimum percentage
interest of 25%. The initial Overcollateralization Amount is
$45,998,547.92.
(2) The Class P Certificates shall not have minimum dollar denominations or
Certificate Principal Balances and shall be issued in a minimum percentage
interest of 25%.
The Certificates shall be executed by manual or facsimile signature on
behalf of the Trustee by an authorized officer. Certificates bearing the manual
or facsimile signatures of individuals who were, at the time when such
signatures were affixed, authorized to sign on behalf of the Trustee shall bind
the Trust Fund, notwithstanding that such individuals or any of them have ceased
to be so authorized prior to the authentication and delivery of such
Certificates or did not hold such offices at the date of such authentication and
delivery. No Certificate shall be entitled to any benefit under this Agreement,
or be valid for any purpose, unless there appears on such Certificate a
certificate of authentication substantially in the form set forth as attached
hereto executed by the Trustee by manual signature, and such certificate of
authentication upon any Certificate shall be conclusive evidence, and the only
evidence, that such Certificate has been duly authenticated and delivered
hereunder. All Certificates shall be dated the date of their authentication. On
the Closing Date, the Trustee shall authenticate the Certificates to be issued
at the written direction of the Depositor, or any Affiliate thereof.
SECTION 5.02. Certificate Register; Registration of Transfer and
Exchange of Certificates.
(a) The Trustee shall maintain, or cause to be maintained in
accordance with the provisions of Section 5.09 hereof, a Certificate Register
for the Trust Fund in which, subject to the provisions of subsections (b) and
(c) below and to such reasonable regulations as it may prescribe, the Trustee
shall provide for the registration of Certificates and of Transfers and
exchanges of Certificates as herein provided. Upon surrender for registration of
Transfer of any Certificate, the Trustee shall authenticate and deliver, in the
name of the designated transferee or transferees, one or more new Certificates
of the same Class and of like aggregate Percentage Interest.
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At the option of a Certificateholder, Certificates may be exchanged
for other Certificates of the same Class in authorized denominations and
evidencing the same aggregate Percentage Interest upon surrender of the
Certificates to be exchanged at the office or agency designated by the Trustee.
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 registration of Transfer or exchange shall 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 to the Certificateholders shall be made for any
registration of Transfer or exchange of Certificates, but payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any Transfer or exchange of Certificates may be required. All
Certificates surrendered for registration of Transfer or exchange shall be
canceled and subsequently destroyed by a Trustee in accordance with such
Trustee's customary procedures.
No Transfer of a Class C or Class P Certificate shall be made unless
such Transfer is made pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws or is exempt from the
registration requirements under the Securities Act and such state securities
laws. In the event that a Transfer is to be made in reliance upon an exemption
from the Securities Act and such laws, in order to assure compliance with the
Securities Act and such laws, the Certificateholder desiring to effect such
Transfer and such Certificateholder's prospective transferee shall (except with
respect to the initial transfer of a Class C or Class P Certificate by ▇▇▇▇▇▇▇
▇▇▇▇▇ & Co. or, in connection with any transfers of a Class C or Class P
Certificate to the indenture trustee under an Indenture pursuant to which NIM
Notes are issued) each certify to the Trustee in writing the facts surrounding
the Transfer in substantially the form set forth in Exhibit F (the "Transferor
Certificate") and (i) deliver a letter in substantially the form of either
Exhibit G (the "Investment Letter") or Exhibit H (the "Rule 144A Letter") or
(ii) there shall be delivered to the Trustee an Opinion of Counsel that such
Transfer may be made pursuant to an exemption from the Securities Act, which
Opinion of Counsel shall not be an expense of the Depositor or the Trustee. The
Depositor shall provide to any Holder of a Class C or Class P Certificate and
any prospective transferee designated by any such Holder, information regarding
the related Certificates and the Mortgage Loans and such other information as
shall be necessary to satisfy the condition to eligibility set forth in Rule
144A(d)(4) for Transfer of any such Certificate without registration thereof
under the Securities Act pursuant to the registration exemption provided by Rule
144A. The Trustee shall cooperate with the Depositor in providing the Rule 144A
information referenced in the preceding sentence, including providing to the
Depositor such information in the possession of the Trustee regarding the
Certificates, the Mortgage Loans and other matters regarding the Trust Fund as
the Depositor shall reasonably request to meet its obligation under the
preceding sentence. Each Holder of a Class C or Class P Certificate desiring to
effect such Transfer shall, and does hereby agree to, indemnify the Depositor
and the Trustee against any liability that may result if the Transfer is not so
exempt or is not made in accordance with such federal and state laws.
No transfer of an ERISA Restricted Certificate that is a Class R
Certificate may be made to any Person unless the Trustee has received a
representation that such Person is not an employee benefit plan subject to Title
I of ERISA, a plan subject to Section 4975 of the Code or a plan subject to any
state, local, federal, non-U.S. or other law substantively similar to the
foregoing provisions of ERISA or the Code ("Similar Law"), or any Person
directly or indirectly acquiring such Certificate for, on behalf of, or with any
assets of any such plan (collectively, "Plan"). Each Person to whom a Class R
Certificate is to be transferred shall be required or deemed to represent that
it is not a Plan.
No transfer of an ERISA-Restricted Certificate (other than the Class R
Certificate) shall be made to any Person unless the Trustee has received (A) a
representation that such transferee is not a
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Plan, or (B) if the Certificate has been the subject of an ERISA-Qualifying
Underwriting, a representation that such transferee is an insurance company that
is acquiring the Certificate with assets of an "insurance company general
account," as defined in Section V(e) of Prohibited Transaction Class Exemption
("PTCE") 95-60, and the acquisition and holding of the Certificate are covered
and exempt under Sections I and III of PTCE 95-60, or (C) solely in the case of
any such Certificate that is a Definitive Certificate, an Opinion of Counsel
satisfactory to the Trustee, and upon which the Trustee shall be entitled to
rely, to the effect that the acquisition and holding of such Certificate will
not constitute or result in a nonexempt prohibited transaction under Title I of
ERISA or Section 4975 of the Code, or a violation of Similar Law, and will not
subject the Trustee, the Servicer or the Depositor to any obligation in addition
to those expressly undertaken in this Agreement, which Opinion of Counsel shall
not be an expense of the Trustee, the Servicer or the Depositor.
For purposes of the two immediately preceding paragraphs of this
Subsection 5.02(a), other than clause (C) in the immediately preceding
paragraph, the representations as set forth therein shall be deemed to have been
made to the Trustee by the transferee's acceptance of an ERISA Restricted
Certificate (or the acceptance by a Certificate Owner of the beneficial interest
in any Class of ERISA Restricted Certificates). Notwithstanding any other
provision herein to the contrary, any purported transfer of an ERISA Restricted
Certificate to or on behalf of a Plan without the delivery to the Trustee of a
representation or an Opinion of Counsel satisfactory to the Trustee as described
above shall be void and of no effect. The Trustee shall not be under any
liability to any Person for any registration or transfer of any ERISA Restricted
Certificate that is in fact not permitted by this Section 5.02(a), nor shall the
Trustee be under any liability for making any payments due on such Certificate
to the Holder thereof or taking any other action with respect to such Holder
under the provisions of this Agreement so long as the transfer was registered by
the Trustee in accordance with the foregoing requirements. The Trustee shall be
entitled, but not obligated, to recover from any Holder of any ERISA Restricted
Certificate that was in fact a Plan and that held such Certificate in violation
of this Section 5.02(a) all payments made on such ERISA Restricted Certificate
at and after the time it commenced such holding. Any such payments so recovered
shall be paid and delivered to the last preceding Holder of such Certificate
that is not a Plan.
(b) Each Person who has or who acquires any Ownership Interest in a
Class R Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions, and
the rights of each Person acquiring any Ownership Interest in a Class R
Certificate are expressly subject to the following provisions:
(i) Each Person holding or acquiring any Ownership Interest in a
Class R Certificate shall be a Permitted Transferee and shall promptly notify
the Trustee of any change or impending change in its status as a Permitted
Transferee.
(ii) No Ownership Interest in a Class R Certificate may be
purchased, transferred or sold, directly or indirectly, except in accordance
with the provisions hereof. No Ownership Interest in a Class R Certificate may
be registered on the Closing Date or thereafter transferred, and the Trustee
shall not register the Transfer of any Class R Certificate unless, in addition
to the certificates required to be delivered to the Trustee under subparagraph
(a) above, the Trustee shall have been furnished with an affidavit (a "Transfer
Affidavit") of the initial owner or the proposed transferee in the form attached
hereto as Exhibit E-1 and an affidavit of the proposed transferor in the form
attached hereto as Exhibit E-2. In the absence of a contrary instruction from
the transferor of a Class R Certificate, declaration (11) in Appendix A of the
Transfer Affidavit may be left blank. If the transferor requests by written
notice to the Trustee prior to the date of the proposed transfer that one of the
two other forms of declaration (11) in Appendix A of the Transfer Affidavit be
used, then the requirements of this Section 5.02(b)(ii) shall not have been
satisfied unless the Transfer Affidavit includes such other form of declaration.
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(iii) Each Person holding or acquiring any Ownership Interest in
a Class R Certificate shall agree (A) to obtain a Transfer Affidavit from any
other Person to whom such Person attempts to Transfer its Ownership Interest in
a Class R Certificate, (B) to obtain a Transfer Affidavit from any Person for
whom such Person is acting as nominee, trustee or agent in connection with any
Transfer of a Class R Certificate and (C) not to Transfer its Ownership Interest
in a Class R Certificate or to cause the Transfer of an Ownership Interest in a
Class R Certificate to any other Person if it has actual knowledge that such
Person is not a Permitted Transferee. Further, no transfer, sale or other
disposition of any Ownership Interest in a Class R Certificate may be made to a
person who is not a U.S. Person (within the meaning of Section 7701 of the Code)
unless such person furnishes the transferor and the Trustee with a duly
completed and effective Internal Revenue Service Form W-8ECI (or any successor
thereto) and the Trustee consents to such transfer, sale or other disposition in
writing.
(iv) Any attempted or purported Transfer of any Ownership
Interest in a Class R Certificate in violation of the provisions of this Section
5.02(b) shall be absolutely null and void and shall vest no rights in the
purported Transferee. If any purported transferee shall become a Holder of a
Class R Certificate in violation of the provisions of this Section 5.02(b), then
the last preceding Permitted Transferee shall be restored to all rights as
Holder thereof retroactive to the date of registration of Transfer of such Class
R Certificate. The Trustee shall be under no liability to any Person for any
registration of Transfer of a Class R Certificate that is in fact not permitted
by Section 5.02(a) and this Section 5.02(b) or for making any payments due on
such Certificate to the Holder thereof or taking any other action with respect
to such Holder under the provisions of this Agreement so long as the Transfer
was registered after receipt of the related Transfer Affidavit. The Trustee
shall be entitled but not obligated to recover from any Holder of a Class R
Certificate that was in fact not a Permitted Transferee at the time it became a
Holder or, at such subsequent time as it became other than a Permitted
Transferee, all payments made on such Class R Certificate at and after either
such time. Any such payments so recovered by the Trustee shall be paid and
delivered by the Trustee to the last preceding Permitted Transferee of such
Certificate.
(v) At the option of the Holder of the Class R Certificate, the
Class LTR Interest and the residual interest in the Upper Tier REMIC may be
severed and represented by separate certificates (with the separate certificate
that represents the Residual Interest also representing all rights of the Class
R Certificate to distributions attributable to a Pass-Through Rate on the Class
R Certificate in excess of the Net Rate); provided, however, that such separate
certification may not occur until the Trustee receive an Opinion of Counsel to
the effect that separate certification in the form and manner proposed would not
result in the imposition of federal tax upon the Trust Fund or any of the REMICs
provided for herein or cause any of the REMICs provided for herein to fail to
qualify as a REMIC; and provided further, that the provisions of Sections
5.02(a) and (b) will apply to each such separate certificate as if the separate
certificate were a Class R Certificate. If, as evidenced by an Opinion of
Counsel, it is necessary to preserve the REMIC status of any of the REMICs
provided for herein, the Class LTR Interest and the Residual Interest in the
Upper Tier REMIC shall be severed and represented by separate certificates (with
the separate certificate that represents the Residual Interest also representing
all rights of the Class R Certificate to distributions attributable to a
Pass-Through Rate on the Class R Certificate in excess of the Net Rate).
The restrictions on Transfers of a Class R Certificate set forth in
this Section 5.02(b) shall cease to apply (and the applicable portions of the
legend on a Class R Certificate may be deleted) with respect to Transfers
occurring after delivery to the Trustee of an Opinion of Counsel, which Opinion
of Counsel shall not be an expense of the Trustee or the Depositor, to the
effect that the elimination of such restrictions will not cause any of the
REMICs provided for herein to fail to qualify as a REMIC at any time that the
Certificates are outstanding or result in the imposition of any tax on the Trust
Fund, any REMIC provided for herein, a Certificateholder or another Person. Each
Person holding or acquiring any
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Ownership Interest in a Class R Certificate hereby consents to any amendment of
this Agreement that, based on an Opinion of Counsel furnished to the Trustee, is
reasonably necessary (a) to ensure that the record ownership of, or any
beneficial interest in, a Class R Certificate is not transferred, directly or
indirectly, to a Person that is not a Permitted Transferee and (b) to provide
for a means to compel the Transfer of a Class R Certificate that is held by a
Person that is not a Permitted Transferee to a Holder that is a Permitted
Transferee.
(c) The transferor of the Class R Certificate shall notify the Trustee
in writing upon the transfer of the Class R Certificate.
(d) The preparation and delivery of all certificates, opinions and
other writings referred to above in this Section 5.02 shall not be an expense of
the Trust Fund, the Depositor or the Trustee.
SECTION 5.03. Mutilated, Destroyed, Lost or Stolen Certificates.
If (a) any mutilated Certificate is surrendered to the Trustee or the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Certificate and of the ownership thereof and (b) there is delivered to
the Trustee such security or indemnity as may be required by them to save each
of them harmless, then, in the absence of notice to the Trustee that such
Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute, authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
Class, tenor and Percentage Interest. In connection with the issuance of any new
Certificate under this Section 5.03, the Trustee may require the payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in relation thereto and any other expenses (including the fees and expenses of
the Trustee and its counsel) connected therewith. Any replacement Certificate
issued pursuant to this Section 5.03 shall constitute complete and indefeasible
evidence of ownership in the Trust Fund, as if originally issued, whether or not
the lost, stolen or destroyed Certificate shall be found at any time. All
Certificates surrendered to the Trustee under the terms of this Section 5.03
shall be canceled and destroyed by the Trustee in accordance with its standard
procedures without liability on its part.
SECTION 5.04. Persons Deemed Owners.
The Trustee and any agent of the Trustee may treat the Person in whose
name any Certificate is registered as the owner of such Certificate for the
purpose of receiving distributions as provided in this Agreement and for all
other purposes whatsoever, and neither the Trustee, nor any agent of the Trustee
shall be affected by any notice to the contrary.
SECTION 5.05. Access to List of Certificateholders' Names and
Addresses.
If three or more Certificateholders (a) request such information in
writing from the Trustee, (b) state that such Certificateholders desire to
communicate with other Certificateholders with respect to their rights under
this Agreement or under the Certificates, and (c) provide a copy of the
communication that such Certificateholders propose to transmit or if the
Depositor shall request such information in writing from the Trustee, then the
Trustee shall, within ten Business Days after the receipt of such request,
provide the Depositor or such Certificateholders at such recipients' expense the
most recent list of the Certificateholders of the Trust Fund held by the
Trustee, if any. The Depositor and every Certificateholder, by receiving and
holding a Certificate, agree that the Trustee shall not be held accountable by
reason of the disclosure of any such information as to the list of the
Certificateholders hereunder, regardless of the source from which such
information was derived.
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SECTION 5.06. Book-Entry Certificates.
The Regular Certificates, upon original issuance, shall be issued in
the form of one or more typewritten Certificates representing the Book-Entry
Certificates, to be delivered to the Depository by or on behalf of the
Depositor. The Class C, Class P and Class R Certificates shall be Definitive
Certificates (as defined below). The Book-Entry Certificates shall initially be
registered on the Certificate Register in the name of the Depository or its
nominee, and no Certificate Owner of a Book-Entry Certificate will receive a
definitive certificate representing such Certificate Owner's interest in such
Certificates, except as provided in Section 5.08. Unless and until definitive,
fully registered Certificates ("Definitive Certificates") have been issued to
the Certificate Owners of the Book-Entry Certificates pursuant to Section 5.08:
(a) the provisions of this Section shall be in full force and effect;
(b) the Depositor and the Trustee may deal with the Depository and the
Depository Participants for all purposes (including the making of distributions)
as the authorized representative of the respective Certificate Owners of the
Book-Entry Certificates;
(c) registration of the Book-Entry Certificates may not be transferred
by the Trustee except to another Depository;
(d) the rights of the respective Certificate Owners of the Book-Entry
Certificates shall be exercised only through the Depository and the Depository
Participants and shall be limited to those established by law and agreements
between the Owners of the Book-Entry Certificates and the Depository and/or the
Depository Participants. Pursuant to the Depository Agreement, unless and until
Definitive Certificates are issued pursuant to Section 5.08, the Depository will
make book-entry transfers among the Depository Participants and receive and
transmit distributions of principal and interest on the related Certificates to
such Depository Participants;
(e) the Depository may collect its usual and customary fees, charges
and expenses from its Depository Participants;
(f) the Trustee may rely and shall be fully protected in relying upon
information furnished by the Depository with respect to its Depository
Participants; and
(g) to the extent that the provisions of this Section conflict with
any other provisions of this Agreement, the provisions of this Section shall
control.
For purposes of any provision of this Agreement requiring or
permitting actions with the consent of, or at the direction of,
Certificateholders evidencing a specified percentage of the aggregate unpaid
principal amount of any Class of Certificates, such direction or consent may be
given by Certificate Owners (acting through the Depository and the Depository
Participants) owning Book-Entry Certificates evidencing the requisite percentage
of principal amount of such Class of Certificates.
SECTION 5.07. Notices to Depository.
Whenever any notice or other communication is required to be given to
Certificateholders of the Class with respect to which Book-Entry Certificates
have been issued, unless and until Definitive Certificates shall have been
issued to the related Certificate Owners, the Trustee shall give all such
notices and communications to the Depository.
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SECTION 5.08. Definitive Certificates.
If, after Book-Entry Certificates have been issued with respect to any
Certificates, (a) the Depository or the Depositor advises the Trustee that the
Depository is no longer willing, qualified or able to discharge properly its
responsibilities under the Depository Agreement with respect to such
Certificates and the Trustee or the Depositor is unable to locate a qualified
successor, (b) the Depositor notifies the Trustee and the Depository of its
intent to terminate the book entry system through the Depository and, upon
receipt of notice of such intent from the Depository, the Certificate Owners of
the Book-Entry Certificates agree to initiate such termination or (c) after the
occurrence and continuation of an Event of Default, Certificate Owners of such
Book-Entry Certificates having not less than 51% of the Voting Rights evidenced
by any Class of Book-Entry Certificates advise the Trustee and the Depository in
writing through the Depository Participants that the continuation of a
book-entry system with respect to Certificates of such Class through the
Depository (or its successor) is no longer in the best interests of the
Certificate Owners of such Class, then the Trustee shall notify all Certificate
Owners of such Book-Entry Certificates, through the Depository, of the
occurrence of any such event and of the availability of Definitive Certificates
to Certificate Owners of such Class requesting the same. The Depositor shall
provide the Trustee with an adequate inventory of certificates to facilitate the
issuance and transfer of Definitive Certificates. Upon surrender to the Trustee
of any such Certificates by the Depository, accompanied by registration
instructions from the Depository for registration, the Trustee shall
authenticate and deliver such Definitive Certificates. Neither the Depositor nor
the Trustee shall be liable for any delay in delivery of such instructions and
each may conclusively rely on, and shall be protected in relying on, such
instructions. Upon the issuance of such Definitive Certificates, all references
herein to obligations imposed upon or to be performed by the Depository shall be
deemed to be imposed upon and performed by the Trustee, to the extent applicable
with respect to such Definitive Certificates and the Trustee shall recognize the
Holders of such Definitive Certificates as Certificateholders hereunder.
SECTION 5.09. Maintenance of Office or Agency.
The Trustee will maintain or cause to be maintained at its expense an
office or offices or agency or agencies where Certificates may be surrendered
for registration of transfer or exchange. The Trustee initially designates its
offices at DB Services Tennessee, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇-▇▇▇▇, Attention: Transfer Unit as offices for such purposes. The Trustee
will give prompt written notice to the Certificateholders of any change in such
location of any such office or agency.
ARTICLE VI
THE DEPOSITOR AND THE SERVICER
SECTION 6.01. Respective Liabilities of the Depositor and the
Servicer.
The Depositor and the Servicer shall each be liable in accordance
herewith only to the extent of the obligations specifically and respectively
imposed upon and undertaken by them herein.
SECTION 6.02. Merger or Consolidation of the Depositor and the
Servicer.
Except as provided in the next paragraph, the Depositor and the
Servicer will each keep in full effect its existence, rights and franchises as a
corporation or banking association under the laws of the United States or under
the laws of one of the States thereof and will each obtain and preserve its
qualification to do business as a foreign corporation in each jurisdiction in
which such qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, or any of the Mortgage Loans and to perform
its respective duties under this Agreement.
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Any Person into which the Depositor or the Servicer may be merged or
consolidated, or any Person resulting from any merger or consolidation to which
the Depositor or the Servicer shall be a party, or any Person succeeding to the
business of the Depositor or the Servicer, shall be the successor of the
Depositor or the Servicer, as the case may be, hereunder, without the execution
or filing of any paper or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding (except for the
execution of an assumption agreement where such succession is not effected by
operation of law); provided, however, that the successor or surviving Person to
the Servicer shall be qualified to sell mortgage loans to, and to service
mortgage loans on behalf of, ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac.
SECTION 6.03. Limitation on Liability of the Depositor, the Servicer
and Others.
None of the Depositor, the Servicer nor any of the directors,
officers, employees or agents of the Depositor or the Servicer shall be under
any liability to the Trust Fund or the Certificateholders for any action taken
or for refraining from the taking of any action in good faith pursuant to this
Agreement, or for errors in judgment; provided, however, that this provision
shall not protect the Depositor, the Servicer or any such Person against any
breach of representations or warranties made by it herein or protect the
Depositor, the Servicer or any such Person from any liability that would
otherwise be imposed by reasons of willful misfeasance, bad faith or negligence
in the performance of duties or by reason of reckless disregard of obligations
and duties hereunder. The Depositor or the Servicer and any director, officer,
employee or agent of the Depositor or the Servicer may rely in good faith on any
document of any kind prima facie properly executed and submitted by any Person
respecting any matters arising hereunder. The Depositor, the Servicer and any
director, officer, employee or agent of the Depositor or the Servicer shall be
indemnified by the Trust Fund and held harmless against any loss, liability or
expense, incurred in connection with the performance of their duties under this
agreement or incurred in connection with any audit, controversy or judicial
proceeding relating to a governmental taxing authority or any legal action
relating to this Agreement or the Certificates, other than (i) any loss,
liability or expense incurred by reason of willful misfeasance, bad faith or
negligence in the performance of duties hereunder or by reason of reckless
disregard of obligations and duties hereunder or (ii) which does not constitute
an "unanticipated expense" within the meaning of Treasury Regulation Section
1.860G-1(b)(3)(ii). Neither the Depositor nor the Servicer shall be under any
obligation to appear in, prosecute or defend any legal action that is not
incidental to its respective duties hereunder and that in its opinion may
involve it in any expense or liability; provided, however, that either the
Depositor or the Servicer in its discretion may undertake any such action that
it may deem necessary or desirable in respect of this Agreement and the rights
and duties of the parties hereto and the interests of the Trustee and the
Certificateholders hereunder. In such event, the legal expenses and costs of
such action and any liability resulting therefrom shall be expenses, costs and
liabilities of the Trust Fund, and the Depositor and the Servicer shall be
entitled to be reimbursed therefor out of the Collection Account as provided by
Section 3.08 hereof.
SECTION 6.04. Limitation on Resignation of Servicer.
The Servicer shall not resign from the obligations and duties hereby
imposed on it except upon determination that its duties hereunder are no longer
permissible under applicable law. Any such determination permitting the
resignation of the Servicer shall be evidenced by an Opinion of Counsel to such
effect delivered to the Trustee. No such resignation shall become effective
until the Trustee or a successor servicer reasonably acceptable to the Trustee
is appointed and has assumed the Servicer's responsibilities, duties,
liabilities and obligations hereunder. Any such resignation shall not relieve
the Servicer of any of the obligations specified in Section 7.01 and 7.02 as
obligations that survive the resignation or termination of the Servicer.
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SECTION 6.05. Errors and Omissions Insurance; Fidelity Bonds.
The Servicer shall, for so long as it acts as servicer under this
Agreement, obtain and maintain in force (a) a policy or policies of insurance
covering errors and omissions in the performance of its obligations as servicer
hereunder, and (b) a fidelity bond in respect of its officers, employees and
agents. Each such policy or policies and bond shall, together, comply with the
requirements from time to time of ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac for Persons
performing servicing for mortgage loans purchased by ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac.
The Servicer shall provide the Trustee, upon request, with copies of such
policies and fidelity bond or a certification from the insurance provider
evidencing such policies and fidelity bond. In the event that any such policy or
bond ceases to be in effect, the Servicer shall use its reasonable commercial
efforts to obtain a comparable replacement policy or bond from an insurer or
issuer meeting the requirements set forth above as of the date of such
replacement.
ARTICLE VII
DEFAULT; TERMINATION OF SERVICER
SECTION 7.01. Events of Default.
"Event of Default," wherever used herein, means any one of the
following events:
(i) any failure by the Servicer to deposit in the Collection
Account or the Certificate Account or remit to the Trustee (a) any payment
(excluding Advances) required to be made under the terms of this Agreement,
which failure shall continue unremedied for three Business Days or (b) Advances
required to be made under Section 4.01 hereof, which failure shall continue
unremedied as of 3:00 p.m. New York City Time on the Business Day immediately
prior to the related Distribution Date, or
(ii) any failure by the Servicer to observe or perform in any
material respect any other of the covenants or agreements on the part of the
Servicer contained in this Agreement or any representation or warranty shall
prove to be untrue, which failure or breach shall continue unremedied for a
period of 60 days after the date on which written notice of such failure shall
have been given to the Servicer by the Trustee or the Depositor; or
(iii) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a receiver or liquidator in
any insolvency, readjustment of debt, marshaling of assets and liabilities or
similar proceedings, or for the winding-up or liquidation of its affairs, shall
have been entered against the Servicer and such decree or order shall have
remained in force undischarged or unstayed for a period of 60 consecutive days;
or
(iv) consent by the Servicer to the appointment of a receiver or
liquidator in any insolvency, readjustment of debt, marshaling of assets and
liabilities or similar proceedings of or relating to the Servicer or all or
substantially all of the property of the Servicer; or
(v) admission by a Servicer in writing of its inability to pay
its debts generally as they become due, file a petition to take advantage of, or
commence a voluntary case under, any applicable insolvency or reorganization
statute, make an assignment for the benefit of its creditors, or voluntarily
suspend payment of its obligations; or
(vi) any failure by the Servicer to duly perform, within the
required time period, its obligations under Sections 3.17, 3.18 and 3.22 of this
Agreement, which failure continues
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unremedied for a period of ten (10) days after the date on which written notice
of such failure, requiring the same to be remedied, shall have been given to the
Servicer by any party to this Agreement.
If an Event of Default shall occur with respect to the Servicer
pursuant to subsection (i) of this Section 7.01, the Trustee shall by notice in
writing to the Servicer (with a copy to each Rating Agency), terminate all of
the rights and obligations of the Servicer under this Agreement and in and to
the Mortgage Loans and the proceeds thereof, other than its rights as a
Certificateholder hereunder. If an Event of Default shall occur with respect to
the Servicer pursuant to subsection (ii) - (vi) of this Section 7.01, then, and
in each and every such case, so long as such Event of Default shall not have
been remedied within the applicable grace period, the Trustee may, or, at the
direction of the Holders of Certificates evidencing not less than 25% of the
Voting Rights evidenced by the Certificates, shall, by notice in writing to the
Servicer (with a copy to each Rating Agency), terminate all of the rights and
obligations of the Servicer under this Agreement and in and to the Mortgage
Loans and the proceeds thereof, other than its rights as a Certificateholder
hereunder. On or after the receipt by the Servicer of any such written notice,
all authority and power of the Servicer hereunder, whether with respect to the
Mortgage Loans or otherwise, shall pass to and be vested in the Trustee. To the
extent the Event of Default resulted from the failure of the Servicer to make a
required Advance, the Trustee shall terminate the Servicer and thereupon make
any Advance described in Section 4.01 hereof as successor servicer subject to
Section 3.04 hereof. The Trustee is hereby authorized and empowered to execute
and deliver, on behalf of the Servicer, as attorney-in-fact or otherwise, any
and all documents and other instruments, and to do or accomplish all other acts
or things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement or assignment of
the Mortgage Loans and related documents, or otherwise. Unless expressly
provided in such written notice, no such termination shall affect any obligation
of the Servicer to pay amounts owed pursuant to Article VIII. The Servicer
agrees to cooperate with the Trustee in effecting the termination of the
Servicer's responsibilities and rights hereunder, including, without limitation,
the transfer to the Trustee of all cash amounts which shall at the time be
credited to the Collection Account, or thereafter be received with respect to
the Mortgage Loans. The Servicer and the Trustee shall promptly notify the
Rating Agencies of the occurrence of an Event of Default or an event that, with
notice, passage of time, other action or any combination of the foregoing would
be an Event of Default, such notice to be provided in any event within two
Business Days of such occurrence.
Notwithstanding any termination of the activities of the Servicer
hereunder, the Servicer shall be entitled to receive, out of any late collection
of a Scheduled Payment on a Mortgage Loan that was due prior to the notice
terminating the Servicer's rights and obligations as Servicer hereunder and
received after such notice, that portion thereof to which the Servicer would
have been entitled pursuant to Section 3.08(a), and any other amounts payable to
the Servicer hereunder the entitlement to which arose prior to the termination
of its activities hereunder. Notwithstanding anything herein to the contrary,
upon termination of the Servicer hereunder, any liabilities of the Servicer
which accrued prior to such termination shall survive such termination.
For purposes of this Section 7.01, the Trustee shall not be deemed to
have knowledge of an Event of Default unless a Responsible Officer of the
Trustee assigned to and working in the Trustee's Corporate Trust Office has
actual knowledge thereof or unless written notice of any event that is in fact
such Event of Default is received by the Trustee and such notice references the
Certificates, the Trust Fund or this Agreement.
SECTION 7.02. Trustee to Act; Appointment of Successor.
On and after the time the Servicer receives a notice of termination
pursuant to Section 7.01 hereof, the Trustee shall, to the extent provided in
Section 3.04, be the successor to the Servicer in its
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capacity as servicer under this Agreement and the transactions set forth or
provided for herein and shall be subject to all the responsibilities, duties and
liabilities (other than liabilities incurred by the predecessor Servicer)
relating thereto placed on the Servicer by the terms and provisions hereof and
applicable law including the obligation to make advances pursuant to Section
4.01. As compensation therefor, subject to the last paragraph of Section 7.01,
the Trustee shall be entitled to all fees, compensation and reimbursement for
costs and expenses that the Servicer would have been entitled to hereunder if
the Servicer had continued to act hereunder. Notwithstanding the foregoing, if
the Trustee has become the successor to the Servicer in accordance with Section
7.01 hereof, the Trustee may, if it shall be unwilling to so act, or shall, if
it is prohibited by applicable law from making Advances pursuant to Section 4.01
hereof or if it is otherwise unable to so act, appoint, or petition a court of
competent jurisdiction to appoint, any established mortgage loan servicing
institution the appointment of which does not adversely affect the then current
rating of the Certificates by each Rating Agency (as acknowledged by a letter
from each Rating Agency, as described below) as the successor to the Servicer
hereunder in the assumption of all or any part of the responsibilities, duties
or liabilities of the Servicer hereunder. Any successor Servicer shall be an
institution that is a ▇▇▇▇▇▇ ▇▇▇ and ▇▇▇▇▇▇▇ Mac approved seller/servicer in
good standing, that has a net worth of at least $15,000,000, and that is willing
to service the Mortgage Loans and executes and delivers to the Depositor and the
Trustee an agreement accepting such delegation and assignment, that contains an
assumption by such Person of the rights, powers, duties, responsibilities,
obligations and liabilities of the Servicer (other than liabilities of the
Servicer under Section 6.03 hereof incurred prior to termination of the Servicer
under Section 7.01), with like effect as if originally named as a party to this
Agreement; and provided further that each Rating Agency acknowledges that its
rating of the Certificates in effect immediately prior to such assignment and
delegation will not be qualified or reduced as a result of such assignment and
delegation. No appointment of a successor to the Servicer hereunder shall be
effective until the Trustee and the Depositor shall have consented thereto and
written notice of such proposed appointment shall have been provided by the
Trustee to each Certificateholder. The Trustee shall not resign as servicer
until a successor servicer has been appointed and has accepted such appointment.
Pending appointment of a successor to the Servicer hereunder, the Trustee,
unless the Trustee is prohibited by law from so acting, shall, subject to
Section 3.04 hereof, act in such capacity as hereinabove provided. In connection
with such appointment and assumption, the Trustee may make such arrangements for
the compensation of such successor out of payments on Mortgage Loans as it and
such successor shall agree; provided, however, that no such compensation shall
be in excess of that permitted the Servicer hereunder. The Trustee and such
successor shall take such action, consistent with this Agreement, as shall be
necessary to effectuate any such succession. Neither the Trustee nor any other
successor servicer shall be deemed to be in default hereunder by reason of any
failure to make, or any delay in making, any distribution hereunder or any
portion thereof or any failure to perform, or any delay in performing, any
duties or responsibilities hereunder, in either case caused by the failure of
the Servicer to deliver or provide, or any delay in delivering or providing, any
cash, information, documents or records to it.
The Trustee or other successor servicer shall be entitled to be
reimbursed by the Servicer (or by the Trust Fund if the Servicer is unable to
fulfill its obligations hereunder, or if the Servicer is the Trustee) for all
reasonable out-of-pocket costs (such expenses of the Trustee to be documented by
the Trustee to the extent possible) associated with the transfer of servicing
from the predecessor Servicer, including without limitation any such costs or
expenses associated with the complete transfer of all servicing data and the
completion, correction or manipulation of such servicing data or otherwise to
enable the Trustee as successor servicer or other successor servicer to service
the Mortgage Loans properly and effectively.
Any successor to the Servicer as servicer shall give notice to the
Mortgagors of such change of servicer and shall, during the term of its service
as servicer maintain in force the policy or policies that the Servicer is
required to maintain pursuant to Section 6.05.
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SECTION 7.03. Notification to Certificateholders.
(a) Upon any termination of or appointment of a successor to the
Servicer, the Trustee shall give prompt written notice thereof to
Certificateholders, the Depositor and to each Rating Agency.
(b) Within 60 days after the occurrence of any Event of Default, the
Trustee shall transmit by mail to all Certificateholders notice of each such
Event of Default hereunder known to the Trustee, unless such Event of Default
shall have been cured or waived.
ARTICLE VIII
CONCERNING THE TRUSTEE
SECTION 8.01. Duties of 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, shall undertake to
perform such duties and only such duties as are specifically set forth in this
Agreement. In case an Event of Default has occurred and remains uncured, the
Trustee shall exercise such of the rights and powers vested in it by this
Agreement and use the same degree of care and skill in their exercise as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs. In case an Event of Default or other default by the
Servicer or the Depositor hereunder shall occur and be continuing, the Trustee
shall, at the written direction of the majority of the Certificateholders, or
may, proceed to protect and enforce its rights and the rights of the
Certificateholders under this Agreement by a suit, action or proceeding in
equity or at law or otherwise, whether for the specific performance of any
covenant or agreement contained in this agreement or in aid of the execution of
any power granted in this Agreement or for the enforcement of any other legal,
equitable or other remedy, as the Trustee, being advised by counsel and subject
to the foregoing, shall deem most effectual to protect and enforce any of the
rights of the Trustee and the Certificateholders. Any permissive right of the
Trustee enumerated in this Agreement shall not be construed as a duty.
The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee that are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform on their face to the requirements of this Agreement. If any such
instrument is found not to conform on its face to the requirements of this
Agreement in a material manner, the Trustee shall notify the person providing
such Agreement of such non-conformance, and if the instrument is not corrected
to the Trustee's satisfaction, the Trustee will provide notice thereof to the
Certificateholders and take such further action as directed by the
Certificateholders.
No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own misconduct, its negligent failure to perform its obligations
in compliance with this Agreement, or any liability that would be imposed by
reason of its willful misfeasance or bad faith; provided, however, that:
(i) prior to the occurrence of an Event of Default, and after the
curing of all such Events of Default that may have occurred, the duties and
obligations of the Trustee shall be determined solely by the express provisions
of this Agreement, the Trustee shall not be liable, individually or as Trustee,
except for the performance of such duties and obligations as are specifically
set forth in this Agreement, no implied covenants or obligations shall be read
into this Agreement against the
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Trustee, and the Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Agreement that it reasonably believed in good faith to be
genuine and to have been duly executed by the proper authorities respecting any
matters arising hereunder;
(ii) the Trustee shall not, individually or as Trustee, be liable
for an error of judgment made in good faith by a Responsible Officer or
Responsible Officers of the Trustee unless the Trustee was negligent or acted in
bad faith or with willful misfeasance; and
(iii) the Trustee shall not be liable, individually or as
Trustee, with respect to any action taken, suffered or omitted to be taken by it
in good faith in accordance with the direction of the Holders in accordance with
this Agreement 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.
SECTION 8.02. Certain Matters Affecting the Trustee.
(a) Except as otherwise provided in Section 8.01:
(i) the Trustee may request and conclusively rely upon and shall
be fully protected in acting or refraining from acting upon any resolution,
Officer's Certificate, certificate of auditors or any other certificate,
statement, instrument, opinion, report, notice, request, consent, order,
appraisal, bond or other paper or document believed by it to be genuine and to
have been signed or presented by the proper party or parties;
(ii) the Trustee may consult with counsel of its choice and any
advice 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 Opinion of Counsel;
(iii) the Trustee shall not be liable for any action taken,
suffered or omitted by it in good faith and believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this Agreement;
(iv) prior to the occurrence of an Event of Default hereunder and
after the curing of all Events of Default that may have occurred, the Trustee
shall not be bound to make any investigation into the facts or matters stated in
any resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, approval, bond or other paper or document, unless
requested in writing so to do by the Holders of each Class of Certificates
evidencing not less than 25% of the Voting Rights of such Class;
(v) the Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents,
custodians, accountants, attorneys or independent contractors and the Trustee
will not be responsible for any misconduct or negligence on the part of any
agent, custodian, accountant, attorney or independent contractor appointed with
due care by it hereunder;
(vi) the Trustee shall not be required to expend its own funds or
otherwise incur any financial liability in the performance of any of its duties
hereunder if it shall have reasonable grounds for believing that repayment of
such funds or adequate indemnity against such liability is not assured to it;
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(vii) the Trustee shall not be liable, individually or as
Trustee, for any loss on any investment of funds pursuant to this Agreement
(other than as issuer of the investment security);
(viii) the Trustee shall not be deemed to have knowledge of an
Event of Default until a Responsible Officer of the Trustee shall have received
written notice thereof;
(ix) the Trustee shall be under no obligation to exercise any of
the trusts or powers vested in it by this Agreement or to make any investigation
of matters arising hereunder or to institute, conduct or defend any litigation
hereunder or in relation hereto at the request, order or direction of any of the
Certificateholders, pursuant to the provisions of this Agreement, unless the
Certificateholders shall have offered to the Trustee security or indemnity
satisfactory to it against the costs, expenses and liabilities that may be
incurred therein or thereby;
(x) if requested by the Servicer, the Trustee may appoint the
Servicer as the Trustee's attorney-in-fact in order to carry out and perform
certain activities that are necessary or appropriate for the servicing and
administration of the Mortgage Loans pursuant to this Agreement. Such
appointment shall be evidenced by a power of attorney in such form as may be
agreed to by the Trustee and the Servicer. The Trustee shall have no liability
for any action or inaction of the Servicer in connection with such power of
attorney and the Trustee shall be indemnified by the Servicer for all
liabilities, costs and expenses incurred by the Trustee in connection with the
Servicer's use or misuse of such powers of attorney; and
(xi) in order to comply with its duties under the U.S.A. Patriot
Act, the Trustee shall obtain and verify certain information and documentation
from the other parties hereto, including but not limited to, such party's name,
address and other identifying information
(xii) the Trustee may rely on the sole judgment of the Depositor
in determining whether "Eligible Collateral" (as defined in the Cap Contract)
has been delivered in an amount equal to the "Exposure" (as defined in the Cap
Contract) as contemplated by Section 4(10) of the Cap Contract. The Trustee
shall not be liable, individually or as Trustee, for any action relating to the
determination of whether collateral delivered pursuant to the sentence above
constitutes "Eligible Collateral."
(b) All rights of action under this Agreement or under any of the
Certificates, enforceable by the Trustee, may be enforced by the Trustee without
the possession of any of the Certificates, or the production thereof at the
trial or other proceeding relating thereto, and any such suit, action or
proceeding instituted by the Trustee shall be brought in its name for the
benefit of all the Holders of the Certificates, subject to the provisions of
this Agreement. The Trustee shall have no duty (A) to record, file or deposit
this Agreement or any agreement referred to herein or any financing statement or
continuation statement evidencing a security interest, or to see to the
maintenance of any rerecording, refiling or redepositing, as applicable,
thereof, (B) to establish or maintain any insurance or (C) to see to the payment
or discharge of any tax, assessment, or other governmental charge or any lien or
encumbrance of any kind owing with respect to, assessed or levied against, any
part of the Trust Fund.
(c) The Trustee is hereby directed to execute and deliver on behalf of
the Trust Fund any letter agreements relating to the MI Policy.
SECTION 8.03. Trustee Not Liable for Certificates or Mortgage Loans.
The recitals contained herein shall be taken as the statements of the
Depositor or the Servicer, as the case may be, and the Trustee assumes no
responsibility for their correctness. The Trustee
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makes no representation as to the validity or sufficiency of this Agreement, of
any Mortgage Loan, or of any related document other than with respect to the
execution and authentication of the Certificates, if the Trustee executed or
authorized the Certificates. The Trustee shall not be accountable for the use or
application by the Depositor or the Servicer of any funds paid to the Depositor
or the Servicer in respect of the Mortgage Loans or deposited in or withdrawn
from the Collection Account or the Certificate Account by the Depositor or the
Servicer.
SECTION 8.04. Trustee May Own Certificates.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Certificates with the same rights as it would have if it was
not the Trustee.
SECTION 8.05. Trustee's Fees and Expenses.
The Trustee shall be entitled to compensation (which shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust) for all services rendered by it 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.
SECTION 8.06. Indemnification and Expenses of Trustee.
(a) The Trustee and its respective directors, officers, employees and
agents shall be entitled to indemnification from the Trust Fund for any loss,
liability or expense incurred in connection with (i) any audit, controversy or
judicial proceeding relating to a governmental authority or any default, claim,
pending or threatened claim or legal proceeding incurred without negligence or
willful misconduct on their part, arising out of, or in connection with the
acceptance or administration of the trusts created hereunder and (ii) the
performance of their respective duties hereunder, including any applicable fees
and expenses payable hereunder, and the costs and expenses of defending
themselves against any claim in connection with the exercise or performance of
any of their powers or duties hereunder, provided that:
(i) with respect to any such claim, the Trustee shall have given
the Depositor written notice thereof promptly after the Trustee shall have
knowledge thereof; provided that failure to so notify shall not relieve the
Trust Fund of the obligation to indemnify the Trustee; however, any reasonable
delay by the Trustee to provide written notice to the Depositor and the Holders
promptly after the Trustee shall have obtained knowledge of a claim shall not
relieve the Trust Fund of the obligation to indemnify the Trustee under this
Section 8.06;
(ii) while maintaining control over its own defense, the Trustee
shall reasonably cooperate and consult with the Depositor in preparing such
defense;
(iii) notwithstanding anything to the contrary in this Section
8.06, the Trust Fund shall not be liable for settlement of any such claim by the
Trustee entered into without the prior consent of the Depositor, which consent
shall not be unreasonably withheld or delayed; and
(iv) indemnification therefor would constitute "unanticipated
expenses" within the meaning of Treasury Regulation Section 1.860G-1(b)(3)(ii).
The provisions of this Section 8.06 shall survive any termination of
this Agreement and the resignation or removal of the Trustee and shall be
construed to include, but not be limited to any loss, liability or expense under
any environmental law.
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(b) The Trustee shall be entitled to reimbursement by the Trust Fund
of all reasonable expenses, disbursements and advances incurred or made by the
Trustee in accordance with this Agreement (including fees and expenses of its
counsel and all persons not regularly in its employment), except any such
expenses, disbursements and advances that either (i) arise from its negligence,
bad faith or willful misconduct or (ii) do not constitute "unanticipated
expenses" within the meaning of Treasury Regulations Section 1.860G-1(b)(3)(ii).
SECTION 8.07. Eligibility Requirements for Trustee.
The Trustee hereunder shall, at all times, be a corporation or
association organized and doing business under the laws of a state or the United
States of America, authorized under such laws to exercise corporate trust powers
having a combined capital and surplus of at least $50,000,000, subject to
supervision or examination by federal or state authority and with a credit
rating that would not cause any of the Rating Agencies to reduce their
respective ratings of any Class of Certificates below the ratings issued on the
Closing Date (or having provided such security from time to time as is
sufficient to avoid such reduction). If such corporation or association
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purposes of this Section 8.07 the combined capital and surplus of such
corporation or association shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section 8.07, the Trustee shall resign immediately in the
manner and with the effect specified in Section 8.08 hereof. The corporation or
national banking association serving as Trustee may have normal banking and
trust relationships with the Depositor and its respective Affiliates; provided,
however, that such corporation cannot be an Affiliate of the Servicer other than
the Trustee in its role as successor to the Servicer.
SECTION 8.08. Resignation and Removal of Trustee.
The Trustee may at any time resign and be discharged from the trusts
hereby created by (1) giving written notice of resignation to the Depositor by
mailing notice of resignation by first class mail, postage prepaid, to the
Certificateholders at their addresses appearing on the Certificate Register and
each Rating Agency, not less than 60 days before the date specified in such
notice when, subject to Section 8.09, such resignation is to take effect, and
(2) acceptance of appointment by a successor trustee in accordance with Section
8.09 and meeting the qualifications set forth in Section 8.07. If no successor
trustee shall have been so appointed and have accepted appointment within 30
days after the giving of such notice or resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
trustee.
If at any time (i) the Trustee shall cease to be eligible in
accordance with the provisions of Section 8.07 hereof and shall fail to resign
after written request thereto by the Depositor or (ii) the Trustee shall become
incapable of acting, or shall be adjudged as 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, then the
Depositor may remove the Trustee and shall promptly appoint a successor trustee
by written instrument, in triplicate, one copy of which instrument shall be
delivered to the Trustee, one copy of which shall be delivered to the Servicer
and one copy of which shall be delivered to the successor trustee.
The Holders evidencing at least 51% of the Voting Rights of all
Classes of Certificates, upon failure of the Trustee to perform its obligations
hereunder, may at any time remove the Trustee and the Depositor shall appoint a
successor trustee by written instrument or instruments, in triplicate, signed by
such Holders or their attorneys-in-fact duly authorized, one complete set of
which instruments shall be
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delivered by the successor trustee to the Trustee so removed and one complete
set to the successor so appointed. Notice of any removal of the Trustee shall be
given to each Rating Agency by the successor trustee.
Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 8.08 shall
become effective upon acceptance of appointment by the successor trustee as
provided in Section 8.09 hereof.
SECTION 8.09. Successor Trustee.
Any successor trustee appointed as provided in Section 8.08 hereof
shall execute, acknowledge and deliver to the Depositor and to its predecessor
trustee and the Servicer an instrument accepting such appointment hereunder and
thereupon the resignation or removal of the predecessor trustee shall become
effective and such successor trustee, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with the like effect as if originally
named as trustee herein.
No successor trustee shall accept appointment as provided in this
Section 8.09 unless at the time of such acceptance such successor trustee shall
be eligible under the provisions of Section 8.07 hereof and its appointment
shall not adversely affect the then current rating of the Certificates.
Upon acceptance of appointment by a successor trustee as provided in
this Section 8.09, the Depositor shall mail notice of the succession of such
trustee hereunder to all Holders of Certificates. If the Depositor fails to mail
such notice within ten days after acceptance of appointment by the successor
trustee, the successor trustee shall cause such notice to be mailed at the
expense of the Depositor.
SECTION 8.10. Merger or Consolidation of Trustee.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided that such corporation shall be eligible under the provisions of Section
8.07 hereof without the execution or filing of any paper or further act on the
part of any of the parties hereto, anything herein to the contrary
notwithstanding (except for the execution of an assumption agreement where such
succession is not effected by operation of law).
SECTION 8.11. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Trust Fund or property securing any Mortgage Note may at the
time be located, the Servicer and the Trustee acting jointly shall have the
power and shall execute and deliver all instruments to appoint one or more
Persons approved by the Trustee to act as co-trustee or co-trustees jointly with
the Trustee, or separate trustee or separate trustees, of all or any part of the
Trust Fund, and to vest in such Person or Persons, in such capacity and for the
benefit of the Certificateholders, such title to the Trust Fund or any part
thereof, whichever is applicable, and, subject to the other provisions of this
Section 8.11, such powers, duties, obligations, rights and trusts as the
Servicer and the Trustee may consider necessary or desirable. Any such
co-trustee or separate trustee shall be compensated by the Trust Fund and
subject to the written approval of the Servicer. The Trustee shall not be liable
for the actions of any co-trustee appointed with due care; provided that the
appointment of a co-trustee shall not relieve the Trustee of its obligations
hereunder. If
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the Servicer shall not have joined in such appointment within 15 days after the
receipt by it of a request to do so, or in the case an Event of Default shall
have occurred and be continuing, the Trustee alone shall have the power to make
such appointment. No co-trustee or separate trustee hereunder shall be required
to meet the terms of eligibility as a successor trustee under Section 8.07 and
no notice to Certificateholders of the appointment of any co-trustee or separate
trustee shall be required under Section 8.09.
Every separate trustee and co-trustee shall, to the extent permitted
by law, be appointed and act subject to the following provisions and conditions:
(i) All rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and exercised or
performed by the Trustee and such separate trustee or co-trustee jointly (it
being understood that such separate trustee or co-trustee is not authorized to
act separately without the Trustee joining in such act), except to the extent
that under any law of any jurisdiction in which any particular act or acts are
to be performed (whether as Trustee hereunder or as successor to the Servicer
hereunder), the Trustee shall be incompetent or unqualified to perform such act
or acts, in which event such rights, powers, duties and obligations (including
the holding of title to the Trust Fund or any portion thereof in any such
jurisdiction) shall be exercised and performed singly by such separate trustee
or co-trustee, but solely at the direction of the Trustee;
(ii) No trustee hereunder shall be held personally liable by
reason of any act or omission of any other trustee hereunder; and
(iii) The Trustee may at any time accept the resignation of or
remove any separate trustee or co-trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article VIII. Each separate trustee and co-trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to the
Servicer and the Depositor.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
SECTION 8.12. Tax Matters.
(a) It is intended that each of the REMICs provided for herein REMIC
shall constitute, and that the affairs of the Trust Fund shall be conducted so
as to allow each such REMIC to qualify as, a "real estate mortgage investment
conduit" as defined in and in accordance with the REMIC Provisions. In
furtherance of such intention, the Trustee covenants and agrees that it shall
act as agent (and the Trustee is hereby appointed to act as agent) on behalf of
each of the REMICs provided for herein and that in such capacity it shall: (a)
prepare and file, or cause to be prepared and filed, in a timely
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manner, a U.S. Real Estate Mortgage Investment Conduit Income Tax Return (Form
1066 or any successor form adopted by the Internal Revenue Service) and prepare
and file or cause to be prepared and filed with the Internal Revenue Service and
applicable state or local tax authorities income tax or information returns for
each taxable year with respect to each of the REMICs provided for herein,
containing such information and at the times and in the manner as may be
required by the Code or state or local tax laws, regulations, or rules, and
furnish or cause to be furnished to Certificateholders the schedules, statements
or information at such times and in such manner as may be required thereby; (b)
within thirty days of the Closing Date, furnish or cause to be furnished to the
Internal Revenue Service, on Forms 8811 or as otherwise may be required by the
Code, the name, title, address, and telephone number of the person that the
holders of the Certificates may contact for tax information relating thereto,
together with such additional information as may be required by such Form, and
update such information at the time or times in the manner required by the Code
for each of the REMICs provided for herein; (c) make or cause to be made
elections, on behalf of each of the REMICs provided for herein to be treated as
a REMIC on the federal tax return of such REMICs for their first taxable years
(and, if necessary, under applicable state law); (d) prepare and forward, or
cause to be prepared and forwarded, to the Certificateholders and to the
Internal Revenue Service and, if necessary, state tax authorities, all
information returns and reports as and when required to be provided to them in
accordance with the REMIC Provisions, including without limitation, the
calculation of any original issue discount using the Prepayment Assumption; (e)
provide information necessary for the computation of tax imposed on the transfer
of a Class R Certificate to a Person that is not a Permitted Transferee, or an
agent (including a broker, nominee or other middleman) of a Person that is not a
Permitted Transferee, or a pass through entity in which a Person that is not a
Permitted Transferee is the record holder of an interest (the reasonable cost of
computing and furnishing such information may be charged to the Person liable
for such tax); (f) to the extent that they are under its control conduct the
affairs of each of the REMICs provided for herein at all times that any
Certificates are outstanding so as to maintain the status of each of the REMICs
provided for herein as a REMIC under the REMIC Provisions; (g) not knowingly or
intentionally take any action or omit to take any action that would cause the
termination of the REMIC status of any of the REMICs provided for herein or
result in the imposition of tax upon any such REMIC; (h) pay, from the sources
specified in the last paragraph of this Section 8.12, the amount of any federal,
state and local taxes, including prohibited transaction taxes as described
below, imposed on each of the REMICs provided for herein prior to the
termination of the Trust Fund when and as the same shall be due and payable (but
such obligation shall not prevent the Trustee or any other appropriate Person
from contesting any such tax in appropriate proceedings and shall not prevent
the Trustee from withholding payment of such tax, if permitted by law, pending
the outcome of such proceedings); (i) sign or cause to be signed federal, state
or local income tax or information returns; (j) maintain records relating to
each of the REMICs provided for herein, including but not limited to the income,
expenses, assets and liabilities of each of the REMICs provided for herein, and
the fair market value and adjusted basis of the Trust Fund property determined
at such intervals as may be required by the Code, as may be necessary to prepare
the foregoing returns, schedules, statements or information; and (k) as and when
necessary and appropriate, represent each of the REMICs provided for herein in
any administrative or judicial proceedings relating to an examination or audit
by any governmental taxing authority, request an administrative adjustment as to
any taxable year of any of the REMICs provided for herein, enter into settlement
agreements with any governmental taxing agency, extend any statute of
limitations relating to any tax item of any of the REMICs provided for herein,
and otherwise act on behalf of each of the REMICs provided for herein in
relation to any tax matter involving any of such REMICs or any controversy
involving the Trust Fund.
In order to enable the Trustee to perform its duties as set forth
herein, the Depositor shall provide, or cause to be provided, to the Trustee
within 10 days after the Closing Date all information or data that the Trustee
requests in writing and determines to be relevant for tax purposes to the
valuations and offering prices of the Certificates, including, without
limitation, the price, yield, prepayment assumption and projected cash flows of
the Certificates and the Mortgage Loans. Thereafter, the
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Depositor shall provide to the Trustee promptly upon written request therefor,
any such additional information or data that the Trustee may, from time to time,
request in order to enable the Trustee to perform its duties as set forth
herein. The Depositor hereby agrees to indemnify the Trustee for any losses,
liabilities, damages, claims or expenses of the Trustee arising from any errors
or miscalculations of the Trustee that result from any failure of the Depositor
to provide, or to cause to be provided, accurate information or data to the
Trustee on a timely basis.
In the event that any tax is imposed on "prohibited transactions" of
any of the REMICs provided for herein as defined in Section 860F(a)(2) of the
Code, on the "net income from foreclosure property" of the any of such REMICs as
defined in Section 860G(c) of the Code, on any contribution to the Trust Fund
after the Startup Day pursuant to Section 860G(d) of the Code, or any other tax
is imposed, if not paid as otherwise provided for herein, such tax shall be paid
by (i) the Trustee, if any such other tax arises out of or results from a breach
by the Trustee of any of its obligations under this Agreement, (ii) any party
hereto (other than the Trustee) to the extent any such other tax arises out of
or results from a breach by such other party of any of its obligations under
this Agreement or as a result of the location of such other party (except for
the Trustee) or (iii) in all other cases, or in the event that any liable party
here fails to honor its obligations under the preceding clauses (i) or (ii), any
such tax will be paid first with amounts (other than amounts derived by the
Trust Fund from a payment on the Cap Contract) otherwise to be distributed to
the Class R Certificateholders (pro rata) pursuant to Section 4.04, and second
with amounts otherwise to be distributed to all other Certificateholders in the
following order of priority: first, to the Class C Certificates (pro rata),
second to the Class B-4 Certificates (pro rata), third to the Class B-3
Certificates (pro rata), fourth to the Class B-2 Certificates (pro rata), fifth,
to the Class B-1 Certificates (pro rata), sixth to the Class M-2 Certificates
(pro rata), seventh to the Class M-1 Certificates (pro rata), and eighth to the
Class A Certificates (pro rata). Notwithstanding anything to the contrary
contained herein, to the extent that such tax is payable by the Class R
Certificate, the Trustee is hereby authorized pursuant to such instruction to
retain on any Distribution Date, from the Holders of the Class R Certificate
(and, if necessary, from the Holders of all other Certificates in the priority
specified in the preceding sentence), funds otherwise distributable to such
Holders in an amount sufficient to pay such tax. The Trustee agrees to promptly
notify in writing the party liable for any such tax of the amount thereof and
the due date for the payment thereof.
(b) Each of the Depositor and the Trustee agrees not to knowingly or
intentionally take any action or omit to take any action that would cause the
termination of the REMIC status of any of the REMICs provided for herein or
result in the imposition of a tax upon any of the REMICs provided for herein.
ARTICLE IX
TERMINATION
SECTION 9.01. Termination upon Liquidation or Repurchase of all
Mortgage Loans.
(a) Subject to Section 9.03, the obligations and responsibilities of
the Depositor, the Servicer and the Trustee created hereby with respect to the
Trust Fund shall terminate upon the earlier of (a) an Optional Termination and
(b) the later of (i) the maturity or other liquidation (or any Advance with
respect thereto) of the last Mortgage Loan remaining in the Trust Fund and the
disposition of all REO Property and (ii) the distribution to Certificateholders
of all amounts required to be distributed to them pursuant to this Agreement, as
applicable. In no event shall the trusts created hereby continue beyond the
earlier of (i) the expiration of 21 years from the death of the last survivor of
the descendants of ▇▇▇▇▇▇ ▇.
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▇▇▇▇▇▇▇, the late Ambassador of the United States to the Court of St. James's,
living on the date hereof and (ii) the Latest Possible Maturity Date.
(b) On or before the Determination Date following the Initial Optional
Termination Date, the Trustee shall attempt to terminate the Trust Fund by
conducting an auction of all of the Mortgage Loans and REO Properties (the
"Auction") upon its receipt of bids in accordance with the auction procedures
set forth in Exhibit N, attached hereto, and which bids are solicited by the
Auction Agent or its successor. The Trustee shall be entitled to retain the
Auction Agent in connection with the Auction, the cost of which shall be
included in the Optional Termination Price (unless an Optional Termination does
not occur in which case such costs shall be an expense of the Trust Fund). The
Trustee shall accept the highest bid received at the Auction; provided that the
amount of such bid equals or exceeds the Optional Termination Price. The Trustee
shall determine the Optional Termination Price based upon information provided
by (i) the Servicer with respect to the amounts described in clauses (A) and (B)
of the definition of "Optional Termination Price", (ii) the Depositor with
respect to the information described in clause (C) of the definition of
"Optional Termination Price." The Trustee may conclusively rely upon the
information provided to it in accordance with the immediately preceding sentence
and shall not have any liability for the failure of any party to provide such
information.
If an Optional Termination does not occur as a result of the Auction's
failure to achieve the Optional Termination Price, the Servicer may, on any
Distribution Date following such Auction, at its option, terminate the Trust
Fund by purchasing all of the Mortgage Loans and REO Properties at a price equal
to the Optional Termination Price. In the event that the Auction fails to
achieve the Optional Termination Price, the Servicer may, on the first
Distribution Date following such Auction, at its option, terminate the Trust
Fund by purchasing all of the Mortgage Loans and REO Properties at a price equal
to the Optional Termination Price. In connection with such termination, the
Optional Termination Price shall be delivered to the Trustee no later than the
Servicer Remittance Date immediately preceding the related Distribution Date.
Notwithstanding anything to the contrary herein, the Optional Termination Amount
paid to the Trustee by the winning bidder at the Auction or by the Servicer
shall be deposited by the Trustee directly into the Certificate Account
immediately upon receipt. Upon any termination as a result of an Auction, the
Trustee shall, out of the Optional Termination Amount deposited into the
Certificate Account, (x) reimburse the Trustee for its costs and expenses
necessary to conduct the Auction and any other unreimbursed amounts owing to it
and (y) pay to the Servicer, the aggregate amount of any unreimbursed
out-of-pocket costs and expenses owed to the Servicer and any unpaid or
unreimbursed Servicing Fees, Advances and Servicing Advances.
(c) Notwithstanding anything to the contrary in clause (b) above, in
the event that the Trustee receives the written opinion of a nationally
recognized participant in mortgage finance acceptable to the Seller (which may
be the Auction Agent) that the Mortgage Loans and REO Properties to be included
in the Auction will not be saleable at a price sufficient to achieve the
Optional Termination Price, the Trustee need not conduct the Auction. In such
event, the Servicer shall have the option to purchase the Mortgage Loans and REO
Properties at the Optional Termination Price as of the Initial Optional
Termination Date.
SECTION 9.02. Final Distribution on the Certificates.
If on any Determination Date, (i) the Trustee determines that there
are no Outstanding Mortgage Loans and no other funds or assets in the Trust Fund
other than the funds in the Collection Account, the Trustee shall send a final
distribution notice promptly to each Certificateholder or (ii) the Trustee
determines that a Class of Certificates shall be retired after a final
distribution on such Class, the Trustee shall notify the Certificateholders
within seven (7) Business Days after such Determination Date that the final
distribution in retirement of such Class of Certificates is scheduled to be made
on the
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immediately following Distribution Date. Any final distribution made pursuant to
the immediately preceding sentence will be made only upon presentation and
surrender of the Certificates at the office of the Trustee specified in such
notice.
Notice of any termination of the Trust Fund, specifying the
Distribution Date on which Certificateholders may surrender their Certificates
for payment of the final distribution and cancellation, shall be given promptly
by the Trustee by letter to Certificateholders mailed no later than the last
calendar day of the month immediately preceding the month of such final
distribution (or with respect to an Auction, mailed no later than one Business
Day following completion of such Auction). Any such notice shall specify (a) the
Distribution Date upon which final distribution on the Certificates will be made
upon presentation and surrender of Certificates at the office therein
designated, (b) the location of the office or agency at which such presentation
and surrender must be made, and (c) that the Record Date otherwise applicable to
such Distribution Date is not applicable, distributions being made only upon
presentation and surrender of the Certificates at the office therein specified.
The Trustee will give such notice to each Rating Agency at the time such notice
is given to Certificateholders.
In the event such notice is given, the Servicer shall cause all funds
in the Collection Account to be deposited in the Certificate Account on the
Servicer Remittance Date prior to the applicable Distribution Date in an amount
equal to the final distribution in respect of the Certificates. Upon such final
deposit with respect to the Trust Fund, certification to the Trustee that such
required amount has been deposited in the Trust Fund and the receipt by the
Trustee of a Request for Release therefor, the Trustee (or its custodian) shall
promptly release the Mortgage Files for the Mortgage Loans.
Upon presentation and surrender of the Certificates, the Trustee shall
cause to be distributed to Certificateholders of each Class the amounts
allocable to such Certificates held in the Certificate Account in the order and
priority set forth in Section 4.04 hereof on the final Distribution Date and in
proportion to their respective Percentage Interests.
In the event that any affected Certificateholders shall not surrender
Certificates for cancellation within six months after the date specified in the
above mentioned written notice, the Trustee shall give a second written notice
to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
six months after the second notice all the applicable Certificates shall not
have been surrendered for cancellation, the Trustee may take appropriate steps,
or may appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates, and the cost
thereof shall be paid out of the funds and other assets that remain a part of
the Trust Fund. If within one year after the second notice all Certificates
shall not have been surrendered for cancellation, the Class R Certificateholders
shall be entitled to all unclaimed funds and other assets of the Trust Fund that
remain subject hereto. Upon payment to the Class R Certificateholders of such
funds and assets, the Trustee shall have no further duties or obligations with
respect thereto.
SECTION 9.03. Additional Termination Requirements.
(a) In the event the Trustee or the Servicer completes an Optional
Termination as provided in Section 9.01, the Trust Fund shall be terminated in
accordance with the following additional requirements, unless the Trustee has
been supplied with an Opinion of Counsel, at the expense of the Servicer, or in
the case of an Optional Termination by Auction, at the expense of the winning
bidder, to the effect that the failure of the Trust Fund to comply with the
requirements of this Section 9.03 will not (i) result in the imposition of taxes
on "prohibited transactions" of any of the REMICs provided for herein as defined
in Section 860F of the Code, or (ii) cause any of the REMICs provided for herein
to fail to qualify as a REMIC at any time that any Certificates are outstanding:
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(i) The Depositor shall establish a 90-day liquidation period and
notify the Trustee thereof, and the Trustee shall in turn specify the first day
of such period in a statement attached to the final tax returns of each of the
REMICs provided for herein pursuant to Treasury Regulation Section 1.860F-1. The
Depositor shall satisfy all the requirements of a qualified liquidation under
Section 860F of the Code and any regulations thereunder, as evidenced by an
Opinion of Counsel obtained at the expense of the Servicer, or in the case of an
Optional Termination, at the expense of the winning bidder, and addressed to and
provided to the Trustee;
(ii) During such 90-day liquidation period, and at or prior to
the time of making the final payment on the Certificates, the Depositor as agent
of the Trustee shall sell all of the assets of the Trust Fund for cash; and
(iii) At the time of the making of the final payment on the
Certificates, the Trustee shall distribute or credit, or cause to be distributed
or credited, to the Class R Certificateholders all cash on hand (other than cash
retained to meet outstanding claims), and the Trust Fund shall terminate at that
time, whereupon the Trustee shall have no further duties or obligations with
respect to sums distributed or credited to the Class R Certificateholders.
(b) By their acceptance of the Certificates, the Holders thereof
hereby authorize the Depositor to specify the 90-day liquidation period for the
Trust Fund, which authorization shall be binding upon all successor
Certificateholders.
(c) The Trustee as agent for each REMIC hereby agrees, upon the
written request of the Depositor, to adopt and sign such a plan of complete
liquidation prepared and delivered to it by Depositor and the receipt of the
Opinion of Counsel referred to in Section 9.03(a) and to take such other action
in connection therewith as may be reasonably requested by the Depositor.
(d) Notwithstanding any other terms of this Agreement, prior to any
termination of the Trust Fund, the Servicer may prepare a reconciliation of all
Advances and Servicing Advances made by it for which it has not been reimbursed
and a reasonable estimate of all additional Servicing Advances and other costs
for which it would be entitled to be reimbursed if the Trust Fund were not being
terminated, including without limitation, any Servicing Advances and other costs
arising under Section 6.03 (Limitation on Liability of the Depositor, the
Servicer and Others), and the Servicer may recover these Advances, Servicing
Advances and estimated Servicing Advances and other costs from the Collection
Account (to the extent that such recovery of Servicing Advances, estimated
Servicing Advances and other costs constitutes "unanticipated expenses" within
the meaning of Treasury Regulation Section 1.860G-1(b)(3)(ii)).
(e) Notwithstanding any other terms of this Agreement, unless the
Servicer previously has notified the Trustee that it has entered into a
servicing agreement for the servicing after the termination date of the Trust
Fund assets, at least 20 days prior to any termination of the Trust Fund, the
Trustee or the Depositor shall notify the Servicer in writing to transfer the
assets of the Trust Fund as of the termination date to the person specified in
the notice, or if such person is not then known, to continue servicing the
assets until the date that is 20 days after the termination date and on the
termination date, the Depositor shall notify the Servicer of the person to whom
the assets should be transferred on that date. In the latter event the Servicer
shall be entitled to recover its servicing fee and any advances made for the
interim servicing period from the collections on the assets which have been
purchased from the Trust and the new owner of the assets, and the agreements for
the new owner to obtain ownership of the assets of the Trust Fund shall so
provide.
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ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.01. Amendment.
This Agreement may be amended from time to time by the Depositor, the
Servicer and the Trustee and without the consent of any of the
Certificateholders to,
(i) to cure any ambiguity or correct any mistake,
(ii) to correct, modify or supplement any provision therein which
may be inconsistent with the Prospectus Supplement or any other provision
herein,
(iii) to add any other provisions with respect to matters or
questions arising under this Agreement, or
(iv) to modify, alter, amend, add to or rescind any of the terms
or provisions contained in this Agreement, provided, however, that, in the case
of clauses (iii) and (iv), such amendment will not, as evidenced by an Opinion
of Counsel to such effect, adversely affect in any material respect the
interests of any Holder; provided, further, however, that such amendment will be
deemed to not adversely affect in any material respect the interest of any
Holder if the Person requesting such amendment obtains a letter from each Rating
Agency stating that such amendment will not result in a reduction or withdrawal
of its rating of any Class of the Certificates, it being understood and agreed
that any such letter in and of itself will not represent a determination as to
the materiality of any such amendment and will represent a determination only as
to the credit issues affecting any such rating.
Notwithstanding the foregoing, without the consent of the
Certificateholders, the Depositor, the Servicer and the Trustee may at any time
and from time to time amend this Agreement to modify, eliminate or add to any of
its provisions to such extent as shall be necessary or appropriate to maintain
the qualification of any of the REMICs provided for herein as REMICs under the
Code or to avoid or minimize the risk of the imposition of any tax on the Trust
Fund or any of the REMICs provided for herein pursuant to the Code that would be
a claim against the Trust Fund at any time prior to the final redemption of the
Certificates, provided that the Trustee shall have been provided an Opinion of
Counsel, which opinion shall be an expense of the party requesting such
amendment but in any case shall not be an expense of the Trustee, to the effect
that such action is necessary or appropriate to maintain such qualification or
to avoid or minimize the risk of the imposition of such a tax.
This Agreement may also be amended from time to time by the Depositor,
the Servicer, the Trustee and the Holders of the Certificates affected thereby
evidencing not less than 66 2/3% of the Voting Rights, for the purpose of adding
any provisions to or changing in any manner or eliminating any of the provisions
of this Agreement or of modifying in any manner the rights of the Holders of
Certificates; provided, however, that no such amendment shall (i) reduce in any
manner the amount of, or delay the timing of, payments required to be
distributed on any Certificate without the consent of the Holder of such
Certificate, (ii) adversely affect in any material respect the interests of the
Holders of any Class of Certificates in a manner other than as described in (i),
without the consent of the Holders of Certificates of such Class evidencing 66
2/3% or more of the Voting Rights of such Class or (iii) reduce the aforesaid
percentages of Certificates the Holders of which are required to consent to any
such amendment without the consent of the Holders of all such Certificates then
outstanding.
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Notwithstanding any contrary provision of this Agreement, the Trustee
shall not consent to any amendment to this Agreement unless it shall have first
received an Opinion of Counsel, which opinion shall be an expense of the party
requesting such amendment but in any case shall not be an expense of the
Trustee, to the effect that such amendment will not cause the imposition of any
tax on the Trust Fund, any of the REMICs provided for herein or the
Certificateholders or cause any of the REMICs provided for herein to fail to
qualify as a REMIC at any time that any Certificates are outstanding.
Promptly after the execution of any amendment to this Agreement
requiring the consent of Certificateholders, the Trustee or upon the written
request of the Trustee to the Servicer, the Servicer shall furnish written
notification of the substance of such amendment to each Certificateholder and
each Rating Agency.
It shall not be necessary for the consent of Certificateholders under
this Section to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Certificateholders shall be subject to such reasonable
regulations as the Trustee may prescribe.
Nothing in this Agreement shall require the Trustee to enter into an
amendment without receiving an Opinion of Counsel, satisfactory to the Trustee
that (i) such amendment is permitted and is not prohibited by this Agreement and
that all requirements for amending this Agreement have been complied with; and
(ii) either (A) the amendment does not adversely affect in any material respect
the interests of any Certificateholder or (B) the conclusion set forth in the
immediately preceding clause (A) is not required to be reached pursuant to this
Section 10.01.
The Trustee may, but shall not be obligated to, enter into any
supplement, modification or waiver which affects its rights, duties or
obligations hereunder.
SECTION 10.02. Counterparts.
This Agreement may be executed simultaneously in any number of
counterparts, each of which counterparts shall be deemed to be an original, and
such counterparts shall constitute but one and the same instrument.
SECTION 10.03. Governing Law.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND
TO BE PERFORMED IN THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HERETO AND THE CERTIFICATEHOLDERS SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO THE CONFLICTS OF LAWS PRINCIPLES
THEREOF.
SECTION 10.04. Intention of Parties.
It is the express intent of the parties hereto that the conveyance of
the Mortgage Notes, Mortgages, assignments of Mortgages, title insurance
policies and any modifications, extensions and/or assumption agreements and
private mortgage insurance policies relating to the Mortgage Loans by the
Depositor to the Trustee be, and be construed as, an absolute sale thereof to
the Trustee. It is, further, not the intention of the parties that such
conveyance be deemed a pledge thereof by the Depositor to the Trustee. However,
in the event that, notwithstanding the intent of the parties, such assets are
held to be
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the property of the Depositor, or if for any other reason this Agreement is held
or deemed to create a security interest in such assets, then (i) this Agreement
shall be deemed to be a security agreement within the meaning of the Uniform
Commercial Code of the State of New York and (ii) the conveyance provided for in
this Agreement shall be deemed to be an assignment and a grant by the Depositor
to the Trustee, for the benefit of the Certificateholders, of a security
interest in all of the assets that constitute the Trust Fund, whether now owned
or hereafter acquired.
The Depositor for the benefit of the Certificateholders shall, to the
extent consistent with this Agreement, take such actions as may be necessary to
ensure that, if this Agreement were deemed to create a security interest in the
assets of the Trust Fund, such security interest would be deemed to be a
perfected security interest of first priority under applicable law and will be
maintained as such throughout the term of the Agreement. The Depositor shall
arrange for filing any Uniform Commercial Code continuation statements in
connection with any security interest granted or assigned to the Trustee for the
benefit of the Certificateholders.
SECTION 10.05. Notices.
(a) The Trustee shall use its best efforts to promptly provide notice
to each Rating Agency with respect to each of the following of which it has
actual knowledge:
(i) Any material change or amendment to this Agreement;
(ii) The occurrence of any Event of Default that has not been
cured;
(iii) The resignation or termination of the Trustee or the
Servicer and the appointment of any successor;
(iv) The repurchase or substitution of Mortgage Loans pursuant to
Sections 2.02, 2.03 and 3.12;
(v) The final payment to Certificateholders; and
(vi) Any change in the location of the Certificate Account.
(b) The Trustee shall promptly furnish or make available to each
Rating Agency copies of the following:
(i) Each report to Certificateholders described in Section 4.05;
(ii) Each annual statement as to compliance described in Section
3.17; and
(iii) Each annual independent public accountants' servicing
report described in Section 3.18.
All directions, demands and notices hereunder shall be in writing and
shall be deemed to have been duly given when delivered to (a) in the case
of the Depositor, ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors, Inc. ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
4 World Financial Center, 10th Floor, New York, New York 10080, Attention:
Asset-Backed Finance; (b) in the case of the Rating Agencies, (i) Standard
& Poor's Ratings Services, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.,
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇; and (ii) ▇▇▇▇▇'▇ Investors
Service, Inc., ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇; (c)
in the case of the Servicer, Wilshire Credit Corporation, 14523
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▇.▇. ▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇; (d) in the case of
the Trustee, Deutsche Bank National Trust Company, ▇▇▇▇ ▇▇▇▇ ▇▇., ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Trust Administration -
ML05A1; (e) in the case of the MI Insurer, MGIC Plaza, ▇.▇. ▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇; and in the case of any of the foregoing
persons, such other addresses as may hereafter be furnished by any such
persons to the other parties to this Agreement. Notices to
Certificateholders shall be deemed given when mailed, first class postage
prepaid, to their respective addresses appearing in the Certificate
Register.
SECTION 10.06. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms
of this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement or of the Certificates or the rights of the Holders thereof.
SECTION 10.07. Assignment.
Notwithstanding anything to the contrary contained herein, except as
provided pursuant to Section 6.02, this Agreement may not be assigned by the
Servicer without the prior written consent of Trustee and the Depositor;
provided, however, the Servicer is hereby authorized to enter into an Advance
Facility under which (l) the Servicer sells, assigns or pledges to an Advancing
Person the Servicer's rights under this Agreement to be reimbursed for any
Advances or Servicing Advances and/or (2) an Advancing Person agrees to fund
some or all Advances or Servicing Advances required to be made by the Servicer
pursuant to this Agreement. No consent of the Trustee, Certificateholders or any
other party is required before the Servicer may enter into an Advance Facility.
Notwithstanding the existence of any Advance Facility under which an Advancing
Person agrees to fund Advances and/or Servicing Advances on the Servicer's
behalf, the Servicer shall remain obligated pursuant to this Agreement to make
Advances and Servicing Advances pursuant to and as required by this Agreement,
and shall not be relieved of such obligations by virtue of such Advance
Facility.
Reimbursement amounts shall consist solely of amounts in respect of
Advances and/or Servicing Advances made with respect to the Mortgage Loans for
which the Servicer would be permitted to reimburse itself in accordance with
this Agreement, assuming the Servicer had made the related Advance(s) and/or
Servicing Advance(s).
The Servicer shall maintain and provide to any successor Servicer a
detailed accounting on a loan by loan basis as to amounts advanced by, pledged
or assigned to, and reimbursed to any Advancing Person. The successor Servicer
shall be entitled to rely on any such information provided by the predecessor
Servicer, and the successor Servicer shall not be liable for any errors in such
information.
An Advancing Person who purchases or receives an assignment or pledge
of the rights to be reimbursed for Advances and/or Servicing Advances, and/or
whose obligations hereunder are limited to the funding of Advances and/or
Servicing Advances shall not be required to meet the criteria for qualification
of a Subservicer set forth in this Agreement.
The documentation establishing any Advance Facility shall require that
such reimbursement amounts distributed with respect to each Mortgage Loan be
allocated to outstanding unreimbursed Advances or Servicing Advances (as the
case may be) made with respect to that Mortgage Loan on a "first in, first out"
(FIFO) basis. Such documentation shall also require the Servicer to provide to
the related Advancing Person or its designee loan by loan information with
respect to each such
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reimbursement amount distributed to such Advancing Person or Advance Facility
trustee on each Distribution Date, to enable the Advancing Person or Advance
Facility trustee to make the FIFO allocation of each such reimbursement amount
with respect to each Mortgage Loan. The Servicer shall remain entitled to be
reimbursed by the Advancing Person or Advance Facility trustee for all Advances
and Servicing Advances funded by the Servicer to the extent the related rights
to be reimbursed therefor have not been sold, assigned or pledged to an
Advancing Person.
Any amendment to this Section 10.07 or to any other provision of this
Agreement that may be necessary or appropriate to effect the terms of an Advance
Facility as described generally in this Section 10.07, including amendments to
add provisions relating to a successor Servicer, may be entered into by the
Trustee and the Servicer, without the consent of any Certificateholder
notwithstanding anything to the contrary in this Agreement, upon receipt by the
Trustee of an Opinion of Counsel that such amendment has no material adverse
effect on the Certificateholders or written confirmation from the Rating
Agencies that such amendment will not adversely affect the ratings on the
Certificates. Prior to entering into an Advance Facility, the applicable
Servicer shall notify the lender under such facility in writing that: (a) the
Advances financed by and/or pledged to the lender are obligations owed to the
Servicer on a non recourse basis payable only from the cash flows and proceeds
received under this Agreement for reimbursement of Advances only to the extent
provided herein, and the Trustee and the Trust Fund are not otherwise obligated
or liable to repay any Advances financed by the lender; (b) the Servicer will be
responsible for remitting to the lender the applicable amounts collected by it
as reimbursement for Advances funded by the lender, subject to the restrictions
and priorities created in this Agreement; and (c) the Trustee shall not have any
responsibility to track or monitor the administration of the financing
arrangement between the Servicer and the lender.
SECTION 10.08. Limitation on Rights of Certificateholders.
The death or incapacity of any Certificateholder shall not operate to
terminate this Agreement or the Trust Fund, nor entitle such Certificateholder's
legal representative or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a petition or winding up of the Trust
Fund, or otherwise affect the rights, obligations and liabilities of the parties
hereto or any of them.
No Certificateholder shall have any right to vote (except as provided
herein) or in any manner otherwise control the operation and management of the
Trust Fund, or the obligations of the parties hereto, nor shall anything herein
set forth or contained in the terms of the Certificates be construed so as to
constitute the Certificateholders from time to time as partners or members of an
association; nor shall any Certificateholder be under any liability to any third
party by reason of any action taken by the parties to this Agreement pursuant to
any provision hereof.
No Certificateholder shall have any right by virtue or by availing
itself of any provisions of this Agreement to institute any suit, action or
proceeding in equity or at law upon or under or with respect to this Agreement,
unless such Holder previously shall have given to the Trustee a written notice
of an Event of Default and of the continuance thereof, as hereinbefore provided,
the Holders of Certificates evidencing not less than 25% of the Voting Rights
evidenced by the Certificates shall also have made written request to the
Trustee to institute such action, suit or proceeding in its own name as Trustee
hereunder and shall have offered to the Trustee such indemnity satisfactory to
it 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
-113-
any provisions of this Agreement to affect, disturb or prejudice the rights of
the Holders of any other of the 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 common
benefit of all Certificateholders. For the protection and enforcement of the
provisions of this Section 10.08, each and every Certificateholder and the
Trustee shall be entitled to such relief as can be given either at law or in
equity.
SECTION 10.09. Inspection and Audit Rights.
The Servicer agrees that, on reasonable prior notice, it will permit
any representative of the Depositor or the Trustee during the Servicer's normal
business hours, to examine all the books of account, records, reports and other
papers of the Servicer relating to the Mortgage Loans, to make copies and
extracts therefrom, to cause such books to be audited by independent certified
public accountants selected by the Depositor or the Trustee and to discuss its
affairs, finances and accounts relating to the Mortgage Loans with its officers,
employees, agents, counsel and independent public accountants (and by this
provision the Servicer hereby authorizes such accountants to discuss with such
representative such affairs, finances and accounts), all at such reasonable
times and as often as may be reasonably requested. Any out-of-pocket expense
incident to the exercise by the Depositor or the Trustee of any right under this
Section 10.09 shall be borne by the party requesting such inspection (except in
the case of the Trustee in which case such expenses shall be borne by the
requesting Certificateholder(s)); all other such expenses shall be borne by the
Servicer.
SECTION 10.10. Certificates Nonassessable and Fully Paid.
It is the intention of the Depositor that Certificateholders shall not
be personally liable for obligations of the Trust Fund, that the interests in
the Trust Fund represented by the Certificates shall be nonassessable for any
reason whatsoever, and that the Certificates, upon due authentication thereof by
the Trustee pursuant to this Agreement, are and shall be deemed fully paid.
SECTION 10.11. Third Party Rights.
The MI Insurer shall be deemed a third-party beneficiary of this
Agreement to the same extent as if it were a party hereto, and shall have the
right to enforce the provisions of this Agreement.
[SIGNATURE PAGE IMMEDIATELY FOLLOWS]
-114-
IN WITNESS WHEREOF, the Depositor, the Trustee and the Servicer have
caused their names to be signed hereto by their respective officers thereunto
duly authorized as of the day and year first above written.
▇▇▇▇▇▇▇ ▇▇▇▇▇ MORTGAGE INVESTORS, INC.,
as Depositor
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
DEUTSCHE BANK NATIONAL TRUST COMPANY,
as Trustee
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
WILSHIRE CREDIT CORPORATION,
as Servicer
By:
------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice President
EXHIBIT A
FORMS OF CERTIFICATES
[INTENTIONALLY OMITTED]
A-1
EXHIBIT B-1
MORTGAGE LOAN SCHEDULE - MORTGAGE POOL
[INTENTIONALLY OMITTED]
B-1-1
EXHIBIT B-2
MORTGAGE LOAN SCHEDULE - GROUP ONE MORTGAGE LOANS
[INTENTIONALLY OMITTED]
B-2-1
EXHIBIT B-3
MORTGAGE LOAN SCHEDULE - GROUP TWO MORTGAGE LOANS
[INTENTIONALLY OMITTED]
B-3-1
EXHIBIT B-4
MORTGAGE LOAN SCHEDULED - GROUP THREE MORTGAGE LOANS
[INTENTIONALLY OMITTED]
B-4-1
EXHIBIT C
[RESERVED]
C-1
EXHIBIT D
FORM OF CUSTODIAN CERTIFICATION
[DATE]
▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
4 World Financial ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Wilshire Credit Corporation
▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Deutsche Bank National Trust Company
▇▇▇▇ ▇▇▇▇ ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors Trust, Mortgage Loan Asset-Backed
Certificates, Series 2005-AR1
Ladies and Gentlemen:
In accordance with Section 2.02 of the Pooling and Servicing Agreement
dated as of September 1, 2005 among ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors, Inc., as
depositor, Deutsche Bank National Trust Company, as trustee and Wilshire Credit
Corporation, as servicer (the "Pooling and Servicing Agreement"), the
undersigned, as custodian, hereby certifies that [, except as set forth in
Schedule A hereto,] as to each Mortgage Loan listed in the Mortgage Loan
Schedule attached hereto (other than any Mortgage Loan paid in full or listed on
the attachment hereto) it has reviewed the Mortgage File and the Mortgage Loan
Schedule and has determined that:
(i) All documents in the Mortgage File required to be delivered to the
Trustee pursuant to Section 2.01 of the Pooling and Servicing Agreement are in
its possession;
(ii) In connection with each Mortgage Loan or Assignment thereof as to
which documentary evidence of recording was not received on the Closing Date, it
has received evidence of such recording; and
(iii) Such documents have been reviewed by it and appear regular on
their face and relate to such Mortgage Loan.
The custodian has made no independent examination of any documents
contained in each Mortgage File beyond confirming (i) that the Mortgage Loan
number, the name of the Mortgagor, the street address (excluding zip code), the
mortgage interest rate at origination, the gross margin (if applicable), the
lifetime rate cap (if applicable), the periodic rate cap (if applicable), the
original principal balance, the first payment due date and the original maturity
date in each Mortgage File conform to the respective Mortgage Loan number and
name listed on the Mortgage Loan Schedule and (ii) the existence
D-1
in each Mortgage File of each of the documents listed in subparagraphs (i)(A)
through (E), as applicable, inclusive, of Section 2.01 in the Agreement. The
custodian makes no representations or warranties as to the validity, legality,
recordability, sufficiency, enforceability, due authorization or genuineness of
any of the documents contained in each Mortgage Loan or the collectability,
insurability, effectiveness, priority, perfection or suitability of any such
Mortgage Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-referenced Pooling and Servicing
Agreement.
DEUTSCHE BANK NATIONAL TRUST COMPANY,
as Custodian
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
D-2
EXHIBIT E-1
FORM OF TRANSFEREE'S LETTER AND AFFIDAVIT
[DATE]
Deutsche Bank National Trust Company
▇▇▇▇ ▇▇▇▇ ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Services - ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors Trust,
Series 2005-AR1
Ladies and Gentlemen:
We propose to purchase ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors Trust,
Mortgage Loan Asset-Backed Certificates, Series 2005-AR1, Class R, described in
the Prospectus Supplement, dated September 27, 2005, and Prospectus, dated
August 26, 2005.
1. We certify that (a) we are not a disqualified organization and (b)
we are not purchasing such Class R Certificate on behalf of a disqualified
organization; for this purpose the term "disqualified organization" means the
United States, any state or political subdivision thereof, any foreign
government, any international organization, any agency or instrumentality of any
of the foregoing (except any entity treated as other than an instrumentality of
the foregoing for purposes of Section 168(h)(2)(D) of the Internal Revenue Code
of 1986, as amended (the "Code")), any organization (other than a cooperative
described in Section 521 of the Code) that is exempt from taxation under the
Code (unless such organization is subject to tax on excess inclusions) and any
organization that is described in Section 1381(a)(2)(C) of the Code. We
understand that any breach by us of this certification may cause us to be liable
for an excise tax imposed upon transfers to disqualified organizations.
2. We certify that (a) we have historically paid our debts as they
became due, (b) we intend, and believe that we will be able, to continue to pay
our debts as they become due in the future, (c) we understand that, as
beneficial owner of the Class R Certificate, we may incur tax liabilities in
excess of any cash flows generated by the Class R Certificate, and (d) we intend
to pay any taxes associated with holding the Class R Certificate as they become
due and (e) we will not cause income from the Class R Certificate to be
attributable to a foreign permanent establishment or fixed base (within the
meaning of an applicable income tax treaty) of ours or another U.S. taxpayer.
3. We acknowledge that we will be the beneficial owner of the Class R
Certificate and:(1)
____________ The Class R Certificate will be registered in our name.
____________ The Class R Certificate will be held in the name of our
nominee, ____________ _________________, which is not a disqualified
organization.
----------
(1) Check appropriate box and if necessary fill in the name of the Transferee's
nominee.
E-1-1
4. We certify that we are not an employee benefit plan subject to
Title I of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), a plan subject to Section 4975 of the Code or a plan subject to
federal, state, local, non-U.S. or other law substantively similar to the
foregoing provisions of ERISA or the Code (each, a "Plan"), and are not directly
or indirectly acquiring the Class R Certificate on behalf of or with any assets
of a Plan.
5. We certify that (i) we are a U.S. person or (ii) we will hold the
Class R Certificate in connection with the conduct of a trade or business within
the United States and have furnished the transferor and the Trustee with a duly
completed and effective Internal Revenue Service Form W-8ECI or successor form
at the time and in the manner required by the Code; for this purpose the term
"U.S. person" means a citizen or resident of the United States, a corporation,
or partnership (unless, in the case of a partnership, Treasury regulations are
adopted that provide otherwise) created or organized in or under the laws of the
United States, any State thereof or the District of Columbia, including an
entity treated as a corporation or partnership for federal income tax purposes,
an estate whose income is subject to United States federal income tax regardless
of the source of its income, or a trust if a court within the United States is
able to exercise primary supervision over the administration of the trust and
one or more such U.S. persons have the authority to control all substantial
decisions of the trust (or, to the extent provided in applicable Treasury
regulations, certain trusts in existence on August 20, 1996 which are eligible
to elect to be treated as U.S. Persons. We agree that any breach by us of this
certification shall render the transfer of any interest in the Class R
Certificate to us absolutely null and void and shall cause no rights in the
Class R Certificate to vest in us.
6. We agree that in the event that at some future time we wish to
transfer any interest in the Class R Certificate, we will transfer such interest
in the Class R Certificate only (a) to a transferee that (i) is not a
disqualified organization and is not purchasing such interest in the Class R
Certificate on behalf of a disqualified organization, (ii) is a U.S. person or
will hold the Class R Certificate in connection with the conduct of a trade or
business within the United States and will furnish us and the Trustee with a
duly completed and effective Internal Revenue Service Form W-8ECI or successor
form at the time and in the manner required by the Code and (iii) has delivered
to the Trustee a letter in the form of this letter (including the affidavit
appended hereto) and, we will provide the Trustee a written statement
substantially in the form of Exhibit E-2 to the Pooling and Servicing Agreement.
7. We hereby designate _______________________ as our fiduciary to act
as the tax matters person for each of the REMICs provided for in the Pooling and
Servicing Agreement.
Very truly yours,
[PURCHASER]
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Accepted as of ________ ___, 200___
▇▇▇▇▇▇▇ ▇▇▇▇▇ MORTGAGE INVESTORS,
INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
E-1-2
APPENDIX A
Affidavit pursuant to (i) Section 860E(e)(4) of the Internal
Revenue Code of 1986, as amended, and (ii) certain provisions of the
Pooling and Servicing Agreement
Under penalties of perjury, the undersigned declares that the following is true:
1. He or she is an officer of _________________________ (the
"Transferee"),
2. the Transferee's Employer Identification number is __________,
3. the Transferee is not a "disqualified organization" (as defined
below), has no plan or intention of becoming a disqualified
organization, and is not acquiring any of its interest in the
▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors Trust, Mortgage Loan
Asset-Backed Certificates, Series 2005-AR1, Class R Certificate
on behalf of a disqualified organization or any other entity,
4. unless ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors, Inc.("MLMI") has
consented to the transfer to the Transferee by executing the form
of Consent affixed as Appendix B to the Transferee's Letter to
which this Certificate is affixed as Appendix A, the Transferee
is a "U.S. person" (as defined below),
5. that no purpose of the transfer is to avoid or impede the
assessment or collection of tax,
6. the Transferee has historically paid its debts as they became
due,
7. the Transferee intends, and believes that it will be able, to
continue to pay its debts as they become due in the future,
8. the Transferee understands that, as beneficial owner of the Class
R Certificate, it may incur tax liabilities in excess of any cash
flows generated by the Class R Certificate,
9. the Transferee intends to pay any taxes associated with holding
the Class R Certificate as they become due,
10. the Transferee consents to any amendment of the Pooling and
Servicing Agreement that shall be deemed necessary by MLMI (upon
advice of counsel) to constitute a reasonable arrangement to
ensure that the Class R Certificate will not be owned directly or
indirectly by a disqualified organization, and
11. IF BRACKETED, THE FOLLOWING CERTIFICATIONS ARE INAPPLICABLE [the
transfer is not a direct or indirect transfer of the Class R
Certificate to a foreign permanent establishment or fixed base
(within the meaning of an applicable income tax treaty) of the
Transferee, and as to each of the residual interests represented
by the Class R Certificate, the present value of the anticipated
tax liabilities associated with holding such residual interest
does not exceed the sum of:
E-1-3
12. the present value of any consideration given to the Transferee to
acquire such residual interest;
13. the present value of the expected future distributions on such
residual interest; and
14. the present value of the anticipated tax savings associated with
holding such residual interest as the related REMIC generates
losses.
For purposes of this declaration, (i) the Transferee is assumed to pay
tax at a rate equal to the highest rate of tax specified in Section
11(b)(1) of the Code, but the tax rate specified in Section
55(b)(1)(B) of the Code may be used in lieu of the highest rate
specified in Section 11(b)(1) of the Code if the Transferee has been
subject to the alternative minimum tax under Section 55 of the Code in
the preceding two years and will compute its taxable income in the
current taxable year using the alternative minimum tax rate, and (ii)
present values are computed using a discount rate equal to the Federal
short-term rate prescribed by Section 1274(d) of the Code for the
month of the transfer and the compounding period used by the
Transferee;]
[(11)(A) at the time of the transfer, and at the close of each of the
Transferee's two fiscal years preceding the Transferee's fiscal year
of transfer, the Transferee's gross assets for financial reporting
purposes exceed $100 million and its net assets for financial
reporting purposes exceed $10 million; and
(B) the Transferee is an eligible corporation as defined in Treasury
regulations Section 1.860E-1(c)(6)(i) and has agreed in writing that
any subsequent transfer of the Class R Certificate will be to another
eligible corporation in a transaction that satisfies Treasury
regulation Sections 1.860E-1(c)(4)(i), 1.860E-1(c)(4)(ii),
1.860E-1(c)(4)(iii) and 1.860E-1(c)(5) and such transfer will not be a
direct or indirect transfer to a foreign permanent establishment
(within the meaning of an applicable income tax treaty) of a domestic
corporation.
For purposes of this declaration, the gross and net assets of the Transferee do
not include any obligation of any related person as defined in Treasury
regulation Section 1.860E-1(c)(6)(ii) or any other asset if a principal purpose
for holding or acquiring the other asset is to permit the Transferee to make
this declaration or to satisfy the requirements of Treasury regulation Section
1.860E-1(c)(5)(i).]
(12) The Transferee will not cause income from the Class R Certificate to be
attributable to a foreign permanent establishment or fixed base (within the
meaning of an applicable income tax treaty) of the Transferee or another U.S.
taxpayer.
E-1-4
For purpose of this affidavit, the term "disqualified organization" means the
United States, any state or political subdivision thereof, any foreign
government, any international organization, any agency or instrumentality of any
of the foregoing (except any entity treated as other than an instrumentality of
the foregoing for purposes of Section 168(h)(2)(D) of the Internal Revenue Code
of 1986, as amended (the "Code")), any organization (other than a cooperative
described in Section 521 of the Code) that is exempt from taxation under the
Code (unless such organization is subject to tax on excess inclusions) and any
organization that is described in Section 1381(a)(2)(C) of the Code and the term
"U.S. Person" means a citizen or resident of the United States, a corporation or
partnership (unless, in the case of a partnership, Treasury regulations are
adopted that provide otherwise) created or organized in or under the laws of the
United States, any state thereof or the District of Columbia, including an
entity treated as a corporation or partnership for federal income tax purposes,
an estate whose income is subject to Unites States federal income tax regardless
of its source, or a trust if a court within the United States is able to
exercise primary supervision over the administration of such trust, and one or
more such U.S. Persons have the authority to control all substantial decisions
of such trust, (or, to the extent provided in applicable Treasury regulations,
certain trusts in existence on August 20, 1996 which are eligible to elect to be
treated as U.S. Persons).
-------------------------------------
By:
---------------------------------
---------------------------------
Address of Investor for receipt of distribution:
Address of Investor for receipt of tax information:
(Corporate Seal)
Attest:
---------------------------------
, Secretary
---------------------------------
E-1-5
Personally appeared before me the above-named ______________, known or proved to
me to be the same person who executed the foregoing instrument and to be the
_______ of the Investor, and acknowledged to me that he executed the same as his
free act and deed and the free act and deed of the Investor.
Subscribed and sworn before me this
day of _________, 200_.
_____________________________________
Notary Public
County of ____________________________
State of _____________________________
My commission expires the ________ day of ______________
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Dated:
------------------------------
E-1-6
EXHIBIT E-2
FORM OF TRANSFEROR'S AFFIDAVIT
[DATE]
Deutsche Bank National Trust Company
▇▇▇▇ ▇▇▇▇ ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Services - ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors Trust,
Series 2005-AR1
Re: ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors Trust, Mortgage Loan Asset-Backed
Certificates, Series 2005-AR1
_______________________ (the "Transferor") has reviewed the attached
affidavit of _____________________________ (the "Transferee"), and has no actual
knowledge that such affidavit is not true, and has no reason to believe that the
Transferee has the intention to impede the assessment or collection of any
federal, state or local taxes legally required to be paid with respect to the
Class R Certificate referred to in the attached affidavit. In addition, the
Transferor has conducted a reasonable investigation at the time of the transfer
and found that the Transferee had historically paid its debts as they came due
and found no significant evidence to indicate that the Transferee will not
continue to pay its debts as they become due.
Very truly yours,
----------------------------------------
Name:
----------------------------------
Title:
---------------------------------
E-2-1
EXHIBIT F
FORM OF TRANSFEROR CERTIFICATE
[DATE]
Deutsche Bank National Trust Company
▇▇▇▇ ▇▇▇▇ ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Services - ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors Trust,
Series 2005-AR1
RE: ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors Trust, Mortgage Loan Asset-Backed
Certificates, Series 2005-AR1
Ladies and Gentlemen:
In connection with our disposition of the Class [____] Certificate, we
certify that (a) we understand that the Certificates have not been registered
under the Securities Act of 1933, as amended (the "Act"), and are being disposed
by us in a transaction that is exempt from the registration requirements of the
Act and (b) we have not offered or sold any Certificates to, or solicited offers
to buy any Certificates from, any person, or otherwise approached or negotiated
with any person with respect thereto, in a manner that would be deemed, or taken
any other action that would result in, a violation of Section 5 of the Act. All
capitalized terms used herein but not defined herein shall have the meanings
assigned to them in the Pooling and Servicing Agreement dated as of September 1,
2005, among ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors, Inc., as depositor, Deutsche Bank
National Trust Company, as trustee and Wilshire Credit Corporation, as servicer.
Very truly yours,
Name of Transferor
By:
------------------------------------
Name:
----------------------------------
Title
----------------------------------
F-1
EXHIBIT G
FORM OF INVESTMENT LETTER
(ACCREDITED INVESTOR)
[DATE]
Deutsche Bank National Trust Company
▇▇▇▇ ▇▇▇▇ ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Services - ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors Trust,
Series 2005-AR1
Re: ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors Trust, Mortgage Loan Asset-Backed
Certificates, Series 2005-AR1
Ladies and Gentlemen:
______________ (the "Purchaser") intends to purchase from
________________ (the "Transferor") $_______ by original principal balance (the
"Transferred Certificates") of ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors Trust, Mortgage
Loan Asset-Backed Certificates, Series 2005-AR1, Class [____] (the
"Certificates"), issued pursuant to a Pooling and Servicing Agreement, dated as
of September 1, 2005 (the "Pooling and Servicing Agreement"), among ▇▇▇▇▇▇▇
▇▇▇▇▇ Mortgage Investors, Inc., as depositor (the "Depositor"), Deutsche Bank
National Trust Company as trustee (the "Trustee") and Wilshire Credit
Corporation, as servicer (the "Servicer"). [THE PURCHASER INTENDS TO REGISTER
THE TRANSFERRED CERTIFICATE IN THE NAME OF ____________________, AS NOMINEE FOR
_________________.] All terms used and not otherwise defined herein shall have
the meanings set forth in the Pooling and Servicing Agreement.
For good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Purchaser certifies, represents and warrants
to, and covenants with, the Depositor and the Trustee that:
1. The Purchaser understands that (a) the Certificates have not been
registered or qualified under the Securities Act of 1933, as amended (the
"Securities Act"), or the securities laws of any state, (b) neither the
Depositor nor the Trustee is required, and neither of them intends, to so
register or qualify the Certificates, (c) the Certificates cannot be resold
unless (i) they are registered and qualified under the Securities Act and the
applicable state securities laws or (ii) an exemption from registration and
qualification is available and (d) the Pooling and Servicing Agreement contains
restrictions regarding the transfer of the Certificates.
2. The Certificates will bear a legend to the following effect:
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), THE INVESTMENT COMPANY ACT OF 1940, AS
AMENDED (THE "1940 ACT") OR ANY STATE SECURITIES OR "BLUE SKY" LAWS,
AND MAY NOT, DIRECTLY OR INDIRECTLY, BE SOLD OR OTHERWISE TRANSFERRED,
OR OFFERED FOR SALE, UNLESS SUCH TRANSFER IS NOT SUBJECT TO
REGISTRATION UNDER THE ACT, THE 1940 ACT AND ANY APPLICABLE STATE
G-1
SECURITIES LAWS AND SUCH TRANSFER ALSO COMPLIES WITH THE OTHER
PROVISIONS OF SECTION 5.02 OF THE POOLING AND SERVICING AGREEMENT. NO
TRANSFER OF THIS CERTIFICATE SHALL BE MADE UNLESS THE TRUSTEE SHALL
HAVE RECEIVED, IN FORM AND SUBSTANCE SATISFACTORY TO THE TRUSTEE (A)
AN INVESTMENT LETTER FROM THE PROSPECTIVE INVESTOR; AND (B)
REPRESENTATIONS FROM THE TRANSFEROR REGARDING THE OFFERING AND SALE OF
THE CERTIFICATES.
3. The ERISA Restricted Certificates (other than the Class R
Certificates) will bear a legend to the following effect:
NO TRANSFER OF THIS CERTIFICATE SHALL BE MADE UNLESS THE TRUSTEE HAS
RECEIVED (A) A REPRESENTATION THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE
BENEFIT PLAN SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED ("ERISA"), A PLAN SUBJECT TO SECTION
4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") OR
A PLAN SUBJECT TO STATE, LOCAL, FEDERAL, NON-U.S. OR OTHER LAW
SUBSTANTIVELY SIMILAR TO THE FOREGOING PROVISIONS OF ERISA OR THE CODE
("SIMILAR LAW"), AND IS NOT DIRECTLY OR INDIRECTLY ACQUIRING THIS
CERTIFICATE BY, ON BEHALF OF, OR WITH ANY ASSETS OF ANY SUCH PLAN, (B)
IF THE CERTIFICATE HAS BEEN THE SUBJECT OF AN ERISA-QUALIFYING
UNDERWRITING, A REPRESENTATION THAT SUCH TRANSFEREE IS AN INSURANCE
COMPANY THAT IS ACQUIRING THE CERTIFICATE WITH ASSETS OF AN "INSURANCE
COMPANY GENERAL ACCOUNT" AS DEFINED IN SECTION V(E) OF PROHIBITED
TRANSACTION CLASS EXEMPTION ("PTCE") 95-60 AND THE ACQUISITION AND
HOLDING OF THE CERTIFICATE ARE COVERED AND EXEMPT UNDER SECTIONS I AND
III OF PTCE 95-60, OR (C) SOLELY IN THE CASE OF A DEFINITIVE
CERTIFICATE, AN OPINION OF COUNSEL SATISFACTORY TO THE TRUSTEE, AND
UPON WHICH THE TRUSTEE SHALL BE ENTITLED TO RELY, TO THE EFFECT THAT
THE ACQUISITION AND HOLDING OF SUCH CERTIFICATE BY THE PROSPECTIVE
TRANSFEREE WILL NOT CONSTITUTE OR RESULT IN A NONEXEMPT PROHIBITED
TRANSACTION UNDER TITLE I OF ERISA OR SECTION 4975 OF THE CODE OR A
VIOLATION OF SIMILAR LAW AND WILL NOT SUBJECT THE TRUSTEE, THE
SERVICER OR THE DEPOSITOR TO ANY OBLIGATION IN ADDITION TO THOSE
UNDERTAKEN BY SUCH ENTITIES IN THE POOLING AND SERVICING AGREEMENT,
WHICH OPINION OF COUNSEL SHALL NOT BE AN EXPENSE OF THE TRUSTEE, THE
SERVICER OR THE DEPOSITOR. IF THE CERTIFICATE IS NOT A DEFINITIVE
CERTIFICATE, THE TRANSFEREE IS DEEMED TO HAVE MADE THE REPRESENTATION
IN (A) OR (B) ABOVE.
G-2
4. The Class R Certificate will bear a legend to the following effect:
NO TRANSFER OF THIS CERTIFICATE SHALL BE REGISTERED UNLESS THE
PROSPECTIVE TRANSFEREE PROVIDES THE TRUSTEE WITH A REPRESENTATION THAT
SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO TITLE I OF
THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
("ERISA"), A PLAN SUBJECT TO SECTION 4975 OF THE CODE OR A PLAN
SUBJECT TO STATE, LOCAL, FEDERAL, NON-U.S. OR OTHER LAW SUBSTANTIVELY
SIMILAR TO THE FOREGOING PROVISIONS OF ERISA OR THE CODE ("SIMILAR
LAW"), AND IS NOT DIRECTLY OR INDIRECTLY ACQUIRING THIS CERTIFICATE
BY, ON BEHALF OF, OR WITH ANY ASSETS OF ANY SUCH PLAN.
5. The Purchaser is acquiring the Transferred Certificates for its own
account [FOR INVESTMENT ONLY]* and not with a view to or for sale or other
transfer in connection with any distribution of the Transferred Certificates in
any manner that would violate the Securities Act or any applicable state
securities laws, subject, nevertheless, to the understanding that disposition of
the Purchaser's property shall at all times be and remain within its control.
6. The Purchaser (a) is a substantial, sophisticated institutional
investor having such knowledge and experience in financial and business matters,
and in particular in such matters related to securities similar to the
Certificates, such that it is capable of evaluating the merits and risks of
investment in the Certificates, (b) is able to bear the economic risks of such
an investment and (c) is an "accredited investor" within the meaning of Rule
501(a) promulgated pursuant to the Securities Act.
7. The Purchaser will not nor has it authorized nor will it authorize
any person to (a) offer, pledge, sell, dispose of or otherwise transfer any
Certificate, any interest in any Certificate or any other similar security to
any person in any manner, (b) solicit any offer to buy or to accept a pledge,
disposition or other transfer of any Certificate, any interest in any
Certificate or any other similar security from any person in any manner, (c)
otherwise approach or negotiate with respect to any Certificate, any interest in
any Certificate or any other similar security with any person in any manner, (d)
make any general solicitation by means of general advertising or in any other
manner, or (e) take any other action, that would constitute a distribution of
any Certificate under the Securities Act or the Investment Company Act of 1940,
as amended (the "1940 Act"), that would render the disposition of any
Certificate a violation of Section 5 of the Securities Act or any state
securities law, or that would require registration or qualification pursuant
thereto. Neither the Purchaser nor anyone acting on its behalf has offered the
Certificates for sale or made any general solicitation by means of general
advertising or in any other manner with respect to the Certificates. The
Purchaser will not sell or otherwise transfer any of the Certificates, except in
compliance with the provisions of the Pooling and Servicing Agreement.
8. The Purchaser of an ERISA Restricted Certificate (other than the
Class R Certificate) (A) is not an employee benefit plan subject to Title I of
ERISA, a plan subject to Section 4975 of the Code, a plan subject to any state,
local, federal, non-U.S. or other law substantively similar to the foregoing
provisions of ERISA or the Code ("Similar Law") and is not directly or
indirectly acquiring such Certificates by, on behalf of, or with any assets of
any such plan, or (B) if the Certificate has been
----------
* Not required of a broker/dealer purchaser.
G-3
the subject of an ERISA-Qualifying Underwriting, is an insurance company that is
acquiring the Certificate with assets of an "insurance company general account,"
as defined in Section V(e) of Prohibited Transaction Class Exemption ("PTCE")
95-60, and the acquisition and holding of the Certificate are covered and exempt
under Sections I and III of PTCE 95-60, or (C) solely in the event the
Certificate is a Definitive Certificate, herewith delivers an Opinion of Counsel
satisfactory to the Trustee, and upon which the Trustee shall be entitled to
rely, to the effect that the acquisition and holding of the Certificate will not
constitute or result in a nonexempt prohibited transaction under Title I of
ERISA or Section 4975 of the Code, or a violation of Similar Law, and will not
subject the Trustee, the Servicer or the Depositor to any obligation in addition
to those expressly undertaken in the Pooling and Servicing Agreement, which
Opinion of Counsel shall not be an expense of the Trustee, the Servicer or the
Depositor.
9. The Purchaser of a Class R Certificate is not an employee benefit
plan subject to Title I of ERISA, a plan subject to Section 4975 of the Code, a
plan subject to any state, local, federal, non-U.S. or other law substantively
similar to the foregoing provisions of ERISA or the Code ("Similar Law"), or a
Person directly or indirectly acquiring such Certificate by, on behalf of, or
with any assets of any such plan.
10. Prior to the sale or transfer by the Purchaser of any of the
Certificates, the Purchaser will obtain from any subsequent purchaser
substantially the same certifications, representations, warranties and covenants
contained in the foregoing paragraphs and in this letter or a letter
substantially in the form of Exhibit H to the Pooling and Servicing Agreement.
11. The Purchaser agrees to indemnify the Trustee, the Servicer and
the Depositor against any liability that may result from any misrepresentation
made herein.
Very truly yours,
[PURCHASER]
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
G-4
EXHIBIT H
FORM OF RULE 144A INVESTMENT LETTER
(QUALIFIED INSTITUTIONAL BUYER)
[DATE]
Deutsche Bank National Trust Company
▇▇▇▇ ▇▇▇▇ ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Services - ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors Trust,
Series 2005-AR1
Re: ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors Trust, Mortgage Loan Asset-Backed
Certificates, Series 2005-AR1
Ladies and Gentlemen:
______________ (the "Purchaser") intends to purchase from
________________ (the "Transferor") $_______ by original principal balance (the
"Transferred Certificates") of ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors Trust, Mortgage
Loan Asset-Backed Certificates, Series 2005-AR1, Class [____] (the
"Certificates"), issued pursuant to a Pooling and Servicing Agreement, dated as
of September 1, 2005 (the "Pooling and Servicing Agreement"), among ▇▇▇▇▇▇▇
▇▇▇▇▇ Mortgage Investors, Inc., as depositor (the "Depositor"), Deutsche Bank
National Trust Company as trustee (the "Trustee"), Wilshire Credit Corporation,
as servicer (the "Servicer"). [THE PURCHASER INTENDS TO REGISTER THE TRANSFERRED
CERTIFICATE IN THE NAME OF ____________________, AS NOMINEE FOR
_________________.] All terms used and not otherwise defined herein shall have
the meanings set forth in the Pooling and Servicing Agreement.
For good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Purchaser certifies, represents and warrants
to, and covenants with, the Depositor and the Trustee that:
In connection with our acquisition of the above Transferred
Certificates we certify that (a) we understand that the Certificates are not
being registered under the Securities Act of 1933, as amended (the "Act"), or
any state securities laws and are being transferred to us in a transaction that
is exempt from the registration requirements of the Act and any such laws, (b)
we have such knowledge and experience in financial and business matters that we
are capable of evaluating the merits and risks of investments in the
Certificates, (c) we have had the opportunity to ask questions of and receive
answers from the Depositor concerning the purchase of the Transferred
Certificates and all matters relating thereto or any additional information
deemed necessary to our decision to purchase the Transferred Certificates,
(d)(A) solely with respect to ERISA Restricted Certificates, we are not an
employee benefit plan subject to Title I of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), a plan subject to Section 4975 of
the Internal Revenue Code of 1986, as amended (the "Code"), a plan subject to
any state, local, federal, non-U.S. or other law substantively similar to the
foregoing provisions of ERISA or the Code ("Similar Law"), or Persons directly
or indirectly acting on behalf of or using any assets of any such plan, or (B)
solely with respect to ERISA Restricted Certificates (other than the Class R
Certificates), if the Certificate has been the subject of an ERISA-Qualifying
Underwriting, we are an insurance company that is acquiring the Certificate with
assets of an "insurance company general account," as defined in Section V(e) of
Prohibited Transaction Class Exemption ("PTCE") 95-60, and the acquisition and
holding of the Certificate are covered and exempt under Sections I and III of
PTCE 95-60,
H-1
or (C) solely in the event the Certificate is an ERISA Restricted Certificate
(other than a Class R Certificate) and also a Definitive Certificate, we will
herewith deliver an Opinion of Counsel satisfactory to the Trustee, and upon
which the Trustee shall be entitled to rely, to the effect that the acquisition
and holding of the Certificate will not constitute or result in a nonexempt
prohibited transaction under Title I of ERISA or Section 4975 of the Code, or a
violation of Similar Law, and will not subject the Trustee, the Servicer or the
Depositor to any obligation in addition to those expressly undertaken in the
Pooling and Servicing Agreement, which Opinion of Counsel shall not be an
expense of the Trustee, the Servicer or the Depositor, (e) we have not, nor has
anyone acting on our behalf offered, transferred, pledged, sold or otherwise
disposed of the Certificates, any interest in the Certificates or any other
similar security to, or solicited any offer to buy or accept a transfer, pledge
or other disposition of the Certificates, any interest in the Certificates or
any other similar security from, or otherwise approached or negotiated with
respect to the Certificates, any interest in the Certificates or any other
similar security with, any person in any manner, or made any general
solicitation by means of general advertising or in any other manner, or taken
any other action, that would constitute a distribution of the Certificates under
the Securities Act or that would render the disposition of the Certificates a
violation of Section 5 of the Securities Act or require registration pursuant
thereto, nor will act, nor has authorized or will authorize any person to act,
in such manner with respect to the Certificates, (f) we are a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act and have completed one of the forms of certification to that effect attached
hereto as Annex 1 or Annex 2. We are aware that the sale of the Transferred
Certificates to us is being made in reliance on Rule 144A. We are acquiring the
Transferred Certificates for our own account or for resale pursuant to Rule 144A
and further understand that such Certificates may be resold, pledged or
transferred only (i) to a person reasonably believed by us, based upon
certifications of such purchaser or information we have in our possession, to be
a qualified institutional buyer that purchases for its own account or for the
account of a qualified institutional buyer to whom notice is given that the
resale, pledge or transfer is being made in reliance on Rule 144A, or (ii)
pursuant to another exemption from registration under the Securities Act.
We agree to indemnify the Trustee, the Servicer and the Depositor
against any liability that may result from any misrepresentation made herein.
Very truly yours,
[PURCHASER]
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
▇-▇
▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ BUYER STATUS UNDER SEC RULE 144A
[FOR TRANSFEREES OTHER THAN REGISTERED INVESTMENT COMPANIES]
The undersigned (the "Buyer") hereby certifies as follows to the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:
1. As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
Buyer.
2. In connection with the purchases by the Buyer, the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A") because (i) the Buyer owned
and/or invested on a discretionary basis $____________* in securities (except
for the excluded securities referred to below) as of the end of the Buyer's most
recent fiscal year (such amount being calculated in accordance with Rule 144A)
and (ii) the Buyer satisfies the criteria in the category marked below.
___ Corporation, etc. The Buyer is a corporation (other than a bank,
savings and loan association or similar institution),
Massachusetts or similar business trust, partnership, or
charitable organization described in Section 501(c)(3) of the
Internal Revenue Code of 1986, as amended.
___ Bank. The Buyer (a) is a national bank or banking institution
organized under the laws of any State, territory or the District
of Columbia, the business of which is substantially confined to
banking and is supervised by Federal, State or territorial
banking commission or similar official or is a foreign bank or
equivalent institution, and (b) has an audited net worth of at
least $25,000,000 as demonstrated in its latest annual financial
statements, a copy of which is attached hereto.
___ Savings and Loan. The Buyer (a) is a savings and loan
association, building and loan association, cooperative bank,
homestead association or similar institution, which is supervised
and examined by a State or Federal authority having supervision
over such institution or is a foreign savings and loan
association or equivalent institution and (b) has an audited net
worth of at least $25,000,000 as demonstrated in its latest
annual financial statements, a copy of which is attached hereto.
___ Broker-dealer. The Buyer is a dealer registered pursuant to
Section 15 of the Securities Exchange Act of 1934, as amended.
----------
* Buyer must own and/or invest on a discretionary basis at least $100,000,000
in securities unless Buyer is a dealer, and, in that case, Buyer must own
and/or invest on a discretionary basis at least $10,000,000 in securities.
H-3
___ Insurance Company. The Buyer is an insurance company whose
primary and predominant business activity is the writing of
insurance or the reinsuring of risks underwritten by insurance
companies and which is subject to supervision by the insurance
commissioner or a similar official or agency of the State,
territory or the District of Columbia.
___ State or Local Plan. The Buyer is a plan established and
maintained by a State, its political subdivisions, or any agency
or instrumentality of the State or its political subdivisions,
for the benefit of its employees.
___ ERISA Plan. The Buyer is an employee benefit plan subject to
Title I of the Employee Retirement Income Security Act of 1974,
as amended.
___ Investment Advisor. The Buyer is an investment advisor registered
under the Investment Advisors Act of 1940, as amended.
___ Small Business Investment Company. Buyer is a small business
investment company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small Business
Investment Act of 1958, as amended.
___ Business Development Company. Buyer is a business development
company as defined in Section 202(a)(22) of the Investment
Advisors Act of 1940, as amended.
3. The term "securities" as used for purposes of the calculation of
the dollar amount in paragraph 2 excludes: (i) securities of issuers that are
affiliated with the Buyer, (ii) securities that are part of an unsold allotment
to or subscription by the Buyer, if the Buyer is a dealer, (iii) securities
issued or guaranteed by the U.S. or any instrumentality thereof, (iv) bank
deposit notes and certificates of deposit, (v) loan participations, (vi)
repurchase agreements, (vii) securities owned but subject to a repurchase
agreement and (viii) currency, interest rate and commodity swaps.
4. For purposes of determining the aggregate amount of securities
owned and/or invested on a discretionary basis by the Buyer, the Buyer used the
cost of such securities to the Buyer and did not include any of the securities
referred to in the preceding paragraph, except (i) where the Buyer reports its
securities holdings in its financial statements on the basis of their market
value, and (ii) no current information with respect to the cost of those
securities has been published. If clause (ii) in the preceding sentence applies,
the securities may be valued at market. Further, in determining such aggregate
amount, the Buyer may have included securities owned by subsidiaries of the
Buyer, but only if such subsidiaries are consolidated with the Buyer in its
financial statements prepared in accordance with generally accepted accounting
principles and if the investments of such subsidiaries are managed under the
Buyer's direction. However, such securities were not included if the Buyer is a
majority-owned, consolidated subsidiary of another enterprise and the Buyer is
not itself a reporting company under the Securities Exchange Act of 1934, as
amended.
5. The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the Certificates
are relying and will continue to rely on the statements made herein because one
or more sales to the Buyer may be in reliance on Rule 144A.
H-4
6. Until the date of purchase of the Rule 144A Securities, the Buyer
will notify each of the parties to which this certification is made of any
changes in the information and conclusions herein. Until such notice is given,
the Buyer's purchase of the Certificates will constitute a reaffirmation of this
certification as of the date of such purchase. In addition, if the Buyer is a
bank or savings and loan as provided above, the Buyer agrees that it will
furnish to such parties updated annual financial statements promptly after they
become available.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Date:
----------------------------------
▇-▇
▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ BUYER STATUS UNDER SEC RULE 144A
[FOR TRANSFEREES THAT ARE REGISTERED INVESTMENT COMPANIES]
The undersigned (the "Buyer") hereby certifies as follows to the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:
1. As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the Buyer or, if the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A"), because Buyer is part of a
Family of Investment Companies (as defined below), is such an officer of the
Adviser.
2. In connection with purchases by Buyer, the Buyer is a "qualified
institutional buyer" as defined in Rule 144A because (i) the Buyer is an
investment company registered under the Investment Company Act of 1940, as
amended and (ii) as marked below, the Buyer alone, or the Buyer's Family of
Investment Companies, owned at least $100,000,000 in securities (other than the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year. For purposes of determining the amount of securities owned by the
Buyer or the Buyer's Family of Investment Companies, the cost of such securities
was used, except (i) where the Buyer or the Buyer's Family of Investment
Companies reports its securities holdings in its financial statements on the
basis of their market value, and (ii) no current information with respect to the
cost of those securities has been published. If clause (ii) in the preceding
sentence applies, the securities may be valued at market.
___ The Buyer owned $___________ in securities (other than the
excluded securities referred to below) as of the end of the
Buyer's most recent fiscal year (such amount being calculated in
accordance with Rule 144A).
___ The Buyer is part of a Family of Investment Companies which owned
in the aggregate $__________ in securities (other than the
excluded securities referred to below) as of the end of the
Buyer's most recent fiscal year (such amount being calculated in
accordance with Rule 144A).
3. The term "Family of Investment Companies" as used herein means two
or more registered investment companies (or series thereof) that have the same
investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).
4. The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer or are part of the
Buyer's Family of Investment Companies, (ii) securities issued or guaranteed by
the U.S. or any instrumentality thereof, (iii) bank deposit notes and
certificates of deposit, (iv) loan participations, (v) repurchase agreements,
(vi) securities owned but subject to a repurchase agreement and (vii) currency,
interest rate and commodity swaps.
5. The Buyer is familiar with Rule 144A and understands that the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates are relying and will continue to
H-6
rely on the statements made herein because one or more sales to the Buyer will
be in reliance on Rule 144A. In addition, the Buyer will only purchase for the
Buyer's own account.
6. Until the date of purchase of the Certificates, the undersigned
will notify the parties listed in the Rule 144A Transferee Certificate to which
this certification relates of any changes in the information and conclusions
herein. Until such notice is given, the Buyer's purchase of the Certificates
will constitute a reaffirmation of this certification by the undersigned as of
the date of such purchase.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
IF AN ADVISER:
----------------------------------------
Print Name of Buyer
Date:
----------------------------------
H-7
EXHIBIT I
FORM OF REQUEST FOR RELEASE
[DATE]
To: Deutsche Bank National Trust Company
▇▇▇▇ ▇▇▇▇ ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors Trust, Mortgage Loan Asset-Backed
Certificates, Series 2005-AR1
In connection with the administration of the Mortgage Loans held by
you, as Trustee, pursuant to the Pooling and Servicing Agreement dated as of
September 1, 2005 among ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors, Inc., as depositor,
Deutsche Bank National Trust Company, as trustee and Wilshire Credit
Corporation, as servicer (the "Pooling and Servicing Agreement"), we request the
release, and hereby acknowledge receipt, of the Mortgage File for the Mortgage
Loan described below, for the reason indicated.
Mortgage Loan Number:
Mortgagor Name, Address & Zip Code:
Reason for Requesting Documents (check one):
___ 1. Mortgage Paid in Full
___ 2. Foreclosure
___ 3. Substitution
___ 4. Other Liquidation (Repurchases, etc.)
___ 5. Nonliquidation
_____________________________________________________________
Address to which the Trustee should deliver the Mortgage File:
By:
------------------------------------
(authorized signer)
Address:
-------------------------------
Date:
----------------------------------
I-1
If box 1 or 2 above is checked, and if all or part of the Mortgage File was
previously released to us, please release to us our previous receipt on file
with you, as well as any additional documents in your possession relating to the
above specified Mortgage Loan.
If box 3, 4, 5 or 6 above is checked, upon our return of all of the above
documents to you as Trustee, please acknowledge your receipt by signing in the
space indicated below, and returning this form.
Please acknowledge the execution of the above request by your signature and date
below:
WILSHIRE CREDIT CORPORATION,
as Servicer
By:
--------------------------------- ----------------------------------------
Signature Date
Documents returned to Custodian:
By:
--------------------------------- ----------------------------------------
Signature Date
I-2
EXHIBIT J
[RESERVED]
J-1
EXHIBIT K
FORM OF OFFICER'S CERTIFICATE OF TRUSTEE
[DATE]
▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
4 World Financial ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Re: ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors Trust, Mortgage Loan Asset-Backed
Certificates, Series 2005-AR1
I, [identify the certifying individual], a [title] of Deutsche Bank
National Trust Company, as Trustee under the Pooling and Servicing Agreement
dated as of September 1, 2005 among ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors, Inc., as
depositor, Deutsche Bank National Trust Company, as trustee and Wilshire Credit
Corporation, as servicer (the "Agreement"), hereby certify to the Depositor, and
its officers, directors and affiliates, and with the knowledge and intent that
they will rely upon this certification, that:
1. I have reviewed the Monthly Statements delivered pursuant to the Agreement
since the last Officer's Certificate executed pursuant to Section 3.21 of
the Agreement [or in the case of the first certification, since the Cut-off
Date] (the "Trustee Information").
2. Based on my knowledge, the information in the Monthly Statement, taken as a
whole, does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light of
the circumstances under which such statements were made, not misleading as
of the date hereof;
3. Based on my knowledge, the Monthly Statements required to be prepared by
the Trustee under the Agreement has been prepared and provided in
accordance with the Agreement.
Date:
-------------------------------
Deutsche Bank National Trust Company,
as Trustee
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
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EXHIBIT L
FORM OF OFFICER'S CERTIFICATE OF SERVICER
[DATE]
▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
4 World Financial ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Deutsche Bank National Trust Company
▇▇▇▇ ▇▇▇▇ ▇▇.
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Services - ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors Trust,
Series 2005-AR1
Re: ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors Trust, Mortgage Loan Asset-Backed
Certificates, Series 2005-AR1
I, [identify the certifying individual], an authorized representative
of Wilshire Credit Corporation, as servicer under the Pooling and Servicing
Agreement dated as of September 1, 2005 among ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors,
Inc., as depositor, Deutsche Bank National Trust Company, as trustee and
Wilshire Credit Corporation, as servicer (the "Agreement"), hereby certify to
the Trustee and the Depositor, and each of their respective officers, directors
and affiliates, and with the knowledge and intent that they will rely upon this
certification, that:
1. Based on my knowledge, the information in the annual statement of
compliance identified in Section 3.17 of the Agreement, the annual independent
public accountants' report identified in Section 3.18 of the Agreement and all
servicing reports, officer's certificates and other information relating to the
servicing of the Mortgage Loans submitted to the Trustee taken as a whole, does
not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading as of the date of this
certification;
2. The servicing information required to be provided to the Trustee by
the Servicer under the Agreement has been provided to the Trustee;
3. I am responsible for reviewing the activities performed by the
Servicer under the Agreement and based upon the review required hereunder, and
except as disclosed in the annual statement of compliance identified in Section
3.17 of the Agreement, the annual independent public accountants' report
identified in Section 3.18 of the Agreement and all servicing reports, officer's
certificates and other information relating to the servicing of the Mortgage
Loans submitted to the Trustee, the Servicer has, as of the date of this
certification, fulfilled its obligations under this Agreement; and
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4. I have disclosed to the Trustee all significant deficiencies
relating to the Servicer's compliance with the minimum servicing standards in
accordance with a review conducted in compliance with the Uniform Single
Attestation Program for Mortgage Bankers or similar standard as set forth under
the Agreement.
Date:
-------------------------------
Wilshire Credit Corporation, as Servicer
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
▇-▇
▇▇▇▇▇▇▇ ▇-▇
[RESERVED]
▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
FORM OF MONTHLY REMITTANCE ADVICE
STANDARD FILE LAYOUT - SCHEDULED/SCHEDULED
COLUMN NAME DESCRIPTION DECIMAL FORMAT COMMENT
----------- ----------- ------- --------------
LOAN_NBR Loan Number assigned by investor Text up to 10 digits
SERVICER LOAN_NBR Servicer Loan Number Text up to 10 digits
SCHED_PMT_AMT P&I constant 2 No commas(,) or dollar signs ($)
NOTE_INT_RATE Gross Interest Rate 4 Max length of 6
NET_RATE Gross Interest Rate less the Service Fee Rate 4 Max length of 6
SERV_FEE_RATE Service Fee Rate 4 Max length of 6
ARM_INDEX_RATE ARM loan's index Rate used 4 Max length of 6
ACTL_BEG_BAL Beginning Actual Balance 2 No commas(,) or dollar signs ($)
ACTL_END_BAL Ending Actual Balance 2 No commas(,) or dollar signs ($)
NEXT_DUE_DATE Borrower's next due date MM/DD/YYYY
CURT_AMT_1 Curtailment Amount 2 No commas(,) or dollar signs ($)
CURT_DATE_1 Due date Curtailment was applied to MM/DD/YYYY
CURT_ADJ_ AMT_1 Curtailment Interest if applicable 2 No commas(,) or dollar signs ($)
CURT_AMT_2 Curtailment Amount 2 2 No commas(,) or dollar signs ($)
CURT_DATE_2 Due date Curtailment was applied to MM/DD/YYYY
CURT_ADJ_ AMT2 Curtailment Interest if applicable 2 No commas(,) or dollar signs ($)
CURT_AMT_3 Curtailment Amount 3 2 No commas(,) or dollar signs ($)
CURT_DATE_3 Due date Curtailment was applied to MM/DD/YYYY
CURT_ADJ_AMT3 Curtailment Interest, if applicable 2 No commas(,) or dollar signs ($)
SCHED_BEG_BAL Beginning Scheduled Balance 2 No commas(,) or dollar signs ($)
SCHED_END_BAL Ending Scheduled Balance 2 No commas(,) or dollar signs ($)
SCHED_PRIN_AMT Scheduled Principal portion of P&I 2 No commas(,) or dollar signs ($)
SCHED_NET_INT Scheduled Net Interest (less Service Fee) 2 No commas(,) or dollar signs ($)
portion of P&I
LIQ_AMT Liquidation Principal Amt to bring balance to 2 No commas(,) or dollar signs ($)
zero
PIF_DATE Liquidation Date MM/DD/YYYY
ACTION_CODE Either 60 for liquidation or 65 for Repurchase Max length of 2
M-2-1
COLUMN NAME DESCRIPTION DECIMAL FORMAT COMMENT
----------- ----------- ------- --------------
PRIN_ADJ_AMT Principal Adjustments made to loan, if applicable 2 No commas(,) or dollar signs ($)
INT_ADJ_AMT Interest Adjustment made to loan, if applicable 2 No commas(,) or dollar signs ($)
PREPAYMENT PENALTY AMT Prepayment penalty amount, if applicable 2 No commas(,) or dollar signs ($)
SOILDER_SAILOR ADJ AMT Soldier and Sailor Adjustment amount, if 2 No commas(,) or dollar signs ($)
applicable
NON ADV LOAN AMT Non Recoverable Loan Amount, if applicable 2 No commas(,) or dollar signs ($)
M-2-2
EXHIBIT N
FORM OF AUCTION PROCEDURES
The following sets forth the auction procedures to be followed in
connection with the Pooling and Servicing Agreement (the "Agreement") among
▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors, Inc., as depositor, Deutsche Bank National
Trust Company, as trustee, and Wilshire Credit Corporation, as servicer, dated
September 1, 2005. Capitalized terms used herein that are not otherwise defined
shall have the meanings described thereto in the Agreement.
1. Upon notice that the aggregate Stated Principal Balance of the Mortgage
Loans is equal to ten percent (10%) or less of the Stated Principal Balance
of the Mortgage Loans as of the Cut-off Date (which notice will also be
sent to the Servicer), the Trustee will engage the Auction Agent to
initiate the general auction procedures consisting of the following: (i)
prepare a general solicitation package along with a confidentiality
agreement; (ii) derive a list of bidders which shall include (x) the
Holders of the Class C Certificates (other than the Seller or any Affiliate
of the Seller) and (y) a minimum of three (3) bidders other than the
Holders of the Class C Certificates, each of whom shall be a nationally
recognized participant in mortgage finance; (iii) initiate contact with all
bidders, (iv) send a confidentiality agreement to all bidders; and (v) upon
receipt of a signed confidentiality agreement, send the general bid
solicitation package to all bidders.
2. The general solicitation package will include (i) the Agreement; (ii) a
copy of all monthly trustee reports or electronic access thereto; (iii) a
form of a Mortgage Loan Purchase Agreement acceptable to the Servicer and
Depositor (the Mortgage Loans and other property included in the Trust Fund
will be offered and sold on an "as is, where is" basis, without any
representation or warranty, expressed or implied, of any kind and without
recourse to, or guaranty by, the Trustee); (iv) a description of the
minimum price as set forth in the Agreement; (v) a formal bid sheet as
determined by the Seller and provided to the Trustee; (vi) a detailed
timetable (which shall include, but not be limited to, the provisions and
dates preliminary bids, due diligence and final bids); and (vii) a data
tape of the Mortgage Loans as of the related Remittance Period reflecting
substantially the same data attributes used in the Prospectus Supplement
dated September 27, 2005.
3. A detailed timetable will be determined approximately ten (10) days prior
to the proposed auction sale date and shall be determined by the Seller and
acceptable to the Trustee, which shall not be unreasonably withheld, within
reasonable market conditions at the time of the auction sale.
4. All bids will be submitted directly to the Auction Agent, who shall deliver
the bids to the Trustee. Upon receipt and acceptance of the highest bid
that meets or exceeds the conditions set forth in Section 9.01, the Trustee
will complete the auction by selling the Mortgage Loans and the other
property included in the Trust Fund and distributing the proceeds from the
auction to the holders of the Certificates on the next succeeding
Distribution Date as set forth in the Agreement. In the event the Trustee
receives two (2) or more bids from bidders above the Optional Termination
Price and at equal bids (a "Tie
Event"), the Trustee shall instruct the Auction Agent to notify such
bidders to resubmit a bid to break the Tie Event.
5. Upon determination that the minimum price was not met, the Trustee shall
cancel such auction sale and notify the Servicer and the Depositor
immediately.
6. The Trustee, the Servicer and the Seller may mutually agree to revise or
supplement these provisions as necessary, provided that the purchase price
is at all times required to be at least the Optional Termination Price.
N-2
EXHIBIT O
FORM OF CAP CONTRACT
[INTENTIONALLY OMITTED]
O-1
EXHIBIT P
ONE-MONTH LIBOR CAP TABLE
BEGINNING LOWER COLLAR (%)
PERIOD ACCRUAL ENDING ACCRUAL NOTIONAL BALANCE($) (1) UPPER COLLAR (%)
------ --------- -------------- ------------------- ---------------- ----------------
1 09/29/05 10/25/05 1,062,281,000.00 7.015 10.220
2 10/25/05 11/25/05 1,050,151,492.00 5.842 10.220
3 11/25/05 12/25/05 1,035,590,072.00 6.049 10.220
4 12/25/05 01/25/06 1,018,637,063.00 5.850 10.220
5 01/25/06 02/25/06 999,327,746.00 5.855 10.220
6 02/25/06 03/25/06 977,729,736.00 6.519 10.220
7 03/25/06 04/25/06 953,913,156.00 5.868 10.220
8 04/25/06 05/25/06 928,321,252.00 6.081 10.220
9 05/25/06 06/25/06 901,150,400.00 5.885 10.220
10 06/25/06 07/25/06 874,749,345.00 6.100 10.220
11 07/25/06 08/25/06 849,096,413.00 5.904 10.220
12 08/25/06 09/25/06 824,170,147.00 5.914 10.220
13 09/25/06 10/25/06 799,949,708.00 6.131 10.220
14 10/25/06 11/25/06 776,414,859.00 5.935 10.220
15 11/25/06 12/25/06 753,545,951.00 6.153 10.220
16 12/25/06 01/25/07 731,323,901.00 5.957 10.220
17 01/25/07 02/25/07 709,730,177.00 5.968 10.220
18 02/25/07 03/25/07 688,746,785.00 6.651 10.220
19 03/25/07 04/25/07 667,625,783.00 5.993 10.220
20 04/25/07 05/25/07 632,253,354.00 6.227 10.220
21 05/25/07 06/25/07 598,780,341.00 7.274 10.220
22 06/25/07 07/25/07 567,015,525.00 7.549 10.220
23 07/25/07 08/25/07 536,956,970.00 7.320 10.220
24 08/25/07 09/25/07 508,933,644.00 7.345 10.220
25 09/25/07 10/25/07 491,040,102.00 7.619 10.220
26 10/25/07 11/25/07 473,748,730.00 7.384 10.220
27 11/25/07 12/25/07 457,037,153.00 8.289 10.220
28 12/25/07 01/25/08 440,918,125.00 8.034 10.220
29 01/25/08 02/25/08 425,337,519.00 8.056 10.220
30 02/25/08 03/25/08 410,276,874.00 8.656 10.220
31 03/25/08 04/25/08 395,718,371.00 8.104 10.220
32 04/25/08 05/25/08 381,644,810.00 8.410 10.220
33 05/25/08 06/25/08 368,039,591.00 9.195 10.220
34 06/25/08 07/25/08 354,895,621.00 9.540 10.220
35 07/25/08 08/25/08 342,187,768.00 9.253 10.220
36 08/25/08 09/25/08 329,901,184.00 9.284 10.220
37 09/25/08 10/25/08 318,021,496.00 9.636 10.220
38 10/25/08 11/25/08 318,021,496.00 9.002 10.220
39 11/25/08 12/25/08 313,083,415.00 9.947 10.220
40 12/25/08 01/25/09 303,256,514.00 9.602 10.220
41 01/25/09 02/25/09 293,752,981.00 9.588 10.220
42 02/25/09 03/25/09 284,561,832.00 10.220 10.220
43 03/25/09 04/25/09 275,672,471.00 9.558 10.220
44 04/25/09 05/25/09 267,074,665.00 9.870 10.220
(1) With respect to any Distribution Date, if One-Month LIBOR (as determined by
the Cap Contract Counterparty and subject to a cap equal to 10.220%)
exceeds the Lower Collar, the Trust Fund will receive payments pursuant to
the Cap Contract.
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