Exhibit 4.2
----------------------------------------------------
STANDARD TERMS FOR POOLING AND
SERVICING AGREEMENTS
----------------------------------------------------
Dated as of August 1, 2006
Citicorp Residential Mortgage Securities, Inc.
REMIC Pass-Through Certificates, Series 2006-1
--------------------------------------------------------------------------------
TABLE OF CONTENTS
ARTICLE I DEFINITIONS........................................................
Section 1.01 Definitions.............................................
Section 1.02 Fiscal Year.............................................
ARTICLE II CONVEYANCE OF TRUST FUND; ORIGINAL ISSUANCE OF CERTIFICATES.......
Section 2.01 Conveyance of Trust Fund................................
Section 2.02 Acceptance by Trustee...................................
Section 2.03 Representations and Warranties of CRMSI and CMI.........
Section 2.04 Substitution of Qualified Substitute Mortgage
Loans for Nonconforming Mortgage Loans..................
Section 2.05 [Reserved]..............................................
Section 2.06 Authentication of Certificates..........................
Section 2.07 Permitted Activities....................................
The Trust is created for the object and purposes of engaging in
Permitted Activities....................................
Section 2.08 Additional Representations..............................
CRMSI represents and warrants that.....................................
ARTICLE III ADMINISTRATION AND SERVICING OF MORTGAGE LOANS...................
Section 3.01 Servicing...............................................
Section 3.02 Collection of Mortgage Payments.........................
Section 3.03 Subservicing Agreements.................................
Section 3.04 No Contractual Relationship.............................
Section 3.05 Assumption or Termination of Subservicing
Agreement...............................................
Section 3.06 Collection Account; Remittances to Certificate
Account.................................................
Section 3.07 Delinquency Advances; Servicing Advances................
Section 3.08 Compensating Interest...................................
Section 3.09 Maintenance of Insurance................................
Section 3.10 Due-on-Sale Clauses; Assumption and Substitution........
Section 3.11 Realization Upon Defaulted Mortgage Loans;
Workouts................................................
Section 3.12 Trustee to Cooperate; Release of Files..................
Section 3.13 Servicing Compensation..................................
Section 3.14 Annual Statement of Compliance..........................
Section 3.15 Assessments of Compliance and Attestation Reports.......
Section 3.16 Access to Loan Documentation and Information............
Section 3.17 Inspections; Errors and Omissions Insurance.............
Section 3.18 [Reserved]..............................................
Section 3.19 Prepayment Charges......................................
Section 3.20 Escrow Account..........................................
Section 3.21 Refinancings of Mortgage Loans..........................
ARTICLE IV ACCOUNTS AND DISTRIBUTIONS........................................
Section 4.01 Collection of Money.....................................
Section 4.02 Certificate Account.....................................
Section 4.03 Investment of Accounts..................................
Section 4.04 [Reserved]..............................................
Section 4.05 Eligible Investments....................................
Section 4.06 Accounting and Directions...............................
Section 4.07 Reports by Certificate Administrator to Holders.........
Section 4.08 Other Reports by Certificate Administrator or
Paying Agent............................................
Section 4.09 Commission Filings......................................
Section 4.10 Amounts Not Distributed.................................
Section 4.11 Payment of Trust Expenses...............................
ARTICLE V THE CERTIFICATES...................................................
Section 5.01 The Certificates........................................
Section 5.02 Registration of Transfer and Exchange of
Certificates............................................
Section 5.03 Mutilated, Destroyed, Lost or Stolen Certificates.......
Section 5.04 Persons Deemed Owners...................................
Section 5.05 Access to List of Certificateholders' Names and
Addresses...............................................
Section 5.06 Definitive Certificates.................................
Section 5.07 Notices to Clearing Agency..............................
ARTICLE VI CRMSI AND THE SERVICER............................................
Section 6.01 Liability...............................................
Section 6.02 Merger or Consolidation, or Assumption of
Obligations.............................................
Section 6.03 Limitation on Liability.................................
Section 6.04 Servicer Not to Resign..................................
Section 6.05 Maintenance of Office or Agency.........................
Section 6.06 Delegation of Duties....................................
ARTICLE VII SERVICER DEFAULT; RESIGNATION....................................
Section 7.01 Servicing Events of Default.............................
ARTICLE VIII THE TRUSTEE.....................................................
Section 8.01 Duties of the Trustee...................................
Section 8.02 Certain Matters Affecting the Trustee...................
Section 8.03 Trustee Not Liable for Certificates or Mortgage
Loans...................................................
Section 8.04 Trustee May Own Certificates............................
Section 8.05 Fees and Expenses Paid by Servicer......................
Section 8.06 Eligibility Requirements for Trustee....................
Section 8.07 Resignation or Removal of Trustee.......................
Section 8.08 Successor Trustee.......................................
Section 8.09 Merger or Consolidation of Trustee......................
Section 8.10 Appointment of Co-Trustee or Separate Trustee...........
Section 8.11 Tax Returns.............................................
Section 8.12 Appointment of Authenticating Agent.....................
Section 8.13 Appointment of Custodians...............................
ARTICLE IX TERMINATION.......................................................
Section 9.01 Termination upon Purchase by Servicer of Mortgage
Loans...................................................
ARTICLE X GENERAL PROVISIONS.................................................
Section 10.01 Amendment...............................................
Section 10.02 Recordation of Agreement................................
Section 10.03 Limitation on Rights of Certificateholders..............
Section 10.04 Governing Law...........................................
Section 10.05 Intention of Parties....................................
Section 10.06 Notices.................................................
Section 10.07 Severability of Provisions..............................
Section 10.08 Assignment..............................................
Section 10.09 Certificates Nonassessable and Fully Paid...............
Section 10.10 No Usurious Intent......................................
Section 10.11 Counterparts............................................
ARTICLE XI DEPOSITORIES......................................................
Section 11.01 Depositories............................................
APPENDIX 1 80
THESE STANDARD TERMS FOR POOLING AND SERVICING AGREEMENTS, dated as of
August 1, 2006 (the "Standard Terms Document"), declare the basic terms and
conditions upon which one or more series of pass-through certificates packaged
by Citicorp Residential Mortgage Securities, Inc. ("CRMSI") are to be issued,
authenticated and delivered from time to time pursuant to, for each such series,
a Pooling and Servicing Agreement (a "Pooling Agreement") between CRMSI as
depositor, CitiMortgage, Inc. ("CMI") as servicer, and the institution named
therein as trustee establishing such series.
This Standard Terms Document as incorporated in a Pooling Agreement shall
apply to the series of pass-through certificates established thereby to the
extent provided therein. Hereinafter, references to the "Pooling Agreement" and
the pass-through certificates executed and delivered thereunder and to terms
such as "this Agreement", "herein", "hereof" and words of similar import shall
refer only to a particular Pooling Agreement, including as and to the extent
incorporated therein this Standard Terms Document, and the series of
pass-through certificates established thereby.
ARTICLE I
DEFINITIONS
Section 1.01 Definitions.
Whenever used in this Agreement, the following words and phrases, unless
otherwise specified in Article XII or unless the context otherwise requires,
shall have the following meanings, and the definitions of such terms are
applicable to the singular as well as the plural form of such terms and to the
masculine as well as to the feminine and neuter genders of such terms. Defined
terms used in this Standard Terms Document and not defined herein have the
respective meanings ascribed thereto in Article XII.
Accountant: A Person engaged in the practice of accounting who (except
when this Agreement provides that an Accountant must be Independent) may be
employed by or with the Depositor or an Affiliate thereof.
Act: The Securities Act of 1933, as amended.
Additional Form 10-D Disclosure: As defined in Section 4.09(b).
Additional Form 10-K Disclosure: As defined in Section 4.09(d).
Additional Servicer: As defined in Section 3.03.
Additional Servicing Compensation: All amounts of the type described as
such in Section 3.13.
Adjustment Date: For an adjustable rate Mortgage Loan, each date on which
the Mortgage Note Rate is subject to adjustment, as provided in the related
Mortgage Note.
Affiliate: For any specified Person, any other Person controlling or
controlled by or under common control with such specified Person. For the
purposes of this definition, "control" when used with respect to any specified
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
Aggregate Current Pool Balance: On any date of determination, the Pool
Balance as of the end of the most recently ended Collection Period.
Aggregate Initial Pool Balance: The Pool Balance as of the Cut-Off Date.
Amount Held for Future Distribution: For any Collection Period, any
collections on any Mortgage Loans received during such Collection Period (or the
related Prepayment Collection Period, as the case may be) the that are not
required to be remitted to the Certificate Account on the related Distribution
Date.
Applied Loss Amount: For any Distribution Date, any excess of (x) the
Certificate Balance, after giving effect to distributions of principal to the
Class A Certificates and Class M Certificates on such date (and after giving
effect to any increase in Class M Subclass Principal Balances as a result of Net
Subsequent Recoveries) but prior to allocation pursuant to Section 13.02, over
(y) the Aggregate Current Pool Balance as of the end of the related Collection
Period.
Appraisal: For any Mortgage Loan, the appraisal conducted in connection
with the origination of such Mortgage Loan, whether conducted upon the purchase
of the related Mortgaged Property or in connection with a refinancing.
Authenticating Agent: Any Authenticating Agent appointed pursuant to
Section 8.12. The Authenticating Agent may be an Affiliate of the Depositor.
Authorized Officer: With respect to the Servicer or the Depositor, the
Chairman, the President, any Executive Vice President, Senior Vice President,
Vice President, Controller, Assistant Controller, Secretary, Assistant
Secretary, Treasurer or Assistant Treasurer, or any other natural person
designated in an Officer's Certificate signed by any of the foregoing officers
and furnished to the Trustee and, solely in the case of an Officer's Certificate
given pursuant to Section 3.14, any Servicing Officer.
Bankruptcy Code: The United States Bankruptcy Code of 1978, as amended.
Beneficial Owner: With respect to a Certificate held by a Clearing Agency,
the Person who is the beneficial owner of such Certificate as reflected on the
books of such Clearing Agency or on the books of a Person maintaining an account
with such Clearing Agency (directly or as an Indirect Participant, in accordance
with the rules of such Clearing Agency).
Bi-Weekly Interest Advance: The aggregate of the advances made by the
Servicer pursuant to clause (ii) of the first sentence of Section 3.07(a), the
amount of any such Bi-Weekly Interest Advance with respect to a particular
Collection Period being no more than the aggregate of the Bi-Weekly Interest
Advanceable Amounts in respect of the Bi-Weekly Loans for such Collection
Period, after adjustment of such interest shortfall amounts to interest at the
Pass-Through Rate.
Bi-Weekly Interest Advanceable Amount: For a Bi-Weekly Loan and a
Collection Period in which only two (rather than three) Scheduled Payments in
respect of such loan were automatically deductible from the related Mortgagor's
personal bank account, an amount equal to the excess (if any) of (x) the amount
of interest that accrued on such Bi-Weekly Loan during such Collection Period
over (y) the aggregate of the interest portions of the Scheduled Payments that
were automatically deductible during such Collection Period.
Bi-Weekly Loan: An Equity Builder Loan with respect to which the related
Mortgagor has authorized the Originator to cause the Servicer automatically to
deduct from such Mortgagor's personal bank account on a bi-weekly basis certain
periodic payments (as specified in the related Equity Builder Agreement).
Business Day: Any day other than (x) a Saturday, a Sunday or a day on
which banking institutions in New York, New York or in the cities where the
Trustee, any Paying Agent and the Servicer are located are authorized or
obligated by law or executive order to be closed or (y) only with respect to a
Distribution Date and if there are Book-Entry Certificates, a day on which the
relevant Clearing Agency is closed.
Certificate: Any certificate or residual certificate identified as such in
Article XII.
Certificate Account: The account or accounts created and maintained
pursuant to Section 4.02, each such account to be held in trust for the benefit
of Certificateholders, in the name of the Trustee. The term Certificate Account
shall be deemed to include an Alternative Certificate Account (as defined in
Section 11.01).
Certificate Balance: As of any date, the aggregate of the Principal
Balances of all Certificates.
Certificate Rate: For any Class or Subclass of Certificates, the rate per
annum at which interest accrues on Certificates of such Class or such Subclass,
as specified in Article XII.
Certificate Register and Certificate Registrar: The register maintained
pursuant to Section 5.02 and the Certificate Registrar identified in Article
XII.
Certificateholder or Holder: The Person in whose name a Certificate is
registered in the Certificate Register.
Certification: As defined in Section 4.09(d).
Civil Relief Act: The Servicemembers Civil Relief Act.
Civil Relief Shortfall: For any Collection Period and any Mortgage Loan
for which there has been a reduction in the amount of interest collectible for
such Collection Period as a result of the Civil Relief Act or Similar State Law,
the reduction in the amount of interest collectible on such Mortgage Loan during
such Collection Period as a result of such reduction.
Civil Relief Shortfall Amount: For any Distribution Date and any
interest-bearing Class or Subclass of Certificates, the pro rata share allocated
thereto, based on the amount of interest accrued thereon at the applicable
Certificate Rate during the related Interest Accrual Period, of the aggregate of
the Civil Relief Shortfalls for all Mortgage Loans for the related Collection
Period.
Class: With respect to the Certificates, any group of Certificates
designated as a Class in Article XII and with respect to Residual Certificates,
all Residual Certificates having the same Class designation.
Class A Certificateholder: A registered holder of a Class A Certificate.
Class A Certificate: A Certificate of any Class or Subclass designated as
a Class A Certificate in Article XII.
Class A Interest Amount: For any Distribution Date and for a particular
Group, the sum of the related Class A Subclass Interest Amounts for such
Distribution Date.
Class A Interest Shortfall Amount: For a Distribution Date, the sum of all
Class A Subclass Interest Shortfall Amounts for such date.
Class A Principal Balance: For any date, an amount equal to the sum of the
Class A Subclass Principal Balances.
Class A Subclass Interest Amount: As to any Distribution Date and each
Class A Subclass (other than a Class A Principal-Only Subclass), (i) the amount
of interest accrued during the related Interest Accrual Period on the Class A
Subclass Principal Balance (or in the case of any interest-only Subclass, the
notional amount) of such Class A Subclass at the lesser of (x) the applicable
Certificate Rate and (y) the Net WAC Rate for such Distribution Date, minus (ii)
the sum of (x) any Non-Supported Prepayment Interest Shortfall allocated to such
Class A Subclass for such Distribution Date, (y) any Non-Supported Simple
Interest Shortfall allocated to such Class A Subclass for such Distribution Date
and (z) any Civil Relief Shortfall Amount allocated to such Class A Subclass for
such Distribution Date.
Class A Subclass Interest Shortfall Amount: As to any Distribution Date
and each Class A Subclass in a particular Group (other than a Class A
Principal-Only Subclass), any amount by which the Class A Subclass Interest
Amount of such Class A Subclass for such Distribution Date exceeds the amount
distributed in respect of such Class A Subclass on such Distribution Date
pursuant to clause 1.a of Section 13.01(b).
Class A Subclass Principal Balance: As to the first Distribution Date and
each Class A Subclass in a particular Group, the Initial Principal Balance of
such Class A Subclass as set forth in Section 12.01(a). As of any subsequent
Distribution Date, such Initial Principal Balance minus the sum of all amounts
previously distributed in respect of such Class A Subclass on prior Distribution
Dates pursuant to clause 1.c of Section 13.01(b).
Class A Unpaid Interest Shortfall: As to any Distribution Date and for a
particular Group, an amount equal to the sum of the related Class A Subclass
Interest Shortfall Amounts.
Class M Certificateholder: A registered holder of a Class M Certificate.
Class M Interest Amount: For any Distribution Date, the sum of the Class M
Subclass Interest Amounts for such Distribution Date.
Class M Principal Balance: An amount equal to the sum of all Class M
Subclass Principal Balances.
Class M Subclass Applied Losses: For any Distribution Date and any Class M
Subclass, the aggregate amount of all Applied Loss Amounts allocated to such
Class M Subclass on all prior Distribution Dates.
Class M Subclass Interest Amount: As to any Distribution Date and any
Class M Subclass, (i) the amount of interest accrued during the related Interest
Accrual Period on the Class M Subclass Principal Balance of such Class M
Subclass at the lesser of (x) the applicable Certificate Rate and (y) the Net
WAC Rate for such Distribution Date, minus (ii) the sum of (x) any Non-Supported
Prepayment Interest Shortfall allocated to such Class M Subclass for such
Distribution Date, (y) any Non-Supported Simple Interest Shortfall allocated to
such Class M Subclass for such Distribution Date and (z) any Civil Relief
Shortfall Amount allocated to such Class M Subclass for such Distribution Date.
Class M Subclass Interest Shortfall Amount: As to any Distribution Date
and any Class M Subclass, any amount by which the Class M Subclass Interest
Amount for such Class M Subclass for such Distribution Date exceeds the amount
distributed in respect of such Class M Subclass on such Distribution Date
pursuant to clause 1.b of Section 13.01(b).
Class M Subclass Loss Amount: For any Distribution Date and any Class M
Subclass, (a) the aggregate amount of all Applied Loss Amounts allocated to such
Class M Subclass on all prior Distribution Dates minus (b) the sum of (i) the
aggregate amount of all distributions to such Class M Subclass in reduction of
such Class M Subclass Loss Amount on all prior Distribution Dates pursuant to
clause 1.e of Section 13.01(b) and (ii) the cumulative amount of any Net
Subsequent Recoveries allocated to such Class M Subclass.
Class M Subclass Principal Balance: As to the first Distribution Date and
any Class M Subclass, the Initial Principal Balance of such Class M Subclass as
set forth in Section 12.01(a). As of any subsequent Distribution Date, the
lesser of (a) such Initial Principal Balance minus (i) the sum of (A) all
amounts previously distributed to holders thereof in reduction of Principal
Balance and (B) the Class M Subclass Applied Losses for such Class M Subclass,
plus (ii) any Net Subsequent Recoveries allocated to such Class for previous
Distribution Dates, and (b) the Aggregate Current Pool Balance minus the sum of
the Class A Principal Balance and the Class M Subclass Principal Balances of all
Class M Subclasses with lower numerical designations, each as of the immediately
preceding Distribution Date (after taking into account distributions in
reduction of such Class M Subclass Principal Balances, increases in such Class M
Subclass Principal Balances as a result of Net Subsequent Recoveries, and the
allocation of any Applied Loss Amounts on such date).
Class M Unpaid Interest Shortfall: As to any Distribution Date, the sum of
the Class M Subclass Interest Shortfall Amounts.
Class R Certificate: Any Residual Certificate designated as such in
Article XII.
Clearing Agency: An organization registered as a "clearing agency"
pursuant to Section 17A of the Exchange Act and the regulations of the
Commission thereunder. Unless otherwise specified in Article XII, the initial
Clearing Agency is The Depository Trust Company.
Clearing Agency Participant: A broker, dealer, bank or other financial
institution or other person for whom from time to time a Clearing Agency effects
book-entry transfers and pledges of securities deposited with the Clearing
Agency.
Code: The Internal Revenue Code of 1986, as it may be amended from time to
time, any successor statutes thereto, and applicable U.S. Department of the
Treasury temporary or final regulations issued pursuant thereto.
Collection Account: As defined in Section 3.06.
Collection Period: For a particular Distribution Date, the period
commencing with the opening of business of the first day of the preceding
calendar month and ending at the close of business on the last day of such
preceding calendar month.
Commission: The Securities and Exchange Commission.
Compensating Interest: As defined in Section 3.08(c).
Constituent REMICs: Each of the one or more segregated asset pools
designated in Article XII as a REMIC within the Trust Fund.
Corporate Trust Office: The principal office of the Trustee at which at
any particular time its corporate trust business shall be administered, which
office on the date hereof is located at the address set forth in Article XII.
CRMSI: Citicorp Residential Mortgage Securities, Inc., a corporation
organized and existing under the laws of the State of Delaware, or its
successors in interest.
Cumulative Loss Percentage: As of any date, the percentage equivalent of
Cumulative Realized Losses divided by the Aggregate Initial Pool Balance.
Cumulative Realized Losses: As of any date, the aggregate amount of
Realized Losses on all Mortgage Loans for all Prepayment Collection Periods
ending prior to such date (reduced by the aggregate amount of Subsequent
Recoveries received since the Cut-Off Date through the last day of the related
Prepayment Collection Period).
Current Interest: For any Distribution Date, the sum of the Class A
Interest Amount for all Groups and the Class M Interest Amount.
Custodian: The person identified in Article XII or its successors in
interest named pursuant to the Mortgage File Custodial Agreement. The Custodian
may be the Trustee, any Affiliate of the Trustee or the Depositor or an
independent entity.
Deficiency Amount: For any Distribution Date, any excess of (x) the
Targeted Level over (y) the Overcollateralization Amount, taking into account
the reduction of the Certificate Balance by application of Principal Proceeds
but prior to applying any Extra Principal Distribution Amount or Applied Loss
Amount.
Deficient Valuation: For any Mortgage Loan, a valuation by a court of
competent jurisdiction of the Mortgaged Property in an amount less than the
then-outstanding indebtedness under the Mortgage Loan, or any reduction in the
amount of principal to be paid in connection with any Scheduled Payment that
results in a permanent forgiveness of principal, which valuation or reduction
results from a proceeding under the Bankruptcy Code or any other similar state
law.
Definitive Securities: Any Class or Subclass of Certificates or the
Residual Certificates issued in definitive, fully registered form, either upon
initial issuance or in accordance with the provisions of Section 5.06.
Delinquency Advance: The aggregate of the advances made by the Servicer
pursuant to clause (i) of the first sentence of Section 3.07(a), the amount of
any such Delinquency Advance with respect to a particular Collection Period
being no more than the aggregate of the interest portions (net of the related
Servicing Fees) of Scheduled Payments on the Mortgage Loans that were due during
the related Collection Period and Delinquent as of the related Determination
Date (net of amounts collected as income on the related REO Properties, in the
case of REO Mortgage Loans), after adjustment of delinquent interest payments to
interest at the Pass-Through Rate.
Delinquent: A Mortgage Loan is "Delinquent" if any Scheduled Payment due
thereon (or part thereof in excess of $5.00) is not received from the Mortgagor
by the close of business on the Due Date. A Mortgage Loan is "30 days
Delinquent" if such payment has not been received by the close of business on
the corresponding day of the month following the month of such Due Date [(or, if
there is no corresponding day, on the last day of such following month)], and
similarly for "60 days Delinquent", "90 days Delinquent" and so on.
Deposit Date: The Business Day preceding each Distribution Date.
Depositor: CRMSI, or its successors in interest.
Depositor Order: A written order or request signed in the name of the
Depositor by an Authorized Officer.
Depository: The bank or banks (which may be Citibank, N.A., Citibank
(Delaware) or Citibank (New York State)) or savings and loan association or
associations or trust company or companies (which may be the Trustee or which
may be, directly or indirectly, controlled by or under common control with the
Depositor) at which the Collection Account, Certificate Account and Escrow
Account are established or maintained pursuant to Section 4.02, 3.19 or 3.20.
Each Depository must meet the requirements set forth in Section 11.01.
Disqualified Organization: As defined in Section 5.02.
Distribution Date Statement: The statement required to be delivered
pursuant to Section 4.07(a).
Due Date: For a Mortgage Loan, the day of each calendar month on which a
Scheduled Payment is due; provided that, in the case of a Bi-Weekly Loan or a
Semi-Monthly Loan, "Due Date" shall refer to each day of each calendar month on
which a periodic payment is automatically deductible from the related
Mortgagor's personal bank account in accordance with the terms of the related
Equity Builder Agreement.
▇▇▇▇▇: As defined in Section 4.09(b).
Eligible Account: Either (a) a segregated account or accounts maintained
at Citibank, N.A. or a Citibank banking affiliate, provided that the short-term
unsecured debt obligations of Citibank, N.A. or the Citibank banking affiliate
are rated at least "A-1+" by S&P if S&P is a Rating Agency, "F-l" by Fitch if
Fitch is a Rating Agency, and "P-1" by Moody's if ▇▇▇▇▇'▇ is a Rating Agency, or
(b) a segregated account or accounts maintained with an institution (i) whose
deposits are insured by the FDIC, (ii) the unsecured and uncollateralized debt
obligations of which are rated at least "AA" by S&P if S&P is a Rating Agency,
"AA" by Fitch if Fitch is a Rating Agency, and "Aa" by Moody's if ▇▇▇▇▇'▇ is a
Rating Agency, (iii) that has a short term rating of at least "A-1+" by S&P if
S&P is a Rating Agency, "F-1" by Fitch if Fitch is a Rating Agency, and "P-1" by
Moody's if ▇▇▇▇▇'▇ is a Rating Agency, and (iv) that is either (A) a federal
savings and loan association duly organized, validly existing and in good
standing under the federal banking laws, (B) an institution duly organized,
validly existing and in good standing under the applicable banking laws of any
state, (C) a national banking association duly organized, validly existing and
in good standing under the federal banking laws or (D) a principal subsidiary of
a bank holding company, or (c) a trust account maintained with the trust
department of a federal or state chartered depository institution or of a trust
company, having capital and surplus of not less than $50,000,000, acting in its
fiduciary capacity. Any Eligible Account maintained with the Trustee shall
conform to the preceding clause (c).
Eligible Investments: As defined in Section 4.05.
Equity Builder Agreement: For any Equity Builder Loan, the agreement
between the Originator and the related Mortgagor, pursuant to which the
Mortgagor is enrolled in the Equity Builder Program.
Equity Builder Loan: As of any date of determination, a Mortgage Loan with
respect to which the related Mortgagor is enrolled in the Equity Builder Program
on such date of determination.
Equity Builder Program: A program of the Originator, pursuant which an
enrolled mortgagor authorizes the Originator to cause the related servicer to
deduct automatically from the mortgagor's personal bank account, on the monthly
due date or on either a bi-weekly or semi-monthly basis, level periodic payments
of principal and interest on the mortgagor's mortgage loan, which payments are
calculated based on the scheduled monthly payment due under the terms of the
related mortgage note. Mortgagors who are eligible for the Equity Builder
Program have the option to enroll (and, subsequently, to disenroll) in the
program at any time, and if an enrolled mortgagor subsequently becomes
ineligible, he or she may be disenrolled by the Originator from the program. Any
previously enrolled mortgagor who chose to have bi-weekly or semi-monthly
payments automatically deducted from his or her bank account and who disenrolls
(or is disenrolled) from the Equity Builder Program will, subsequent to such
disenrollment, be required to make the scheduled monthly payments due under the
terms of the related mortgage note but will not be required to make any such
bi-weekly or semi-monthly payments that had been automatically deductible from
the mortgagor's bank account while he or she was enrolled in the program.
ERISA: The Employee Retirement Income Security Act of 1974, as amended
from time to time and any applicable rule, regulation or order promulgated
thereunder.
ERISA Prohibited Holder: As defined in Section 5.02.
Escrow Account: The account, if any, created and maintained pursuant to
Section 3.20.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Extra Principal Distribution Amount: For any Distribution Date, the lesser
of (x) Monthly Excess Interest and (y) the Deficiency Amount.
FDIC: The Federal Deposit Insurance Corporation.
FHLMC: The Federal Home Loan Mortgage Corporation.
Fitch: Fitch Ratings, or its successors.
Foreclosure Profits: As to any Distribution Date, the sum of (1) any
excess of (a) Net Liquidation Proceeds for each Mortgage Loan that became a
Liquidated Loan during the related Collection Period over (b) the sum of the
Unpaid Loan Balance of each such Liquidated Loan plus accrued and unpaid
interest at the applicable Mortgage Note Rate on such Unpaid Loan Balance from
the Due Date to which interest was last paid by the Mortgagor (or, in the case
of a Liquidated Loan that had been an REO Mortgage Loan, from the Due Date to
which interest was last deemed to have been paid to the Due Date in the month in
which such Mortgage Loan became a Liquidated Loan) and (2) any excess of (a) Net
Subsequent Recoveries during such related Collection Period for each Mortgage
Loan that became a Liquidated Loan during a Collection Period prior to such
related Collection Period over (b) the Unpaid Loan Balance of each such
Liquidated Loan plus accrued and unpaid interest at the applicable Mortgage Note
Rate on such Unpaid Loan Balance from the Due Date to which interest was last
paid by the Mortgagor (or, in the case of a Liquidated Loan that had been an REO
Mortgage Loan, from the Due Date to which interest was last deemed to have been
paid to the Due Date in the month in which such Mortgage Loan became a
Liquidated Loan) after giving effect to any Net Liquidation Proceeds for such
Liquidated Loan and any Net Subsequent Recoveries for such Liquidated Loan that
were received during a Collection Period prior to such related Collection
Period. (References in this definition to either Net Liquidation Proceeds or Net
Subsequent Recoveries shall refer to such term without giving effect to clause
(ii) in the first sentence of the definition of such term.)
Form 8-K Disclosure Information: As defined in Section 4.09(e).
GIC: A guaranteed investment contract or surety bond.
Gross Margin: The percentage set forth in the Mortgage Note for an
adjustable rate Mortgage which is to be added to the applicable index to
determine the Mortgage Note Rate on each Adjustment Date.
Group: For Class A Certificates, those Classes or Subclasses designated in
Article XII as being part of a particular "Group" of Class A Certificates and as
being related to a particular Pool. Group 1 Class A Certificates shall be
related to Pool 1, Group 2 Class A Certificates shall be related to Pool 2, and
so on for additional Groups and Pools.
Holder: Has the same meaning as "Certificateholder".
Independent: When used with respect to any specified Person, means such a
Person who is "independent" within the meaning of Rule 2-01(b) of the
Commission's Regulation S-X under the Exchange Act.
Indirect Participant: A broker, dealer, bank or other financial
institution or other person who acts through a Clearing Agency Participant to
effect book-entry transfers through the Clearing Agency and pledges of
securities deposited with the Clearing Agency.
Initial Principal Balance: For any Class or Subclass of Certificates, the
amount specified in Article XII, and for any Certificate, the amount specified
thereon as the Initial Principal Balance.
Insurance Proceeds: Proceeds paid in respect of a Mortgage Loan pursuant
to any Primary Mortgage Insurance Certificates, amounts paid pursuant to hazard
insurance policies to the extent not applied to restore the related Mortgaged
Property or released to the Mortgagor in accordance with the Servicer's normal
servicing procedures, and amounts paid pursuant to any other insurance policy or
bond relating to the Mortgage Loan or the servicing thereof.
Interest Proceeds: For a Distribution Date, the sum (without duplication)
of (a) all interest received on the Mortgage Loans in respect of Due Dates
during the related Collection Period (net of the Servicing Fee for the related
Collection Period), (b) all Compensating Interest paid by the Servicer for the
related Collection Period, (c) the interest portion of any payment made during
the related Prepayment Collection Period in connection with the repurchase of a
Mortgage Loan pursuant to Section 2.02 or 2.03(a), (d) the interest portion of
Net Liquidation Proceeds received in the related Prepayment Collection Period,
(e) the interest portion of Net Subsequent Recoveries received in the related
Prepayment Collection Period, (f) all Delinquency Advances made for the related
Collection Period, (g) all Bi-Weekly Interest Advances made for the related
Collection Period, (h) all Simple Interest Advances made for the related
Collection Period and (i) the interest portion of any payment made on such
Distribution Date in connection with the purchase of the Mortgage Loans pursuant
to the Right to Purchase under Section 9.01(a).
Investment Account: As and to the extent specified in Article XII, each
account or any portion of any thereof which consists of cash or Eligible
Investments.
Investment Income: Any and all investment income and gains, net of any
losses, actually received on the investment of funds on deposit in a particular
Investment Account.
Issue Date: The date on which Certificates are first executed,
authenticated and delivered, as specified in Article XII. For the Avoidance of
doubt, unless otherwise specified in Article XII, the Issue Date shall be the
Closing Date as defined in Section 12.02.
Last Scheduled Distribution Date: For each Class or Subclass of
Certificates or Certificates, the date specified in Article XII.
Liquidated Loan: A Mortgage Loan (including an REO Property) with respect
to which the Servicer determines that all Liquidation Proceeds which it expects
to recover have been recovered or a Mortgage Loan for which the related
Mortgaged Property is retained or sold by the Mortgagor and for which the
Servicer has released the Mortgage as a result of a determination by the
Servicer that the potential Liquidation Expenses with respect to such Mortgage
Loan would exceed the amount by which any payment made by the Mortgagor is less
than the outstanding principal balance of such Mortgage Loan plus accrued and
unpaid interest thereon to the date on which such Mortgage Loan became an REO
Mortgage Loan.
Liquidation Expenses: For any Liquidated Loan, expenses paid or incurred
by or for the account of the Servicer or the Trust Fund for (a) Property
Protection Expenses, (b) property sales expenses, (c) foreclosure costs,
including court costs and reasonable attorneys' fees, (d) similar expenses
reasonably paid or incurred in connection with the liquidation of such
Liquidated Loan and (e) any tax imposed on the Trust Fund with respect to a
Liquidated Loan or property received by deed in lieu of foreclosure.
Liquidation Proceeds: For any Liquidated Loan, the amounts received by the
Servicer in connection with the liquidation of such Liquidated Loan, whether
through judicial or non-judicial foreclosure, proceeds of insurance policies,
condemnation proceeds or otherwise, including payments received from the
Mortgagor in respect of such Liquidated Loan, other than amounts required to be
paid to the Mortgagor pursuant to the terms of such Liquidated Loan or to be
applied otherwise pursuant to law.
Loan Balance: For any Mortgage Loan as of any date, the outstanding
principal balance thereof as of the close of business on the Cut-Off Date, less
all scheduled principal payments received during all prior Collection Periods,
and all unscheduled principal payments received during all prior Prepayment
Collection Periods, on such Mortgage Loan, without regard to any adjustments
thereof in connection with Mortgagor bankruptcies (other than a Deficient
Valuation).
Loan Repurchase Price: As defined in Section 2.02.
Loan-to-Value Ratio: As of any date, (a) for a Mortgage Loan secured by a
Senior Lien, the percentage equivalent of (x) the Unpaid Loan Balance divided by
(y) the Original Value and (b) for a Second Mortgage Loan, the percentage
equivalent of (x) the sum of the Unpaid Loan Balance of the Second Mortgage Loan
and the remaining principal balance of all Senior Liens on the related Mortgaged
Property as of such date, divided by (y) the Original Value.
Lost Note Affidavit: For any Mortgage Loan for which the original Mortgage
Note has been permanently lost, misplaced or destroyed and has not been
replaced, an affidavit of the Originator or an Affiliate of the Originator
certifying that the original Mortgage Note has been lost, misplaced or destroyed
(attaching a copy of such Mortgage Note) and indemnifying the Trust Fund against
any loss, cost or liability resulting from the failure to deliver such original
Mortgage Note.
Maximum Compensating Interest Amount: For any Distribution Date, the
lesser of (a) the aggregate amount of the Servicing Fee actually received on the
Mortgage Loans for such Distribution Date (but not including any Servicing Fee
received because of a Delinquency Advance, Bi-Weekly Interest Advance or Simple
Interest Advance for the related Collection Period) and (b) one-half of the sum
of the Daily Servicing Fee Accrual Amounts for each Mortgage Loan for each day
during the related Collection Period. For the avoidance of doubt, in accordance
with clause (a) of this definition, the Servicer will not advance any Servicing
Fee or any portion thereof to reduce Prepayment Interest Shortfalls pursuant to
Sections 3.08(a) and (c) or to reduce Simple Interest Shortfalls pursuant to
Sections 3.08(b) and (c).
Maximum Note Rate: The maximum rate of interest set forth in the Mortgage
Note relating to an adjustable rate Mortgage Loan.
MERS: Mortgage Electronic Registration Systems, Inc. and its successors in
interest.
Minimum Note Rate: The minimum rate of interest set forth in the Mortgage
Note relating to an adjustable rate Mortgage Loan.
Monthly Deposit Amount: As defined in Section 3.06(c).
Monthly Excess Interest: For any Distribution Date, any excess of (x)
Interest Proceeds over (y) the sum of Current Interest and any Class A Subclass
Interest Shortfalls.
Moody's: ▇▇▇▇▇'▇ Investors Service, Inc.
Mortgage: For any Mortgage Loan, the mortgage, deed of trust or other
security instrument creating a first or second lien on and an interest in real
property securing a Mortgage Note.
Mortgage Documents: All documents contained in the Mortgage Files.
Mortgage File: The mortgage documents listed in Section 2.01 pertaining to
a particular Mortgage Loan and any additional documents required to be added to
such documents pursuant to this Agreement.
Mortgage File Custodial Agreement: The Mortgage File Custodial Agreement
from time to time in effect between the Custodian, the Depositor, the Servicer
and the Trustee, as the same may be amended or modified from time to time.
Mortgage Loan: At any time, the indebtedness of a Mortgagor evidenced by a
Mortgage Note which is secured by real property and which is sold and assigned
to the Trustee and held at such time in the Trust Fund pursuant to this
Agreement, the Mortgage Loans originally so held being identified in Exhibit B.
Mortgage Loan Schedule: The list of Mortgage Loans transferred to the
Trustee as part of the Trust Fund, the original list being attached hereto as
Exhibit B.
Mortgage Note: For a Mortgage Loan, the promissory note or other evidence
of indebtedness of the Mortgagor.
Mortgage Note Rate: For a Mortgage Loan, the annual rate per annum at
which interest accrues on such Mortgage Loan.
Mortgaged Property: Any real property subject to a Mortgage.
Mortgagor: The obligor or obligors on a Mortgage Note.
Net Bi-Weekly Interest Advances: For any period, the amount (which may be
negative) obtained by subtracting the amount of any reimbursements of Bi-Weekly
Interest Advances received in such period from the aggregate amount of Bi-Weekly
Interest Advances made in such period.
Net Delinquency Advances: For any period, the amount (which may be
negative) obtained by subtracting the amount of any reimbursements of
Delinquency Advances received in such period from the aggregate amount of
Delinquency Advances made in such period.
Net Liquidation Proceeds: For any period and for any Liquidated Loan, the
aggregate amount of Liquidation Proceeds, net of (i) related Liquidation
Expenses and related unreimbursed Delinquency Advances, unreimbursed Bi-Weekly
Interest Advances, unreimbursed Simple Interest Advances and unreimbursed
Servicing Advances, received by the Servicer or deposited in the Collection
Account, as the case may be, as proceeds of such Mortgage Loan, and (ii)
Foreclosure Profits with respect to such Net Liquidation Proceeds. Net
Liquidation Proceeds shall be allocated first to accrued and unpaid interest on
the related Mortgage Loan and then to the unpaid principal balance thereof.
Net Servicing Advances: For any period, the amount (which may be negative)
obtained by subtracting the amount of any reimbursements of Servicing Advances
received in such period from the aggregate amount of Servicing Advances made in
such period.
Net Simple Interest Advances: For any period, the amount (which may be
negative) obtained by subtracting the amount of any reimbursements of Simple
Interest Advances received in such period from the aggregate amount of Simple
Interest Advances made in such period.
Net Subsequent Recoveries: For any Prepayment Collection Period and for
any Liquidated Loan, the aggregate amount of Subsequent Recoveries, net of (i)
related Liquidation Expenses and related unreimbursed Delinquency Advances,
unreimbursed Bi-Weekly Interest Advances, unreimbursed Simple Interest Advances
and unreimbursed Servicing Advances (in each case, after giving effect to any
Liquidation Proceeds and previous Subsequent Recoveries applied to the
reimbursement of such expenses or advances), received by the Servicer or
deposited in the Collection Account, as the case may be, as proceeds of such
Mortgage Loan, and (ii) Foreclosure Profits with respect to such Net Subsequent
Recoveries. Net Subsequent Recoveries shall be allocated first to accrued and
unpaid interest on the related Mortgage Loan and then to the unpaid principal
balance thereof.
Net WAC Rate: As defined in Section 12.02.
Nonrecoverable Advance: Any portion of a Delinquency Advance, Bi-Weekly
Interest Advance, Simple Interest Advance or Servicing Advance previously made
which has not been previously reimbursed to the Servicer and which, in the good
faith judgment of the Servicer, would not be ultimately recoverable from
Liquidation Proceeds or other recoveries in respect of the related Mortgage
Loan.
Non-Supported Prepayment Interest Shortfall: For any Distribution Date,
and any interest-bearing Class or Subclass of Certificates, the pro rata share
allocated thereto based on the amount of interest accrued thereon during the
related Interest Accrual Period at the related Certificate Rate (or, if lower,
the Net WAC Rate for such Distribution Date) of the excess, if any, of (x) the
Prepayment Interest Shortfalls for the related Prepayment Collection Period over
(y) the portion of the Maximum Compensating Interest Amount allocated to cover
such Prepayment Interest Shortfalls pursuant to Sections 3.08(a) and (c) for the
related Collection Period; provided that, in accordance with clause (a) of the
definition of "Maximum Compensating Interest Amount", the Servicer will not
advance its Servicing Fee or any portion thereof to reduce Prepayment Interest
Shortfalls.
Non-Supported Simple Interest Shortfall: For any Distribution Date, and
any interest-bearing Class or Subclass of Certificates, the pro rata share
allocated thereto based on the amount of interest accrued thereon during the
related Interest Accrual Period at the related Certificate Rate (or, if lower,
the Net WAC Rate for such Distribution Date) of the excess, if any, of (x) the
Simple Interest Shortfalls for the related Collection Period over (y) the
portion of the Maximum Compensating Interest Amount allocated to cover such
Simple Interest Shortfalls pursuant to Sections 3.08(b) and (c) for such
Collection Period; provided that, in accordance with clause (a) of the
definition of "Maximum Compensating Interest Amount", the Servicer will not
advance its Servicing Fee or any portion thereof to reduce Simple Interest
Shortfalls.
Officer's Certificate: A certificate signed by an Authorized Officer of
the Depositor or the Servicer, as applicable.
Opinion of Counsel: A written opinion of counsel, who (unless otherwise
specified) may be counsel for, or an employee of, the Depositor or an Affiliate
thereof, which counsel shall be reasonably acceptable to the addressee.
Original Value: For a Mortgaged Property, the lesser of the sales price of
such Mortgaged Property and the appraised value thereof determined pursuant to
an appraisal made in connection with origination of such Mortgage Loan, except
that the original appraisal of such Mortgaged Property may be used for a
Mortgage Loan that is not a purchase money mortgage.
Originator: Citicorp Trust Bank, fsb.
Outstanding: As of any date, all Certificates theretofore authenticated
and delivered under this Agreement except:
(i) Certificates theretofore canceled by the Certificate Registrar or
delivered to the Certificate Registrar for cancellation;
(ii) Certificates with respect to which money for a distribution in the
necessary amount to reduce the Principal Balance thereof to zero has been
theretofore deposited with the Trustee or any Paying Agent in trust for
the Holders of such Certificates; (iii) Certificates in exchange for or in
lieu of which other Certificates have been authenticated and delivered
pursuant to this Agreement unless proof satisfactory to the Certificate
Registrar is presented that any such Certificates are held by a holder in
due course; and
(iv) Certificates alleged to have been destroyed, lost or stolen for which
replacement Certificates have been issued as provided for in Section 5.03
and authenticated and delivered pursuant to this Agreement;
provided, however, that in determining whether the Holders of the
requisite percentage of the aggregate Principal Balance or Percentage Interest
of any Outstanding Certificates or of the Outstanding Certificates of any one or
more Classes thereof have given any request, demand, authorization, direction,
notice, consent or waiver hereunder, such percentage shall be based on the
Principal Balance of such Certificate and provided, further, Certificates owned
by the Depositor or any Affiliate of the Depositor shall be disregarded and
deemed not to be Outstanding, except that, in determining whether the Trustee
shall be protected in relying upon any such request, demand, authorization,
direction, notice, consent, or waiver, only Certificates which a Responsible
Officer of the Trustee has actual knowledge are so owned shall be so disregarded
and except that where the Depositor or any Affiliate of the Depositor shall be
owner of 100% of the aggregate Principal Balance or Percentage Interest of any
Class or Subclass of Outstanding Certificates, the Depositor or such Affiliate
shall be permitted to give any request, demand, authorization, direction,
notice, consent or waiver hereunder. Certificates so owned which have been
pledged in good faith may be regarded as Outstanding if the pledgee certifies in
writing to the Trustee the pledgee's right so to act with respect to such
Certificates and that the pledgee is not the Depositor or any Affiliate of the
Depositor.
Overcollateralization Amount: For any Distribution Date, any excess of (x)
the Aggregate Current Pool Balance as of the last day of the related Collection
Period over (y) the Certificate Balance (after giving effect to (i)
distributions of Principal Proceeds on such Distribution Date and (ii) and the
increase of any Class M Subclass Principal Balance as a result of Subsequent
Recoveries, but prior to the payment of any Extra Principal Distribution
Amount).
Pass-Through Rate: For a Mortgage Loan as of any date or for any period,
the applicable Mortgage Note Rate less the Servicing Fee Rate.
Paying Agent: Each paying agent identified in Article XII which is
authorized to make distributions on the Certificates on behalf of the Trustee. A
Paying Agent may be an Affiliate of the Depositor and, if not an Affiliate, must
be authorized to exercise corporate trust powers under the laws of its
jurisdiction of organization.
Percentage Interest: For a Class of Class R Certificates, if the
Certificate has a Principal Balance as specified in Article XII, the Initial
Principal Balance of such Certificate (expressed as a percentage) of the
aggregate Initial Principal Balance of the Certificates of such Class and, if
the Certificate does not have a Principal Balance, the portion represented by
such Certificate (expressed as a percentage) of the total ownership interest in
the applicable Constituent REMIC represented by all Certificates of such Class.
For a Class of Class CE Certificates, if the Certificate has a Principal Balance
as specified in Article XII, the Initial Principal Balance of such Certificate
(expressed as a percentage) of the aggregate Initial Principal Balance of the
Certificates of such Class and, if the Certificate does not have a Principal
Balance, the portion represented by such Certificate (expressed as a percentage)
of the total ownership interest in the Certificates of such Class. For any
Certificate of an interest-only Class or Subclass of Certificates, the ratio of
the notional amount of such Certificate to the aggregate notional amount of the
entire Class or Subclass.
Periodic Rate Cap: The provision in a Mortgage Note that limits
permissible increases and decreases in the Mortgage Note Rate on any Adjustment
Date for an adjustable rate Mortgage Loan.
Permitted Activities: The primary activities of the trust created
hereunder, which shall be (a) holding Mortgage Loans sold by the Depositor and
other assets of the Trust Fund, including any credit enhancement and passive
derivative financial instruments, (b) issuing Certificates and other interests
in the assets of the Trust Fund, (c) receiving collections on the Mortgage Loans
and making payments on Certificates and interests in accordance with the
provisions of this Agreement and (d) engaging in other activities that are
necessary or incidental to accomplish these limited purposes.
Person: Any legal person, including any individual, corporation,
partnership, joint venture, association, joint stock company, trust, limited
liability company, unincorporated organization or government or any agency or
political subdivision thereof.
Plan: As defined in Section 5.02.
Pool: Each of the pools of Mortgage Loans designated as such in Article
XII.
Pool Balance: For the Mortgage Loans in a particular Pool as of any date,
the aggregate of the Loan Balances of all such Mortgage Loans.
Pool Distribution Amount: As of any Distribution Date, the funds eligible
for distribution to Holders on such Distribution Date, being all amounts
deposited into the Collection Account, but excluding all permitted withdrawals
from the Collection Account pursuant to Section 3.06(d). The Pool Distribution
Amount will be calculated for each Pool individually and on an aggregate basis
for all Pools.
Pooling Agreement: The Pooling Agreement (as defined in the preamble to
this Standard Terms Document) entered into with respect to a particular series
of Certificates and into which this Standard Terms Document is incorporated by
reference.
Predatory Lending Law: The Georgia Fair Lending Act, the Maine Consumer
Credit Code - Truth-in-Lending, the New Jersey Home Ownership Security Act of
2002, the New Mexico Home Loan Protection Act, the New York Predatory Lending
Act, or any similar State or federal law that regulates high-cost mortgage
loans.
Prepaid Installment: For any Mortgage Loan, any installment of principal
thereof and interest thereon received prior to the Due Date for such
installment, as an early payment thereof and not as a Principal Prepayment on
such Mortgage Loan.
Prepayment Charge: For a particular Mortgage Loan, the amount the
Mortgagor is contractually obligated to pay as a premium, charge or penalty for
the privilege of refinancing or otherwise prepaying such Mortgage Loan in whole
or in part.
Prepayment Interest Shortfall: As to any Mortgage Loan that was the
subject of a Principal Prepayment applied during a Prepayment Collection Period
(other than a Principal Prepayment applied as of the related Due Date), an
amount equal to the difference between (a) one month of interest on such
Principal Prepayment at the Pass-Through Rate (giving effect to the Civil Relief
Act or Similar State Law, if applicable) that would be due on the next Due Date
for such Mortgage Loan and (b) the amount of interest (adjusted to the
Pass-Through Rate) actually received from the Mortgagor in connection with such
Principal Prepayment.
Prepayment Collection Period. For a particular Distribution Date, the
preceding calendar month, being the period commencing with the opening of
business on the first day of such month and ending at the close of business on
the last day thereof.
Prepayment Principal: For any Distribution Date, the sum of all amounts
that constitute full or partial Principal Prepayments received in the related
Prepayment Collection Period.
Primary Mortgage Insurance Certificate: Any certificate of primary
mortgage insurance relating to a particular Mortgage Loan to the extent
identified in the Mortgage Loan Schedule.
Principal Balance: On any Distribution Date,
(i) for a Class A Certificate of any Subclass, its pro rata share based on
the Initial Principal Balance of the applicable Class A Subclass Principal
Balance; and
(ii) for a Class M Certificate of any Subclass, its pro rata share based
on the Initial Principal Balance of the applicable Class M Subclass
Principal Balance.
The Class CE Certificates and Class R Certificates do not have a Principal
Balance.
Principal Prepayment: For any Mortgage Loan, any payment of principal on
such Mortgage Loan which is received in advance of its Due Date and is not
accompanied by an amount of interest representing scheduled interest for any Due
Date in any month subsequent to the month of prepayment, excluding any proceeds
of or advances on any Liquidated Loan.
Principal Proceeds: For a Distribution Date, the sum (without duplication)
of (a) the principal portion of each Scheduled Payment on the Mortgage Loans
having a Due Date during the related Collection Period, (b) the Loan Balance of
each Mortgage Loan repurchased during the related Prepayment Collection Period
pursuant to Section 2.02 or 2.03(a), (c) any Substitution Adjustment Amount
deposited for a substitution of a Mortgage Loan during the related Prepayment
Collection Period pursuant to Section 3.06(c)(2), (d) the principal portion of
Net Liquidation Proceeds received during the related Prepayment Collection
Period, (e) the principal portion of Net Subsequent Recoveries received during
the related Prepayment Collection Period (f) all Prepayment Principal received
during the related Prepayment Collection Period, (g) the principal portion of
any payment made on such Distribution Date in connection with the purchase of
the Mortgage Loans pursuant to the Right to Purchase under Section 9.01(a), and
(h) if (and only if) the Collection Account or the Certificate Account is an
Investment Account, the allocable amount of investment losses deposited pursuant
to Section 4.03(b)(i).
Proceeding: Any suit in equity, action at law or other judicial or
administrative proceeding.
Property Protection Expenses: For Mortgage Loans prior to their becoming
Liquidated Loans, expenses paid or incurred by or for the account of the
Servicer or the Trust Fund in accordance with the related Mortgages for (a) real
estate property taxes, insurance premiums and property repair, replacement,
protection and preservation expenses and (b) similar expenses reasonably paid or
incurred to preserve or protect the value of such Mortgages or the related
Mortgaged Properties.
Prospectus: As defined in Section 12.02.
Qualified GIC: A GIC, assigned to the Trustee or a Paying Agent, or
entered into by the Trustee or a Paying Agent at the direction of the Depositor,
on or before the Issue Date, providing for the investment of funds ensuring a
minimum or fixed rate of return on investments of such funds, which GIC shall
(a) be an obligation of an insurance company, trust company, commercial
bank (which may be Citibank, N.A., Citibank (Delaware) or Citibank (New
York State)) or other entity whose credit standing is acceptable to each
Rating Agency;
(b) provide that the Trustee or a Paying Agent may exercise all of the
rights of the Depositor under such GIC without the necessity of the taking
of any action by the Depositor;
(c) provide that if at any time (subject to the second proviso of this
paragraph (c)) the then current credit standing of the obligor under such
GIC is such that continued investment of funds included in the Trust Fund
would result in a downgrading or withdrawal of any then current rating of
any Class or Subclass of the Certificates, the Trustee or the Paying Agent
may terminate such GIC and be entitled to the return of all funds
previously invested thereunder, together with accrued interest thereon at
the interest rate provided under such GIC through the date of delivery of
such funds to the Trustee or the Paying Agent, provided that neither the
Trustee nor the Paying Agent shall be charged with knowledge of any such
potential downgrading or withdrawal unless it shall have received written
notice of such potentiality from the Depositor, the Servicer or the
provider of the GIC which must be obligated to give such notice at least
once per year; provided, further, that upon any such event the Depositor,
by written notice to the Trustee or the Paying Agent, may replace such GIC
with a substitute GIC having substantially the same terms (including
without limitation a rate of return at least as high as the GIC being
replaced) so long as such substitute GIC has an obligor with a credit
standing no less than the credit standing of the obligor under the GIC to
be replaced at the time the GIC was executed (or with a credit rating
otherwise acceptable to each Rating Agency) and such fact is certified by
the Depositor to the Trustee or the Paying Agent;
(d) provide that the Trustee's interest therein shall be transferable to
any successor trustee hereunder;
(e) provide that the funds invested thereunder and accrued interest
thereon be available not later than the Business Day prior to any
Distribution Date on which such funds may be required for distribution
hereunder; and
(f) meet such other standards as may be specified in Article XII.
Qualified Nominee: A Person (who may not be the Depositor or an Affiliate
thereof) in whose name Eligible Investments held by the Trustee or Paying Agent
may be registered as nominee of the Trustee or Paying Agent in lieu of
registration in the name of the Trustee or Paying Agent, provided that the
following conditions shall be satisfied in connection with such registration:
(a) the instruments governing the creation and operation of the nominee
provide that neither the nominee nor any owner of an interest in the
nominee (other than the Trustee or Paying Agent) shall have any interest,
beneficial or otherwise, in any Eligible Investments at any time held in
the name of the nominee, except for the purpose of transferring and
holding legal title thereto;
(b) the nominee and the Trustee or the Paying Agent have entered into an
agreement establishing that any Eligible Investments held in the name of
the nominee are to be held by the nominee as agent (other than commission
agent or broker) or nominee for the account of the Trustee; and
(c) in connection with the registration of any Eligible Investment in the
name of the nominee, all requirements under applicable governmental
regulations necessary to effect a valid registration of transfer of such
Eligible Investment are complied with as evidenced to the Trustee or the
Paying Agent upon its request by an Opinion of Counsel.
Qualified Substitute Mortgage Loan: For any Mortgage Loan or Mortgage
Loans (each a "replaced Mortgage Loan") included in the Trust Fund for which
such Qualified Substitute Mortgage Loan is being substituted, a Mortgage Loan
for which all payments of principal and interest due on or before the
Substitution Day have been received and which has the following characteristics:
(a) (i) in the case of a fixed rate Mortgage Loan, a Mortgage Note Rate no
more than 1% per annum higher and no lower than that of such replaced
Mortgage Loan and (ii) in the case of an adjustable rate Mortgage Loan,
(1) a Maximum Note Rate and a Minimum Note Rate no more than 1% per annum
higher and no lower than that of such replaced Mortgage Loan, (2) the same
index and Periodic Rate Cap as such replaced Mortgage Loan and a Gross
Margin of no more than 1% per annum higher and no lower than that of such
replaced Mortgage Loan and (3) currently accruing interest at a rate no
more than 1% per annum higher and no lower than such replaced Mortgage
Loan;
(b) a date of maturity no later, and not more than one year earlier, than
the maturity date of the Mortgage Loan being replaced;
(c) a Loan-to-Value Ratio no higher than that of such replaced Mortgage
Loan;
(d) a Loan Balance at least equal to that of such replaced Mortgage Loan;
(e) a credit quality classification of a same or higher classification as
that of such replaced Mortgage Loan;
(f) secured by a Mortgaged Property that is either a single family
dwelling or is of the same type as that securing such replaced Mortgage
Loan;
(g) an occupancy status that is either primary residence or is the same
status as that of such replaced Mortgage Loan;
(h) a lien priority that is either first or the same as that of such
replaced Mortgage Loan;
(i) is not a "balloon" loan unless such replaced Mortgage Loan is a
"balloon" loan;
(j) is a "qualified replacement mortgage" as defined in Code Section
860G(a)(4); and
(k) in the case of an adjustable rate Mortgage Loan, does not permit
conversion to a fixed rate;
provided, that (i) except for the conditions set forth in clauses (a),
(b), (c), (j) and (k) above, such characteristics may be satisfied on a weighted
average or other aggregate basis, (ii) clause (d) may be satisfied by deposit in
the Collection Account of sufficient funds so that the Loan Balance (calculated
by including such funds) of such Qualified Substitute Mortgage Loan satisfies
such clause (the "Substitution Adjustment Amount") and (iii) the Trustee shall
receive, not later than the Substitution Day, (1) an Opinion of Counsel, dated
the Substitution Day, to the effect that the substitution of such Qualified
Substitute Mortgage Loans and any deposit of cash in the Collection Account will
not constitute a "prohibited transaction" within the meaning of Code Section
860F(a), will not adversely affect the status of the Trust Fund as comprised of
the Constituent REMICs and will not otherwise subject the Trust Fund to any tax
and (2) an Officer's Certificate of the Depositor to the effect that (A) all
documents delivered to the Trustee in connection with such substitution comply
as to form with the requirements of Section 2.01(a) and (B) all conditions to
such substitution specified in Section 2.04(a) have been satisfied.
Realized Losses: For any Distribution Date, the aggregate of the amount of
losses for each Mortgage Loan which became a Liquidated Loan during the related
Prepayment Collection Period, equal to the excess of (i) the unpaid principal
balance of each such Liquidated Loan, plus accrued interest thereon in
accordance with the amortization schedule at the time applicable thereto at the
Mortgage Note Rate from the Due Date as to which interest was last paid through
the Due Date in the Prepayment Collection Period in which such Mortgage Loan
became an REO Mortgage Loan (or if such loan was liquidated without becoming an
REO Mortgage Loan, the Due Date in the Prepayment Collection Period in which
such loan was liquidated), over (ii) Net Liquidation Proceeds for such
Liquidated Loan.
Record Date: As defined in Article XII.
Regulation AB: Subpart 229.1100 - Asset Backed Securities (Regulation AB),
17 C.F.R. ss.ss.229.1100-229.1123, as such may be amended from time to time, and
subject to such clarification and interpretation as have been provided by the
Securities and Exchange Commission in the adopting release (Asset-Backed
Securities, Securities Act Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531 (Jan.
7, 2005)) or by the staff of the Securities and Exchange Commission, or as may
be provided by the Securities and Exchange Commission or its staff from time to
time.
Related Certificate Balance: As of any date, (a) if there is only one
Group, the Certificate Balance and (b) otherwise, for each Pool, the sum of (x)
the aggregate of the Class A Subclass Principal Balances of the Class A
Certificates in the related Group and (y) the aggregate of the Principal
Balances of all Class M Certificates allocated to such Group.
Relevant Servicing Criteria: As defined in Section 3.15(a).
REMIC: A "real estate mortgage investment conduit" within the meaning of
Code Section 860D. References to the "REMIC" are to the Constituent REMICs
constituting one or more portions of the Trust Fund.
REMIC Account: Any account or accounts that are required to be established
(in the same manner as the Certificate Account is established) and maintained
pursuant to Section 12.04.
REMIC Provisions: The provisions of the federal income tax law relating to
REMICs, appearing at Code Sections 860A through 860G, and related provisions and
regulations promulgated thereunder, as may be in effect from time to time.
REO Mortgage Loan: Any Mortgage Loan which is not a Liquidated Loan and as
to which the related Mortgaged Property is held as part of the Trust Fund.
REO Proceeds: Proceeds, net of any related expenses of the Servicer,
received in respect of any REO Mortgage Loan (including, without limitation,
proceeds from the rental of the related REO Property).
REO Property: A Mortgaged Property acquired by or on behalf of the Trust
Fund through foreclosure or deed-in-lieu of foreclosure in connection with a
defaulted Mortgage Loan or otherwise treated as having been acquired pursuant to
the REMIC Provisions.
Reportable Event: As defined in Section 4.09(e).
Required Amount of Certificates: (i) 66 2/3% or more of the aggregate
Voting Interest of the Outstanding Certificates, (ii) 66 2/3% or more of the
aggregate Outstanding Percentage Interest of the Class CE Certificates and (iii)
66 2/3% or more of the aggregate Outstanding Percentage Interest of the Residual
Certificates.
Residual Certificates: The Class R Certificates.
Responsible Officer: For any Person, the Chairman or any Vice Chairman of
the Board of Directors or Trustee, the Chairman or Vice Chairman of the
Executive or Standing Committee of the Board of Directors or Trustee, the
President, the Chairman of the committee on trust matters, any executive vice
president, senior vice president, first vice president, second vice president,
vice president, any assistant vice president, the Secretary, any assistant
secretary, the Treasurer, any assistant treasurer, the Cashier, any assistant or
deputy cashier, any trust officer or assistant trust officer, the Controller and
any assistant controller or any other officer of such Person customarily
performing functions similar to those performed by any of the above designated
officers and also, with respect to a particular matter, any other officer of
such Person to whom such matter is referred because of such officer's knowledge
of and familiarity with the particular subject; provided, however, that in
respect of the Trustee and the Paying Agent, "Responsible Officer" shall mean
any officer within the Corporate Trust Department (or any successor thereto)
thereof, including any vice president, assistant vice president, assistant
treasurer, trust officer or any other officer who customarily performs functions
similar to those provided by the persons who at the time shall be such officers,
respectively, and in each case having direct responsibility for the
administration of the Pooling Agreement or to whom any corporate trust matter is
referred because of such person's knowledge of and familiarity with the
particular subject.
S&P: Standard and Poor's, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.
Scheduled Payment: As to any Mortgage Loan (other than an REO Mortgage
Loan) and any Due Date, the payment of principal and interest that is due
thereon (or, in the case of an Equity Builder Loan, that is automatically
deductible from the related Mortgagor's personal bank account in accordance with
the related Equity Builder Agreement) in accordance with the amortization
schedule at the time applicable (after adjustment for (i) application of prior
Scheduled Payments on the loan to interest and principal pursuant to the simple
interest method employed by the Servicer, (ii) any partial Principal Prepayments
and (iii) Deficient Valuations occurring prior to such Due Date but before any
adjustment to such amortization schedule other than Deficient Valuations by
reason of any bankruptcy, or similar proceeding or any moratorium or similar
waiver or grace period). For the avoidance of doubt: for each Mortgage Loan
other than a Semi-Monthly Loan or a Bi-Weekly Loan, there is one Scheduled
Payment due in each calendar month; for each Semi-Monthly Loan, there are two
Scheduled Payments due in each calendar month; and for each Bi-Weekly Loan,
depending on the calendar month in question, there are either two or three
Scheduled Payments due in a calendar month.
Second Mortgage Loan: A Mortgage Loan secured by a second priority lien on
the related Mortgaged Property.
Semi-Monthly Loan: An Equity Builder Loan with respect to which the
related Mortgagor has authorized the Originator to cause the Servicer
automatically to deduct from such Mortgagor's personal bank account on a
semi-monthly basis certain periodic payments (as specified in the related Equity
Builder Agreement).
Senior Lien: The mortgage loan (which may be a Mortgage Loan) on Mortgaged
Property having a first priority lien.
Servicer: CMI, or its successor in interest, or any successor servicer
appointed as herein provided.
Servicing Advance: The aggregate of the advances made by the Servicer
pursuant to Sections 3.07(b), 3.11 and 3.18.
Servicing Criteria: The "servicing criteria" set forth in Item 1122(d) of
Regulation AB, as such may be amended from time to time.
Servicing Event of Default: An event described in Section 7.01.
Servicing Function Participant: Any affiliate, third party vendor or
Subservicer engaged by the Servicer or the Trustee that is participating in the
servicing function with respect to the Mortgage Loans, within the meaning of
Item 1122 of Regulation AB.
Servicing Officer: Any officer of the Servicer or of an Affiliate of the
Servicer involved in, or responsible for, the administration and servicing of
the Trust Fund whose name appears on a list of servicing officers attached to an
Officer's Certificate furnished to the Trustee and the Paying Agent by the
Servicer, as such list may from time to time be amended.
Similar Law: As defined in Section 5.02.
Similar State Law: Any state law that has the effect of (a) reducing the
Mortgage Note Rate or the amount of the Scheduled Payment, or (b) suspending the
obligation to make a Scheduled Payment, on a Mortgage Loan due to the
Mortgagor's being placed on active duty status, in military service or similar
status.
Simple Interest Advance: The aggregate of the advances made by the
Servicer pursuant to clause (iii) of the first sentence of Section 3.07(a), the
amount of any such Simple Interest Advance with respect to a particular
Collection Period being no more than the aggregate of the Simple Interest
Advanceable Amounts in respect of the Mortgage Loans for such Collection Period.
Simple Interest Advanceable Amount: For a Mortgage Loan and any Scheduled
Payment thereon that is due (or automatically deductible from the related
Mortgagor's personal bank account pursuant to an Equity Builder Agreement) in
any Collection Period and that is paid by the related Mortgagor on a date prior
to the Due Date therefor, an amount equal to the interest that accrues at the
applicable Mortgage Note Rate, from such actual date of payment to such Due
Date, on the outstanding principal balance of such Mortgage Loan after giving
effect to the principal portion of such payment, after adjustment of such
accrued interest to interest at the Pass-Through Rate.
Simple Interest Shortfall: For a Mortgage Loan and any Scheduled Payment
thereon that is due (or automatically deductible from the related Mortgagor's
personal bank account pursuant to an Equity Builder Agreement) in any Collection
Period and that is paid by the related Mortgagor on a date prior to the Due Date
therefor, an amount equal to the interest that, if such Mortgagor had instead
made such Scheduled Payment on such Due Date, would have accrued at the
applicable Mortgage Note Rate (but adjusted to the Pass-Through Rate) from such
actual date of payment to such Due Date on an amount equal to the excess of (x)
the outstanding principal balance of such Mortgage Loan before giving effect to
the principal portion of such payment over (y) the outstanding principal balance
of such Mortgage Loan after giving effect to the principal portion of such
payment.
60+ Delinquent Loans: For a Determination Date, all REO Properties and all
Mortgage Loans for which any portion of a Scheduled Payment is 60 days or more
Delinquent (without regard to any grace period) as of the last day of the
preceding calendar month.
STAMP: As defined in Section 5.02.
Subclass: For a Class of Certificates, any group of such Class designated
as a Subclass in Article XII.
Subordinated Percentage: For any date, 100% minus the Class A Percentage.
Subordination Depletion Date: The first Distribution Date on which the
Principal Balance of the Subordinated Certificates has been reduced to zero.
Subsequent Recoveries: For any Liquidated Loan and any Prepayment
Collection Period, any amounts received by the Servicer in respect of such loan
subsequent to such loan having been determined to be a Liquidated Loan that
resulted in a Realized Loss during a previous Prepayment Collection Period.
Subservicer: Any person or persons to which the Servicer has delegated
servicing obligations hereunder pursuant to Section 3.03 or 6.06.
Subservicing Agreement: Any subservicing agreement between the Servicer
and a Subservicer.
Substitution Adjustment Amount: As defined in the definition of Qualified
Substitute Mortgage Loan.
Substitution Day: As defined in Section 2.04(a).
Trust Expenses: Any amounts payable by the Depositor pursuant to Section
12.05.
Trustee: The Person executing this Agreement as Trustee, or its successor
in interest, or any successor trustee appointed as herein provided.
Trust Fund: The corpus of the trust created by this Agreement, consisting
of the Mortgage Loans, the Certificate Account, the Collection Account, each
REMIC Account, any REO Property, any Primary Mortgage Insurance Certificates,
any other insurance policies with respect to the Mortgage Loans, any investment
earnings on amounts in any Investment Account and any other property or rights
specified in Article XII as being part of the Trust Fund.
Unpaid Loan Balance: For any Mortgage Loan as of any date, the outstanding
principal balance thereof on such date.
U.S. Person: A citizen or resident of the United States of America, 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 of America, 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 U.S. 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).
Section 1.02 Fiscal Year.
The fiscal year of the Trust will be the calendar year.
ARTICLE II
CONVEYANCE OF TRUST FUND; ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01 Conveyance of Trust Fund.
CRMSI, concurrently with the execution and delivery of this Agreement,
does hereby sell, transfer, assign, set over and otherwise convey to the Trustee
without recourse, all the right, title and interest of CRMSI in and to the Trust
Fund, including without limitation all of the right, title and interest of CRMSI
in the Mortgage Loans, including all amounts received or receivable by CRMSI on
or with respect to the Mortgage Loans on or after the Cut-Off Date (but not
payments of principal and interest received on the Mortgage Loans on or before
the Cut-Off Date and not any Prepayment Charges received or receivable with
respect to any Mortgage Loan), together with all of its right, title and
interest in and to the proceeds of any title, hazard or other insurance
policies, or Primary Mortgage Insurance Certificates, related to such Mortgage
Loans. The transfer of the Mortgage Loans hereunder is absolute and is intended
by the parties hereto as a sale. It is the intention of CRMSI that all Mortgage
Loans transferred to the Trust Fund be removed from CRMSI's assets and estate.
If the transfer of the Mortgage Loans is instead characterized as a pledge and
not as a sale, then (x) CRMSI shall be deemed to have granted to the Trustee a
first priority security interest in all of CRMSI's right, title and interest in
and to such the Mortgage Loans and other assets of the Trust Fund and (y) it is
the intention of the parties that this Agreement constitute a security agreement
under applicable law in favor of the Trustee, as secured party hereunder. CRMSI
shall not transfer any additional property to the Trust Fund except as expressly
permitted by this Agreement.
(a) (1) In connection with such transfer and assignment of Mortgage
Loans, CRMSI does herewith deliver to the Trustee (or to the Custodian on
behalf of the Trustee) to be held in trust the following documents or
instruments with respect to each Mortgage Loan so transferred and assigned
(except where, and to the extent, CRMSI is complying with Section
2.01(b)):
(i) The Mortgage Note, endorsed (whether by means of an
allonge or otherwise) by manual or facsimile signature without
recourse by the Originator or an Affiliate of the Originator in
blank or to the Trustee showing a complete chain of endorsements
from the named payee to the Trustee or from the named payee to the
Affiliate of the Originator and from such Affiliate to the Trustee
or, for any lost, misplaced or destroyed Mortgage Note, an original
Lost Note Affidavit, provided that endorsement is not required where
MERS is the named payee or the nominee of the named payee;
(ii) The original recorded Mortgage with evidence of recording
thereon, or a copy of the Mortgage certified by the public recording
office in those jurisdictions where the public recording office
retains the original;
(iii) Any original assumption or modification agreement
applicable to the Mortgage;
(iv) An assignment from the Originator to the Trustee in
recordable form (subject to proviso (x) below) of the Mortgage,
which may be included, where permitted by local law, in a blanket
assignment or assignments of the Mortgage to the Trustee, including
any intervening assignments and showing a complete chain of title
from the original mortgagee named under the Mortgage to CRMSI or an
Affiliate of CRMSI and to the Trustee, provided that (x) any blanket
assignment delivered pursuant to this clause (a)(1)(iv) shall not be
in recordable form but shall be delivered together with a limited
power of attorney to authorize the Custodian, on behalf of the
Trustee, to act for the Originator in preparing, executing,
delivering and recording in the name of the Trustee any instruments
for recording assignments of the related Mortgages to the Trustee,
(y) if the Mortgage is registered with MERS, only assignments from
the originator of the Mortgage to MERS will be required and (z) if
the Mortgage was originated with MERS as the original mortgagee, no
interim assignment will be required; and
(v) Either (x) the original or a copy of the title insurance
policy (which may be a certificate or a short form policy relating
to a master policy of title insurance) or the title searches
pertaining to the Mortgaged Property, or in the event such original
title policy is unavailable, a copy of the preliminary title report
and the lender's recording instructions, with the original to be
delivered within 180 days of the Issue Date or other evidence of
title or (y) in jurisdictions where such practice is customary and
acceptable, an attorney's opinion as to title or an insured title
report.
(2) In addition, CRMSI, concurrently with the execution and delivery of
this Agreement and in connection with such transfer and assignment of
Mortgage Loans shall deposit in the Collection Account the amount of all
payments received by CRMSI after the Cut-Off Date and prior to the Issue
Date with respect to the Mortgage Loans, to the extent such payments are
being transferred and assigned to the Trustee hereunder, except any
portion of such payments on Mortgage Loans (including servicing fees) of a
type not required to be deposited as specified in Article XII.
(b) In instances where an original recorded Mortgage cannot be delivered
to the Trustee by the Issue Date, due to a delay in the recording, CRMSI may (a)
in lieu of delivering such original recorded Mortgage referred to in clause
(a)(1)(ii) above, deliver to the Trustee a copy thereof, provided that CRMSI
certifies that the original Mortgage has been delivered to a title insurance
company for recordation after receipt of its policy of title insurance or binder
therefor (which may be a certificate relating to a master policy of title
insurance), and (b) in lieu of delivering the completed assignment in recordable
form referred to in clause (a)(1)(iv) above to the Trustee, deliver such
assignment to the Trustee completed except for recording information. In such
instances, CRMSI will deliver the original recorded Mortgage and completed
assignment (if applicable) to the Trustee promptly upon receipt thereof. In
instances where an original recorded Mortgage or assignment has been lost or
misplaced, CRMSI or the related title insurance company may deliver, in lieu
thereof, a copy of such Mortgage or assignment bearing recordation information.
In instances where the original or a copy of the title insurance policy referred
to in clause (a)(1)(v)(x) above pertaining to a Mortgaged Property cannot be
delivered to the Trustee by the Issue Date because such policy is not yet
available, CRMSI may deliver to the Trustee a binder with respect to such policy
and deliver the original or a copy of such policy to the Trustee when available.
In instances where an original assumption or modification agreement cannot be
delivered to the Trustee by the Issue Date, CRMSI may deliver a certified copy
thereof, and will deliver the original assumption or modification agreement to
the Trustee promptly upon receipt thereof.
CRMSI agrees, at its own expense, to prepare (or to cause the Servicer to
prepare) each assignment referred to in clause (a)(1)(iv) above and deliver a
copy of each such assignment to the Trustee as soon as practicable but not later
than 60 days after the Issue Date. CRMSI intends to effect (or to cause the
Servicer to effect) recordation of each such assignment (or to supply the
Trustee with evidence of recordation) as soon as practicable after the Issue
Date in the appropriate public office for real property records in each
jurisdiction in which such recordation is required by a Rating Agency. In
addition, in the event that on a Distribution Date a Mortgage Loan is 90 days
Delinquent, if recordation of assignment is required by any Rating Agency under
its then current ratings criteria, then CRMSI shall effect recordation of an
assignment of the related Mortgage to the Trustee promptly thereafter. Except as
provided in this paragraph, neither CRMSI nor the Originator or any Affiliate of
the Originator shall have any obligation to record any assignment of any
Mortgage in order to name the Trustee as mortgagee of record. The preceding
sentence shall not be in derogation of the obligation of CRMSI, the Originator
and Affiliates of the Originator to record (and supply the Trustee with evidence
thereof) assignments of Mortgages required in order that CRMSI, the Originator
or an Affiliate of the Originator be shown as mortgagee of record of each
Mortgage.
In the case of Mortgage Loans which have been prepaid in full after the
Cut-Off Date and prior to the Issue Date, CRMSI, in lieu of delivering the above
documents to the Trustee (or to the Custodian on behalf of the Trustee),
herewith delivers to the Trustee (or to the Custodian on behalf of the Trustee)
a Request for Release as set forth in Section 3.12(a). In connection with such
transfer and delivery of the balance of the Trust Fund, CRMSI, concurrently with
the execution and delivery of this Agreement, shall deposit into the Collection
Account cash in the amount (if any) specified in Article XII.
Wherever it is provided in this Section 2.01 that any document, evidence
or information relating to a Mortgage Loan be delivered or supplied to the
Trustee, CRMSI or the Servicer, as applicable, shall do so by delivery thereof
to the Custodian, to be held on behalf of the Trustee. The functions of the
Trustee under this Agreement with respect to the custody, acceptance, inspection
and release of the Mortgage Files (including the review provided for in Section
2.02) shall be performed by the Custodian, on behalf of the Trustee.
(c) The parties hereto acknowledge and agree that it is not intended that
any mortgage loan be included in the Trust Fund that is a "High-Cost" or
"Covered" mortgage loan as defined by the U.S. Home Ownership and Equity
Protection Act of 1994, as amended, or any other applicable local, state or
federal predatory or abusive lending laws.
Section 2.02 Acceptance by Trustee.
The Trustee, by execution and delivery hereof, acknowledges receipt,
subject to the review described in the following paragraph, of the documents and
other property referred to in Section 2.01 and declares that the Trustee holds
and will hold such documents and other property, including property yet to be
received in the Trust Fund, in trust, upon the trusts herein set forth, for the
benefit of all present and future Certificateholders.
The Trustee (or the Custodian on the Trustee's behalf) shall, for the
benefit of the Certificateholders, review each Mortgage File within 120 days
after the Issue Date, to ascertain that all required documents have been
executed, received and recorded, if applicable, and that such documents relate
to the Mortgage Loans identified in Exhibit B. If in the course of such review
the Trustee finds a document or documents constituting a part of a Mortgage File
to be defective in any material respect, the Trustee shall promptly so notify
CRMSI, whereupon CRMSI shall have a period of 180 days within which to correct
or cure any such defect (including correction or cure by substitution if
permitted by Section 2.04). If any such material defect has not been corrected
or cured, CRMSI will, not later than 180 days after the Trustee's notice
respecting such defect, repurchase the related Mortgage Loan from the Trustee at
a price (the "Loan Repurchase Price") equal to (i) the Loan Balance of such
Mortgage Loan as of the date of repurchase, plus, (ii) to the extent not
previously advanced by the Servicer, accrued and unpaid interest thereon at the
Mortgage Note Rate to (but not including) the date of repurchase, plus (iii) any
unreimbursed payments with respect to such Mortgage Loan, to the extent not
covered in (ii) above, as part of a Servicing Advance, a Delinquency Advance, a
Bi-Weekly Interest Advance or a Simple Interest Advance, plus (iv) any
unreimbursed costs, penalties or damages incurred by the Trustee or the Trust
Fund in connection with any violation of applicable predatory or abusive lending
laws with respect to such Mortgage Loan or otherwise incurred in connection with
such material defect. Notwithstanding the preceding two sentences, any material
defect that causes a Mortgage Loan to fail to constitute a "qualified mortgage"
within the meaning of Code Section 860G(a)(3) shall either be corrected or cured
by CRMSI or, failing such correction or cure, CRMSI shall repurchase such
Mortgage Loan at the Loan Repurchase Price (or, if within two years of the
Startup Day, or such other period as may be permitted by the REMIC Provisions,
substitute a Qualified Substitute Mortgage Loan therefor pursuant to Section
2.04) no later than 90 days after the discovery of such material defect. Any
such repurchase shall be considered a prepayment in full of such Mortgage Loan
on date of repurchase and shall be deposited by CRMSI in the Collection Account
and, upon receipt by the Trustee of written notification of such deposit signed
by an Authorized Officer of CRMSI, the Trustee shall release to CRMSI or its
designee the related Mortgage File and shall execute and deliver such
instruments of transfer or assignment furnished to the Trustee, in each case
without recourse, as CRMSI shall reasonably request, to vest in CRMSI or such
designee any Mortgage Loan so released. Any repurchase by CRMSI of a Mortgage
Loan hereunder shall be deemed to include the right to receive any Scheduled
Payment or other remittance thereon payable or received after the date of
repurchase, and the Trustee or the Paying Agent shall, upon receipt thereof,
promptly remit the amount of such Scheduled Payment or other remittance to
CRMSI. It is understood and agreed that the obligation of CRMSI to repurchase
any Mortgage Loan or make a substitution therefor pursuant to Section 2.04 as to
which a material defect in a constituent document exists shall constitute the
sole remedy against CRMSI with respect to such defect available to the
Certificateholders or the Trustee on behalf of the Certificateholders.
Section 2.03 Representations and Warranties of CRMSI and CMI.
(a) CRMSI makes the representations and warranties set forth in Article
XIV to the Trustee (which representations are incorporated by reference herein
as though set forth below in this Section 2.03(a)) and, in addition, CRMSI
hereby represents and warrants to the Trustee that:
(i) The information set forth in Exhibit B was true and correct in
all material respects as of the Cut-Off Date.
(ii) As of the Cut-Off Date and as of the Issue Date, each Mortgage
is a valid first lien on the property securing the related Mortgage Note
subject only to (a) the lien of current real property taxes and
assessments, (b) covenants, conditions and restrictions, rights of way,
easements and other matters of public record as of the date of recording
of such Mortgage, such exceptions appearing of record being acceptable to
mortgage lending institutions generally or specifically referred to in the
title insurance policy or reflected in the appraisal obtained in
connection with the origination of the related Mortgage Loan and (c) other
matters to which like properties are commonly subject that do not in the
aggregate materially interfere with the benefits of the security intended
to be provided by such Mortgage.
(iii) Immediately prior to the transfer of the Mortgage Loans to the
Trustee, CRMSI has good title to, and is the sole owner of, each Mortgage
Loan (except as set forth in clause (v) below) and immediately upon the
transfer and assignment herein contemplated, CRMSI will have taken all
steps necessary so that the Trustee will have good title to, and will be
the sole owner of, each Mortgage Loan (except as set forth in clause (v)
below).
(iv) As of the Cut-Off Date, except as stated in Article XIV, no
payment of principal of or interest on or in respect of any Mortgage Loan
is more than 30 days Delinquent.
(v) As of the Cut-Off Date and as of the Issue Date, there is no
mechanics' lien or claim for work, labor or material affecting the
premises subject to any Mortgage which is or may be a lien prior to, or
equal with, the lien of such Mortgage except those which are insured
against by the title insurance policy or report referred to in (x) below.
(vi) As of the Cut-Off Date and as of the Issue Date, there is no
delinquent tax or assessment lien against any Mortgaged Property.
(vii) As of the Issue Date, there is no valid offset, defense or
counterclaim to any Mortgage Note or Mortgage, including the obligation of
the Mortgagor to pay the unpaid principal and interest on such Mortgage
Note.
(viii) As of the Cut-Off Date and as of the Issue Date, each
Mortgaged Property is free of substantial damage.
(ix) Each Mortgage Loan, at the time it was originated, complied in
all material respects with applicable State, local and federal laws,
including, but not limited to, all applicable usury, equal credit
opportunity and disclosure laws and all applicable Predatory Lending Laws.
(x) A lender's title insurance policy or binder (which policy was
issued in standard ALTA or equivalent form), insured title report or other
assurance of title customary in the relevant jurisdiction, was issued on
the date of the origination of each Mortgage Loan and, as of the Issue
Date, each such policy, binder, report or assurance is valid and remains
in full force and effect.
(xi) The Mortgage Loans conform in all material respects with the
descriptions thereof in the Prospectus relating to the Certificates.
(xii) The original principal balance of each Mortgage Loan was not
more than 100% of the Original Value of such Mortgage Loan.
(xiii) For each Mortgage where a Lost Note Affidavit has been
delivered to the Trustee, the related original Mortgage Note is no longer
in existence.
(xiv) As of the Issue Date, each Mortgage was recorded (or was in
the process of being recorded) in the name of CRMSI or an Affiliate of
CRMSI.
(xv) No Mortgage has been satisfied, canceled, subordinated or
rescinded, in whole or in part, and the related Mortgaged Property has not
been released from the lien of the Mortgage, in whole or in part, nor has
any instrument been executed that would effect any such satisfaction,
release, cancellation, subordination or rescission.
(xvi) No fraud or material misrepresentation with respect to the
origination of a Mortgage Loan has been committed by CRMSI or any
Affiliate of CRMSI;
(xvii) The proceeds of each Mortgage Loan have been fully disbursed
and there is no requirement for future advances thereunder.
(xviii) As of the date of origination and as of the Cut-Off Date, to
the best of CRMSI's knowledge, each Mortgaged Property was lawfully
occupied.
(xix) The servicing and collection practices used in connection with
each Mortgage Loan have been in all material respects in accordance with
applicable law.
(xx) As of the Cut-Off Date, there was no proceeding pending or, to
CRMSI's knowledge, threatened for the total or partial condemnation of a
Mortgaged Property.
(xxi) As of the Cut-Off Date, no Mortgagor was a debtor in any state
or federal bankruptcy or insolvency proceeding.
(xxii) The Mortgage Documents for all Mortgage Loans have been
delivered to the Custodian or will be so delivered within a reasonable
time after receipt thereof from a settlement agent or recording officer.
(xxiii) No Mortgage Loan contains provisions pursuant to which
Scheduled Payments are paid or partially paid with funds deposited in any
separate account established by the Originator or any other person on
behalf of the Mortgagor, or contains any similar provisions which may
constitute a "buydown" provision.
(xxiv) No Mortgage Loan is a high cost loan under the Predatory
Lending Law of any jurisdiction in which a Mortgaged Property is located.
No Mortgage Loan is a "High Cost Loan" or "Covered Loan," as such terms
are defined in the current version of Standard & Poor's LEVELS(R)
Glossary, (Version 5.7 Revised). No Mortgage Loan originated on or after
October 1, 2002 through March 6, 2003 is governed by the Georgia Fair
Lending Act.
(xxv) Each Mortgage Loan is a "qualified mortgage" within the
meaning of Section 860G(a)(3) of the Code.
(xxvi) Each Mortgage Loan was originated by an entity described in
Section 3(a)(41)(A)(ii) of the Exchange Act.
(xxvii) As of the Issue Date, no Mortgage or Mortgage Note has been
modified in any material respect, except by a written instrument that has
been recorded or submitted for recordation, if necessary, to protect the
interests of the Certificateholders and the original or a copy of which
has been delivered to the Custodian.
(xxviii) To the best of CRMSI's knowledge, at the Issue Date, the
improvements upon each Mortgaged Property are covered by a valid and
existing hazard insurance policy with a generally acceptable carrier that
provides for fire and extended coverage and coverage for such other
hazards as are customary in the area where the Mortgaged Property is
located.
(xxix) To the best of CRMSI's knowledge, at the Issue Date, if the
Mortgaged Property is in an area identified in the Federal Register by the
Federal Emergency Management Agency as having special flood hazards, a
flood insurance policy in a form meeting the requirements of the current
guidelines of the Flood Insurance Administration is in effect with respect
to such Mortgaged Property with a generally acceptable carrier.
(xxx) The Mortgage Loans were not selected from the Originator's
portfolio of non-prime and sub-prime residential mortgage loans on the
Cut-Off Date in a manner believed to be adverse to the interests of the
Certificateholders.
The representations and warranties set forth in, or incorporated by
reference in, this Section 2.03(a) shall survive delivery of the Mortgage Loans
to the Trustee. Upon discovery by CRMSI, the Certificate Administrator or the
Trustee of a breach of any of the foregoing representations and warranties that
materially and adversely affects the interests of the Certificateholders in the
related Mortgage Loan (including any Mortgage Loan substituted for a
nonconforming Mortgage Loan pursuant to Section 2.04), the party discovering
such breach shall give prompt written notice to the other parties hereto. If
within 60 days of the date of such notice of breach or, with the prior written
consent of a Responsible Officer of the Trustee, such longer period specified in
such consent, CRMSI does not cure such breach in all material respects
(including by substitution of one or more Qualified Substitute Mortgage Loans if
permitted by Section 2.04), CRMSI shall repurchase such Mortgage Loan from the
Trustee. With respect to the representations and warranties described in this
Section 2.03(a) that are made to the best of CRMSI's knowledge, if it is
discovered by any of CRMSI, the Certificate Administrator or the Trustee that
the substance of such representation and warranty is inaccurate and such
inaccuracy materially and adversely affects the interests of the
Certificateholders in the related Mortgage Loan, notwithstanding CRMSI's lack of
knowledge with respect to the substance of such representation or warranty, such
inaccuracy shall be deemed a breach of the applicable representation or
warranty.
Any such repurchase of a Mortgage Loan by CRMSI shall be accomplished in
the manner set forth in Section 2.02 and at the Loan Repurchase Price. Any such
repurchase shall be considered a prepayment in full of such Mortgage Loan on
date of repurchase and shall be deposited by CRMSI in the Collection Account
and, upon receipt by the Trustee of written notification of such deposit signed
by an Authorized Officer of CRMSI, the Trustee shall release to CRMSI or its
designee the related Mortgage File and shall execute and deliver such
instruments of transfer or assignment, in each case without recourse, as CRMSI
shall reasonably request, to vest in CRMSI or such designee any Mortgage Loan so
released. Any repurchase by CRMSI of a Mortgage Loan hereunder shall be deemed
to include the right to receive any Scheduled Payment or other remittance
thereon payable or received after the date of repurchase, and the Trustee or the
Paying Agent shall, upon receipt thereof, promptly remit the amount of such
Scheduled Payment or other remittance to CRMSI. It is understood and agreed that
the obligation of CRMSI to repurchase or substitute (as provided in Section
2.04) any Mortgage Loan as to which a breach occurred and is continuing shall
constitute the sole remedy against CRMSI respecting such breach available to the
Certificateholders or the Trustee on behalf of the Certificateholders.
(b) CMI hereby represents and warrants to the Trustee as follows:
(i) It is a corporation validly existing and in good standing under
the laws of the State of New York and is duly authorized and qualified to
transact any and all business contemplated by this Agreement to be
conducted by the Servicer.
(ii) It has the full 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 its part, the execution,
delivery and performance of this Agreement.
(iii) The execution and delivery of this Agreement by it, the
servicing of the Mortgage Loans by it under 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 it is a party or by which
it may be bound, or (C) constitute a material violation of any statute,
order or regulation applicable to it of any court, regulatory body,
administrative agency or governmental body having jurisdiction over it.
(iv) It is a HUD-approved mortgagee.
(v) No litigation is pending or, to the best of its knowledge,
threatened, against the Servicer that would materially and adversely
affect the execution, delivery or enforceability of this Agreement or its
ability to service the Mortgage Loans or to perform any of its other
obligations under this Agreement in accordance with the terms hereof.
Section 2.04 Substitution of Qualified Substitute Mortgage Loans for
Nonconforming Mortgage Loans.
(a) CRMSI shall have the right, in an event requiring a repurchase
pursuant to Section 2.02 or 2.03(a), to substitute one or more Qualified
Substitute Mortgage Loans for any one or more nonconforming Mortgage Loans, any
such substitution to take place on the Business Day designated by CRMSI (the
"Substitution Day") occurring before a date two years after the Startup Day,
subject to the Trustee receiving an Officer's Certificate of CRMSI attaching as
an exhibit a supplemental Mortgage Loan schedule (the "Supplemental Mortgage
Loan Schedule") setting forth the same type of information as appears on the
Mortgage Loan Schedule and representing as to the accuracy thereof and
confirming that the representations and warranties contained in Section 2.03(a)
(other than paragraphs (i) and (xi) thereof) are true and correct in all
material respects with respect to the Qualified Substitute Mortgage Loans on and
as of the Substitution Day, provided that remedies for the inaccuracy of such
representation are limited as set forth in Sections 2.02, 2.03(a) and this 2.04.
CRMSI shall also deposit or cause to be deposited on the Substitution Day (i) an
amount equal to any unreimbursed costs, penalties or damages incurred by the
Trustee or the Trust Fund in connection with any violation of applicable
predatory or abusive lending laws with respect to such nonconforming Mortgage
Loan or Loans and (ii) any Substitution Adjustment Amount with respect to such
Qualified Substitute Mortgage Loan or Loans.
(b) In the event that, on the Substitution Day, any Prepaid Installments
have been deposited for such replaced Mortgage Loan, the full amount of such
Prepaid Installments shall be paid on the Substitution Day to CRMSI from the
Collection Account.
(c) Concurrently with the satisfaction of the conditions set forth in
Section 2.04(a) and the grant of such Qualified Substitute Mortgage Loans to the
Trustee pursuant to Section 2.04(a), (A) Exhibit B to this Agreement shall be
deemed to be amended to exclude all Mortgage Loans being replaced by such
Qualified Substitute Mortgage Loans and to include, pursuant to Section 10.01,
the information set forth on the Supplemental Mortgage Loan Schedule with
respect to such Qualified Substitute Mortgage Loans, and all references in this
Agreement to Mortgage Loans shall include such Qualified Substitute Mortgage
Loans and (B) the Trustee shall release to CRMSI or its designee the
nonconforming Mortgage Loan or Loans and related Mortgage Files and execute and
deliver such instruments of transfer or assignment as may be required to
transfer, without recourse, to CRMSI or such designee such nonconforming
Mortgage Loan or Loans.
Section 2.05 [Reserved].
Section 2.06 Authentication of Certificates.
The Trustee has authenticated and delivered or caused to be authenticated
and delivered to or upon a Depositor Order, in exchange for the Mortgage Loans,
concurrently with the transfer and assignment to the Trustee of the Mortgage
Loans, Certificates duly authenticated by the Trustee or an Authenticating Agent
in authorized denominations evidencing the entire ownership of the Trust Fund.
Section 2.07 Permitted Activities.
The Trust is created for the object and purposes of engaging in Permitted
Activities.
Section 2.08 Additional Representations.
CRMSI represents and warrants that
(a) The Mortgage Notes constitute "instruments" within the meaning of the
Delaware Uniform Commercial Code. All original executed Mortgage Notes have been
or will be delivered to the Trustee (or the Custodian on its behalf) in
accordance with this Agreement.
(b) The Mortgage File Custodial Agreement provides that the Custodian is
holding the Mortgage Notes that evidence the Mortgage Loans solely on behalf of
and for the benefit of the Trustee and the Holders of Certificates.
(c) None of the Mortgage Notes has any marks or notations indicating that
it has been pledged, assigned or otherwise conveyed to any person other than
CRMSI and the Trustee.
(d) CRMSI has not authorized the filing of, and is not aware of, any
financing statement against CRMSI that includes a description of the Mortgage
Loans or the Mortgage Notes.
(e) CRMSI is not aware of any judgment or tax lien filings against it.
ARTICLE III
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 3.01 Servicing.
Acting directly or through one or more Subservicers as provided in Section
3.03, the Servicer shall service and administer the Mortgage Loans in accordance
with this Agreement, the terms of the respective Mortgage Loans, all applicable
laws (including, without limitation, any applicable predatory and abusive
lending laws), and its normal and customary servicing standards, and shall have
full power and authority, acting alone, to do or cause to be done any and all
things in connection with such servicing and administration which it may deem
necessary or desirable. The Servicer shall not be required to institute
litigation for collection of any payment if it reasonably questions its ability
to enforce the provision of the Mortgage Loan under which the payment is
required. Subject to the terms hereof, the Servicer shall have full power and
authority to execute and deliver, on behalf of the Trustee, customary consents,
waivers and similar instruments.
Subject to Section 3.03, the Servicer may, and is hereby authorized to,
perform any of its servicing responsibilities with respect to all or certain of
the Mortgage Loans through a Subservicer as it may from time to time designate,
but no such designation of a Subservicer shall serve to release the Servicer
from any of its obligations under this Agreement. Such Subservicer shall have
the rights and powers of the Servicer which have been delegated to such
Subservicer with respect to such Mortgage Loans under this Agreement.
Without limiting the generality of the foregoing, but subject to Sections
3.11 and 3.12, the Servicer in its own name or in the name of a Subservicer may
be authorized and empowered pursuant to a power of attorney executed and
delivered by the Trustee to execute and deliver, and may be authorized and
empowered by the Trustee to execute and deliver, on behalf of itself, the
Holders and the Trustee or any of them, (i) any and all instruments of
satisfaction or cancellation or of partial or full release or discharge and all
other comparable instruments with respect to the Mortgage Loans and the
Mortgaged Properties, (ii) to institute foreclosure proceedings or obtain a deed
in lieu of foreclosure so as to effect ownership of any Mortgaged Property in
the name of the Servicer on behalf of the Trustee, and (iii) to hold title to
any Mortgaged Property upon such foreclosure or deed in lieu of foreclosure on
behalf of the Trustee. Section 3.11(a) and Section 3.12(a) shall each constitute
a revocable power of attorney from the Trustee to the Servicer to execute an
instrument of satisfaction (or assignment of mortgage without recourse) for any
Mortgage Loan held by the Trustee paid in full or foreclosed (or for which
payment in full has been escrowed). Revocation of such power of attorney shall
take effect upon (i) the receipt by the Servicer of written notice thereof from
the Trustee or (ii) the termination of the Trust. Upon written instructions from
the Servicer, the Trustee shall execute any documentation furnished to it by the
Servicer for recordation by the Servicer in the appropriate jurisdictions as
shall be necessary to effectuate the foregoing. Subject to Sections 3.11 and
3.12, the Trustee shall execute a power of attorney to the Servicer or any
Subservicer and furnish them with any other documents as the Servicer or such
Subservicer shall reasonably request in writing to enable the Servicer and such
Subservicer to carry out their respective servicing and administrative duties
hereunder.
The Servicer shall give prompt written notice to the Trustee of any
action, of which the Servicer has actual knowledge, to (i) assert a claim
against the Trust or (ii) assert jurisdiction over the Trust.
Section 3.02 Collection of Mortgage Payments.
The Servicer shall make reasonable efforts to collect all payments called
for under the terms of the Mortgage Loans and shall, to the extent such
procedures shall be consistent with this Agreement and the terms and provisions
of any insurance policy relating to a Mortgage Loan or Mortgaged Property,
follow collection procedures for all Mortgage Loans at least as rigorous as
those applied to similar mortgage loans held in its own portfolio. Consistent
with the foregoing, and unless otherwise provided in Article XII, the Servicer
may in its discretion (a) waive or permit to be waived any late payment charge,
prepayment charge, assumption fee or any penalty interest in connection with the
prepayment of a Mortgage Loan or any other fee or charge that the Servicer would
be entitled to retain as servicing compensation and (b) arrange with a Mortgagor
a schedule for payment of Delinquent sums provided that, if such arrangement is
for a period of more than 90 days, the Servicer reasonably believes that without
such arrangement, the Mortgagor would default on the Mortgage Loan. In addition,
in the event the Servicer shall consent to the deferment of the due date for any
installment due on a Mortgage Loan, such Mortgage Loan shall be considered
Delinquent to the same extent as if such installment had not been deferred.
Section 3.03 Subservicing Agreements.
The Servicer may enter into Subservicing Agreements for the servicing and
administration of Mortgage Loans with any institution which (x) is authorized
under the laws of each state necessary to enable it to perform its obligations
under such Subservicing Agreement and (y) has experience servicing mortgage
loans that are similar to the Mortgage Loans. The Servicer shall give written
notice to the Trustee and the Rating Agencies of the appointment of any
Subservicer (and shall receive the written confirmation of the Rating Agencies
that such appointment shall not result in a withdrawal or downgrading by any
Rating Agency of the then current rating of the Certificates). For purposes of
this Agreement, the Servicer shall be deemed to have received payments on
Mortgage Loans when a Subservicer has received such payments. Each Subservicer
shall be expressly required to service the Mortgage Loans in accordance with
this Agreement, and each Subservicing Agreement shall be consistent with and not
violate the provisions of this Agreement and shall provide that the Trustee (if
acting as successor Servicer) or any other successor Servicer shall have the
right to terminate such agreement without payment of any penalty if the original
Servicer is terminated or resigns. The Servicer shall deliver to the Trustee
copies of all Subservicing Agreements and any amendments or modifications
thereof promptly upon the execution thereof.
Notwithstanding the foregoing, to the extent the Servicer engages any
affiliate or third party vendor pursuant to Section 6.06 or this Section 3.03,
including any Subservicer, in connection with the performance of any of its
duties under this Agreement, the Servicer shall immediately notify the Depositor
in writing of such engagement. To the extent the Depositor notifies the Servicer
and the Trustee that it has determined that any such affiliate, third party
vendor or Subservicer is a Servicing Function Participant, the Servicer shall
cause such Servicing Function Participant to prepare a separate assessment and
attestation report, as contemplated by Section 3.19 of this Agreement and
deliver such report to the Trustee as set forth in Section 3.22 of this
Agreement. In addition, to the extent the Depositor notifies the Servicer and
the Trustee that it has determined that any such Servicing Function Participant
would be a "servicer" within the meaning of Item 1101 of Regulation AB and meets
the criteria in Item 1108(a)(2)(i), (ii) or (iii) of Regulation AB (an
"Additional Servicer"), the Servicer shall cause such Additional Servicer to
prepare a separate compliance statement as contemplated by Section 3.14 of this
Agreement and deliver such statement to the Depositor and the Trustee as set
forth in Section 3.14 of this Agreement.
In addition, if the Depositor determines any such Servicing Function
Participant would be a "servicer" within the meaning of Item 1101 of Regulation
AB, the Servicer shall cause such Servicing Function Participant to provide the
Depositor and the Trustee the information required by Section 1108(b) and
1108(c) of Regulation AB within two Business Days following such engagement. To
the extent the Servicer terminates any such Servicing Function Participant that
the Depositor has determined is a "servicer" within the meaning of Item 1101 of
Regulation AB, the Servicer shall provide the Depositor and the Trustee the
information required to enable the Trustee to accurately and timely report such
event under Item 6.02 of Form 8-K (if the Trust's Exchange Act reporting
requirements have not been suspended pursuant to Section 15(d) of the Exchange
Act as set forth in Section 4.09 of this Agreement).
Section 3.04 No Contractual Relationship.
Any Subservicing Agreement and any other transactions or services relating
to the Mortgage Loans involving a Subservicer shall be between the Subservicer
and the Servicer alone, and the Trustee and the Holders shall not be deemed
parties thereto and shall have no claims, rights, obligations, duties or
liabilities with respect to any Subservicer except as set forth in Section 3.05.
Section 3.05 Assumption or Termination of Subservicing Agreement.
In connection with the assumption of the responsibilities, duties and
liabilities and of the authority, power and rights of the Servicer hereunder by
the Trustee pursuant to Section 7.01, the Servicer's rights and obligations
under any Subservicing Agreement shall be assumed simultaneously by the Trustee
without act or deed on part of the Trustee; provided, however, that the Trustee
(if acting as successor Servicer) or any other successor Servicer may terminate
the Subservicer as provided in Section 3.03.
The Servicer shall at its expense, upon the reasonable request of the
Trustee, deliver to the assuming party documents and records relating to each
Subservicing Agreement and an accounting of amounts collected and held by it and
otherwise use its best reasonable efforts to effect the orderly and efficient
transfer of the Subservicing Agreements to the assuming party.
Section 3.06 Collection Account; Remittances to Certificate Account.
(a) The Servicer shall establish and maintain at one or more Depositories
or at the Paying Agent the Collection Account to be held as a trust account.
Each Collection Account shall be established in the name of the Trustee, as
trustee for the Holders of the Series of Certificates specified in Article XII.
If the institution at any time holding the Collection Account ceases to be
eligible as a Depository, then the Servicer shall immediately name a successor
institution meeting the requirements for a Depository. If the Servicer fails to
name such a successor institution, then the Collection Account shall thenceforth
be held as a trust account with a qualifying Depository selected by the Trustee.
The Servicer shall notify the Trustee if there is a change in the name, account
number or institution holding the Collection Account.
(b) The Servicer may deposit in the Collection Account the appropriate
payments, collections and funds in respect of one or more series of certificates
issued under a registration statement covering the Certificates or similar
certificates; provided that the senior class of certificates of each such other
series and the senior Class of Certificates are rated either "AAA" or in the
category "AA" or its equivalent by each Rating Agency, and provided further that
separate accounting for each series is maintained.
The Servicer shall not commingle funds and other property in the
Collection Account with any other funds or property of the Servicer or the
Trustee. However, in order to efficiently transfer funds in the Collection
Account to the Certificate Account, so long as CMI is the Servicer, CMI may, on
the Business Day preceding the date on which funds are to be transferred from
the Collection Account to the Certificate Account, transfer those funds to a
commingled clearance account, provided, that if Fitch has rated the
Certificates, CMI may not so commingle funds unless CMI's short-term rating by
Fitch is at least "F1." The clearance account will be under CMI's sole control,
and CMI will maintain adequate records indicating the ownership of the funds in
the clearance account.
(c) The Servicer shall deposit to the Collection Account all Interest
Proceeds and Principal Proceeds for a Collection Period, as follows:
(1) within two Business Days of collection, all amounts representing full
or partial Scheduled Payments and Principal Prepayments;
(2) within two Business Days of collection,, all amounts representing Net
Liquidation Proceeds, Net Subsequent Recoveries, Loan Repurchase Prices
and Substitution Adjustment Amounts;
(3) not later than the related Deposit Date, all amounts representing
Delinquency Advances, Bi-Weekly Interest Advances and, Simple Interest
Advances (subject to clause (y) of the first sentence in the second
paragraph of Section 3.07(a)), and all amounts representing Compensating
Interest, income from REO Properties and any net investment losses on
funds held in the Collection Account as required by Section 4.03(b);
(4) not later than the related Deposit Date, all amounts required to be
deposited into the Collection Account pursuant to the last sentence of
Section 3.09(a) (subject to the proviso in such sentence); and
(5) any other amounts specified in Article XII as being required deposits
to the Collection Account;
minus amounts deposited in the Collection Account representing payments of
principal and/or interest by a Mortgagor which are subsequently returned as
unpaid or "NSF". The aggregate of the amounts so deposited in respect of a
particular Collection Period pursuant to this Section 3.06(c) is the "Monthly
Deposit Amount".
The foregoing requirements for deposit in the Collection Account shall be
exclusive. Amounts required to be deposited into the Escrow Account and (unless
otherwise provided in Article XII) amounts in the nature of prepayment charges,
late payment charges, assumption fees, excess interest paid by Mortgagors and
other fees and proceeds of reimbursements of Property Protection Expenses
received with respect to Mortgage Loans need not be deposited by the Servicer in
the Collection Account.
(d) The Servicer may from time to time make withdrawals from the
Collection Account, only for the following purposes:
(A) to pay itself the Servicing Fee;
(B) to withdraw net investment earnings on amounts on deposit in the
Collection Account;
(C) to effect reimbursement for Liquidation Expenses and Servicing
Advances theretofore incurred in respect of any Mortgage Loan in an
amount not to exceed the amount of Liquidation Proceeds and
Subsequent Recoveries deposited in respect of such Mortgage Loan, to
withdraw any Foreclosure Profits and to pay itself the amounts due
under Section 3.11(a) relating to deficiency actions;
(D) to effect reimbursement for Delinquency Advances, Bi-Weekly
Interest Advances and Simple Interest Advances, the right to
reimbursement pursuant to this clause (D) being limited to amounts
received on particular Mortgage Loans (including, for this purpose,
Insurance Proceeds and Liquidation Proceeds) that represent late
recoveries of payments of principal and/or interest respecting which
any such advance was made;
(E) to effect reimbursement for any Delinquency Advances, Bi-Weekly
Interest Advances, Simple Interest Advances and Servicing Advances
that the Servicer has determined to have become Nonrecoverable
Advances;
(F) to effect reimbursement for advances made on any Mortgage Loan
in payment of taxes, assessments or insurance premiums (except
premiums on any blanket policy referred to in Section 3.09) in any
amount not theretofore reimbursed out of the Escrow Account;
(G) to receive reimbursements permitted under the last sentence of
Section 6.03;
(H) to withdraw amounts that have been deposited to the Collection
Account in error; and
(I) to clear and terminate the Collection Account following the
termination of the Trust pursuant to Article IX.
The Servicer shall keep and maintain (or cause to be kept and maintained)
separate accounting records, on a Pool-by-Pool and a Mortgage Loan-by-Mortgage
Loan basis, for the purpose of accounting for withdrawals from the Collection
Account pursuant to clauses (C) and (F) of this Section; provided, however, that
such records need not be retained by the Servicer for a period longer than its
five most recent fiscal years.
(e) The Servicer shall (x) remit for deposit in the Certificate Account by
wire transfer, or otherwise make funds available in immediately available funds,
the Monthly Deposit Amount for a Collection Period not later than 12:00 noon
(New York City time) on the related Distribution Date, and (y) on each
Determination Date, deliver to the Paying Agent a monthly servicing report,
containing (without limitation) the following information for each Pool and on a
combined basis: principal and interest collected in respect of the Mortgage
Loans, scheduled principal and interest that was due on the Mortgage Loans,
relevant information with respect to any Liquidated Loans, summary and detailed
delinquency reports, Liquidation Proceeds and other similar information
concerning the servicing of the Mortgage Loans, including the information set
forth in Section 4.07(b). In addition, the Servicer shall inform the Trustee on
each Determination Date of the amounts of any Loan Repurchase Prices and
Substitution Adjustment Amounts for such Collection Period.
Section 3.07 Delinquency Advances; Servicing Advances.
(a) On each Determination Date, the Servicer (subject to the last sentence
of this paragraph) shall remit for deposit to the Collection Account out of its
own funds (i) any Delinquent payment of interest on each Delinquent Mortgage
Loan, which payment was not received on or prior to such Determination Date
(subject to the next sentence, in the case of any Delinquent Mortgage Loan that
is an REO Mortgage Loan), (ii) any Bi-Weekly Interest Advanceable Amount for the
related Collection Period in respect of each Bi-Weekly Mortgage Loan that is not
an REO Mortgage Loan, and (iii) any Simple Interest Advanceable Amount for the
related Collection Period in respect of each Mortgage Loan that is not an REO
Mortgage Loan. The amount of any Delinquency Advance that the Servicer shall so
remit in respect of any Delinquent Mortgage Loan that is an REO Mortgage Loan on
any Determination Date shall equal the excess, if any, of the interest portion
(net of the related Servicing Fee) of the Scheduled Payment that would have been
due on the related Due Date in respect of such Mortgage Loan, over the net
income from the related REO Property deposited in the Collection Account
pursuant to Section 3.06(c)(3) for distribution on the related Distribution
Date, provided that the Servicer will not elect to make any such advance on or
after the Determination Date related to the Prepayment Collection Period in
which such Mortgage Loan was deemed to be a Liquidated Loan. The obligation of
the Servicer to make any Delinquency Advance, Bi-Weekly Interest Advance or
Simple Interest Advance shall be contingent on the Servicer's determination,
based on its reasonable business judgment in accordance with the servicing
standards set out herein, that the amount of such Advance will ultimately be
recoverable in respect of the related Mortgage Loan, upon liquidation, from
insurance or otherwise; the Servicer shall not be obligated to make any
Delinquency Advance, Bi-Weekly Interest Advance or Simple Interest Advance that
it deems to be a Nonrecoverable Advance.
If the Servicer determines that it is obligated to make any Delinquency
Advance, Bi-Weekly Interest Advance and/or Simple Interest Advance for a
particular Collection Period, it shall either (x) deposit into the Collection
Account an amount equal to such Delinquency Advance, Bi-Weekly Interest Advance
and/or Simple Interest Advance no later than the related Deposit Date pursuant
to Section 3.06(c)(iii) or (y) make an appropriate entry in its records relating
to the Collection Account that any portion of the Amount Held for Future
Distribution (if any) has been used by the Servicer in discharge of its
obligation to make such Delinquency Advance, Bi-Weekly Interest Advance and/or
Simple Interest Advance on such Deposit Date. Any Amount Held for Future
Distribution that is so applied for any Deposit Date pursuant to clause (y)
shall be replaced by the Servicer by deposit into the Collection Account no
later than the immediately following Deposit Date. The Servicer is entitled to
reimbursement from the Collection Account for each Delinquency Advance,
Bi-Weekly Interest Advance and/or Simple Interest Advance made pursuant to this
Section 3.07(a) as provided in Section 3.06(d)(D).
If the Servicer determines that Delinquency Advances, Bi-Weekly Interest
Advances and/or Simple Interest Advances previously made on a Mortgage Loan have
become Nonrecoverable Advances, the Servicer may reimburse itself for the amount
of such Nonrecoverable Advances as provided in Section 3.06(d)(E) and from
related Liquidation Proceeds. The Servicer shall give written notice (in the
form of an Officer's Certificate) of its determination of nonrecoverability and
the factual basis therefor to the Trustee.
(b) The Servicer will pay all "out-of-pocket" costs and expenses incurred
in the performance of its servicing obligations, including, but not limited to,
(i) Property Protection Expenses, (ii) the cost of any enforcement or judicial
proceedings, including foreclosures, (iii) the cost of the management and
liquidation of REO Property, (iv) advances required by Section 3.11(a), but only
to the extent that such amounts are determined by the Servicer in its reasonable
business judgment to be recoverable, (v) amounts required to be deposited into
the Certificate Account pursuant to the last sentence of Section 3.09(a), but
only to the extent that such amounts are determined by the Servicer in its
reasonable business judgment to be recoverable, and (vi) expenses incurred and
funds advanced pursuant to Section 3.18. The Servicer may recover a Servicing
Advance (x) from the Mortgagor to the extent permitted by the Mortgage Loan or,
if not theretofore recovered from such Mortgagor, from Liquidation Proceeds
realized upon the liquidation of the related Mortgage Loan and (y) as provided
in Section 3.06(d). The Servicer shall be entitled to recover Servicing Advances
from Liquidation Proceeds prior to the deposit of the Liquidation Proceeds
hereunder.
Section 3.08 Compensating Interest.
(a) If a Principal Prepayment of a Mortgage Loan occurs during any
Collection Period, an amount equal to any Prepayment Interest Shortfall for such
Mortgage Loan, up to an aggregate amount not in excess of the Maximum
Compensating Interest Amount for such Collection Period (net of any pro rata
portion of such Maximum Compensating Interest Amount that is allocated pursuant
to Sections 3.08(b) and (c) to cover Simple Interest Shortfalls for such
Collection Period) shall be deposited by the Servicer to the Collection Account.
(b) If one or more Simple Interest Shortfalls occurs with respect to a
Mortgage Loan during any Collection Period, an amount equal to the aggregate of
such Simple Interest Shortfalls for such Mortgage Loan, up to an aggregate
amount not in excess of the Maximum Compensating Interest Amount for such
Collection Period (net of any pro rata portion of such Maximum Compensating
Interest Amount that is allocated pursuant to Sections 3.08(a) and (c) to cover
Prepayment Interest Shortfalls for such Collection Period) shall be deposited by
the Servicer to the Collection Account.
(c) The respective amounts required to be deposited by the Servicer to the
Collection Account pursuant to Section 3.08(a) and Section 3.08(b) in respect of
any Collection Period are referred to herein collectively as the "Compensating
Interest" for such Collection Period. The aggregate amount of Compensating
Interest required to be deposited by the Servicer to the Collection Account for
any Collection Period shall be limited to the Maximum Compensating Interest
Amount for such Collection Period. If the aggregate of (x) the Prepayment
Interest Shortfalls for a Collection Period (or related Prepayment Collection
Period) and (y) the Simple Interest Shortfalls for such Collection Period
exceeds the Maximum Compensating Interest Amount for such Collection Period,
then such Maximum Compensating Interest Amount shall be applied to cover such
Prepayment Interest Shortfalls (pursuant to Section 3.08(a)) and such Simple
Interest Shortfalls (pursuant to Section 3.08(b)), pro rata, based on the
respective amounts of such Prepayment Interest Shortfalls and Simple Interest
Shortfalls.
Section 3.09 Maintenance of Insurance.
(a) To the extent the Servicer is permitted to do so under a Mortgage Loan
(but only to the extent consistent with the Servicer's servicing of its own loan
portfolio), the Servicer shall cause to be maintained for each Mortgage Loan a
hazard insurance policy that provides for fire and extended coverage, and which
provides for a recovery of insurance proceeds relating to such Mortgage Loan, in
an amount not less than the least of (i) the Unpaid Loan Balance (plus the
related senior lien loan, if any), (ii) the minimum amount required to
compensate for damage or loss on a replacement cost basis and (iii) the full
insurable value of the premises. The Servicer shall maintain such insurance
policies in the name of the Servicer for the benefit of the Trustee. The
policies shall require the insurer to provide the mortgagee with 30 days' notice
prior to any cancellation or as otherwise required by law. The Servicer may also
(but is not obligated to) maintain a blanket hazard insurance policy or policies
if the insurer or insurers of such policies are acceptable to each Rating
Agency, in which case the Servicer shall conclusively be deemed to have
satisfied its obligations under this Section 3.09(a). If such a blanket policy
contains a deductible clause, the Servicer shall deposit in the Certificate
Account, in accordance with Section 3.06(c)(4), any amount not payable under the
blanket policy during any Collection Period because of the deductible clause
that would have been paid under a hazard policy that meets the requirements of
this Section 3.09(a) and does not have a deductible clause; provided, however,
that the Servicer's obligation so to deposit any such amount shall exist only if
and to the extent that the Servicer determines, in its reasonable business
judgment, such deposit to be recoverable as a Servicing Advance in accordance
with Section 3.07(b).
If the Mortgage Loan at the time of origination (or if required by federal
law, at any time thereafter) relates to a Mortgaged Property in an area
identified in the Federal Register by the Federal Emergency Management Agency as
having special flood hazards, then to the extent the Servicer is permitted to do
so under the Mortgage Loan (but only to the extent consistent with the
Servicer's servicing of its own loan portfolio), the Servicer will cause to be
maintained thereon a flood insurance policy in a form meeting the requirements
of the then current guidelines of the Federal Insurance Administration in an
amount representing coverage, and which provides for a recovery of insurance
proceeds relating to such Mortgage Loan, of not less than the least of (i) the
Unpaid Loan Balance of the Mortgage Loan (plus the related senior lien loan, if
any), (ii) the minimum amount required to compensate for damage or loss on a
replacement cost basis and (iii) the maximum amount of insurance that is
available under the Flood Disaster Protection Act of 1973. The Servicer shall
indemnify the Trust for any loss to the Trust resulting from the Servicer's
failure to advance premiums for such insurance required by this Section.
The Servicer shall have no obligation to maintain or cause to be
maintained any earthquake or additional insurance on a Mortgage Loan or
Mortgaged Property unless the related Mortgagor is required under applicable law
to maintain such insurance.
Section 3.10 Due-on-Sale Clauses; Assumption and Substitution.
When a Mortgaged Property has been or is about to be conveyed by the
Mortgagor, the Servicer shall, 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 need not
exercise any such right if (a) the Person to whom the Mortgaged Property has
been or is to be conveyed satisfies the terms and conditions in the Mortgage
Note and Mortgage and the consent of the mortgagee thereunder is not required or
(b) the "due-on-sale" clause is, in the reasonable belief of the Servicer, not
enforceable under applicable law. An Opinion of Counsel, provided at the expense
of the Servicer, to the foregoing effect shall conclusively establish the
reasonableness of such belief. In such event, the Servicer shall enter into an
assumption and modification agreement with the transferee to whom such property
has been or is about to be conveyed, pursuant to which such transferee becomes
liable under the Mortgage Note and, unless prohibited by applicable law or the
Mortgage, the original 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 transferee, pursuant to which the
original Mortgagor is released from liability and such transferee is substituted
as Mortgagor and becomes liable under the Mortgage Note. The Servicer shall
notify the Trustee that any such assumption or substitution agreement has been
completed by forwarding to the Custodian, on behalf of the Trustee, the original
copy of such assumption or substitution agreement (indicating the Mortgage File
to which it relates) which copy shall be added 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 any required recording of any assumption
or substitution agreement. In connection with any assumption or substitution
agreement, no material term of the Mortgage Loan (including, without limitation,
the Scheduled Payment, the stated maturity, the Loan Balance or the Mortgage
Note Rate) shall be changed, nor shall any required periodic payments of
principal or interest be deferred or forgiven. Any fee collected 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, or any substitution of liability agreement or any other transfer
of a Mortgaged Property without assumption thereof, by operation of law or by
reason of any assumption or transfer (x) which the Servicer may be restricted by
law from preventing, or (y) which, if prevented, would adversely affect the
coverage under any mortgage pool insurance policy, hazard insurance policy or
any Primary Mortgage Insurance Certificate, for any reason whatsoever.
Section 3.11 Realization Upon Defaulted Mortgage Loans; Workouts.
(a) The Servicer may foreclose upon or otherwise comparably convert the
ownership in the name of, or on behalf of, the Trustee on behalf of the Trust
Fund of Mortgaged Properties relating to defaulted Mortgage Loans as to which no
satisfactory arrangements can be made for collection of Delinquent payments. The
decision of the Servicer whether to foreclose on a defaulted Mortgage Loan shall
be subject to its determination that the proceeds of foreclosure would exceed
the costs and expenses of bringing such a proceeding; such determination to be
based upon a recent appraisal, brokers price opinion or other evidence of the
property's current fair market value and the Servicer's recent experience in
realizing on similar properties similarly located. In connection with such
foreclosure or other conversion, the Servicer shall exercise such of the rights
and powers vested in it hereunder, and use the same degree of care and skill in
their exercise or use, as prudent mortgage lenders would exercise or use under
the circumstances in the conduct of their own affairs and consistent with
applicable law and with its normal and customary servicing standards, including,
but not limited to, advancing funds for the payment of taxes, amounts due with
respect to Senior Liens, and insurance premiums. In the event a deficiency
action is available against the Mortgagor or any other person, the Servicer may
proceed for the deficiency. The Servicer may retain twenty-five percent (25%) of
the net proceeds received pursuant to a deficiency action as compensation for
entering into such action.
The Servicer shall sell any REO Property prior to the close of the third
calendar year beginning after the year of its acquisition by the Trust Fund, at
such price as the Servicer in good ▇▇▇▇▇ ▇▇▇▇▇ necessary to comply with this
covenant unless (i) the Servicer obtains for the Trustee an Opinion of Counsel
(the expense of which opinion shall be a Servicing Advance) experienced in
federal income tax matters and acceptable to the Trustee, addressed to the
Trustee and the Servicer, to the effect that the holding by the Trust Fund of
such REO Property for any greater period will not result in the imposition of
taxes on "prohibited transactions" of the Trust Fund or of any Constituent REMIC
as defined in Code Section 860F or cause any Constituent REMIC to fail to
qualify as a REMIC at any time that any Certificates are outstanding or (ii) the
Servicer shall have applied for an extension of time in the manner contemplated
by Code Section 856(e)(3), in which case such three-year period shall be
extended by the applicable period. The Servicer shall manage, conserve, protect
and operate each REO Property solely for the purpose of its prompt disposition
and sale in a manner which does not cause such REO Property to fail to qualify
as "foreclosure property" within the meaning of Code Section 860G(a)(8) or
result in the receipt by any Constituent REMIC of any "income from non-permitted
assets" within the meaning of Code Section 860F(a)(2)(B) or any "net income from
foreclosure property" which is subject to taxation under the REMIC Provisions.
In its efforts to sell such REO Property, the Servicer shall, either itself or
through an agent, 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, rent the same or
any part thereof as the Servicer deems appropriate for the period prior to the
sale of such REO Property.
The Servicer shall take into account the existence of any hazardous
substances, hazardous wastes or solid wastes, as such terms are defined in the
Comprehensive Environmental Response, Compensation, and Liability Act, the
Resource Conservation and Recovery Act of 1976, or other federal, state or local
environmental legislation, on a Mortgaged Property in determining whether to
foreclose upon or otherwise comparably convert the ownership of such Mortgaged
Property. The Servicer shall be under no obligation to foreclose upon or
otherwise convert the ownership of any Mortgaged Property which it believes may
be contaminated with or affected by solid wastes, hazardous wastes, hazardous
substances or other pollutants. The Servicer shall not be liable to the Holders
if, based on its belief that no such contamination or effect exists, the
Servicer forecloses on a Mortgaged Property and takes title to such Mortgaged
Property, and thereafter such Mortgaged Property is determined to be so
contaminated or affected.
In any case in which property subject to a Mortgage shall have suffered
damage, the Servicer shall not be required to expend its own funds in connection
with any foreclosure or towards the restoration of such property unless it shall
determine in its discretion (a) that such restoration and/or foreclosure will
increase the net proceeds of liquidation of the related Mortgage Loan after
reimbursement to itself for such expenses and (b) that such expenses will be
recoverable by it through either Liquidation Proceeds or Insurance Proceeds
(with respect to each of which it shall have priority for purposes of
withdrawals from the Collection Account, as contemplated in Section 3.06(d)).
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, as contemplated in Section 3.06(d). The Servicer shall
not, however, be entitled to recover legal expenses incurred in connection with
liquidation proceedings where the Mortgagor pays all Delinquent payments and
expenses and such proceedings are terminated prior to liquidation, other than
sums received from the Mortgagor for such expenses.
In the event the Servicer does not elect to foreclose on a Mortgaged
Property, the Servicer may, in the exercise of its judgment, elect to accept a
payment or payments, in connection with the sale by the Mortgagor of such
Mortgaged Property or the retention by the Mortgagor of such Mortgaged Property,
in aggregate amount less than the outstanding balance of the related Mortgage
Loan and accrued interest thereon.
The Trustee shall furnish the Servicer with any powers of attorney and
other documents necessary or appropriate to enable the Servicer to carry out its
efforts in realizing upon defaulted Mortgage Loans hereunder.
In addition to the foregoing provisions, the Servicer may enter into a
special servicing agreement covering any one or more Mortgage Loans in default.
Such special servicing agreement shall be subject to each Rating Agency's
written acknowledgement that the ratings of the Certificates in effect
immediately prior to the entering into of such agreement would not be qualified,
downgraded or withdrawn and the Certificates would not be placed on credit
review status (except for possible upgrading) as a result of such an agreement.
(b) The Servicer shall determine for each defaulted Mortgage Loan at what
time it has recovered, whether through trustee's sale, foreclosure sale or
otherwise, all amounts it expects to recover from or on account of such
defaulted Mortgage Loan, whereupon such Mortgage Loan shall become a "Liquidated
Loan".
(c) The Servicer shall not agree to any modification, waiver, variance or
amendment of any provision of any Mortgage Loan unless, in the Servicer's good
faith judgment, such modification, waiver, variance or amendment would mitigate
the loss that might otherwise be experienced on such Mortgage Loan and only in
the event of a default on such Mortgage Loan or in the event that a default on
such Mortgage Loan is imminent; provided, however, that no such modification,
waiver, variance or amendment shall extend the maturity date of such Mortgage
Loan beyond the Collection Period relating to the latest Last Scheduled
Distribution Date of any Class of Outstanding Certificates. The Servicer shall
be permitted to modify, waive, vary or amend any provision of a Mortgage Loan if
required by statute or a court of competent jurisdiction to do so.
(d) The Servicer shall provide written notice to the Trustee prior to the
execution of any modification, waiver or amendment of any material provision of
any Mortgage Loan and shall deliver to the Custodian, for deposit in the related
Mortgage File, an original counterpart of such modification, waiver or
amendment, promptly following the execution thereof.
Section 3.12 Trustee to Cooperate; Release of Files.
(a) Upon the payment in full of any Mortgage Loan (including any
liquidation of such Mortgage Loan through foreclosure or otherwise), 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 shall deliver to the
Custodian and the Trustee a "Request for Release of Documents" (substantially in
the form of ▇▇▇▇▇▇ ▇▇▇ Form 2009). Upon receipt of such Request for Release, the
Custodian, acting for the Trustee, shall promptly release the related Mortgage
File, in trust, to the Servicer or its designee. In these circumstances, the
Servicer is authorized to give, as attorney-in-fact for the Trustee and the
mortgagee under the Mortgage, an instrument of satisfaction (or assignment of
Mortgage without recourse) regarding the related Mortgaged Property, which
instrument of satisfaction or assignment shall be delivered to the Person or
Persons entitled thereto against receipt of payment in full. No expense incurred
in connection with such instrument of satisfaction or assignment shall be
chargeable to the Collection Account or to the Trustee. In lieu of executing any
such satisfaction or assignment, the Servicer may prepare and submit to the
Trustee a satisfaction (or assignment without recourse, if requested by the
Person or Persons entitled thereto) in form for execution by the Trustee with
all requisite information completed by the Servicer; in such event, the Trustee
shall execute and acknowledge such satisfaction or assignment, as the case may
be, and deliver the same with the related Mortgage File, as aforesaid.
(b) The Servicer shall have the right to accept applications by Mortgagors
for consent to (i) partial releases of Mortgaged Properties, (ii) easements or
alterations and (iii) removal, demolition or division of properties subject to
Mortgages. No application shall be approved by the Servicer unless: (w) the
effect of such application would not cause any Constituent REMIC to fail to
qualify as a REMIC, and would not result in the imposition of any tax on
"prohibited transactions" of the Trust Fund or any Constituent REMIC, (x) the
provisions of the related Mortgage Note and Mortgage have been complied with;
(y) the debt-to-income ratio of the Mortgagor after any release does not exceed
the debt-to-income ratio of such Mortgagor on the Cut-Off Date and any increase
in the Loan-to-Value Ratio shall not exceed 5%; and (z) the lien priority of the
related Mortgage is not adversely affected. Upon receipt by the Trustee of an
Officer's Certificate of the Servicer setting forth the action proposed to be
taken for a particular Mortgage Loan and certifying that the criteria set forth
in the preceding sentence have been satisfied, the Trustee shall execute and
deliver to the Servicer the consent or partial release prepared by the Servicer.
Section 3.13 Servicing Compensation.
As compensation for its activities hereunder, the Servicer shall be
entitled to retain the related Servicing Fee with respect to each Mortgage Loan.
Additional servicing compensation in the form of release fees, bad check
charges, assumption fees, late payment charges, or any other servicing-related
fees, Net Liquidation Proceeds or Net Subsequent Recoveries not required to be
deposited in the Collection Account and similar items may, to the extent
collected from Mortgagors, be retained by the Servicer, unless a successor
Servicer is appointed pursuant to Section 7.01, in which case the provisions of
Section 7.01(g) shall apply.
The right to receive the Servicing Fee may not be transferred in whole or
in part except in connection with the transfer of all of the Servicer's
responsibilities and obligations under this Agreement.
Section 3.14 Annual Statement of Compliance.
The Servicer shall deliver, and the Servicer shall cause each Subservicer
engaged by it to deliver, to the Depositor, the Trustee and each Rating Agency
on or before March 1 of each year or if such day is not a Business Day, the next
Business Day, commencing in March 2007, a certificate in the form required by
Item 1123 of Regulation AB, to the effect that (i) an authorized officer of the
Servicer or the Additional Servicer, as the case may be, has reviewed (or a
review has been made under his or her supervision of) such party's activities
under this Agreement, or such other applicable Subservicing Agreement in the
case of an Additional Servicer, during the prior calendar year or portion
thereof and (ii) to the best of such officer's knowledge, based on such review,
such party has fulfilled all of its obligations under this Agreement, or such
other applicable Subservicing Agreement in the case of an Additional Servicer,
in all material respects throughout the prior calendar year or portion thereof
or, if there has been a failure to fulfill any such obligation in any material
respect, specifying each such failure known to such officer and the nature and
status thereof. Promptly after receipt of each such certificate, the Depositor
shall review such certificate and, if applicable, consult with the Servicer as
to the nature of any failure to fulfill any obligation under the Agreement, or
such other applicable Subservicing Agreement in the case of an Additional
Servicer, in any material respect.
Section 3.15 Assessments of Compliance and Attestation Reports.
(a) Each of the Servicer, the Paying Agent, the Custodian and the
Certificate Administrator, at its own expense, shall deliver to the Depositor
(and in the case of the Servicer, to the Trustee), and shall cause each
Servicing Function Participant engaged by such party to deliver to the
Depositor, on or before March 1 of each year for which a Form 10-K is required
to be filed, or if such day is not a Business Day, the next Business Day, a
report (an "Assessment of Compliance") regarding the Servicer's, Paying Agent's,
Custodian's, Certificate Administrator's or other Servicing Function
Participant's, as applicable, assessment of compliance with, at a minimum, the
Relevant Servicing Criteria for such party during the preceding calendar year,
as required by Rules 13a-18 and 15d-18 of the Exchange Act and Item 1122 of
Regulation AB promulgated under the Act. Each such Assessment of Compliance
delivered by each such party shall contain:
(i) a statement by such party of its responsibility for assessing
compliance with the Servicing Criteria applicable to it;
(ii) a statement that such party used the Servicing Criteria
applicable to it to assess compliance with the Servicing Criteria;
(iii) such party's assessment of compliance with the Servicing
Criteria applicable to it as of and for the preceding fiscal year,
including, if there had been any material instance of noncompliance with
the Servicing Criteria applicable to it, identifying each such failure and
the nature and status thereof; and
(iv) a statement that a registered public accounting firm has issued
an attestation report on such party's assessment of compliance with the
Servicing Criteria applicable to it as of and for the preceding fiscal
year.
For each of the Servicer, the Paying Agent, the Custodian and the Certificate
Administrator, the "Relevant Servicing Criteria" with respect to such party
shall be the servicing criteria set forth opposite its name on Schedule 1;
provided, that Schedule 1 may be modified (x) by the agreement of CRMSI and each
party affected by such modification, without the consent of any other party or
the Certificateholders, and (y) by CRMSI, without the consent of any other party
or the Certificateholders, if CRMSI is advised by counsel that such change may
be required to comply with Regulation AB. For any other Servicing Function
Participant engaged by the Servicer, the Paying Agent, the Custodian or the
Certificate Administrator, "Relevant Servicing Criteria" refers to the portion
of the Relevant Servicing Criteria applicable to the party engaging such
Servicing Function Participant insofar as the functions required to be performed
by such party are to be performed by the Servicing Function Participant. For the
avoidance of doubt, multiple parties can have responsibility for the same
Relevant Servicing Criteria.
(b) On or before March 1 of each year for which a Form 10-K is
required to be filed, or if such day is not a Business Day, the next
Business Day, each of the Servicer, the Paying Agent, the Custodian and
the Certificate Administrator, at its own expense, shall furnish to the
Depositor (and in the case of the Servicer, to the Trustee), and shall
cause each Servicing Function Participant engaged by such party to deliver
to the Depositor, a report (an "Attestation Report") of a registered
public accounting firm that attests to, and reports on, the Assessment of
Compliance made by the Servicer, the Paying Agent, the Custodian, the
Certificate Administrator or another Servicing Function Participant, as
applicable, as required by Rules 13a-18 and 15d-18 of the Exchange Act and
Item 1122(b) of Regulation AB promulgated under the Act, which Attestation
Report must be made in accordance with standards for attestation reports
issued or adopted by the Public Company Accounting Oversight Board.
(c) No later than 30 days following the end of each fiscal year for
the Trust for which a Form 10-K is required to be filed, (i) the Servicer
and the Certificate Administrator shall forward to the Trustee and
Depositor the name of each Servicing Function Participant engaged by it
and what servicing criteria will be addressed in the report on assessment
of compliance prepared by such Servicing Function Participant and (ii)
each of the Paying Agent and the Custodian shall forward to the Depositor
and the Servicer the name of each Servicing Function Participant engaged
by it and what servicing criteria will be addressed in the report on
assessment of compliance prepared by such Servicing Function Participant,
in each case to the extent of any change from the prior year's notice, if
any.
(d) So long as the Servicer and the Certificate Administrator are
the same party: (x) the obligations of the Servicer and Certificate
Administrator to deliver Assessments of Compliance pursuant to Section
3.15(a) may be satisfied through the delivery of a joint Assessment of
Compliance that satisfies the obligations of both the Servicer and the
Certificate Administrator; and (y) the obligations of the Servicer and
Certificate Administrator to furnish Attestation Reports pursuant to
Section 3.15(b) may be satisfied through the furnishing of a joint
Attestation Report that satisfies the obligations of both the Servicer and
the Certificate Administrator.
Section 3.16 Access to Loan Documentation and Information.
The Servicer will provide Holders that are federally insured savings and
loan associations with certain reports, and will provide access to information
and documentation regarding the Mortgage Loans included in the Trust Fund,
sufficient to permit such associations to comply with applicable regulations of
the Office of Thrift Supervision or the FDIC. The Servicer shall provide to the
Trustee and the Certificate Administrator access to the information and
documentation regarding the Mortgage Loans, such access being afforded without
charge but only upon reasonable request and during normal business hours at the
offices of the Servicer designated by it.
Section 3.17 Inspections; Errors and Omissions Insurance.
(a) At any reasonable time and from time to time upon reasonable notice,
the Trustee or any Holder of a Class R Certificate may inspect the Servicer's
servicing operations and discuss the servicing operations of the Servicer during
the Servicer's normal business hours with any of its officers. The costs and
expenses incurred by such a Holder (but not the Trustee) in connection with any
such examinations or discussions shall be for the account of the Holder, and any
such costs or expenses incurred by the Trustee shall be reimbursable in
accordance with Section 8.05.
(b) The Servicer (including the Trustee if it shall become the Servicer
hereunder) agrees to maintain errors and omissions coverage and a fidelity bond,
each at least to the extent required by Section 305 of Part I of the ▇▇▇▇▇▇ ▇▇▇
Guide or any successor provision thereof. If the fidelity bond or the errors and
omissions coverage ceases to be in effect, the Servicer shall promptly give
notice thereof to the Trustee and the Holders.
Section 3.18 [Reserved].
Section 3.19 Prepayment Charges.
If this Section 3.19 is stated to be applicable in Article XII, then the
Servicer will not waive all or any part of any Prepayment Charge unless, in the
Servicer's reasonable judgment, such waiver would maximize recovery of total
proceeds taking into account the value of such Prepayment Charge and the related
Mortgage Loan and giving such waiver is standard and customary in the industry
under similar circumstances in connection with mortgage loan servicing. Subject
to the foregoing, the Servicer will not waive all or any part of a Prepayment
Charge in connection with the refinancing of a Mortgage Loan unless such
refinancing is related to a default or a reasonably imminent default.
If the Servicer shall waive all or any part of a Prepayment Charge in
violation of the standard set forth in the preceding paragraph, then the
Servicer shall, on the second Business Day preceding the next Deposit Date,
deposit out of its own funds the amount so waived into the Collection Account.
Section 3.20 Escrow Account.
To the extent permitted by the related Mortgage Note, the Servicer may
(but is not obligated to) establish and maintain or cause to be established and
maintained with Depositories one or more Escrow Accounts and shall deposit
therein all collections of taxes, assessments, primary mortgage or hazard
insurance premiums or comparable items for the account of the Mortgagors.
Withdrawals from an Escrow Account may be made only to effect payment of taxes,
assessments, primary mortgage or hazard insurance premiums or comparable items,
to reimburse the Servicer out of related collections for any payments made
regarding taxes and assessments, premiums on Primary Mortgage Insurance
Certificates and premiums on standard hazard insurance policies, to refund to
any Mortgagors any sums determined to be overages, to pay interest owed to
Mortgagors on such Account to the extent required by law or to clear and
terminate such Accounts at the termination of this Agreement. Escrow Accounts
shall not be part of the Trust Fund.
Section 3.21 Refinancings of Mortgage Loans.
In addition to waivers and arrangements permitted by Section 3.11, the
Servicer reserves the right to offer refinancings of any Mortgage Loan, if such
refinancing arises out of a request by the related Mortgagor for a refinancing
or a modification, or for other relief from the provisions of the related
Mortgage Loan. For the purposes of this Section, a "refinancing" will include
any process with a Mortgagor that results in the refinanced Mortgage Loan being
identified and serviced as a "new mortgage loan" in the books, records and
servicing files of the Servicer.
On the Deposit Date for the Collection Period in which occurred the
effective date of the refinancing of any Mortgage Loan pursuant to this Section,
the Servicer shall deposit, or cause to be deposited, into the Collection
Account an amount equal to the prepayment in full of such Mortgage Loan (net of
all Servicing Advances, Delinquency Advances, Bi-Weekly Interest Advances and
Simple Interest Advances relating to such Mortgage Loan, which shall be deemed
reimbursed to the Servicer) and, upon receipt by the Trustee and Custodian of
written notification of such deposit signed by a Servicing Officer, the related
Mortgage File shall be released, and the Custodian and the Trustee shall comply
with the provisions of Section 3.12.
ARTICLE IV
ACCOUNTS AND DISTRIBUTIONS
Section 4.01 Collection of Money.
The Paying Agent shall demand payment or delivery of all money and other
property payable to or receivable by the Paying Agent pursuant to this
Agreement, including all payments due on the Mortgage Loans in accordance with
the respective terms and conditions of such Mortgage Loans and required to be
paid over to the Paying Agent by the Servicer or by any Subservicer. The Paying
Agent shall hold all such money and property received by it, other than pursuant
to or as contemplated by Section 4.10, as part of the Trust Fund and shall apply
it as provided in this Agreement.
Section 4.02 Certificate Account.
The Depositor shall cause to be established with the Paying Agent by the
Issue Date, and the Paying Agent on behalf of the Trustee shall maintain, the
Certificate Account to be held by the Paying Agent on behalf of the Trustee as
trustee for the Holders of the specific Series of Certificates identified in
Article XII. The Paying Agent shall deposit in the Certificate Account, upon
receipt, all amounts paid to it pursuant to Section 3.06(e).
Section 4.03 Investment of Accounts.
(a) Consistent with any requirements of the Code, all or a portion of any
Investment Account shall be invested and reinvested in the name of the Trust
Fund, as directed in writing by the Depositor, in one or more Eligible
Investments bearing interest or sold at a discount. The Trustee and a Paying
Agent (in each case acting in its commercial capacity) may be the obligor on any
investment which otherwise qualifies as an Eligible Investment. Except as
otherwise provided in this Section 4.03, no investment in any Investment Account
shall mature later than the Business Day immediately preceding the next
Distribution Date.
If the Depositor shall fail to give investment directions to the Paying
Agent, amounts in the accounts maintained with the Paying Agent shall remain
uninvested.
If any amounts are needed for disbursement from any Investment Account
held by the Paying Agent and sufficient uninvested funds are not available to
make such disbursement, the Paying Agent shall cause to be sold or otherwise
converted to cash a sufficient amount of the investments in such Account. No
investments will be liquidated prior to maturity unless the proceeds thereof are
needed for disbursement.
The Trustee and the Paying Agent shall have no liability for any loss
incurred in connection with any investment or any sale or liquidation thereof,
or for any insufficiency in any Investment Account, except for any such loss or
insufficiency caused by its own negligence or willful misconduct.
(b) (i) If the Collection Account is an Investment Account, then all funds
therein shall be held (i) uninvested up to the amount insured by the FDIC or
(ii) invested in Eligible Investments. Any investments of funds in the
Collection Account shall mature or be withdrawable at par on or prior to the
immediately succeeding Deposit Date. Any investment earnings on funds held in
the Collection Account shall be for the account of the Servicer and may only be
withdrawn from the Collection Account by the Servicer immediately following the
remittance of the Monthly Deposit Amount. Any investment losses on funds held in
the Collection Account shall be for the account of the Servicer and promptly
upon the realization of such loss shall be contributed by the Servicer to the
Collection Account. Any references herein to amounts on deposit in the
Collection Account shall refer to amounts net of investment earnings.
(ii) If the Certificate Account is an Investment Account, then funds
therein shall be invested and reinvested by the Paying Agent at the
Depositor's written direction in one or more Eligible Investments bearing
interest or sold at discount. No investment of any amount held in the
Certificate Account may mature later than the Business Day immediately
preceding the next Distribution Date; provided, however, that investments
(including repurchase agreements) on which the Trustee or the Paying
Agent, in its commercial capacity, is the obligor, may mature on a
Distribution Date.
All income from investment of moneys deposited in the Certificate Account,
and all proceeds of disposition of any assets in the Certificate Account, shall
be deposited in the Certificate Account immediately upon receipt, and any loss
resulting from such investment shall be charged to the Certificate Account.
(c) The Depositor will not direct the Trustee or the Paying Agent to make
any investment of any funds or to sell any investment held in an Investment
Account except under the following terms and conditions:
(i) each such investment shall be made in the name of the Trustee
(in its capacity as such) or in the name of a Qualified Nominee of the
Trustee; and
(ii) each such investment shall be a "cash flow investment" as
defined in Code Section 860G(a)(6).
(d) Generally, no Eligible Investment shall be disposed of prior to its
maturity; provided, however, if any amounts are needed for disbursement from an
Investment Account and sufficient uninvested funds are not available therein to
make such disbursement, in the absence of a Depositor Order for the liquidation
of investments held therein in an amount sufficient to provide the required
funds, the Paying Agent shall cause to be sold or otherwise converted to cash a
sufficient amount of the investments in such Investment Account; provided,
further, however, that prior to any such sale or conversion to cash, the Trustee
or the Paying Agent shall have received (i) an Opinion of Counsel that such sale
or conversion to cash shall not constitute a "prohibited transaction" under Code
Section 860F(a), or (ii) (a) if such sale or conversion to cash constitutes such
a "prohibited transaction", the consent of the Holders of 100% Percentage
Interest of the Residual Certificates to the prohibited transaction together
with each such Holder's proportionate share of any tax imposed on the Trust Fund
attributable to such transaction and (b) an Opinion of Counsel that such
transaction will not disqualify any Constituent REMIC as a REMIC.
Section 4.04 [Reserved].
Section 4.05 Eligible Investments.
The following are Eligible Investments:
(a) direct obligations of, and obligations fully guaranteed by, the United
States of America, ▇▇▇▇▇▇▇ Mac, ▇▇▇▇▇▇ ▇▇▇, the Farm Credit Banks, the Federal
Home Loan Banks, the Student Loan Marketing Association (but only for
obligations backed by letters of credit or senior obligations) or any agency or
instrumentality of the United States of America the obligations of which are
backed by the full faith and credit of the United States of America; provided,
however, that any obligation of, or guaranteed by, the Federal Home Loan Banks
or the Farm Credit Banks or any obligation of, or guaranteed by, ▇▇▇▇▇▇▇ Mac or
▇▇▇▇▇▇ ▇▇▇, other than a senior debt obligation of ▇▇▇▇▇▇▇ Mac or ▇▇▇▇▇▇ ▇▇▇ or
a mortgage participation or pass-through certificate guaranteed by ▇▇▇▇▇▇▇ Mac
or ▇▇▇▇▇▇ ▇▇▇, excluding stripped mortgage securities which are valued greater
than par on the portion of unpaid principal, shall be an Eligible Investment
only if, at the time of investment, each Rating Agency confirms in writing that
such investment is acceptable;
(b) Federal Funds, demand and time deposits in, certificates of deposits
of, or bankers' acceptances issued by, any depository institution or trust
company (including the Trustee or any agent of the Trustee, acting in their
respective commercial capacities) incorporated under the laws of the United
States of America or any state thereof and subject to supervision and
examination by federal or state banking authorities, so long as at the time of
such investment or contractual commitment providing for such investment the
certificate of deposit or other unsecured short-term debt obligations of such
depository institution or trust company have a maturity of not more than one
year and a credit rating of not less than "A-1+" ("A-1" if the maturity is not
greater than 30 days) by S&P if S&P is a Rating Agency, "P-1" by Moody's if
▇▇▇▇▇'▇ is a Rating Agency, and "F-1" by Fitch if Fitch is a Rating Agency; each
such investment being expressly authorized and deemed authorized by a
certificate holder's purchase or acceptance of any certificate when acting in
the capacity of a fiduciary (including a "fiduciary" of an "employee benefit
plan" subject to ERISA, as those term are defined in Sections 3(21) and 3(3) of
ERISA, respectively) which purchase or acceptance shall also evidence and be
deemed to evidence any such certificate holder's representation and warranty to
the Certificate Administrator, the Certificate Registrar and the Trustee and any
agent of the Trustee that such certificate holder is duly authorized by and
empowered under appropriate governing instruments (for example, an employee
benefit plan, in the case of an ERISA fiduciary) to give such authorization; and
money market funds investing exclusively in any of the investments discussed in
this definition of Eligible Investments with a rating of not less than "A-1+"
("A-1" if the maturity is not greater than 30 days) by S&P if S&P is a Rating
Agency, "F-1" by Fitch if Fitch is a Rating Agency, and "P-1" by Moody's if
▇▇▇▇▇'▇ is a Rating Agency;
(c) repurchase obligations for (i) any security described in clause (a)
above or (ii) any other security issued or guaranteed by an agency or
instrumentality of the United States of America the obligations of which are
backed by the full faith and credit of the United States of America, in either
case where such security has a remaining maturity of one year or less and where
such repurchase obligation has been entered into with a depository institution
or trust company (acting as principal) with a rating of not less than "A-1+" by
S&P if S&P is a Rating Agency, "P-1" by Moody's if ▇▇▇▇▇'▇ is a Rating Agency,
and "F-1" by Fitch if Fitch is a Rating Agency;
(d) securities bearing interest or sold at a discount issued by any
corporation incorporated under the laws of the United States of America or any
state thereof which have a maturity not greater than 30 days and an unsecured
long-term debt rating of at least "AA" if S&P is a Rating Agency, "AA" if Fitch
is a Rating Agency, and "Aa" if ▇▇▇▇▇'▇ is a Rating Agency, or an unsecured
short-term debt rating, of at least "A-1" if S&P is a Rating Agency, "F-1" if
Fitch is a Rating Agency, and "P-1" if ▇▇▇▇▇'▇ is a Rating Agency, at the time
of such investment or contractual commitment providing for such investment;
provided, however, that securities issued by any particular corporation shall
not be Eligible Investments to the extent that investment therein shall cause
the then outstanding principal balance of securities issued by such corporation
and held as part of the Trust Fund to exceed 10% of the aggregate current
principal balance of Certificates Outstanding and of the current percentage
interest of the Residual Certificates outstanding, and the aggregate principal
balance of all cash and Eligible Investments, held in the Trust Fund;
(e) commercial paper (including both non-interest-bearing discount
obligations and interest-bearing obligations payable on demand or on a specified
date not more than one year after the date of issuance thereof) having at the
time of such investment a rating of not less than "A-1+" ("A-1" if the maturity
is not greater than 30 days and such commercial paper does not exceed 20% of the
then current balance of the certificates) by S&P if S&P is a Rating Agency,
"F-1" by Fitch if Fitch is a Rating Agency, and "P-1" by Moody's if ▇▇▇▇▇'▇ is a
Rating Agency;
(f) a Qualified GIC;
(g) certificates or receipts representing direct ownership interests in
future interest or principal payments on obligations of the United States of
America or its agencies or instrumentalities (which obligations are backed by
the full faith and credit of the United States of America) held by a custodian
on behalf of the holders of such receipts;
(h) any other money market deposit, obligation, security or investment
bearing interest or sold at a discount which has an unsecured short-term debt
rating of at least "A-1+" ("A-1" if the maturity is not greater than 30 days and
such investments do not exceed 20% of the then scheduled principal balance of
the Mortgage Loans) if S&P is a Rating Agency, "F-1" if Fitch is a Rating
Agency, and "P-1" if ▇▇▇▇▇'▇ is a Rating Agency, or if such investment relates
to a money market fund, such fund must be rated in the highest rating category
by each Rating Agency (which, for S&P, is "AAAm" or "AAAm-G"); and;
(i) any other demand or time deposit, obligation, security or investment
bearing interest or sold at a discount that each Rating Agency confirms in
writing is acceptable;
provided, that each such Eligible Investment is a "permitted investment" as
defined in Internal Revenue Code Section 860G(a)(5).
Section 4.06 Accounting and Directions.
By noon New York time, on the second Business Day preceding each
Distribution Date (or such earlier date as shall be agreed by the Certificate
Administrator and the Trustee), the Certificate Administrator shall provide to
the Trustee, the Paying Agent and the Depositor the following information with
respect to the next Distribution Date (which notification may be given by
facsimile or other electronic transmission (e.g., e-mail), or by telephone
promptly confirmed in writing):
(1) Each Class A Subclass Interest Amount and Class M Subclass Interest
Amount;
(2) The Senior Principal Distribution Amount;
(3) Each Class A Subclass Principal Distribution Amount and each Class M
Subclass Principal Distribution Amount;
(4) The Principal Balance (or notional amount, as applicable) of each
Class and Subclass of Certificates following such payment;
(5) The amount of any Realized Losses for each Pool for the related
Collection Period; and
(6) The amount of 60+ Day Delinquent Loans in each Pool.
Section 4.07 Reports by Certificate Administrator to Holders.
(a) Prior to each Distribution Date, the Servicer shall provide to the
Paying Agent and to the Certificate Administrator (if such party is not also the
Servicer), and on the related Distribution Date the Certificate Administrator
shall forward or make available to each Holder and the Rating Agencies, a report
in writing (which may be a statement prepared by or on behalf of the Servicer)
setting forth:
(i) the amount of the distribution with respect to such Holders'
Certificates (based on a Certificate in the original principal (or
notional) amount of $1,000);
(ii) the amount of such Holder's distributions allocable to
principal (based on a Certificate in the original principal amount of
$1,000);
(iii) the amount of such Holder's distributions allocable to
interest (based on a Certificate in the original principal (or notional)
amount of $1,000);
(iv) each Class A Subclass Interest Shortfall, the Cap Amount, the
Net Civil Relief Amount and the Net Non-Supported Amount for each Class A
Subclass, Class M Subclass Interest Shortfall, Class M Subclass Cap Amount
and the Net Civil Relief Amount and Net Non-Supported Amount for each
Class M Subclass;
(v) the Principal Balance (or notional amount) of each Class and
Subclass (based on a Certificate in the original principal (or notional)
amount of $1,000) which will be Outstanding prior to and after giving
effect to the payment of principal on such Distribution Date;
(vi) the Aggregate Current Pool Balance of, and the number of
Mortgage Loans in, each Pool as of the related Determination Date;
(vii) the aggregate of collections received by the Servicer in
respect of the Mortgage Loans during the related Collection Period and
Prepayment Collection Period;
(viii) the total of any Substitution Adjustment Amounts and any Loan
Repurchase Prices included in such distribution;
(ix) the weighted average Mortgage Note Rate and weighted average
remaining term to maturity of, and cumulative amount of Prepayment
Principal with respect to, the Mortgage Loans in each Pool, each as of the
close of business on the last day of the calendar month preceding such
Distribution Date;
(x) whether a Trigger Event is in effect;
(xi) the Current Class A Enhancement Level;
(xii) the Overcollateralization Amount, any Release Amount, the
amount of Monthly Excess Interest and, if applicable, the Deficiency
Amount (in each case, both before and after giving effect to any Extra
Principal Distribution Amount for such Distribution Date);
(xiii) the amount of any Applied Loss Amount allocated to each Class
and Subclass as of the close of such Distribution Date;
(xiv) for each Class and Subclass, any amount applied in reduction
of the Class M Subclass Loss Amount pursuant to Section 13.02 on such
Distribution Date, and each Class M Subclass Loss Amount after giving
effect to such application;
(xv) the aggregate amount of (A) Net Delinquency Advances, (B) Net
Bi-Weekly Interest Advances and (C) Net Simple Interest Advances;
(xvi) the amount of Net Servicing Advances;
(xvii) the amount of cumulative Nonrecoverable Advances;
(xviii) for each Class of Floating Rate Certificates, the
Certificate Rate for the related Interest Accrual Period;
(xix) the date of such Distribution Date and the Determination Date
for such Distribution Date;
(xx) for each Class, the applicable Record Date and Interest Accrual
Period;
(xxi) the amount of the Servicing Fee paid to or retained by the
Servicer, and the amount of the Trustee Fee paid to the Trustee, with
respect to such Distribution Date;
(xxii) any expenses or indemnification amounts paid by the Trust
Fund, the specific purpose of each payment and the parties to whom such
payments were made;
(xxiii) any material modifications, extensions or waivers as to
Mortgage Loan terms, fees, penalties or payments since the previous
Distribution Date and cumulatively since the Cut-Off Date;
(xxiv) unless such information is set forth in the Form 10-D
relating to such Distribution Date and provided the Servicer is reasonably
able to include such information on the statement, any material breaches
of representations and warranties relating to the Mortgage Loans and any
material breaches of covenants hereunder; and
(xxv) the number and aggregate principal balance of any Mortgage
Loans repurchased by the Depositor from the Trust Fund since the previous
Distribution Date.
In addition, the Certificate Administrator, on behalf of the Trustee,
shall file with the IRS and furnish to Certificateholders such statements and
information, at such times and in such manner, as shall be required by the Code.
(b) On each Distribution Date, the Certificate Administrator will forward
or make available to each Holder and the Rating Agencies, together with the
information described in subsection (a) above, the following information for
each Pool (calculated as of the close of business on the last Business Day of
the month preceding such Deposit Date) prepared by or on behalf of the Servicer
and furnished for such purpose:
(i) the number and aggregate Unpaid Loan Balances of Mortgage Loans
(a) 30 days Delinquent, (b) 60 days Delinquent and (c) 90 days Delinquent,
(d) the number and aggregate Unpaid Loan Balances of all Mortgage Loans
and (e) the percentage that each of the amounts represented by clauses
(a), (b) and (c) represent as a percentage of the amount in clause (d);
(ii) the number and Unpaid Loan Balances of all Mortgage Loans in
foreclosure proceedings, separately stating those Mortgage Loans for which
foreclosure proceedings were commenced in the preceding Collection Period;
(iii) the number and Unpaid Loan Balances of Mortgages involved in
bankruptcy proceedings;
(iv) the Unpaid Loan Balance and book value of any REO Property;
(v) the Cumulative Loss Percentage, Cumulative Realized Losses and
the Realized Losses for the preceding Collection Period; and
(vi) the aggregate Loan Balance of 60+ Day Delinquent Loans (as a
dollar amount and as a percentage of the Aggregate Current Pool Balance).
The Certificate Administrator, in addition to the distribution of
information under subsections (a) and (b), shall distribute or make available
any Additional Pool Information and any Additional Certificate Information
specified in Article XIV, to the persons and by the dates respectively
specified. The Servicer agrees to provide to the Certificate Administrator such
information on the Mortgage Loans and the Certificates as will enable the
Trustee to perform its obligations under the preceding sentence.
(c) The Certificate Administrator shall fulfill its responsibility to
forward or make available any information or report to Holders under this
Section 4.07 by posting the same on its website, currently located at
▇▇▇▇▇://▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇. If a Holder submits a written request to the
Trustee for a paper copy of the Pooling Agreement, the Trustee shall promptly
inform the Certificate Administrator of such request (including any mailing
address specified by the Holder making such request), whereupon the Certificate
Administrator shall promptly mail to such Holder at such address, via first
class mail, a paper copy of the Pooling Agreement (without exhibits).
Section 4.08 Other Reports by Certificate Administrator or Paying Agent.
(a) The Certificate Administrator (or the Paying Agent on its behalf)
shall report to the Depositor the amount on deposit in the Certificate Account
and the identity of the investments included therein, as the Depositor may from
time to time reasonably request. The Certificate Administrator shall, at the
reasonable request of the Depositor, transmit promptly copies of all accountings
of receipts in respect of the Mortgage Loans furnished to it by the Servicer or
the Paying Agent, and the Paying Agent shall notify the Depositor if any Monthly
Deposit Amount has not been received by the Paying Agent when due.
The Certificate Administrator and the Paying Agent shall report to each
Holder regarding any written notices it may from time to time receive which
provide a Responsible Officer with actual knowledge that any of the statements
set forth in Section 2.03(a) are inaccurate.
The Paying Agent shall maintain at all times on its website, currently
located at ▇▇▇▇▇://▇▇▇.▇▇.▇▇▇▇▇▇▇▇▇▇.▇▇▇, information concerning the
then-current Certificate Rate of each Class of Certificates. The Paying Agent
shall also provide such information by telephone to each Holder who calls the
Paying Agent at telephone number (▇▇▇) ▇▇▇-▇▇▇▇ and requests such information.
Section 4.09 Commission Filings.
(a) The Certificate Administrator will prepare and file all reports
required to be filed by the Depositor under the Exchange Act, including required
periodic reports on Form 10-D and any required current report on Form 8-K, but
excluding reports on Form 10-K, which the Depositor will prepare and file.
(b) Within 15 days after each Distribution Date, the Certificate
Administrator shall file with the Commission through the Commission's Electronic
Data Gathering and Retrieval System ("▇▇▇▇▇") any Form 10-D required by the
Exchange Act, in form and substance as required by the Exchange Act. Without
limitation of the foregoing, each such Form 10-D shall include a copy of the
reports under Section 4.07 for such Distribution Date as an exhibit thereto. Any
disclosure in addition to the reports under Section 4.07 that is required to be
included on Form 10-D ("Additional Form 10-D Disclosure") shall be reported by
the parties set forth on Schedule 2 and directed and approved by the Depositor,
and the Certificate Administrator will have no duty or liability for any failure
hereunder to determine or prepare any Additional Form 10-D Disclosure (other
than with respect to itself) absent such reporting, direction and approval. At
least two Business Days prior to filing any Form 10-D containing any Additional
Form 10-D Disclosure, and upon the Depositor's request prior to filing any other
Form 10-D, the Certificate Administrator shall forward electronically a draft
copy of the Form 10-D to the Depositor for review.
For so long as the Trust is subject to the Exchange Act reporting
requirements, within five (5) calendar days after the related Distribution Date,
the parties identified on Schedule 2 shall provide to each of the Certificate
Administrator and the Depositor, in ▇▇▇▇▇-compatible format (e.g., in Word or
Excel format), the form and substance of any Additional Form 10-D Disclosure, if
applicable, and the Depositor will approve, as to form and substance, or
disapprove, as the case may be, the inclusion of the Additional Form 10-D
Disclosure on Form 10-D. The Certificate Administrator has no duty under this
Agreement to monitor or enforce the performance by any other parties listed on
Schedule 2 of their duties under this paragraph or proactively solicit or
procure from such parties any Additional Form 10-D Disclosure (provided that, if
the Certificate Administrator is also the Servicer, this sentence shall not
limit the Servicer's obligations under this Section 4.09(b)). The Certificate
Administrator shall have no liability for any loss, expense, damage or claim
arising out of or with respect to any failure to properly prepare and/or timely
file Additional Form 10-D Disclosure on a Form 10-D, where such failure results
solely from the Certificate Administrator's failure to receive, on a timely
basis, any applicable Additional Form 10-D Disclosure from any other party
specified in Schedule 2 (other than the Servicer, if the Certificate
Administrator is also the Servicer) that is needed to prepare, arrange for
execution or file such Form 10-D, not resulting from the Certificate
Administrator's own negligence, bad faith or willful misconduct.
(c) Prior to January 30 of the year following the year of this Agreement,
the Depositor shall file a Form 15 Suspension Notification for the Trust Fund,
if applicable.
(d) Prior to March 30 of the year following the year of this Agreement,
the Depositor shall file a Form 10-K, in substance conforming to industry
standards, for the Trust Fund.
After preparing the Form 10-K, the Depositor shall forward electronically
a draft copy of the Form 10-K to the Trustee and the Servicer for review. No
later than the close of business on the third Business Day prior to the 10-K
Filing Deadline, a senior officer of the Servicer in charge of the servicing
function shall sign the Form 10-K and return an electronic or fax copy of such
signed Form 10-K, together with a signed copy of the certification (the
"Certification") attached hereto as Exhibit E and required to be included with
each Form 10-K pursuant to the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002, as amended (with an
original executed hard copy of each to follow by overnight mail) to the
Depositor.
Any disclosure or information in addition to (i) each annual statement of
compliance required under Section 3.14, (ii) each Assessment of Compliance
required under Section 3.15(a), (iii) each Attestation Report required under
Section 3.15(b) and (iv) the Certification that is required to be included on
Form 10-K ("Additional Form 10-K Disclosure") shall, pursuant to the paragraph
immediately below, be reported by the parties set forth on Schedule 3 and
directed and approved by the Depositor.
No later than March 1 of each year that the Trust is subject to the
Exchange Act reporting requirements, commencing in March 2007, the parties
identified on Schedule 3 shall provide to the Depositor, in ▇▇▇▇▇-compatible
format (e.g., in Word or Excel format), the form and substance of any Additional
Form 10-K Disclosure, if applicable. The Depositor will approve, as to form and
substance, or disapprove, as the case may be, the inclusion of the Additional
Form 10-K Disclosure on Form 10-K.
(e) Within four (4) Business Days after the occurrence of an event
requiring disclosure on Form 8-K (each such event, a "Reportable Event"), and if
directed by the Depositor, the Certificate Administrator shall prepare, an
authorized officer of the Certificate Administrator shall sign, and the
Certificate Administrator shall file with the Commission, on behalf of the
Trust, any Form 8-K, as required by the Exchange Act; provided that the
Depositor shall prepare and file the initial Form 8-K in connection with the
issuance of the Certificates. Any disclosure or information related to a
Reportable Event or that is otherwise required to be included on Form 8-K ("Form
8-K Disclosure Information") shall, pursuant to the paragraph immediately below,
be reported by the parties set forth on Schedule 4 and directed and approved by
the Depositor, and the Certificate Administrator will have no duty or liability
for any failure hereunder to determine or prepare any Form 8-K Disclosure
Information (other than with respect to itself) absent such reporting, direction
and approval.
For so long as the Trust is subject to the Exchange Act reporting
requirements, no later than the end of business on the second Business Day after
the occurrence of a Reportable Event the parties identified on Schedule 4 shall
provide to each of the Certificate Administrator and the Depositor, in
▇▇▇▇▇-compatible form, the form and substance of any Form 8-K Disclosure
Information, if applicable, and the Depositor will approve, as to form and
substance, or disapprove, as the case may be, the inclusion of the Form 8-K
Disclosure Information on Form 8-K. The Certificate Administrator has no duty
under this Agreement to monitor or enforce the performance by the parties listed
on Schedule 4 of their duties under this paragraph or proactively solicit or
procure from such parties any Form 8-K Disclosure Information (provided that, if
the Certificate Administrator is also the Servicer, this sentence shall not
limit the Servicer's obligations under this Section 4.09(e)).
After preparing the Form 8-K, the Certificate Administrator shall forward
electronically a draft copy of the Form 8-K to the Depositor for review. The
Certificate Administrator shall have no liability for any loss, expense, damage
or claim arising out of or with respect to any failure to properly prepare
and/or timely file such Form 8-K, where such failure results solely from the
Certificate Administrator's failure to receive, on a timely basis, any
applicable Form 8-K Disclosure Information from any other party specified in
Schedule 4 (other than the Servicer, if the Certificate Administrator is also
the Servicer) that is needed to prepare, arrange for execution or file such Form
8-K, not resulting from the Certificate Administrator's own negligence, bad
faith or willful misconduct.
(f) The obligations set forth in paragraphs (a), (b), (d) and (e) of this
Section shall apply only with respect to periods for which the Depositor is
obligated to file reports on Form 8-K, 10-D or 10-K with respect to the Trust.
At any time after the filing of a Form 15 Suspension Notification, if the number
of Certificateholders of record exceeds the number set forth in Section 15(d) of
the Exchange Act or the regulations promulgated pursuant thereto which would
cause the Trust to again become subject to the reporting requirements of the
Exchange Act, the Depositor, the Certificate Administrator and the Servicer, as
applicable, shall recommence preparing and filing reports on Form 10-D and 10-K
as required pursuant to this Section and the parties hereto will again have the
obligations set forth in paragraphs (a), (b), (d) and (e) of this Section.
(g) For so long as the Trust is subject to the Exchange Act reporting
requirements, each of the Depositor, the Certificate Administrator, the Trustee,
the Paying Agent, the Custodian and the Servicer shall notify each other of any
proceedings of the type described in Item 1117 of Regulation AB, together with a
description thereof, within three Business Days of (i) the Distribution Date on
which such proceeding first becomes a reportable event and (ii) each subsequent
Distribution Date following any material development in such proceeding. In
addition, no later than March 1 of each year during which the Trust is subject
to the Exchange Act reporting requirements, the Depositor, the Certificate
Administrator, the Trustee, the Paying Agent, the Custodian and the Servicer
shall notify each other of any affiliations or relationships that develop
following the Closing Date between such party and any of parties listed in Item
1119 of Regulation AB, together with a description thereof.
Section 4.10 Amounts Not Distributed.
Any amount withdrawn for distribution as payment of interest or principal
on any Certificate but which is not distributed because of the non-presentation
of such Certificate, because the check for payment is returned undelivered or
because the Holder thereof has failed to deliver payment instructions to the
Trustee or the Paying Agent, shall be set aside and held by the Trustee or the
Paying Agent in a separate trust account for the benefit of the Holder. Any such
amount shall be deemed to have been duly distributed for the purpose of all
calculations under this Agreement and will not be available for application to
any other amounts payable under this Agreement. If such amount is an amount
representing part of a final distribution pursuant to Section 9.01, the Trustee
and the Paying Agent shall comply with the procedure set forth in the last
paragraph of Section 9.01. After two years from the original date on which such
amount was due and payable to the Holder, any amount remaining in such separate
trust account shall be distributed to the Class R Certificates, and after such
distribution such Holder shall be required to seek payment as an unsecured
general creditor of the Class R Certificateholders.
Section 4.11 Payment of Trust Expenses.
If and only to the extent not otherwise paid under this Agreement, the
Trustee shall make demand on the Depositor to pay the Trust Expenses, and the
Depositor shall promptly pay such expenses directly to the Persons to whom such
amounts are due.
ARTICLE V
THE CERTIFICATES
Section 5.01 The Certificates.
(a) The Certificates and Residual Certificates shall be substantially in
the forms set forth as Exhibits hereto. The Certificates shall be issued in the
denominations specified in Article XII and shall be executed by manual or
facsimile signature on behalf of CRMSI by its Chairman, President, a Senior Vice
President, Treasurer or one of its Vice Presidents or Assistant Vice Presidents.
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
CRMSI shall bind CRMSI, 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 Certificates. No
Certificate shall be entitled to any benefit under this Agreement, or be valid
for any purpose, unless there appears on such Certificate a certificate of
authentication substantially in the form set forth in the following paragraph
executed by the Trustee or, if an Authenticating Agent is appointed pursuant to
Section 8.12, executed by the Authenticating Agent, in each case by manual
signature, and such certificate 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. The Certificates shall be engraved, printed or
lithographed in such manner as to comply with the requirements of The Depository
Trust Company or other Clearing Agency if such Certificates are Book-Entry
Certificates.
The form of authentication referenced in the preceding paragraph is as
follows:
"This is one of the Certificates referred to in the within-mentioned
Agreement.
________________________, as [Trustee][Authenticating
Agent]"
Until such time as Definitive Certificates are issued pursuant to Section
5.06, each Certificate designated as a Book-Entry Certificate in Article XII
shall be held in book-entry form and shall bear a legend in substantially the
following form:
"Unless this certificate is presented by an authorized
representative of [the Clearing Agency] to the Depositor or its
agent for registration of transfer, exchange or payment, and any
certificate issued is registered in the name of [Clearing Agency or
nominee] or such other name as requested by an authorized
representative of [Clearing Agency] and any payment is made to
[Clearing Agency or nominee], any transfer, pledge or other use
hereof for value or otherwise by or to any person is wrongful since
the registered owner hereof, [Clearing Agency or nominee], has an
interest herein."
(b) Upon original issuance, the Book-Entry Certificates shall be issued in
the form of one or more typewritten certificates, to be delivered to the initial
Clearing Agency by, or on behalf of, the Depositor. Such Certificates shall
initially be registered on the Certificate Register in the name of the nominee
of the initial Clearing Agency, and no Beneficial Owner will receive a
definitive certificate representing such Beneficial Owner's interest in the
Book-Entry Certificates, except as provided in Section 5.06. Unless and until
definitive, fully registered certificates ("Definitive Certificates") have been
issued to Beneficial Owners pursuant to Section 5.06:
(i) the provisions of this Section 5.01(b) shall be in full force
and effect;
(ii) the Depositor, the Servicer, the Certificate Registrar, the
Paying Agent and the Trustee may deal with the Clearing Agency for all
purposes (including the making of distributions on the Book-Entry
Certificates and the taking of actions by the Holders of Book-Entry
Certificates) as the authorized representative of the Beneficial Owners;
(iii) to the extent that the provisions of this Section 5.01(b)
conflict with any other provisions of this Agreement, the provisions of
this Section 5.01(b) shall control;
(iv) the rights of Beneficial Owners shall be exercised only through
the Clearing Agency and shall be limited to those established by law, the
rules, regulations and procedures of the Clearing Agency and agreements
between such Beneficial Owners and the Clearing Agency and/or the Clearing
Agency Participants, and all references in this Agreement to actions by
Certificateholders shall, with respect to the Book-Entry Certificates,
refer to actions taken by the Clearing Agency upon instructions from the
Clearing Agency Participants, and all references in this Agreement to
distributions, notices, reports and statements to Certificateholders
shall, with respect to the Book-Entry Certificates, refer to
distributions, notices, reports and statements to the Clearing Agency or
its nominee, as registered holder of the Book-Entry Certificates, as the
case may be, for the distribution to Beneficial Owners in accordance with
the procedures of the Clearing Agency; and
(v) the initial Clearing Agency will make book-entry transfers among
the Clearing Agency Participants and receive and transmit distributions of
principal and interest on the Certificates to the Clearing Agency
Participants, for distribution by such Clearing Agency Participants to the
Beneficial Owners or their nominees.
For purposes of any provision of this Agreement requiring or permitting
actions with the consent of, or at the direction of, Holders of Book-Entry
Certificates evidencing specified voting interests, such direction or consent
shall be given by Beneficial Owners having the requisite percentage interests.
Unless and until Definitive Certificates have been issued to Beneficial
Owners pursuant to Section 5.06, copies of the reports or statements referred to
in Section 4.07 shall be available to Beneficial Owners upon written request to
the Certificate Administrator at ▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇.
Section 5.02 Registration of Transfer and Exchange of Certificates.
The Depositor shall maintain or cause to be maintained in accordance with
the provisions of Section 6.05 a Certificate Register in which, subject to such
reasonable regulations as it may prescribe, the Depositor shall provide for the
registration of Certificates and of transfers and exchanges of Certificates as
herein provided.
Upon surrender for registration of transfer of any Certificate at the
office or agency of the Certificate Registrar, the Depositor shall execute and
the Authenticating Agent shall authenticate and deliver, in the name of the
designated transferee or transferee, one or more new Certificates in authorized
denominations of the same aggregate initial Principal Balance or the same
aggregate Percentage Interest, as the case may be.
At the option of the Certificateholder, Certificates may be exchanged for
other Certificates of authorized denominations evidencing the same aggregate
initial Principal Balance or the same aggregate Percentage Interest, as the case
may be, upon surrender of the Certificates to be exchanged at any such office or
agency. Whenever any Certificates are so surrendered for exchange, the Depositor
shall execute and the Authenticating Agent shall authenticate and deliver the
Certificates which 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 Depositor and the Certificate Registrar duly executed by the
Holder thereof or his attorney duly authorized in writing. Signatures must be
guaranteed by an eligible guarantor institution meeting the requirements of the
Certificate Registrar, which requirements include membership or participation in
the Security Transfer Agent Medallion Program ("STAMP") or such other signature
guarantee program as may be determined by the Certificate Registrar in addition
to, or in substitution for, STAMP, all in accordance with the Securities
Exchange Act of 1934, as amended. Notwithstanding the foregoing, no transfer or
exchange of any Certificate shall be made by the Certificate Registrar or
Authenticating Agent unless the Certificateholder making the exchange has
complied with the provisions of this Agreement, the respective Certificate and
applicable securities laws.
No service charge shall be made for any registration of transfer or
exchange of the Certificates, but the Certificate Registrar may require payment
of a sum sufficient to cover any tax or governmental charge that may be imposed
in connection with any transfer or exchange of Certificates.
All Certificates surrendered for registration of transfer and exchange
shall be canceled and, subject to any record retention requirements of the
Exchange Act, subsequently destroyed by the Certificate Registrar.
The Depositor will cause the Certificate Registrar to provide to the
Trustee and the Paying Agent, if the Paying Agent is not the Certificate
Registrar, not later than the third Business Day next preceding each
Distribution Date, the names and addresses of the Certificateholders as of the
Record Date and the aggregate Principal Balance or Percentage Interest held of
record by each of them.
Notwithstanding the foregoing, no legal or beneficial interest in all or
any portion of a Residual Certificate may be transferred, directly or
indirectly, to a "disqualified organization" within the meaning of Code Section
860E(e)(5), or to an agent of a disqualified organization (including a broker,
nominee, or other middleman) (an "Agent") and any such purported transfer shall
be void and of no effect. Further, no legal or beneficial interest in all or any
portion of a Residual Certificate may be registered in the name of a Plan or a
Person investing the assets of a Plan (such Plan or Person an "ERISA Prohibited
Holder") or in the name of a person that is not (i) a U.S. Person (other a U.S.
Person with respect to whom income is attributable to a foreign permanent
establishment or fixed base (within the meaning of an applicable income tax
treaty) of such person or any other U.S. Person) or (ii) a non-U.S. Person that
holds the Residual Certificate in connection with the conduct of a trade or
business within the United States and has furnished the transferor and the
Certificate Registrar with an effective Internal Revenue Service Form W-8ECI or
(iii) a non-U.S. Person that has delivered to the transferor and the Certificate
Registrar an opinion of a nationally recognized tax counsel to the effect that
the transfer of the Residual Certificate to it is in accordance with the
requirements of the Code and the regulations promulgated thereunder and that
such transfer of the Residual Certificate will not be disregarded for federal
income tax purposes (any such person who is not described in clauses (i), (ii)
or (iii) above being referred to herein as a "Non-permitted Foreign Holder").
The Depositor shall not execute and the Authenticating Agent shall not
authenticate and deliver, a new Residual Certificate in connection with any
transfer of a Residual Certificate, and the Depositor and the Certificate
Registrar shall not accept a surrender for transfer or registration of transfer,
or register the transfer of, any Residual Certificate unless the transferor
shall have provided to the Depositor and the Certificate Registrar an affidavit,
substantially in the form marked as Appendix 1 hereto, signed by the transferee,
to the effect that the transferee is not such a disqualified organization, an
agent for any entity as to which the transferee has not received a substantially
similar affidavit, an ERISA Prohibited Holder or a Non-permitted Foreign Holder,
accompanied by a written statement signed by the transferor to the effect that,
as of the time of the transfer, the transferor has no actual knowledge that such
affidavit is false. Upon notice by the Depositor that any legal or beneficial
interest in any portion of a Residual Certificate has been transferred, directly
or indirectly, to a disqualified organization or an Agent in contravention of
the foregoing restrictions, the Trustee shall furnish to the Internal Revenue
Service and the transferor of such Residual Certificate or to such Agent, within
60 days of the request therefor by such transferor or such Agent, and the
Depositor agrees to provide the Trustee with, the computation of such
information necessary to the application of Code Section 860E(e) as may be
required by the Code, including but not limited to the present value of the
total anticipated excess inclusions with respect to such Residual Certificate
(or portion thereof) for periods after such transfer. At the election of the
Depositor, the reasonable cost of computing and furnishing such information may
be charged to the transferor or such Agent; however, the Trustee and the
Depositor shall in no event be excused from furnishing such information. Every
Holder of a Residual Certificate shall be deemed to have consented to such
amendments to the Pooling Agreement as may be required to further effectuate the
restrictions on transfer of Residual Certificates to a disqualified
organization, an Agent, an ERISA Prohibited Holder or a Non-permitted Foreign
Holder.
The affidavit described in the preceding paragraph shall also contain the
statement of the transferee that it (i) has historically paid its debts as they
have come due and intends to do so in the future, (ii) understands that it may
incur liabilities in excess of cash flows generated by the Residual Certificate,
(iii) intends to pay taxes associated with holding the Residual Certificate as
they become due, (iv) will not cause income from the Residual Certificate to be
attributable to a foreign permanent establishment or fixed base (within the
meaning of an applicable income tax treaty) of such transferee or any other U.S.
Person and (v) will not transfer the Residual Certificate to any person or
entity that does not provide a similar affidavit. The transferor's statement to
the Certificate Registrar accompanying the affidavit shall state that the
transferor has no knowledge or reason to know that the statements made by the
transferee with respect to clauses (i) and (iii) of the preceding sentence are
false. Each Residual Certificate shall bear a legend referring to the
restrictions contained in this paragraph and the preceding paragraph.
No transfer of any Private Certificate may be made unless such transfer is
made pursuant to an effective registration statement under the Act and
applicable state securities laws, or an exemption from the Act and applicable
state securities laws is available. Upon surrender for registration of transfer
of any Private Certificate in reliance on such an exemption, (1) the Certificate
Registrar shall not accept surrender for transfer or registration of transfer
of, or register the transfer of, any Private Certificate and (2) the Depositor
shall not execute, and the Authenticating Agent shall not authenticate and
deliver, any new Private Certificate in connection with the transfer of any
Private Certificate, unless the transferee delivers to the Depositor, the
Certificate Registrar a letter substantially to the effect set forth in Exhibit
C to this Agreement and (x) if such transferee is not a "Qualified Institutional
Buyer" within the meaning of Rule 144A of the Act, and if so requested by the
Depositor, in its sole discretion, an opinion of counsel acceptable to the
Depositor shall have been delivered to it, the Certificate Registrar to the
effect that such transfer may be made pursuant to an exemption from the Act; or
(y) if such transfer is to a non-institutional investor, unless such investor is
an accredited investor (as defined in Regulation D under the Act) and has a net
worth (exclusive of primary residence) of at least $1,000,000 as confirmed in
writing to the Certificate Registrar and the Trustee.
No transfer of an ERISA Restricted Certificate may be made unless any
proposed transferee (i) executes a representation letter in substantially the
form of Exhibit D hereto and in substance satisfactory to the Certificate
Registrar, and the Depositor stating that it is not, and is not acting on behalf
of, any employee benefit plan subject to Title I of ERISA or Section 4975 of the
Code, or a governmental plan, as defined in Section 3(32) of ERISA, subject to
any federal, state or local law ("Similar Law") which is, to a material extent,
similar to the foregoing provisions of ERISA or the Code (collectively, a
"Plan") or using the assets of any such Plan to effect such purchase or (ii)
provides (A) an opinion of counsel in form and substance satisfactory to the
Certificate Registrar, the Servicer and the Depositor that the purchase or
holding of such ERISA Restricted Certificate by or on behalf of such Plan will
not result in the assets of the Trust being deemed to be "plan assets" and
subject to the prohibited transaction provisions of ERISA and the Code or
Similar Law and will not subject the Servicer, the Depositor, the Certificate
Registrar or the Trustee to any obligation in addition to those undertaken in
this Agreement and (B) such other opinions of counsel, officers' certificates
and agreements as the Servicer, the Depositor or the Certificate Registrar may
require in connection with such transfer.
For purposes of clause (i) of the preceding paragraph, such representation
shall be deemed to have been made to the Servicer, the Depositor and the
Certificate Registrar by the transferee's acceptance of an ERISA Restricted
Certificate (or the acceptance by a Beneficial Owner of the beneficial interest
in any such Class of ERISA Restricted Certificates) unless the Servicer, the
Depositor and the Certificate Registrar shall have received from the transferee
an alternative representation acceptable in form and substance to them.
Notwithstanding anything else to the contrary herein, any purported transfer of
an ERISA Restricted Certificate to or on behalf of a Plan without the delivery
to the Servicer, the Depositor and the Certificate Registrar of an Opinion of
Counsel satisfactory to them as described above shall be void and of no effect;
provided, however, that the restriction set forth in this sentence shall not be
applicable if there has been delivered to the Servicer, the Depositor and the
Certificate Registrar an Opinion of Counsel satisfactory to them to the effect
that the purchase or holding of an ERISA Restricted Certificate will not result
in a prohibited transaction under ERISA or the Code and will not subject the
Depositor, the Servicer, the Certificate Registrar or the Trustee to any
obligation in addition to those expressly undertaken in this Agreement. The
Servicer, the Certificate Registrar, the Depositor and the Trustee shall be
under no liability to any Person for any registration of transfer of any ERISA
Restricted Certificate that is in fact not permitted by this Section 5.02 or for
making any payments due on such Certificate to the Holder thereof or taking any
other action with respect to such Holder under the provisions of this Agreement
so long as the transfer was registered by the Certificate Registrar in
accordance with the foregoing requirements. Each of the Servicer and the Trustee
shall be entitled, but not obligated, to recover from any Holder of any ERISA
Restricted Certificate that was in fact a Plan or a Person acting on behalf of a
Plan at the time it became a Holder or, at such subsequent time as it became a
Plan or Person acting on behalf of a Plan, all payments made on such ERISA
Restricted Certificate at and after either such time. Any such payments so
recovered shall be paid and delivered by the Trustee or a Paying Agent to the
last preceding Holder of such Certificate that is not a Plan or Person acting on
behalf of a Plan.
Section 5.03 Mutilated, Destroyed, Lost or Stolen Certificates.
If (a) any mutilated Certificate is surrendered to the Certificate
Registrar or the Certificate Registrar receives evidence to its satisfaction of
the destruction, loss or theft of any Certificate and (b) there is delivered to
the Depositor, the Certificate Registrar and 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 Certificate Registrar or the Trustee that such
Certificate has been acquired by a bona fide purchaser, the Depositor shall
execute and the Authenticating Agent shall authenticate and deliver, in exchange
for or in lieu of such mutilated, destroyed, lost or stolen Certificate, a new
Certificate of like tenor and Initial Principal Balance, initial notional amount
or Percentage Interest. In connection with the issuance of any new Certificate
under this Section 5.03, the Certificate Registrar 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 the Certificate Registrar) connected therewith. Any duplicate
Certificate issued pursuant to this Section 5.03 shall constitute complete and
indefeasible evidence of ownership in the Trust Fund, as if originally issued on
the Issue Date, whether or not the lost, stolen or destroyed Certificate shall
be found at any time.
Section 5.04 Persons Deemed Owners.
Prior to due presentation of a Certificate for registration of transfer,
the Depositor, the Paying Agent, the Trustee, the Certificate Registrar, the
Certificate Administrator and any agent of any of them may treat the Person in
whose name such Certificate is registered as the owner of such Certificate for
the purpose of receiving distributions and for all other purposes whatsoever,
and none of the Depositor, the Paying Agent, the Trustee, the Certificate
Registrar, the Certificate Administrator or any agent of any of them shall be
affected by any notice to the contrary.
Section 5.05 Access to List of Certificateholders' Names and Addresses.
If the Trustee is not the Certificate Registrar and at any time requests
the Depositor or the Certificate Registrar in writing to provide a list of the
names and addresses of Certificateholders, the Depositor will furnish or (if the
Certificate Registrar is not the Depositor) cause the Certificate Registrar to
furnish to the Trustee, within five Business Days after receipt of a request,
such list as of the most recent Record Date, in such form as the Trustee may
reasonably require. If three or more Certificateholders (i) request such
information in writing from the Trustee, (ii) state that such Certificateholders
desire to communicate with other Certificateholders with respect to their rights
under this Agreement or under the Certificates and (iii) provide a copy of the
communication which such Certificateholders propose to transmit, then the
Trustee shall, within five Business Days after the receipt of such request,
afford such Certificateholders access during normal business hours to the most
recent list held by the Trustee. If such list is as of a date more than 90 days
prior to the date of receipt of such Certificateholders' request, the Trustee
shall promptly request from the Depositor or the Certificate Registrar a current
list and shall afford such Certificateholders access to such list promptly upon
its receipt by the Trustee. Every Certificateholder, by receiving and holding a
Certificate, agrees that none of the Depositor, the Certificate Registrar or the
Trustee shall be held accountable by reason of the disclosure of any such
information as to the list of the Certificateholders hereunder, regardless of
the source from which such information was derived.
Section 5.06 Definitive Certificates.
If (A) the Clearing Agency advises the Trustee, the Certificate Registrar
or the Depositor in writing that the Clearing Agency is no longer willing or
able properly to discharge its responsibilities as depository with respect to
the Book-Entry Certificates, and (B) the Depositor is unable to locate a
qualified successor, the Certificate Registrar shall notify the Beneficial
Owners, through the Clearing Agency, of the occurrence of any such event and of
the availability of Definitive Certificates to Beneficial Owners requesting the
same. Upon surrender to the Certificate Registrar by the Clearing Agency of the
Certificates held of record by its nominee, accompanied by re-registration
instructions and directions to authenticate new Certificates from the Depositor,
the Depositor shall execute and the Trustee or the Authenticating Agent shall
authenticate Definitive Certificates for delivery. The Depositor shall arrange
for, and will bear all costs of, the printing and issuance of such Definitive
Certificates. None of the Depositor, the Servicer, the Certificate Registrar,
the Authenticating Agent or the Trustee shall be liable for any delay in
delivery of such instructions by the Clearing Agency and may conclusively rely
on, and shall be protected in relying on, such instructions.
Section 5.07 Notices to Clearing Agency.
Whenever notice or other communication to the Holders of Book-Entry
Certificates is required under this Agreement, unless and until Definitive
Certificates shall have been issued to Beneficial Owners pursuant to Section
5.06, the Trustee shall have all such notices and communications specified
herein to be given to Holders of Book-Entry Certificates to the Clearing Agency.
ARTICLE VI
CRMSI AND THE SERVICER
Section 6.01 Liability.
CRMSI and the Servicer shall be liable in accordance herewith only to the
extent of the respective obligations specifically undertaken by them herein.
Section 6.02 Merger or Consolidation, or Assumption of Obligations.
Any corporation into which CRMSI may be merged or consolidated, or any
corporation resulting from any merger, conversion or consolidation to which
CRMSI shall be a party, or any corporation succeeding to the business of CRMSI,
or any corporation, more than 50% of the voting stock of which is, directly or
indirectly, owned by Citigroup, which executes an agreement of assumption to
perform every obligation of CRMSI hereunder, shall be the successor of CRMSI
hereunder, without the execution or filing of any paper or any further act on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding; provided, that in the event that any such successor corporation
executes such agreement of assumption, CRMSI shall not thereby be released from
any of its obligations or liabilities hereunder.
Any corporation into which the Servicer may be merged or consolidated, or
any corporation resulting from any merger, conversion or consolidation to which
the Servicer shall be a party, or any corporation succeeding to the business of
the Servicer, or any corporation, more than 50% of the voting stock of which is,
directly or indirectly, owned by Citigroup Inc., which executes an agreement of
assumption to perform every obligation of the Servicer hereunder, shall be the
successor of the Servicer hereunder, without the execution or filing of any
paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding; provided, that in the event that any
such successor corporation executes such agreement of assumption, the Servicer
shall not thereby be released from any of its obligations or liabilities
hereunder.
Section 6.03 Limitation on Liability.
None of CRMSI, the Servicer or any of their respective directors,
officers, employees and agents 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 pursuant to this Agreement, or for errors in judgment, provided,
however, that none of CRMSI, the Servicer or any such person will be protected
against any liability which would otherwise be imposed by reason of willful
misfeasance, bad faith or gross negligence in the performance of duties or by
reason of reckless disregard of obligations and duties hereunder. CRMSI, the
Servicer and any director or officer or employee or agent of either of them 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. CRMSI, the
Servicer and any of their respective directors, officers, employees or agents
shall be indemnified and held harmless by the Trust Fund against any loss,
liability or expense incurred in connection with any suit in equity, action at
law or other proceedings relating to this Agreement or the Certificates, other
than any loss, liability or expense incurred by reason of willful misfeasance,
bad faith or gross negligence in the performance of duties hereunder or reckless
disregard of obligations and duties hereunder. The Servicer shall not be under
any obligation to appear in, prosecute or defend any legal action which is not
incidental to its duties to service the Mortgage Loans in accordance with this
Agreement and which in its respective opinion may involve it in any expense or
liability, provided, however, that the Servicer may in its sole discretion
undertake any such action which 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 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 Servicer shall be entitled to be
reimbursed therefor out of the Collection Account.
Section 6.04 Servicer Not to Resign.
Subject to the provisions of Sections 6.02 and 6.06, the Servicer shall
not resign from the obligations and duties hereby imposed on it without the
consent of the Trustee and the Holders of the Required Amount of Certificates,
except upon a determination that the performance of its duties hereunder is no
longer permissible under applicable law or are in material conflict by reason of
applicable law with any other activities carried on by it, such other activities
being of a type and nature carried on by the Servicer at the date hereof. 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 resignation
by the Servicer shall become effective until the Trustee or a successor servicer
shall have assumed the responsibilities and obligations of the Servicer in
accordance with Section 7.01.
Section 6.05 Maintenance of Office or Agency.
CRMSI shall maintain or cause to be maintained at its expense an office or
offices or agency or agencies where the Certificates may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
CRMSI in respect of the Certificates and this Agreement may be served. CRMSI
initially appoints the Certificate Registrar designated in Article XII as its
office for purposes of receipt of notices and demands. CRMSI will give prompt
written notice to the Trustee and to the Certificateholders of any change in the
location of the Certificate Registrar or any such office or agency.
Section 6.06 Delegation of Duties.
In addition to arrangements pursuant to Section 3.03, so long as CMI is
the Servicer and/or Certificate Administrator, CMI may at any time without
notice or consent delegate any duties hereunder to any entity, including an
entity more than 50% of the stock of which is owned, directly or indirectly, by
Citigroup; provided that such entity has been approved as a seller/servicer by
▇▇▇▇▇▇ ▇▇▇ or FHLMC. Such delegation shall not, however, relieve CMI of its
responsibility with respect to such duties.
ARTICLE VII
SERVICER DEFAULT; RESIGNATION
Section 7.01 Servicing Events of Default.
(a) If any one of the following events ("Servicing Events of Default")
shall occur and be continuing:
(i) Any failure by the Servicer, if the Servicer is the Paying
Agent, to distribute to Certificateholders any payment required under the
terms of this Agreement or, if the Servicer is not the Paying Agent, to
pay over or to cause to be paid over to the Paying Agent for such
distribution, any payment so required or to remit to the Paying Agent for
deposit in the Certificate Account any payment required to be made under
the terms of this Agreement (including any payment required to be made by
the Servicer pursuant to Section 3.08) which failure continues unremedied
for a period of (A) ten Business Days after the date on which written
notice of such failure shall have been given to the Servicer by or on
behalf of the Trustee, or to the Servicer and the Trustee by the Holders
of the Required Amount of Certificates, if the Servicer falls to
distribute or remit the full amount of a required payment as the result of
an error in calculating the amount of such required payment or (B) three
Business Days after written notice of such failure shall have been given
to the Servicer as provided above if the Servicer falls to distribute or
remit the full amount of a required payment for any reason other than as a
result of an error in calculation; or
(ii) Failure on the part of the Servicer duly to observe or perform
in any material respect any of its covenants or agreements set forth in
this Agreement, which failure (A) materially adversely affects the rights
of the Certificateholders and (B) continues unremedied for a period of 60
Business 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 or on behalf of the Trustee, or to the Servicer and the Trustee by the
Holders of the Required Amount of Certificates; or
(iii) The entry of a decree or order by a court or agency or
supervisory authority having jurisdiction in the premises for the
appointment of a conservator, receiver or liquidator for the Servicer in
any insolvency, readjustment of debt, marshaling of assets and liabilities
or similar proceedings, or for the winding up or liquidation of its
affairs, and the continuance of any such decree or order unstayed and in
effect for a period of 60 consecutive days; or
(iv) The Servicer shall consent to the appointment of a conservator
or receiver or liquidator in any insolvency, readjustment of debt,
marshaling of assets and liabilities or similar proceedings of or relating
to the Servicer or of or relating to substantially all of its property, or
the Servicer shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for
the benefit of its creditors, or voluntarily suspend payment of its
obligations; or
(v) The occurrence of any other event specified in Section 14.02 as
a Servicing Event of Default;
then the Trustee, acting upon the instructions of the Required Amount of
Certificates, may remove the Servicer as such under this Agreement. The Servicer
shall continue to act as servicer under this Agreement for a period commencing
on the date on which such Servicing Event of Default occurred and ending on the
last day of the calendar quarter in which such Servicing Event of Default
occurred, unless prior to the end of such period a successor Servicer shall have
been appointed pursuant to this Section 7.01 or the Trustee shall have notified
the Servicer of the Trustee's election to assume the Servicer's servicing
responsibilities and obligations at an earlier date.
(b) Each party agrees to use its best efforts to inform the Trustee of any
materially adverse information regarding the Servicer's servicing activities
that comes to the attention of such party from time to time.
(c) [Reserved].
(d) No removal or resignation of the Servicer shall become effective until
the Trustee or a successor Servicer shall have assumed the Servicer's
responsibilities and obligations in accordance with this Section.
(e) Upon removal or resignation of the Servicer, the Servicer at its own
expense also shall promptly deliver or cause to be delivered to a successor
servicer or the Trustee all the books and records (including, without
limitation, records kept in electronic form) that the Servicer has maintained
for the Mortgage Loans, including all tax bills, assessment notices, insurance
premium notices and all other documents as well as all original documents then
in the Servicer's possession.
(f) Any collections then being held by the Servicer prior to its removal
or resignation and any collections received by the Servicer thereafter shall be
endorsed by it to the Trustee and remitted directly and immediately to the
Trustee or the successor Servicer.
(g) Upon removal or resignation of the Servicer, the Trustee may (A)
solicit bids for a successor servicer as described below or (B) assume the
servicing responsibilities and obligations hereunder as Servicer. If the Trustee
elects to solicit bids for a successor Servicer, the Trustee agrees to act as
Servicer during the solicitation process and shall assume all duties of the
Servicer (except as otherwise provided in this Agreement). The Trustee shall, if
it is unable to obtain a qualifying bid and is prevented by law from acting as
Servicer, appoint, or petition a court of competent jurisdiction to appoint, any
housing and home finance institution, bank or mortgage servicing institution
which has been designated as an approved seller-servicer by ▇▇▇▇▇▇ Mae or FHLMC
for first and second mortgage loans and having equity of not less than
$5,000,000, as determined in accordance with generally accepted accounting
principles, as the successor to the Servicer in the assumption of all or any
part of the responsibilities, duties or liabilities of the Servicer hereunder.
The compensation of any successor Servicer (other than the Trustee as successor
Servicer) so appointed shall be the amount agreed to between the successor
Servicer and the Trustee (up to a maximum equal to the Servicing Fee) together
with the other servicing compensation provided in Section 3.13; provided, that
if the Trustee becomes the successor Servicer it shall receive as its
compensation the same compensation paid to the Servicer immediately prior to the
Servicer's removal or resignation.
(h) In the event the Trustee elects to solicit bids as provided above, the
Trustee shall solicit, by public announcement, bids from housing and home
finance institutions, banks and mortgage servicing institutions meeting the
qualifications set forth above. Such public announcement shall specify that the
successor Servicer shall be entitled to servicing compensation in accordance
with subsection (g) above. Within thirty days after any such public
announcement, the Trustee shall negotiate and effect the transfer and assignment
of the servicing rights and responsibilities hereunder to the qualified party
submitting the highest satisfactory bid as to the price it will pay to obtain
servicing. The Trustee shall deduct from any sum received from the successor
Servicer in respect of such sale, transfer and assignment all costs and expenses
of any public announcement and of any sale, transfer and assignment of the
servicing rights and responsibilities hereunder. After such deductions, the
remainder of such sum less any amounts due the Trustee or the Trust from the
Servicer shall be paid by the Trustee to the Servicer at the time of such sale,
transfer and assignment to the Servicer's successor.
(i) The Trustee and such successor Servicer shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession, including the notification to all Mortgagors and each Rating Agency
of the transfer of servicing. The Servicer agrees to cooperate with the Trustee
and any successor Servicer in effecting the termination of the Servicer's
servicing responsibilities and rights and shall promptly provide the Trustee or
such successor Servicer, as applicable, all documents and records reasonably
requested by it to enable it to assume the Servicer's functions and shall
promptly transfer to the Trustee or such successor Servicer, as applicable, all
amounts which then have been or should have been deposited in the Collection
Account by the Servicer or which are thereafter received with respect to the
Mortgage Loans. Neither the Trustee nor any other successor Servicer shall be
held liable by reason of any failure to make, or any delay in making, any
distribution hereunder or any portion thereof caused by (i) the failure of the
Servicer to deliver, or any delay in delivering, cash, documents or records to
it, or (ii) restrictions imposed by any regulatory authority having jurisdiction
over the Servicer. If the Servicer resigns or is removed, the Servicer agrees to
reimburse the Trust, the Trustee and the Holders for the costs and expenses
associated with the transfer of servicing to the successor Servicer.
(j) The Trustee or other successor Servicer, upon assuming the duties of
Servicer, shall (i) unless each Rating Agency has confirmed that recordation is
not required, record all assignments of Mortgage Loans not previously recorded
in the name of the Trustee and (ii) make all Delinquency Advances, Bi-Weekly
Interest Advances, Simple Interest Advances and Compensating Interest payments
and deposit them to the Collection Account which the Servicer has theretofore
failed to remit with respect to the Mortgage Loans; provided, however, that the
Trustee or such successor Servicer shall be required to make Delinquency
Advances, Bi-Weekly Interest Advances and Simple Interest Advances (including
Delinquency Advances, Bi-Weekly Interest Advances and Simple Interest Advances
described in this subsection (j)) only if, in its good faith judgment, such
Delinquency Advances, Bi-Weekly Interest Advances and/or Simple Interest
Advances will ultimately be recoverable from the Mortgage Loans.
(k) The Trustee shall give notice to the Holders, the Depositor and each
Rating Agency of the occurrence of any event described in subsection (a) above
of which the Trustee has knowledge.
ARTICLE VIII
THE TRUSTEE
Section 8.01 Duties of the Trustee.
The Trustee, prior to the occurrence of a Servicing Event of Default and
after the curing of all Servicing Events of Default which may have occurred,
undertakes to perform such duties and only such duties as are specifically set
forth in this Agreement. If a Servicing Event of Default has occurred (which has
not been cured), the Trustee shall exercise such of the rights and powers vested
in it by this Agreement, and use the same degree of care and skill in their
exercise, as a prudent man would exercise or use under the circumstances in the
conduct of his own affairs.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to it which
are specifically required to be furnished pursuant to any provision of this
Agreement, shall examine them to determine whether they conform to the
requirements of this Agreement. The Trustee shall not be responsible for the
accuracy or content of any such instrument furnished by the Servicer or the
Depositor. If any such instrument is found not to confirm in any material
respect to the requirements of this Agreement, the Trustee shall request a
satisfactorily corrected instrument.
No provision of this Agreement shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act or
its own misconduct; provided, however, that:
(a) Prior to the occurrence of a Servicing Event of Default, and after the
curing of all Servicing Events of Default which may have occurred, the duties
and obligations of the Trustee shall be determined solely by the express
provisions of this Agreement, the Trustee shall not be liable except for the
performance of such duties and obligations as are specifically set forth in this
Agreement, no implied covenants or obligations shall be read into this Agreement
against the Trustee and, in the absence of bad faith on the part of the Trustee,
the Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates, statements
or opinions furnished to the Trustee and conforming to the requirements of this
Agreement;
(b) The Trustee shall not be personally liable for an error of judgment
made in good faith by a Responsible Officer of the Trustee, unless it shall be
proved that the Trustee was negligent in ascertaining the pertinent facts;
(c) The Trustee shall not be personally liable with respect to any action
taken, suffered or omitted to be taken by it in good faith in accordance with
the direction of the Holders of the Required Amount of Certificates 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;
(d) The Trustee shall not be charged with knowledge of any default (other
than a default in payment to the Trustee) or a Servicing Event of Default unless
a Responsible Officer of the Trustee obtains actual knowledge of such failure or
the Trustee receives written notice of such failure at its Corporate Trust
Office from the Depositor, the Servicer or the Holders of the Required Amount of
Certificates;
(e) The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it, and
nothing in this Agreement shall in any event require the Trustee to perform, or
be responsible for the manner of performance of, any of the obligations of the
Servicer under this Agreement, except during such time, if any, as the Trustee
shall be the successor to, and be vested with the rights, duties, powers and
privileges of, the Servicer in accordance with the terms of this Agreement; and
(f) Except as specifically required by this Agreement, and without
limiting the generality of this Section 8.01, the Trustee shall have no duty to
see to (A) any recording, filing, or depositing of this Agreement or any
agreement referred to herein or any financing statement or continuation
statement, or to see to the maintenance of any thereof or to any refiling,
rerecording or redepositing of any thereof, (B) any insurance, or (C) the
payment or discharge of any tax, assessment or other governmental charge or any
lien or encumbrance owing with respect to, assessed or levied against, any part
of the Trust Fund other than from funds available in the Certificate Account.
Section 8.02 Certain Matters Affecting the Trustee.
Except as otherwise provided in Section 8.01:
(a) The Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, Officer's Certificate, certificate of auditors
or any other certificate, statement, instruments, 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;
(b) The Trustee may consult with counsel and any written advice or Opinion
of Counsel shall be full and complete authorization and protection in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
accordance with such written advice or Opinion of Counsel;
(c) Whenever in the administration of this Agreement the Trustee or its
agent shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, including any action by the
Trustee pursuant to Section 10.01, the Trustee or its agent (unless other
evidence be herein specifically prescribed) may request and, in the absence of
bad faith on its part, rely upon any Officer's Certificate;
(d) The Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Agreement, or to institute, conduct or defend any
litigation hereunder or in relation hereto, at the request, order or direction
of any of the Certificateholders, pursuant to the provisions of this Agreement,
unless such Certificateholders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities which may be
incurred therein or thereby; nothing herein shall, however, relieve the Trustee
of the obligations, upon the occurrence of a Servicing Event of Default (which
has not been cured), to exercise such of the rights and powers vested in it by
this Agreement, and to use the same degree of care and skill in their exercise
as a prudent man would exercise or use under the circumstances in the conduct of
his own affairs;
(e) The Trustee shall not be personally liable for any action taken,
suffered or omitted by it in good faith and believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this Agreement;
(f) Prior to the occurrence of a Servicing Event of Default and after the
curing of all Servicing Events of Default which may have occurred, the Trustee
shall not be bound to make any investigation into the facts or matters stated in
any resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, approval, bond or other paper or document, unless
requested in writing so to do by the Holders of the Required Amount of
Certificates; provided, however, that if the payment within a reasonable time to
the Trustee of the costs, expenses or liabilities likely to be incurred by it in
the making of such investigation is, in the opinion of the Trustee, not
reasonably assured to the Trustee by the security afforded to it by the terms of
this Agreement, the Trustee may require reasonable security or indemnity from
such Holders against such cost, expense or liability as a condition to such
investigation. Nothing in this subsection (f) shall derogate the obligation of
the Servicer to observe any applicable law prohibiting disclosure of information
regarding the Mortgagors;
(g) The Trustee may appoint agents (which may include the Depositor and
its Affiliates) to perform any of the responsibilities of the Trustee, which
agents shall have any or all of the rights, powers, duties and obligations of
the Trustee conferred on them by such appointment, provided that the Trustee
shall continue to be responsible for its duties and obligations under this
Agreement, but the Trustee will not be responsible for any negligence or
misconduct on the part of any agent appointed by the Trustee with due care. For
the avoidance of doubt, the Trustee is expressly authorized and directed to
approve the designation of each Custodian, Paying Agent, Certificate Registrar
and Authenticating Agent specified in Article XII, and such designated functions
shall be the responsibility of such specified party, and the Trustee shall not
be responsible therefore, notwithstanding the proviso in the preceding sentence.
Section 8.03 Trustee Not Liable for Certificates or Mortgage Loans.
The recitals contained herein and in the Certificates (other than the
certificate of authentication on the Certificates) shall be taken as the
statements of CRMSI and the Trustee assumes no responsibility for the
correctness of the same. The Trustee makes no representations as to the validity
or sufficiency of this Agreement, the Mortgage File Custodial Agreement or of
the Certificates (other than the certificate of authentication on the
Certificates) or of any Mortgage Loan or related document. The Trustee shall not
be accountable for the use or application by CRMSI of any of the Certificates or
of the proceeds of such Certificates or for the use or application of any funds
paid to the Servicer in respect of the Mortgage Loans or deposited in or
withdrawn from the Collection Account or Escrow Account. The Trustee shall have
no liability for any losses incurred as a result of (i) any failure of the Trust
Fund to qualify as the specified separate Constituent REMICs, (ii) any
termination, inadvertent or otherwise, of the status of the Trust Fund as the
specified separate Constituent REMICs, (iii) any tax on prohibited transactions
imposed by Code Section 860F(a)(1), (iv) any tax on net income from foreclosure
property imposed by Code Section 860G(c), (v) any tax on contributions to any
Constituent REMIC after the Startup Day imposed by Code Section 860G(d) or (vi)
any erroneous calculation or determination or any act or omission of the
Servicer hereunder; provided, that the Trustee shall not be excused hereby from
liability for its own negligence, bad faith or failure to perform its duties as
specified herein.
Section 8.04 Trustee May Own Certificates.
The Trustee in its individual or any other capacity may become the owner
or pledgee of one or more of the Certificates with the same rights as it would
have if it were not Trustee and may otherwise deal with the Depositor and its
Affiliates as if it were not the Trustee.
Section 8.05 Fees and Expenses Paid by Servicer.
The Trustee's fees and expenses (and those of any co-trustee appointed
pursuant to Section 8.10, any Certificate Registrar, any Custodian, Depository,
Paying Agent, any Authenticating Agent appointed pursuant to Section 8.12 and
any agent of the Trustee appointed pursuant to Section 8.02(g)) shall be paid by
the Servicer. The Trustee (and any co-trustee) shall be entitled to reasonable
compensation (which shall not be limited by any provision of law regarding the
compensation of a trustee of an express trust) for all services rendered by it
in execution of the trusts hereby created and in the exercise and performance of
the Trustee's powers and duties hereunder, and upon notice to the Servicer, the
Trustee, the Paying Agent, the Certificate Registrar and the Authenticating
Agent will be reimbursed for all reasonable expenses and disbursements incurred
by the Trustee, the Paying Agent, the Certificate Registrar or the
Authenticating Agent, as the case may be, in accordance with the provisions of
this Agreement (including the reasonable compensation, disbursements and
expenses of its counsel and all persons not regularly in its employ), except any
such expense or disbursement as may arise from its negligence or bad faith or
which is covered by any undertaking by Certificateholders pursuant to 8.02(d) or
(f) or, if applicable, Section 8.01(e). The Trustee, the Certificate
Administrator, the Paying Agent, the Certificate Registrar, the Authenticating
Agent, the Custodian, each Depository and each director, officer or employee of
any of them shall be indemnified by the Servicer and held harmless against any
loss, liability or expense incurred or paid to third parties (other than
salaries paid to employees, and allocable overhead) in connection with its
acceptance and administration of its trusts hereunder or under the Certificates,
except any such expense, loss or liability as may arise from its negligence, bad
faith or willful misconduct or which is covered by any indemnity provided by the
Certificateholders pursuant to Section 8.02(d) or (f) or, if applicable, Section
8.01(e). The provisions of this Section 8.05 shall survive the termination of
this Agreement and the resignation or removal of CMI as Servicer (if such action
which caused the need for indemnification occurred while CMI acted as servicer)
and the resignation or removal of the Certificate Administrator, the Certificate
Registrar, the Paying Agent, the Authenticating Agent, the Custodian, any
Depository and the Trustee, as the case may be.
Section 8.06 Eligibility Requirements for Trustee.
The Trustee hereunder shall at all times be a corporation or a national
banking association, other than an Affiliate of the Depositor, organized and
doing business under the laws of the United States of America or any State
thereof, authorized under such laws to exercise corporate trust powers, having
its Corporate Trust Office in the State of New York or the Commonwealth of
Massachusetts, having a combined capital and surplus of at least $30,000,000 and
subject to supervision or examination by federal or state authority and having a
deposit rating in the category of at least "A" from each Rating Agency. If such
corporation or national banking 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 8.06,
the combined capital and surplus of such corporation or national banking
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 8.06, the Trustee shall resign immediately in the manner and with the
effect specified in Section 8.07.
Section 8.07 Resignation or Removal of Trustee.
The Trustee may at any time resign and be discharged from the trusts
hereby created by giving written notice thereof to the Depositor. Upon receiving
such notice of resignation, the Depositor shall promptly appoint a successor
Trustee by written instrument, in duplicate, one copy of which instrument shall
be delivered to the resigning Trustee and one copy to the successor Trustee. If
no successor Trustee shall have been so appointed and having accepted
appointment within 30 days after the giving of such notice of resignation, the
resigning Trustee may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If at any time the Trustee shall cease to be eligible in accordance with
Section 8.06 and shall fail to resign after written request therefor by the
Depositor, or if at any time the Trustee shall be legally unable to act, or
shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or of
its property shall be appointed, or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conversion or liquidation, then the Depositor may remove the
Trustee. If the Depositor removes the Trustee under the authority of the
preceding sentence, the Depositor shall promptly appoint a successor Trustee by
written instrument, in duplicate, one copy of which instrument shall be
delivered to the Trustee so removed and one copy to the successor Trustee.
The Trustee may also be removed at any time (i) by the Depositor, (a) if
the Trustee ceases to be eligible to continue as such under this Agreement or if
the Trustee becomes insolvent, (b) if the Trustee breaches any of its duties
under this Agreement, which breach materially adversely affects the
Certificateholders, (c) if through the performance or nonperformance of certain
actions by the Trustee, any rating assigned to the Certificates would be
reduced, qualified or withdrawn or (d) if the credit rating of the Trustee is
downgraded to a level which would result in any rating assigned to the
Certificates to be reduced, qualified or withdrawn; or (ii) by the Holders of
Certificates evidencing more than 50% of the Voting Interest of the Certificates
then Outstanding, more than 50% of the Percentage Interests of the Class CE
Certificates then Outstanding and more than 50% of the Percentage Interests of
the Residual Certificates then Outstanding.
Any resignation or removal of the Trustee and appointment of a successor
Trustee pursuant to any of the provisions of this Section 8.07 shall not become
effective until acceptance of appointment by the successor Trustee as provided
in Section 8.08.
Section 8.08 Successor Trustee.
Any successor Trustee appointed as provided in Section 8.07 shall execute,
acknowledge and deliver to the Depositor and to its predecessor Trustee an
instrument accepting such appointment hereunder, and thereupon the resignation
or removal of the predecessor Trustee shall become effective and such successor
Trustee, without any further act, deed or conveyance, shall become fully vested
with all the rights, powers, duties and obligations of its predecessor hereunder
with like effect as if originally named as Trustee. The predecessor Trustee
shall deliver to the successor Trustee all Mortgage Files and related documents
and statements held by it hereunder; and the predecessor Trustee shall amend the
Mortgage File Custodial Agreement to make the successor Trustee the successor to
the predecessor Trustee thereunder; and the Depositor and the predecessor
Trustee shall execute and deliver such instruments and do other such things as
may reasonably be required for fully and certainly vesting and confirming in the
successor Trustee all such rights, powers, duties and obligations. All costs
associated with the appointment of a successor Trustee shall be paid to the
Person that incurred them by the predecessor Trustee. Without limiting the
predecessor Trustee's obligation, if the predecessor Trustee fails to pay such
costs, such costs shall be reimbursed by the Trust; provided, however, that if
the predecessor Trustee has been terminated pursuant to the third paragraph of
Section 8.07, all reasonable expenses incurred in complying with this Section
8.08 shall be reimbursed by the Trust to the Person that incurred them.
No successor Trustee shall accept appointment as provided in this Section
8.08 unless (x) at the time of such acceptance such successor Trustee shall be
eligible under Section 8.06 and (y) each Rating Agency shall have provided
written acknowledgement to the Depositor that the ratings of the Certificates in
effect immediately prior to the appointment of such successor Trustee would not
be qualified, downgraded or withdrawn and the Certificates would not be placed
on credit review status (except for possible upgrading) as a result of such
appointment.
Upon acceptance of appointment by a successor Trustee as provided in this
Section 8.08, the Depositor shall mail notice of the succession of such Trustee
hereunder to all Holders of Certificates at their addresses as shown in the
Certificate Register. If the Depositor fails to mail such notice within 10 days
after acceptance of appointment by the successor Trustee, the successor Trustee
shall cause such notice to be mailed at the expense of the Depositor.
The predecessor Trustee and successor Trustee shall notify the Depositor
and the Servicer of any such appointment at least two Business Days prior to the
effective date thereof and shall provide the Servicer with all information
required by the Servicer to comply with the reporting obligation under Item 6.02
of Form 8-K with respect to the Trust not later than the effective date of such
appointment.
Section 8.09 Merger or Consolidation of Trustee.
Any corporation or national banking association into which the Trustee may
be merged or converted or with which it may be consolidated, or any corporation
or national banking association resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any corporation or
national banking association succeeding to all or substantially all of the
corporate trust business of the Trustee, shall be the successor of the Trustee
hereunder, provided such corporation or national banking association shall be
eligible under Section 8.06, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding; provided, however, that the Trustee and such surviving
Person shall notify the Depositor and the Servicer of any such merger,
conversion or consolidation and shall provide the Servicer with all information
required by the Servicer to comply with the reporting obligation under Item 6.02
of Form 8-K with respect to the Trust not later than the effective date of such
merger, conversion or consolidation.
Section 8.10 Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for
the purpose of meeting any legal requirements of any jurisdiction in which any
part of the Trust Fund or property securing any Mortgage Note may at the time be
located, the Depositor 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, and, subject to the other provisions of this Section 8.10, such powers,
duties, obligations, rights and trusts as the Depositor and the Trustee may
consider necessary and desirable. If the Depositor shall not have joined in such
appointment within 15 days after the receipt by it of a request so to do, or in
the case a Servicing Event of Default shall have occurred and be continuing, the
Trustee alone shall have the power to make such appointment. No co-trustee or
separate trustee hereunder shall be required to meet the terms of eligibility as
a successor trustee under Section 8.06 and no notice to the Certificateholders
of the appointment of any co-trustee or separate trustee shall be required under
Section 8.08.
Every separate trustee and co-trustee shall, to the extent permitted by
law and by the instrument appointing such separate trustee or co-trustee, be
appointed and act subject to the following provisions and conditions:
(a) All rights, powers, duties and obligations conferred or imposed upon
the Trustee shall be conferred or imposed upon and exercised or performed by the
Trustee and such separate trustee or co-trustee jointly (it being understood
that such separate trustee or co-trustee is not authorized to act separately
without the Trustee joining 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 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;
(b) No trustee hereunder shall be held personally liable by reason of any
act or omission of any other trustee hereunder; and
(c) The Depositor and the Trustee acting jointly 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 of the provisions of this Agreement
relating to the conduct of, affecting the liability of, or affording protection
to, the Trustee. Every such instrument shall be filed with the Trustee and a
copy thereof given to the Depositor.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee to the extent permitted by law, without the appointment of a new or
successor trustee.
Section 8.11 Tax Returns.
(a) The Trustee, the Servicer, the Certificate Administrator, the
Certificate Registrar and the Paying Agent shall, upon request, furnish the
Depositor with all such information as may be reasonably required so that the
Depositor may 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 for each Constituent REMIC and
for any portion of the Trust Fund that is treated as a grantor trust, 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 shall 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. Within
30 days of the Closing Date, the Certificate Administrator will furnish to the
Internal Revenue Service, on Form 8811 or as otherwise required by the Internal
Revenue Code, the name, title, address, and telephone number of the person that
the Certificateholders may contact for tax information relating to the REMICs,
together with any additional information required by Form 8811, and will update
such information as required by the Internal Revenue Code. Such federal, state
or local income tax or information returns, at the written request of the
Depositor, be signed by the Trustee or such other person as may be required to
sign such returns by the Code or state or local tax laws, regulations or rules,
provided that the Depositor, and not the Trustee, shall be responsible for the
contents and filing of such returns.
(b) In the first federal income tax return of each of the Constituent
REMICs for its short taxable year ending December 31 in the year in which the
Startup Day occurs, REMIC status shall be elected for such taxable year and all
succeeding taxable years.
(c) The Certificate Administrator on behalf of the Trustee will maintain
such records relating to each of the Constituent REMICs, including but not
limited to the income, expenses, assets and liabilities thereof, and the
adjusted basis of the property thereof determined at such intervals as may be
required by the Code, as may be necessary to prepare the foregoing returns,
schedules, statements or information.
(d) If in any taxable year there will be more than one holder of any class
of residual certificates, a tax matters person may be designated for the related
REMIC, as more specifically provided for in Section 12.06.
(e) Each Holder of a Residual Certificate shall be deemed to have agreed,
by acceptance thereof, to be bound by this Section 8.11, by Section 5.02 and by
the "REMIC-Related Provisions" set forth in Section 12.04.
Section 8.12 Appointment of Authenticating Agent.
On the date of this Agreement, on the Issue Date or at any time when any
of the Certificates remain outstanding the Trustee may appoint an Authenticating
Agent or Agents (which may include CRMSI or any of its Affiliates) which shall
be authorized to act on behalf of the Trustee to authenticate Certificates, and
Certificates so authenticated shall be entitled to the benefit of this Agreement
and shall be valid and obligatory for all purposes as if authenticated by the
Trustee hereunder. Wherever reference is made in this Agreement to the
authentication and delivery of Certificates by the Trustee or the Trustee's
certificate of authentication, such reference shall be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating Agent
and a certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent shall be acceptable to the
Depositor and shall at all times be a corporation or national banking
association organized and doing business under the laws of the United States of
America, any state thereof or the District of Columbia, authorized under such
laws to act as Authenticating Agent, having a combined capital and surplus of
not less than $15,000,000, authorized under such laws to conduct a trust
business and subject to supervision or examination by federal or state
authority. If such Authenticating Agent publishes reports of condition at least
annually, pursuant to law or to the requirements of said supervising or
examining authority, then for the purposes of this Section 8.12, the combined
capital and surplus of such Authenticating Agent shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. If at any time an Authenticating Agent shall cease to be eligible
in accordance with the provisions of this Section 8.12, such Authenticating
Agent shall resign immediately in the manner and with the effect specified in
this Section 8.12.
Any corporation or national banking association into which an
Authenticating Agent may be merged in or converted or with which it may be
consolidated, or any corporation or national banking association resulting from
any merger, conversion or consolidation to which such Authenticating Agent shall
be a party, or any corporation or national banking association succeeding to the
corporate agency or corporate trust business of an Authenticating Agent, shall
continue to be an Authenticating Agent, provided such corporation or national
banking association shall be otherwise eligible under this Section 8.12, without
the execution or filing of any paper or any further act on the part of the
Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Depositor. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice thereof
to such Authenticating Agent and to the Depositor. Upon receiving such a notice
of resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with this Section
8.12, the Trustee may appoint a successor acceptable to the Depositor and shall
mail written notice of such appointment by first-class mail, postage prepaid to
all Certificateholders as their names and addresses appear in the Certificate
Register. Any successor Authenticating Agent upon acceptance of its appointment
hereunder shall become vested with all the rights, powers and duties of its
predecessor hereunder, with like effect as if originally named as an
Authenticating Agent herein. No successor Authenticating Agent shall be
appointed unless eligible under the provisions of this Section 8.12.
Any reasonable compensation paid to an Authenticating Agent for its
services under this Section 8.12 shall be a reimbursable expense pursuant to
Section 8.05 if paid by the Trustee.
If an appointment is made pursuant to this Section 8.12, the Certificates
may have endorsed thereon, in addition to the Trustee's certificate of
authentication, an alternate certificate of authentication in the following
form:
"This is one of the Certificates referred to in the within-mentioned
Agreement.
___________________________________
As Trustee
By:________________________________
Authenticating Agent
By:________________________________
Authenticating Signature"
Section 8.13 Appointment of Custodians.
The Trustee may at any time on or after the Closing Date, with the consent
of the Depositor and the Servicer, appoint one or more Custodians to hold all or
a portion of the Mortgage Files as agent for the Trustee, by entering into a
custodial agreement in a form acceptable to the Depositor and the Servicer.
Subject to this Article VII, the Trustee agrees to comply with the terms of each
custodial agreement and to enforce the terms and provisions thereof against the
Custodian for the benefit of the Certificateholders. Each Custodian shall be a
depository institution subject to supervision by federal or state authority,
shall have a combined capital and surplus of at least $10,000,000 and shall be
qualified to do business in the jurisdiction in which it holds any Mortgage
File.
Notwithstanding the foregoing, to the extent the Trustee appoints one or
more Custodians with respect to more than 5% of the aggregate Pool Balance, the
Trustee shall cause such Custodian to prepare a separate Assessment of
Compliance and Attestation Report, as contemplated by Sections 3.15(a) and
3.15(b) of this Agreement and deliver such reports in accordance with such
Sections 3.15(a) and 3.15(b).
ARTICLE IX
TERMINATION
Section 9.01 Termination upon Purchase by Servicer of Mortgage Loans.
(a) The respective obligations and responsibilities of the Depositor, the
Servicer and the Trustee created hereby and the Trust Fund created hereby shall
terminate upon the earlier of (x) the purchase on a Distribution Date by the
Servicer of all of the Mortgage Loans and all property acquired in respect of
any Mortgage Loan remaining in the Trust Fund at a price equal to the sum of (i)
100% of the Unpaid Loan Balance of each Mortgage Loan as of the related
Determination Date, together with accrued interest thereon to (but not
including) such Distribution Date at the related Pass-Through Rate, to the
extent not previously advanced by the Servicer, net of unreimbursed Servicing
Advances, Delinquency Advances, Bi-Weekly Interest Advances and Simple Interest
Advances, and (ii) the appraised value of any REO Property in the Trust Fund
(less the good faith estimate of the Depositor of liquidation expenses to be
incurred in connection with its disposal thereof), such appraisal to be
conducted by an appraiser mutually agreed upon by the Depositor and the Trustee
and (y) 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 property acquired upon foreclosure or by deed in lieu of
foreclosure of any Mortgage Loan and (ii) the payment to the Certificateholders
of all amounts required to be paid to them pursuant to this Agreement; provided,
however, that in no event shall the trust created hereby continue beyond the
expiration of 21 years from the death of the last survivor of the lawful
descendants of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the late Ambassador of the United States of
America to the Court of St. James's, living on the date of this Agreement. Such
termination shall occur only in connection with a "qualified liquidation" of
each Constituent REMIC within the meaning of Code Section 860F(a)(4)(A),
pursuant to which the Trustee shall sell or otherwise dispose of all of the
remaining assets of the Trust Fund and make all required distributions to
Certificateholders within 90 days of the adoption of a plan of complete
liquidation. For this purpose, the notice of termination described in the next
paragraph shall be the adoption of a plan of complete liquidation described in
Code Section 860F(a)(4)(A)(i), which shall be deemed to occur on the date the
first such notice is mailed. Such date shall be specified in the final federal
income tax return of each Constituent REMIC constituting the Trust Fund.
(b) The right of the Servicer to purchase all of the Mortgage Loans on any
Distribution Date pursuant to clause (a)(x) above shall be conditioned upon (A)
the Aggregate Current Pool Balance, at the time of such repurchase and after
giving effect to distributions and allocations of losses to be made on such
Distribution Date, being less than 10% of the Aggregate Initial Pool Balance and
(B) any other condition set forth in Article XII. The right of the Servicer to
purchase all of the Mortgage Loans on any Distribution Date pursuant to clause
(a)(x) above shall be further conditioned upon the purchase price specified in
clause (a)(x) above being less than or equal to the aggregate fair market value
of the Mortgage Loans (other than any REO Mortgage Loans) and the Mortgaged
Properties related to the REO Mortgage Loans; provided, however, that this
sentence shall not apply to any purchase by the Servicer if, at the time of the
purchase, no relevant party is subject to regulation by the Office of the
Comptroller of the Currency, the FDIC, the Federal Reserve or the Office of
Thrift Supervision (provided, that a determination that no party subject to such
regulation is a "relevant party" for the purposes of this sentence shall require
the agreement of the Depositor and, if CMI is the Servicer, the Servicer). Fair
market value for purposes of this paragraph and the preceding paragraph will be
determined by the Servicer as of the close of business on the third Business Day
next preceding the date upon which notice of any termination is furnished to
Certificateholders pursuant to Section 9.01(d). The payment made by the Servicer
under clause (a)(x) above shall be in addition to (but not in duplication of any
part of) the distribution that would otherwise be made on the Certificates on
such Distribution Date. The Servicer shall have the right, in its sole
discretion, to transfer its right to repurchase the Mortgage Loans to any third
party of its choice.
(c) Any other method of termination of the Trust or repurchase of Mortgage
Loans than as set forth above must be based on the receipt by the Trustee of an
Opinion of Counsel or other evidence that such termination or repurchase will be
part of a "qualified liquidation" within the meaning of Code Section
860F(a)(4)(A), will not adversely affect the status of the Trust Fund as the
separate Constituent REMICs under the Code and will not otherwise subject the
Trust Fund to any tax.
(d) Notice of any termination, specifying the Distribution Date upon which
the Certificateholders may surrender their Certificates to the Paying Agent for
payment of the final distribution and cancellation, shall be given promptly by
the Paying Agent by letter to Certificateholders mailed not later than 30 days
nor more than 60 days prior to such Distribution Date specifying (A) the
Distribution Date upon which final payment of the Certificates will be made upon
presentation and surrender of Certificates at the office therein designated, (B)
the amount of such final payment and (C) that the Record Date otherwise
applicable to such Distribution Date is not applicable, payments being made only
upon presentation and surrender of the Certificates at the office of the Paying
Agent therein specified. The Depositor shall provide such notice to the Trustee
prior to the time at which such notice is required to be given to
Certificateholders and, if applicable, to the Certificate Registrar, the
Custodian and the Paying Agent at the time such notice is given to
Certificateholders. In the event such notice is given, the Depositor shall
deposit in the Certificate Account or the account designated by the Paying Agent
if the Depositor is not the Paying Agent, on the Business Day preceding the
Distribution Date for such final distribution, an amount equal to the final
payment in respect of the Certificates. Upon certification to the Trustee by an
Authorized Officer of the Depositor to the effect that all conditions set forth
in this Article IX have been met, the Trustee shall promptly release the
Mortgage Files to the Depositor or its designee.
In the event that all Certificateholders shall not surrender their
Certificates for cancellation within six months after the date specified in the
above-mentioned notice, the Paying Agent shall give a second written notice to
the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
one year after the second notice all such Certificates shall not have been
surrendered for cancellation, the Paying Agent 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 deposited by the Depositor for such final
payment which remain subject hereto. Interest shall not accrue for the period of
any delay in the payment of a Certificate resulting from the failure of a Holder
to surrender such Certificate in accordance herewith.
ARTICLE X
GENERAL PROVISIONS
Section 10.01 Amendment.
This Agreement may be amended from time to time by the Depositor, the
Servicer, the Certificate Administrator, the Trustee, the Paying Agent, the
Certificate Registrar and the Authenticating Agent, without the consent of any
of the Certificateholders, (a) to cure any ambiguity or error, (b) to correct or
supplement any provisions herein or therein which may be inconsistent with any
other provisions herein or therein, (c) to add any other provisions with respect
to matters or questions arising under this Agreement, which shall not be
inconsistent with the provisions of this Agreement, (d) to comply with any
requirements imposed by the Code, (e) to modify the provisions regarding the
transferability of the Residual Certificates, (f) to establish a "qualified
reserve fund" within the meaning of Code Section 860G(a)(7)(B) or (g) to
maintain the status of the Trust Fund as separate Constituent REMICs. This
Agreement may also be amended by the Depositor, the Servicer and the Trustee,
without Certificateholder consent, if the Depositor delivers an Opinion of
Counsel acceptable to the Trustee to the effect that such amendment will not
materially adversely affect the interests of the Certificateholders. In lieu of
an Opinion of Counsel, the Depositor may deliver a confirmation from each Rating
Agency that such amendment will not cause a downgrade, qualification or
withdrawal with respect to any affected Certificates. The Trustee hereby agrees
to execute and deliver any amendment to this Agreement provided by the Depositor
to it, that conforms to the applicable provisions of the preceding three
sentences of this paragraph provided, however, that the Trustee may, but shall
not be obligated to, enter into any such amendment that affects the Trustee's
own rights, duties or immunities under this Agreement.
This Agreement may also be amended from time to time by the Depositor, the
Servicer, the Certificate Administrator, the Trustee, the Paying Agent, the
Certificate Registrar and the Authenticating Agent with the consent of the
Holders of Certificates evidencing, in the aggregate, not less than 66-2/3% of
the Voting Interest of the Certificates affected by such amendment (after giving
effect to each proviso to the definition of "Outstanding"; and provided that if
any Class of Certificates is affected differently in any material respect by
such amendment than the other affected Classes, the consent of the Holders of
Certificates evidencing 66-2/3% of the Voting Interest of each such differently
affected Class shall be required) and, if the Class CE Certificates are
materially and adversely affected by such amendment, 66-2/3% of the Percentage
Interests of the Class CE Certificates then Outstanding, and, if the Residual
Certificates are materially and adversely affected by such amendment, 66-2/3% of
the Percentage Interests of the Residual Certificates then Outstanding, 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 the Certificates; provided, however, that (i) in connection with
any such amendment, the Depositor shall deliver an Opinion of Counsel acceptable
to the Trustee (x) identifying any Class of Certificates that may be affected
differently in any material respect than the other affected Classes (or stating
that there is no such differently affected Class) and (y) identifying any Class
whose Certificateholders would not be affected by such amendment and (ii) no
such amendment shall, without the consent of the Holders of all Certificates
then Outstanding, (a) reduce in any manner the amount of, or delay the timing
of, collections or payments received on Mortgage Loans or distributions which
are required to be made on any Certificate or (b) reduce the aforesaid
percentage required to consent to any such amendment. Promptly after the
execution of any such amendment or consent the Trustee shall furnish or cause to
be furnished written notification of the substance of such amendment (or a copy
thereof) to each Certificateholder.
It shall not be necessary for the consent of Certificateholders under this
Section 10.01 to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by the Certificateholders shall be subject to such reasonable
requirements as the Trustee may prescribe. Any proposed amendment is subject to
the receipt by the Trustee, at the expense of the party proposing such amendment
(or at the expense of the Trust Fund if proposed by the Trustee) that the
amendment will not cause any Constituent REMIC to fail to qualify as a REMIC or
subject any Constituent REMIC to tax.
Prior to entering into any amendment pursuant to this Section, the Trustee
may request and rely upon an Opinion of Counsel stating that the proposed
amendment is permissible under this Agreement and that all conditions precedent,
if any, to the entering into of such amendment have been fulfilled.
Section 10.02 Recordation of Agreement.
This Agreement is subject to recordation in all appropriate public offices
for real property records in all the counties or other comparable jurisdictions
in which any or all of the properties subject to the Mortgages are situated and
in which this Agreement may be recorded, and in any other appropriate public
recording office or elsewhere, such recordation to be effected by the Depositor
and at its expense upon request of the Trustee, who will act at the direction of
the Holders of a majority by Percentage Interest of the Residual Certificates,
but only upon request of the Trustee accompanied by an Opinion of Counsel,
provided at the expense of such Holders, to the effect that such recordation
materially and beneficially affects the interests of the Certificateholders;
provided, however, that recordation of this Agreement shall not be required
unless recordation of each assignment relating to the Mortgages is required to
be made pursuant to Section 7.01.
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one and
the same instrument.
Section 10.03 Limitation on Rights of Certificateholders.
The death or incapacity of any Certificateholder shall not operate to
terminate this Agreement or the Trust Fund, nor entitle such Certificateholder's
legal representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the Trust
Fund, nor otherwise affect the rights, obligations and liabilities of the
parties hereto or any of them.
No Certificateholder shall have any right to vote (except as provided in
Section 10.01) 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 (except to
the extent provided in Code Section 860F(e) with respect to Holders of Residual
Certificates) or members of an association; nor shall any Certificateholder be
under any liability to any third person by reason of any action taken by the
parties to this Agreement pursuant to any provision hereof.
No Certificateholder shall have any right by virtue or by availing itself
of any provisions of this Agreement to institute any suit, action or proceeding
in equity or at law upon or under or with respect to this Agreement, unless such
Holder previously shall have given to the Trustee a written notice of default
and of the continuance thereof as hereinbefore provided, and unless also the
Holders of the Required Amount of Certificates shall have made written request
upon the Trustee to institute such action, suit or proceeding in its own name as
Trustee hereunder and shall have offered to the Trustee such reasonable
indemnity as it may require against the costs, expenses and liabilities to be
incurred therein or thereby, and the Trustee, for 60 days after its receipt of
such notice, request and offer of indemnity, shall have neglected or refused to
institute any such action, suit or proceeding; it being understood and intended,
and being expressly covenanted by each Certificateholder with every other
Certificateholder and the Trustee, that no one or more Holders of Certificates
shall have any right in any manner whatever by virtue or by availing itself or
themselves of any 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
equal, ratable and common benefit of all Certificateholders. For the protection
and enforcement of the provisions of this Section 10.03, each and every
Certificateholder and the Trustee shall be entitled to such relief as can be
given either at law or in equity.
Section 10.04 Governing Law.
This Agreement and the Certificates issued pursuant to this Agreement
shall be construed in accordance with the laws of the State of New York,
provided that the immunities and standards of care of the Trustee shall be
governed by the law of the jurisdiction in which is located its Corporate Trust
Office.
Section 10.05 Intention of Parties.
The execution and delivery of this Agreement shall constitute an
acknowledgment by CRMSI on behalf of the Certificateholders that it intends
hereby to establish and maintain (for federal income tax purposes) one or more
"real estate mortgage investment conduits" within the meaning of Code Section
860D and CRMSI and the Trustee are hereby granted all necessary powers to
further such intent.
Section 10.06 Notices.
All communications relating to this Agreement including all demands and
notices shall be in writing and shall be deemed to have been duly given if
personally delivered at or mailed by first class mail, to the applicable address
for notices set forth in Article XII or, as to each party, at such other address
as shall be designated by such party in a written notice to each other party.
Any notice required or permitted to be mailed to a Certificateholder shall be
given by first class mail, postage prepaid, at the address of such Holder as
shown in the Certificate Register. Any notice so mailed within the time
prescribed in this Agreement shall be conclusively presumed to have been duly
given, whether or not the Certificateholder receives such notice; provided that
notices to the Trustee shall be effective only upon receipt.
Section 10.07 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 and 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 10.08 Assignment.
Except as provided in Sections 6.02, 6.04 and 6.06, this Agreement may not
be assigned by CRMSI or the Servicer without the prior written consent of the
Trustee.
Section 10.09 Certificates Nonassessable and Fully Paid.
It is the intention of the Depositor that the Certificateholders shall not
be personally liable for obligations of the Trust Fund, that the interests
represented by the Certificates shall be nonassessable for any reason
whatsoever, and that the Certificates upon due authentication thereof by the
Trustee are and shall be deemed fully paid.
Section 10.10 No Usurious Intent.
The amount of interest paid or payable on any Certificate shall be limited
to an amount that shall not exceed the maximum nonusurious rate of interest
which, under applicable New York law or any applicable United States federal
law, could be lawfully contracted for, charged or received.
Section 10.11 Counterparts.
This Agreement may be signed in any number of counterparts, each of which
will be deemed an original, which taken together shall constitute one and the
same instrument.
ARTICLE XI
DEPOSITORIES
Section 11.01 Depositories.
The Depositor may at any time and from time to time in its discretion
transfer the Certificate Account, the Collection Account or any Escrow Account
to a bank, savings and loan association or trust company organized under the
laws of the United States or any State thereof (an "eligible depository"). Upon
such transfer, such transferee bank, savings and loan association or trust
company shall be deemed to be a Depository with respect to the account or
accounts so transferred. In the event that the long-term debt obligations of any
Depository of the Certificate Account, Collection Account or Escrow Account
shall be rated at less than A by Fitch if Fitch is a Rating Agency, or the
short-term debt obligations of such Depository shall be rated by S&P at less
than A-1+ if S&P is a Rating Agency, by Fitch at less than F-1 if Fitch is a
Rating Agency and by Moody's at less than P-1 if ▇▇▇▇▇'▇ is a Rating Agency (the
"Ratings Requirements") and such account does not otherwise meet the
requirements of this Section 11.01, then within five Business Days of such
reduction, the Depositor shall (A) transfer or direct the Paying Agent in
writing to transfer the Certificate Account, Collection Account or Escrow
Account to an eligible depository satisfying the Ratings Requirements, (B)
establish another account in the corporate trust department of the Paying Agent
or if such Paying Agent has a long-term and short-term debt rating at least
equal to the Rating Requirements, in any department of the Paying Agent (the
"Alternative Certificate Account", the "Alternative Collection Account" or the
"Alternative Escrow Account", as the case may be) and direct the Servicer to
remit in accordance with this Agreement any funds deposited into the Escrow
Account to the Alternative Escrow Account, and direct the Servicer to remit in
accordance with this Agreement any funds deposited into the Certificate Account
or the Collection Account to the Alternative Certificate Account or Alternative
Collection Account, respectively, (C) (i) cause such Depository to pledge
securities in the manner provided by applicable law or (ii) pledge or cause to
be pledged securities, which shall be held by the Paying Agent or its agent free
and clear of the lien of any third party, in a manner conferring on the Paying
Agent a perfected first lien and otherwise reasonably satisfactory to the Paying
Agent; such pledge in either case to secure such Depository's performance of its
obligations in respect of the Certificate Account, Collection Account or Escrow
Account to the extent, if any, that such obligation is not fully insured by the
FDIC; provided, however, that prior to the day a Depository or the Depositor, as
the case may be, pledges securities pursuant to this subsection (C), the
Depositor and the Paying Agent shall have received the written assurance of each
Rating Agency that the pledging of such securities and any arrangements or
agreements relating thereto will not result in a reduction or withdrawal of the
then-current rating of the Certificates, (D) establish an account or accounts or
enter into an agreement so that the existing Certificate Account, Collection
Account or Escrow Account is supported by a letter of credit or some other form
of credit support which the provider of such letter of credit or other form of
credit support has a long-term and short-term debt rating at least equal to the
Rating Requirements; provided, however, that prior to the establishment of such
an account or the entering into of such an agreement, the Depositor and the
Paying Agent shall have received written assurance from each Rating Agency that
the establishment of such an account or the entering into of such an agreement
so that the existing Certificate Account, Collection Account or Escrow Account
is supported by a letter of credit or some other form of credit support will not
result in a reduction or withdrawal of the then-current rating on the
Certificates, (E) establish another account which constitutes an Eligible
Account or (F) make such other arrangements as to which the Depositor and the
Paying Agent have received prior written assurance from each Rating Agency that
such arrangement will not result in a reduction or withdrawal of the
then-current rating on the Certificates. In the event that the rating on the
Certificates has been downgraded as a result of a rating downgrade of the
Depository, for purposes of this paragraph, the then-current rating on the
Certificates shall be the rating assigned to the Certificates prior to any such
downgrade.
Appendix 1
TRANSFEREE'S AFFIDAVIT
AFFIDAVIT PURSUANT TO SECTION 860E(e)(4)
OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED
STATE OF )
):
COUNTY OF )
[ ], being first duly sworn, deposes and says:
1. That he is [_____________] of [____________] (the "Investor"), a [state
type of entity] duly organized and existing under the laws of the [State of
___________] [United States], on behalf of which he makes this affidavit.
2. That the Investor's Taxpayer Identification Number is [_____________].
3. That the Investor is not a "disqualified organization" within the
meaning of Section 860E(e)(5) of the Internal Revenue Code of 1986, as amended
(the "Code") or an ERISA Prohibited Holder, and will not be a "disqualified
organization" or an ERISA Prohibited Holder as of [Issue Date], 200[*], and that
the Investor is not acquiring a Citicorp Residential Mortgage Securities, Inc.
REMIC Pass-Through Certificates, Series 200[*]-[*] Class R Certificate (the
"Residual Certificate") for the account of, or as agent (including a broker,
nominee or other middleman) for, any person or entity from which it has not
received an affidavit substantially in the form of this affidavit. For these
purposes, a "disqualified organization" means the United States, any state or
political subdivision thereof, any foreign governments, any international
organization, any agency or instrumentality of any of the foregoing (other than
an instrumentality if all of its activities are subject to tax and a majority of
its board of directors is not appointed by such governmental entity), any
cooperative organization furnishing electric energy or providing telephone
service to persons in rural areas described in Code Section 1381(a)(2)(C), or
any organization (other than a farmers' cooperative described in Code Section
521) that is exempt from federal income tax unless such organization is subject
to the tax on unrelated business income imposed by Code Section 511. For these
purposes, an "ERISA Prohibited Holder" means an employee benefit plan the
investment of which is regulated under Section 406 of the Employee Retirement
Income Security Act of 1974, as amended, and/or Code Section 4975 or a
governmental plan, as defined in Section 3(32) of ERISA, subject to any federal,
state or local law which is, to a material extent, similar to the foregoing
provisions of ERISA or the Code (collectively, a "Plan") or a Person investing
the assets of a Plan.
4. That the Investor historically has paid its debts as they have come due
and intends to pay its debts as they come due in the future and the Investor
intends to pay taxes associated with holding the Residual Certificate as they
become due.
5. That the Investor understands that it may incur tax liabilities with
respect to the Residual Certificate in excess of cash flows generated by the
Residual Certificate.
6. That the Investor will not transfer the Residual Certificate to any
person or entity as to which the Investor has actual knowledge that the
requirements set forth in paragraph 3, paragraph 4, paragraph 7 or paragraph 10
hereof are not satisfied or that the Investor has reason to know does not
satisfy the requirements set forth in paragraph 4 hereof.
7. That the Investor (i) is not a Non-U.S. Person or (ii) is a Non-U.S.
Person that holds the Residual Certificate in connection with the conduct of a
trade or business within the United States and has furnished the transferor and
the Trustee with an effective Internal Revenue Service Form W-8ECI or (iii) is a
Non-U.S. Person that has delivered to both the transferor and the Trustee an
opinion of a nationally recognized tax counsel to the effect that the transfer
of the Residual Certificate to it is in accordance with the requirements of the
Code and the regulations promulgated thereunder and that such transfer of the
Residual Certificate will not be disregarded for federal income tax purposes.
"Non-U.S. Person" shall mean an individual, corporation, partnership or other
person other than a "U.S. Person." "U.S. Person" shall mean a citizen or
resident of the United States, a corporation, partnership (except to the extent
provided in applicable Treasury regulations) or other entity created or
organized in or under the laws of the United States or any jurisdiction thereof,
an estate that is subject to U.S. 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 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 be treated as U.S.
Persons).
8. That the Investor agrees to such amendments of the Pooling and
Servicing Agreement dated as of [Month] 1, 200[*], among Citicorp Residential
Mortgage Securities, Inc., CitiMortgage, Inc., Citibank, N.A. and U.S. Bank
National Association, as Trustee (the "Pooling and Servicing Agreement") as may
be required to further effectuate the restrictions on transfer of the Citicorp
Residential Mortgage Securities, Inc. REMIC Pass-Through Certificates, Series
200[*]-[*] Residual Certificate to such a "disqualified organization," an agent
thereof, an "ERISA Prohibited Holder" or a person that does not satisfy the
requirements of paragraphs 4, 5 and 7 hereof.
9. That the Investor consents to the irrevocable designation of the
[Trustee][Servicer] as its agent to act as agent for the "tax matters person" of
the REMIC pursuant to the Pooling and Servicing Agreement.
10. The Investor will not cause income from the Residual Certificate to be
attributable to a foreign permanent establishment or fixed base, within the
meaning of an applicable income tax treaty, of the Investor or any other U.S.
Person.
11. Check one of the following:
____ The present value of the anticipated tax liabilities associated
with holding the Residual Certificate does not exceed the sum of:
(i) the present value of any consideration given to the Investor to
acquire the Residual Certificate;
(ii) the present value of the expected future distributions on the
Residual Certificate; and
(iii) the present value of the anticipated tax savings associated with
holding on the Residual Certificate as the REMIC generates losses.
For purposes of this calculation, (i) the Investor is assumed to pay tax
at the highest rate currently specified in Code Section 11(b) (but the tax rate
in Code Section 55(b)(1)(B) may be used in lieu of the highest rate specified in
Code Section 11(b) if the Investor has been subject to the alternative minimum
tax under Code Section 55 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
short-term Federal rate prescribed by Code Section 1274(d) for the month of the
transfer and the compounding period used by the Investor.
_____ The transfer of the Residual Certificate complies with U.S. Treasury
Regulations Sections 1.860G-1(c)(5) and (6) and, accordingly,
(i) the Investor is an "eligible corporation," as defined in US. Treasury
Regulations Sections 1.860E-1(c)(6)(i), as to which income from the
Residual Certificate will only be taxed in the United States;
(ii) at the time of the transfer, and at the close of the Investor's two
fiscal years preceding the year of the transfer, the Investor had gross
assets for financial reporting purposes (excluding any obligation of a
person related to the Investor within the meaning of U.S. Treasury
Regulation Section 1.860E-1(c)(6)(ii)) in excess of $100 million and net
assets in excess of $10 million;
(iii) the Investor will transfer the Residual Certificate only to another
"eligible corporation," as defined in U.S. Treasury Regulations Section
1.860E-1(c)(6)(i), in a transaction that satisfies the requirements of
U.S. Treasury Regulations Sections 1.860G-1(c)(4)(i), (ii) and (iii) and
1.860E-1(c)(5); and
(iv) the Investor determined the consideration paid to it to acquire the
Residual Certificate based on reasonable market assumptions (including,
but not limited to, borrowing and investment rates, prepayment and loss
assumptions, expense and reinvestment assumptions, tax rates and other
factors specific to the Investor) that it has determined in good faith.
_____ None of the above.
IN WITNESS WHEREOF, the Investor has caused this instrument to be executed
on its behalf, pursuant to authority of its Board of Directors, by its
[________] this ____ day of 200_.
_____________________________________
By:__________________________________
Name:
Title:
COUNTY OF )
)
STATE OF )
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 to before me this ___ day of ________ 200__.