Exhibit 99.1
Execution Copy
ASSET BACKED SECURITIES CORPORATION
Depositor
OPTION ONE MORTGAGE CORPORATION
Servicer
and
▇▇▇▇▇ FARGO BANK MINNESOTA, NATIONAL ASSOCIATION
Trustee
-----------------------------------------
POOLING AND SERVICING AGREEMENT
Dated as of September 1, 2001
-----------------------------------------
Asset Backed Securities Corporation Home Equity Loan Trust 2001-HE3
Asset Backed Pass-Through Certificates, Series 2001-HE3
Table of Contents
Page
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ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms.............................................................................3
SECTION 1.02. Allocation of Certain Interest Shortfalls................................................39
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; ORIGINAL ISSUANCE OF CERTIFICATES
SECTION 2.01. Conveyance of Mortgage Loans.............................................................45
SECTION 2.02. Acceptance of REMIC I by the Trustee.....................................................51
SECTION 2.03. Repurchase or Substitution of Mortgage Loans by the Originators, the Seller or the
Depositor; Payment of Prepayment Charges in the event of breach..........................52
SECTION 2.04. Representations and Warranties of the Depositor..........................................56
SECTION 2.05. Representations, Warranties and Covenants of the Servicer................................58
SECTION 2.06. Issuance of Class R-I Certificates.......................................................60
SECTION 2.07. Conveyance of REMIC I Regular Interests; Acceptance of REMIC II by the Trustee...........61
SECTION 2.08. Issuance of Class R-II Certificates......................................................61
SECTION 2.09. Conveyance of REMIC II Regular Interests; Acceptance of REMIC III by the Trustee.........61
SECTION 2.10. Conveyance of the REMIC III Regular Interest; Accepance of the REMIC III by the Trustee..61
SECTION 2.11. Conveyance of REMIC III Regular Interests; Acceptance of REMIC IV by the Trustee.........62
SECTION 2.12. Issuance of Class R-IV Certificates......................................................62
SECTION 2.13. Conveyance of REMIC IV Regular Interests; Acceptance of REMIC V by the Trustee...........62
ARTICLE III
ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS
SECTION 3.01. Servicer to Act as Servicer..............................................................63
SECTION 3.02. Sub-Servicing Agreements Between the Servicer and Sub-Servicers..........................64
SECTION 3.03. Successor Sub-Servicers..................................................................66
SECTION 3.04. Liability of the Servicer................................................................66
SECTION 3.05. No Contractual Relationship Between Sub-Servicers and Trustee or Certificateholders......66
SECTION 3.06. Assumption or Termination of Sub-Servicing Agreements by Trustee.........................67
SECTION 3.07. Collection of Certain Mortgage Loan Payments.............................................67
SECTION 3.08. Sub-Servicing Accounts...................................................................68
SECTION 3.09. Collection of Taxes, Assessments and Similar Items; Servicing Accounts...................68
SECTION 3.10. Collection Account; Distribution Account and Prefunding Account..........................69
SECTION 3.11. Withdrawals from the Collection Account and Distribution Account.........................71
SECTION 3.12. Investment of Funds in the Collection Account and the Distribution Account...............73
SECTION 3.13. RESERVED.................................................................................75
SECTION 3.14. Maintenance of Hazard Insurance and Errors and Omissions and Fidelity Coverage and the
MGIC Policy..............................................................................75
SECTION 3.15. Enforcement of Due-On-Sale Clauses; Assumption Agreements................................77
SECTION 3.16. Realization Upon Defaulted Mortgage Loans................................................78
SECTION 3.17. Trustee to Cooperate; Release of Mortgage Files..........................................80
SECTION 3.18. Servicing Compensation...................................................................81
SECTION 3.19. Reports to the Trustee; Collection Account Statements....................................82
SECTION 3.20. Statement as to Compliance...............................................................82
SECTION 3.21. Independent Public Accountants' Servicing Report.........................................82
SECTION 3.22. Access to Certain Documentation..........................................................83
SECTION 3.23. Title, Management and Disposition of REO Property........................................83
SECTION 3.24. Obligations of the Servicer in Respect of Prepayment Interest Shortfalls.................86
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SECTION 3.25. Obligations of the Servicer in Respect of Mortgage Rates and Monthly Payments............87
SECTION 3.26. Net WAC Fund; Cap Agreement..............................................................87
SECTION 3.27. Reserved.................................................................................88
ARTICLE IV
PAYMENTS TO CERTIFICATEHOLDERS
SECTION 4.01. Distributions............................................................................88
SECTION 4.02. Statements to Certificateholders.........................................................93
SECTION 4.03. Remittance Reports; P&I Advances.........................................................97
SECTION 4.04. Allocation of Realized Losses............................................................98
SECTION 4.05. Compliance with Withholding Requirements.................................................99
SECTION 4.06. Commission Reporting....................................................................100
SECTION 4.07. Early Termination Fund..................................................................100
ARTICLE V
THE CERTIFICATES
SECTION 5.01. The Certificates........................................................................101
SECTION 5.02. Registration of Transfer and Exchange of Certificates...................................103
SECTION 5.03. Mutilated, Destroyed, Lost or Stolen Certificates.......................................108
SECTION 5.04. Persons Deemed Owners...................................................................108
SECTION 5.05. Certain Available Information...........................................................108
ARTICLE VI
THE DEPOSITOR AND THE SERVICER
SECTION 6.01. Liability of the Depositor and the Servicer.............................................109
SECTION 6.02. Merger or Consolidation of the Depositor or the Servicer................................109
SECTION 6.03. Limitation on Liability of the Depositor, the Servicer and Others.......................110
SECTION 6.04. Limitation on Resignation of the Servicer...............................................110
SECTION 6.05. Rights of the Depositor in Respect of the Servicer......................................111
ARTICLE VII
DEFAULT
SECTION 7.01. Servicer Events of Default..............................................................112
SECTION 7.02. Trustee to Act; Appointment of Successor................................................114
SECTION 7.03. Notification to Certificateholders......................................................115
SECTION 7.04. Waiver of Servicer Events of Default....................................................116
ARTICLE VIII
CONCERNING THE TRUSTEE
SECTION 8.01. Duties of Trustee.......................................................................116
SECTION 8.02. Certain Matters Affecting the Trustee...................................................117
SECTION 8.03. Trustee Not Liable for Certificates or Mortgage Loans...................................119
SECTION 8.04. Trustee May Own Certificates............................................................119
SECTION 8.05. Fees and Expenses of the Trustee........................................................119
SECTION 8.06. Eligibility Requirements for Trustee....................................................120
SECTION 8.07. Resignation and Removal of the Trustee..................................................121
SECTION 8.08. Successor Trustee.......................................................................121
SECTION 8.09. Merger or Consolidation of Trustee......................................................122
SECTION 8.10. Appointment of Co-Trustee or Separate Trustee...........................................122
SECTION 8.11. [Reserved]..............................................................................123
SECTION 8.12. Appointment of Office or Agency.........................................................123
SECTION 8.13. Representations and Warranties..........................................................123
SECTION 8.14. Cap Agreement...........................................................................124
ARTICLE IX
TERMINATION
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SECTION 9.01. Termination Upon Repurchase or Liquidation of All Mortgage Loans........................124
SECTION 9.02. Additional Termination Requirements.....................................................126
ARTICLE X
REMIC PROVISIONS
SECTION 10.01. REMIC Administration....................................................................127
SECTION 10.02. Prohibited Transactions and Activities..................................................130
SECTION 10.03. Servicer and Trustee Indemnification....................................................131
ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.01. Amendment...............................................................................131
SECTION 11.02. Recordation of Agreement; Counterparts..................................................132
SECTION 11.03. Limitation on Rights of Certificateholders..............................................132
SECTION 11.04. Governing Law...........................................................................133
SECTION 11.05. Notices.................................................................................133
SECTION 11.06. Severability of Provisions..............................................................134
SECTION 11.07. Notice to Rating Agencies...............................................................134
SECTION 11.08. Article and Section References..........................................................135
SECTION 11.09. Third Party Rights......................................................................135
SECTION 11.10. Grant of Security Interest..............................................................135
SECTION 11.11. Protection of Assets....................................................................136
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Exhibits
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Exhibit A-1 Form of Class A1 Certificates
Exhibit A-2 Form of Class M1, M2 Certificates
Exhibit A-3 Form of Class B Certificate
Exhibit A-4 Form of Class X Certificate
Exhibit A-5 Form of Class P Certificate
Exhibit A-6 Form of Class A-IO Certificate
Exhibit A-7 Form of Class B-IO Certificate
Exhibit A-8 Form of Class R Certificate
Exhibit B (Reserved)
Exhibit C-1 Form of Initial Certification of Trustee
Exhibit C-2 Form of Final Certification of Trustee
Exhibit D Form of Mortgage Loan Purchase Agreement
Exhibit E-1 Form of Request for Release
Exhibit E-2 Form of Request for Release
Exhibit F-1 Forms of Transferor/Transferee Representation Letter
Exhibit F-2 Form of Transfer Affidavit and Agreement
Exhibit G Form of ERISA Certification
Exhibit H Form of Certificate regarding Prepayment Premiums
Exhibit I Form of MGIC Policy
Exhibit J Form of Subsequent Transfer Agreement
Schedules
Schedule 1 Mortgage Loan Schedule
Part A - New Century Mortgage Corporation
Part B - Option One Mortgage Corporation
Part C - Peoples Choice Home Loan, Inc.
Part D - WMC Mortgage Corp.
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This Pooling and Servicing Agreement, is dated and effective as of September
1, 2001, among ASSET BACKED SECURITIES CORPORATION as Depositor, OPTION ONE
MORTGAGE CORPORATION, as Servicer, and ▇▇▇▇▇ FARGO BANK MINNESOTA, NATIONAL
ASSOCIATION, as Trustee.
PRELIMINARY STATEMENT:
The Depositor intends to sell pass-through certificates
(collectively, the "Certificates"), to be issued hereunder in multiple
classes, which in the aggregate will evidence the entire beneficial ownership
interest in multiple REMICs (as defined herein) created hereunder. The Trust
Fund will consist of a segregated pool of assets consisting of the Mortgage
Loans and certain other related assets subject to this Agreement.
As of the Cut-off Date, the Original Mortgage Loans had an aggregate
Scheduled Principal Balance equal to $1,068,528,011.19.
Set forth below are designations of Classes of Certificates to the categories
used herein.
LIBOR Certificates.................................... Class A1 and Subordinated Offered Certificates.
Book-Entry Certificates............................... All Classes of Certificates other than the Physical
Certificates.
Class A1 Certificates................................. Class A1 Certificates.
Mezzanine Certificates................................ Class M1 and Class M2 Certificates.
Non-Offered Certificates.............................. Class B-IO, Class X, Class P and Residual Certificates.
Offered Certificates.................................. Class A1, Class A-IO and Subordinated Offered
Certificates.
Physical Certificates................................. Class B-IO, Class X, Class P and Residual Certificates.
Regular Certificates.................................. All Classes of Certificates other than the Residual
Certificates.
Residual Certificates................................. Class R Certificates.
Subordinated Certificates............................. Class X, Class B-IO and Subordinated Offered
Certificates.
Subordinated Offered Certificates..................... Mezzanine Certificates and Class B Certificates.
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In consideration of the mutual agreements herein contained, the
Depositor, the Servicer and the Trustee agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms.
Whenever used in this Agreement, including, without limitation, in
the Preliminary Statement hereto, the following words and phrases, unless the
context otherwise requires, shall have the meanings specified in this Article.
"Accepted Servicing Practices": With respect to any Mortgage Loan,
those mortgage servicing practices of prudent mortgage lending institutions
which service mortgage loans of the same type as such Mortgage Loan in the
jurisdiction where the related Mortgaged Property is located.
"Accrued Certificate Interest": With respect to any Class of Offered
Certificates or the Class B-IO Certificates and any Distribution Date,
interest accrued during the related Interest Accrual Period at the related
Pass-Through Rate for such Class for such Distribution Date on the Certificate
Principal Balance, in the case of the Class A1 Certificates, and the
Subordinated Offered Certificates, or on the respective Notional Amount, in
the case of the Class A-IO and Class B-IO Certificates, of such Class
immediately prior to such Distribution Date. With respect to the Class X
Certificates, the Accrued Certificate Interest shall equal the amount of
interest that accrues during the related Interest Accrued Period which is
equal to the product of footnotes (3) and (4) of Section 1.03(a) herein. The
Class P and Class R Certificates are not entitled to distributions in respect
of interest and, accordingly, will not accrue interest. Accrued Certificate
Interest with respect to each Distribution Date, as to any Class A1
Certificate, Subordinated Offered Certificate, Class X Certificate, Class A-IO
Certificate or Class B-IO Certificate, shall be reduced by an amount equal to
the portion allocable to such Certificate pursuant to Section 1.02 hereof of
the sum of (a) the aggregate Prepayment Interest Shortfall, if any, for such
Distribution Date to the extent not covered by payments pursuant to Section
3.24 and (b) the aggregate amount of any Relief Act Interest Shortfall, if
any, for such Distribution Date.
"Adjustable Rate Mortgage Loan": Each of the Mortgage Loans
identified in the Mortgage Loan Schedule as having a Mortgage Rate that is
subject to adjustment.
"Adjusted Net WAC": As to any Distribution Date, will be a per annum
rate equal to (a) a fraction, expressed as a percentage, the numerator of
which is the weighted average of the Expense Adjusted Mortgage Rates of the
Mortgage Loans as of the first day of the related Due Period for such date
less the Current Interest for the Strip Amount for such date, and the
denominator of which is the applicable Aggregate Collateral Balance
immediately preceding such Distribution Date. This rate will be adjusted to
correspond with the day counting convention used for the Certificates.
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"Adjustment Date": With respect to each Adjustable Rate Mortgage
Loan, the day of the month on which the Mortgage Rate of such Mortgage Loan
changes pursuant to the related Mortgage Note. The first Adjustment Date
following the Cut-off Date as to each Mortgage Loan is set forth in the
Mortgage Loan Schedule.
"Affiliate": With respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control" when used with respect
to any specified Person means the power to direct the management and policies
of such Person, directly or indirectly, whether through the ownership of
voting securities, by contract or otherwise, and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Aggregate Collateral Balance": As of any date of determination will
be equal to the aggregate Stated Principal Balance of the Mortgage Loans and
any REO Properties owned by the Trust plus the amount, if any, then on deposit
in the Pre-Funding Account.
"Aggregate Subsequent Transfer Amount": With respect to any
Subsequent Transfer Date, the aggregate Stated Principal Balances as of the
applicable Cut-off Date of the Subsequent Mortgage Loans conveyed on such
Subsequent Transfer Date, as listed on the revised Mortgage Loan Schedule
delivered pursuant to Section 2.01(d); provided, however, that such amount
shall not exceed the amount on deposit in the Prefunding Account.
"Agreement": This Pooling and Servicing Agreement and all amendments
hereof and supplements hereto.
"Applicable Regulations" : As to any Mortgage Loan, all federal,
state and local laws, statutes, rules and regulations applicable thereto.
"Applied Realized Loss Amount": With respect to any Distribution
Date, the amount, if any, by which, (i) the aggregate Certificate Principal
Balance of the LIBOR Certificates after distributions of principal on such
Distribution Date exceeds the Aggregate Collateral Balance as of the last day
of the immediately preceding Due Period.
"Assignment": An assignment of Mortgage, notice of transfer or
equivalent instrument, in recordable form (excepting therefrom, if applicable,
the mortgage recordation information which has not been required pursuant to
Section 2.01 hereof or returned by the applicable recorder's office and/or the
assignee's name), which is sufficient under the laws of the jurisdiction
wherein the related Mortgaged Property is located to reflect of record the
sale of the Mortgage, which assignment, notice of transfer or equivalent
instrument may be in the form of one or more blanket assignments covering
Mortgages secured by Mortgaged Properties located in the same county, if
permitted by law.
"Assignment and Assumption Agreement": That certain assignment and
assumption agreement dated as of the Cut-off Date, by and between the Seller,
as assignor and the Depositor, as assignee, relating to the Mortgage Loans.
"Available Distribution Amount": With respect to any Distribution
Date, an amount equal to (1) the sum of (a) the aggregate of the amounts on
deposit in the Collection
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Account and Distribution Account as of the close of business on the related
Determination Date, (b) the aggregate of any amounts received in respect of an
REO Property withdrawn from any REO Account and deposited in the Distribution
Account for such Distribution Date pursuant to Section 3.23, (c) the aggregate
of any amounts deposited in the Distribution Account by the Servicer in
respect of Prepayment Interest Shortfalls for such Distribution Date pursuant
to Section 3.24 and (d) the aggregate of any P&I Advances made by the Servicer
for such Distribution Date pursuant to Section 4.03, reduced (to not less than
zero) by (2) the sum of the portion of the amount described in clause (1)(a)
above that represents (i) Monthly Payments on the Mortgage Loans received from
a Mortgagor on or prior to the Determination Date but due during any Due
Period subsequent to the related Due Period, (ii) Principal Prepayments on the
Mortgage Loans received after the related Prepayment Period (together with any
interest payments received with such Principal Prepayments to the extent they
represent the payment of interest accrued on the Mortgage Loans during a
period subsequent to the related Prepayment Period), (iii) Liquidation
Proceeds and Insurance Proceeds received in respect of the Mortgage Loans
after the related Prepayment Period, (iv) amounts reimbursable or payable to
the Depositor, an Originator, the Servicer, the Trustee, the Seller or any
Sub-Servicer pursuant to Section 3.11 or Section 3.12 or otherwise payable in
respect of Extraordinary Trust Fund Expenses, (v) amounts deposited in the
Collection Account or the Distribution Account in error, and (vi) the amount
of any Prepayment Charges collected by the Servicer in connection with the
voluntary Principal Prepayment in full of any of the Mortgage Loans or the
Servicer Prepayment Charge Payment Amount.
"Available Funds Cap": With respect to any Class of LIBOR
Certificates and any Interest Accrual Period and the related Distribution
Date, a rate per annum equal to the Triple Adjusted Net WAC Rate.
"Bankruptcy Code": The Bankruptcy Reform Act of 1978 (Title 11 of
the United States Code), as amended.
"Bankruptcy Loss": With respect to any Mortgage Loan, a Realized
Loss resulting from a Deficient Valuation (i.e. "principal cramdown") or Debt
Service Reduction (i.e. "interest cramdown").
"Book-Entry Certificate": As specified in the Preliminary Statement.
"Book-Entry Custodian": The custodian appointed pursuant to Section
5.01.
"Business Day": Any day other than a Saturday, a Sunday or a day on
which banking or savings and loan institutions in the State of California, the
State of New York, the State of Maryland, the State of Minnesota, or the
Commonwealth of Pennsylvania, the city in which the Corporate Trust Office of
the Trustee is located, are authorized or obligated by law or executive order
to be closed.
"Cap Agreement": The interest rate cap agreement consisting of the
ISDA Master Agreement and the Schedule and Confirmation thereto, each dated as
of the Closing Date between the Trustee on behalf of the Trust and the Cap
Provider, as such agreement may be
5
amended and supplemented in accordance with its terms and any replacement
interest rate cap agreement acceptable to the Depositor and the Trustee.
"Cap Default": An Event of Default under the Cap Agreement.
"Cap Provider": Westdeutsche Landesbank Girozentrale, New York
Branch and any successor thereto under the Cap Agreement.
"Carryover Termination Payment": For any Distribution Date, the
portion of any Termination Payment payable by the Trust to the Cap Provider
previously due on a prior Distribution Date that remains unpaid on such
Distribution Date plus interest thereon at the Default Rate for the period
from the date such Termination Payment was due but unpaid to but excluding the
date such amount has been paid (such interest to be compounded daily).
"Certificate": Any one of the certificates issued under this
Agreement in substantially the forms attached hereto as Exhibits A1 through
A-8.
"Certificate Factor": With respect to any Class of LIBOR
Certificates as of any Distribution Date, a fraction, expressed as a decimal
carried to six places, the numerator of which is the aggregate Certificate
Principal Balance of such Class of Certificates on such Distribution Date
(after giving effect to any distributions of principal and allocations of
Realized Losses in reduction of the Certificate Principal Balance of such
Class of Certificates to be made on such Distribution Date), and the
denominator of which is the initial aggregate Certificate Principal Balance of
such Class of Certificates as of the Closing Date.
"Certificate Margin": As to any Class of LIBOR Certificates, the
respective amount set forth below:
Certificate Margin
Class (1) (2)
----- ----------- ------
A1 0.270% 0.540%
M1 0.600% 0.900%
M2 1.050% 1.575%
B 1.800% 2.700%
(1) Through and including the Optional Termination Date.
(2) After the Optional Termination Date.
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"Certificate Owner": With respect to a Book-Entry Certificate, the
Person who is the beneficial owner of such Certificate as reflected on the
books of the Depository or on the books of a Depository Participant or on the
books of an indirect participating brokerage firm for which a Depository
Participant acts as agent.
"Certificate Principal Balance": With respect to any Class of
Certificates, other than the Class R, Class X, Class A-IO and Class B-IO
Certificates, as of any date of determination, the Certificate Principal
Balance of such Class on the Distribution Date immediately prior to such date
of determination, minus all distributions allocable to principal made thereon
and Realized Losses allocated thereto on the immediately prior Distribution
Date (or, in the case of any date of determination up to and including the
first Distribution Date, the initial Certificate Principal Balance of such
Class, as stated on the face thereof). The Class A-IO, Class B-IO, and the
Residual Certificates do not have a Certificate Principal Balance.
"Certificate Register" and "Certificate Registrar": The register
maintained and the registrar appointed pursuant to Section 5.02.
"Certificateholder" or "Holder": The Person in whose name a
Certificate is registered in the Certificate Register, except that a
Disqualified Organization or a Non-United States Person shall not be a Holder
of a Residual Certificate for any purposes hereof and, solely for the purposes
of giving any consent pursuant to this Agreement, any Certificate registered
in the name of the Depositor or the Servicer or any Affiliate thereof shall be
deemed not to be outstanding and the Voting Rights to which it is entitled
shall not be taken into account in determining whether the requisite
percentage of Voting Rights necessary to effect any such consent has been
obtained, except as otherwise provided in Section 11.01. The Trustee may
conclusively rely upon a certificate of the Depositor or the Servicer in
determining whether a Certificate is held by an Affiliate thereof. All
references herein to "Holders" or "Certificateholders" shall reflect the
rights of Certificate Owners as they may indirectly exercise such rights
through the Depository and participating members thereof, except as otherwise
specified herein; provided, however, that the Trustee shall be required to
recognize as a "Holder" or "Certificateholder" only the Person in whose name a
Certificate is registered in the Certificate Register.
"Class": All of the Certificates bearing the same class designation
as set forth in the Preliminary Statement.
"Class A1 Principal Distribution Amount": With respect to any
Distribution Date, the excess of (x) the aggregate Certificate Principal
Balance of the Certificates immediately prior to such Distribution Date over
(y) the lesser of (A) the product of (i) 81.50% and (ii) the Aggregate
Collateral Balance as of the last day of the related Due Period and (B) the
Aggregate Collateral Balance as of the last day of the related Due Period
minus $5,856,556.
"Class B Principal Distribution Amount": With respect to any
Distribution Date, the excess of (x) the sum of (i) the aggregate Certificate
Principal Balance of the Class A1 Certificates (after taking into account the
payment of the Class A1 Principal Distribution Amount on such Distribution
Date), (ii) the Certificate Principal Balance of the Class M1 Certificates
(after taking into account the payment of the Class M1 Principal Distribution
7
Amount on such Distribution Date), (iii) the Certificate Principal Balance of
the Class M2 Certificates (after taking into account the payment of the Class
M2 Principal Distribution Amount on such Distribution Date) and (iv) the
Certificate Principal Balance of the Class B Certificates immediately prior to
such Distribution Date over (y) the lesser of (A) the product of (i) 98.00%
and (ii) the Aggregate Collateral Balance as of the last day of the related
Due Period and (B) the Aggregate Collateral Balance as of the last day of the
related Due Period minus $5,856,556.
"Class B-IO Cap Rate": With respect to any Distribution Date on or
prior to the eighteenth Distribution Date shall be a per annum rate equal to
the difference between (A) the weighted average of the Expense Adjusted
Mortgage Rates on the Mortgage Loans as of the beginning of the related Due
Period and (B) the sum of the Strip Amount for such Distribution Date and the
Monthly Interest Distributable Amount for the Class A-IO Certificates for such
Distribution Date, multiplied by a fraction, the numerator of which is twelve
and the denominator of which is the Stated Principal Balance of the Mortgage
Loans as of the beginning of the related Due Period (adjusted to an effective
rate reflecting accrued interest calculated on the basis of a 360-day year and
the actual number of days elapsed).
"Class Exemption": A class exemption granted by the U.S. Department
of Labor, which provides relief from certain of the prohibited transaction
provisions of ERISA and the related excise tax provisions of the Code.
"Class M1 Principal Distribution Amount": With respect to any
Distribution Date, the excess of (x) the sum of (i) the Certificate Principal
Balance of the Class A1 Certificates (after taking into account the payment of
the Class A1 Principal Distribution Amount on such Distribution Date) and (ii)
the Certificate Principal Balance of the Class M1 Certificates immediately
prior to such Distribution Date over (y) the lesser of (A) the product of (i)
88.00% and (ii) the Aggregate Collateral Balance as of the last day of the
related Due Period and (B) the Aggregate Collateral Balance as of the last day
of the related Due Period minus $5,856,556.
"Class M2 Principal Distribution Amount": With respect to any
Distribution Date, the excess of (x) the sum of (i) the Certificate Principal
Balance of the Class A1 Certificates (after taking into account the payment of
the related Class A1 Principal Distribution Amount on such Distribution Date),
(ii) the Certificate Principal Balance of the Class M1 Certificates (after
taking into account the payment of the Class M1 Principal Distribution Amount
on such Distribution Date) and (iii) the Certificate Principal Balance of the
Class M2 Certificates immediately prior to such Distribution Date over (y) the
lesser of (A) the product of (i) 93.00% and (ii) the Aggregate Collateral
Balance as of the last day of the related Due Period and (B) the Aggregate
Collateral Balance as of the last day of the related Due Period minus
$5,856,556.
"Class X Distribution Amount": With respect to any Distribution Date
the sum of (i) the Overcollateralization Reduction Amount, if any, remaining
after the making of all applications, transfers and disbursements described in
Section 4.01(a)(3)(i)-(xiv) and (ii) the product of footnotes (3) and (4) of
Section 1.03(a) hereof for that Distribution Date.
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"Closing Date": September 27, 2001.
"Code": The Internal Revenue Code of 1986, including any successor
or amendatory provisions.
"Collection Account": The account or accounts created and maintained
by the Servicer pursuant to Section 3.10(a), which shall be entitled "Option
One Mortgage Corporation, as the Servicer for ▇▇▇▇▇ Fargo Bank Minnesota,
National Association as Trustee, in trust for the registered holders of Asset
Backed Securities Corporation Home Equity Loan Trust 2001-HE3, Series
2001-HE3". The Collection Account must be an Eligible Account.
"Commission": The Securities and Exchange Commission.
"Compensating Interest": As defined in Section 3.24 hereof.
"Controlling Person": The majority of the Percentage Interest of the
Holders of Class X Certificates.
"Corporate Trust Office": The principal corporate trust office of
the Trustee at which at any particular time its corporate trust business in
connection with this Agreement shall be administered, which offices at the
date of the execution of this instrument is located: (i) for certificate
transfer purposes, at ▇▇▇▇▇ Fargo Bank Minnesota, National Association, Sixth
and Marquette, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: CSFB 2001-HE3, and
(ii) for all other purposes, at ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: CSFB 2001-HE3 or at such other address as the Trustee may
designate from time to time by notice to the Certificateholders, the
Depositor, the Servicer, and the Trustee.
"Corresponding Classes of Certificates": With respect to each REMIC
Regular Interest, any Class of Certificates appearing opposite such REMIC
Regular Interest in Section 1.03 hereof.
"Credit Enhancement Percentage": For any Distribution Date, the
percentage obtained by dividing (x) the sum of (i) the aggregate Certificate
Principal Balances of the Subordinated Offered Certificates (after giving
effect to the distribution of the Principal Distribution Amount on such
Distribution Date) and (ii) the Overcollateralized Amount by (y) the aggregate
Stated Principal Balance of the Mortgage Loans as of the last day of the
related Due Period and the amount on deposit in the Prefunding Account (net of
investment earnings) immediately prior to such date.
"Custodian": US Bank Trust National Association.
"Custodial Agreement": That certain custodial agreement by and among
the Trustee, the Depositor and Credit Suisse First Boston Mortgage Capital
LLC, as the same may be amended or supplemented from time to time.
"Cut-off Date": With respect to each Original Mortgage Loan that is
an Initial Mortgage Loan, September 1, 2001. With respect to each Original
Mortgage Loan that is a Subsequent Mortgage Loan, the applicable Subsequent
Transfer Date. With respect to all
9
Qualified Substitute Mortgage Loans, their respective dates of substitution.
References herein to the "Cut-off Date," when used with respect to more than
one Mortgage Loan, shall be to the respective Cut-off Dates for such Mortgage
Loans.
"Debt Service Reduction": With respect to any Mortgage Loan, a
reduction in the scheduled Monthly Payment for such Mortgage Loan by a court
of competent jurisdiction in a proceeding under the Bankruptcy Code, except
such a reduction resulting from a Deficient Valuation.
"Default Rate": As defined in the Cap Agreement.
"Deficient Valuation": With respect to any Mortgage Loan, a
valuation of the related Mortgaged Property by a court of competent
jurisdiction in an amount less than the then outstanding principal balance of
the Mortgage Loan, which valuation results from a proceeding initiated under
the Bankruptcy Code.
"Definitive Certificates": As defined in Section 5.01(b).
"Deleted Mortgage Loan": A Mortgage Loan replaced or to be replaced
by a Qualified Substitute Mortgage Loan.
"Delinquency Percentage": With respect to the last day of a Due
Period, the percentage equivalent of a fraction, the numerator of which is the
aggregate Stated Principal Balance of all Mortgage Loans that, as of the last
day of the previous calendar month, are 60 or more days delinquent, are in
foreclosure, have been converted to REO Properties or have been discharged by
reason of bankruptcy, and the denominator of which is the sum of (x) the
aggregate Stated Principal Balance of the Mortgage Loans and REO Properties of
the last day of the previous calendar month and (y) the amount of deposit in
the Prefunding Account on such date.
"Depositor": Asset Backed Securities Corporation, a Delaware
corporation, or its successor in interest.
"Depository": The Depository Trust Company, or any successor
Depository hereafter named. The nominee of the initial Depository, for
purposes of registering those Certificates that are to be Book-Entry
Certificates, is CEDE & Co. The Depository shall at all times be a "clearing
corporation" as defined in Section 8-102(a)(5) of the Uniform Commercial Code
of the State of New York and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Securities Exchange Act of 1934, as amended.
"Depository Institution": Any depository institution or trust
company, including the Trustee, that (a) is incorporated under the laws of the
United States of America or any State thereof, (b) is subject to supervision
and examination by federal or state banking authorities and (c) has
outstanding unsecured commercial paper or other short-term unsecured debt
obligations that are rated F-1 (if rated by Fitch), A-1+ by S&P and P-1 by
Moody's (or comparable ratings if Fitch and Moody's are not the Rating
Agencies).
10
"Depository Participant": A broker, dealer, bank or other financial
institution or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
"Determination Date": With respect to each Distribution Date, the
5th day of the calendar month in which such Distribution Date occurs or, if
such 5th day is not a Business Day, the Business Day immediately preceding
such 5th day.
"Directly Operate": With respect to any REO Property, the furnishing
or rendering of services to the tenants thereof, the management or operation
of such REO Property, the holding of such REO Property primarily for sale to
customers, the performance of any construction work thereon or any use of such
REO Property in a trade or business conducted by the Trust Fund other than
through an Independent Contractor; provided, however, that the Trustee (or the
Servicer on behalf of the Trustee) shall not be considered to Directly Operate
an REO Property solely because the Trustee (or the Servicer on behalf of the
Trustee) establishes rental terms, chooses tenants, enters into or renews
leases, deals with taxes and insurance, or makes decisions as to repairs or
capital expenditures with respect to such REO Property.
"Disqualified Organization": Any of the following: (i) the United
States, any State or political subdivision thereof, any possession of the
United States, or any agency or instrumentality of any of the foregoing (other
than an instrumentality which is a corporation if all of its activities are
subject to tax and, except for ▇▇▇▇▇▇▇ Mac, a majority of its board of
directors is not selected by such governmental unit), (ii) any foreign
government, any international organization, or any agency or instrumentality
of any of the foregoing, (iii) any organization (other than certain farmers'
cooperatives described in Section 521 of the Code) which is exempt from the
tax imposed by Chapter 1 of the Code (including the tax imposed by Section 511
of the Code on unrelated business taxable income), (iv) rural electric and
telephone cooperatives described in Section 1381(a)(2)(C) of the Code, (v) an
"electing large partnership" within the meaning of Section 775 of the Code and
(vi) any other Person so designated by the Trustee based upon an Opinion of
Counsel that the holding of an Ownership Interest in a Residual Certificate by
such Person may cause any REMIC created hereunder, or any Person having an
Ownership Interest in any Class of Certificates (other than such Person) to
incur a liability for any federal tax imposed under the Code that would not
otherwise be imposed but for the Transfer of an Ownership Interest in a
Residual Certificate to such Person. The terms "United States," "State" and
"international organization" shall have the meanings set forth in Section 7701
of the Code or successor provisions.
"Distribution Account": The trust account or accounts created and
maintained by the Trustee pursuant to Section 3.10(b) which shall be entitled
"Distribution Account, ▇▇▇▇▇ Fargo Bank Minnesota, National Association, as
Trustee, in trust for the registered holders of Asset Backed Securities
Corporation Home Equity Loan Trust 2001-HE3, Series 2001-HE3". The
Distribution Account must be an Eligible Account.
"Distribution Date": The 15th day of any month, or if such 15th day
is not a Business Day, the Business Day immediately following such 15th day,
commencing in October 2001.
11
"Double Adjusted Net WAC": As to any Distribution Date, will be a
per annum rate equal to (a) the Adjusted Net WAC less (b) the Current Interest
for the Class A-IO Certificate for such date, divided by the Aggregate
Collateral Balance immediately preceding such Distribution Date. This rate
will be adjusted to correspond with the day counting convention used for the
Certificates.
"Due Date": With respect to each Distribution Date, the first day of
the calendar month in which such Distribution Date occurs, which is generally
the day of the month on which the Monthly Payment is due on a Mortgage Loan,
exclusive of any days of grace.
"Due Period": With respect to any Distribution Date, the period
commencing on the second day of the month immediately preceding the month in
which such Distribution Date occurs and ending on the related Due Date.
"Early Termination Date": As defined in the Cap Agreement.
"Early Termination Fund": The separate Eligible Account created and
initially maintained by the Trustee pursuant to Section 4.07 in the name of
the Trustee for the benefit of the Certificateholders and designated "▇▇▇▇▇
Fargo Bank Minnesota, National Association in trust for registered holders of
Asset Backed Securities Corp., Asset Backed Pass-Through Certificates, Series
2001-HE3." The Early Termination Fund shall not be part of any REMIC. Funds in
the Early Termination Fund shall be held in trust for the Class X
Certificateholders for the uses and purposes set forth in this Agreement.
"Eligible Account": Any of (i) an account or accounts maintained
with a Depository Institution, (ii) an account or accounts the deposits in
which are fully insured by the FDIC or (iii) a trust account or accounts
maintained with the corporate trust department of a federal or state chartered
depository institution or trust company acting in its fiduciary capacity.
Eligible Accounts may bear interest.
"ERISA": The Employee Retirement Income Security Act of 1974, as
amended.
"Estate in Real Property": A fee simple estate in a parcel of land.
"Excess Overcollateralized Amount": With respect to any Distribution
Date, the excess, if any, of (i) the Overcollateralized Amount for such
Distribution Date over (ii) the Required Overcollateralized Amount for such
Distribution Date.
"Expense Adjusted Mortgage Rate": With respect to any Mortgage Loan
or REO Property, the then applicable Mortgage Rate thereon minus the related
Expense Fee Rate expressed as a per annum rate.
"Expense Fee Rate": For any Distribution Date and Mortgage Loan, the
sum of (i) the Servicing Fee Rate and (ii) the MGIC Fee Rate, if applicable,
for that Mortgage Loan.
"Expense Fees": For any Distribution Date and Mortgage Loan, the sum
of (i) the Servicing Fee and (ii) the MGIC Fee, if applicable, for that
Mortgage Loan.
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"Extraordinary Trust Fund Expense": Any amounts reimbursable to the
Trustee, or any director, officer, employee or agent of the Trustee, from the
Trust Fund pursuant to Section 2.02, 3.02(b) or 8.05(a), any amounts payable
from the Distribution Account in respect of taxes pursuant to Section
10.01(g)(iii), any amounts payable from the Distribution Account in respect of
any REMIC Administration pursuant to Section 10.01(c) and any amounts payable
from the Trust Fund as a trustee fee or any successor trustee and any amounts
payable by the Trustee pursuant to Section 2.02.
"▇▇▇▇▇▇ Mae": ▇▇▇▇▇▇ ▇▇▇, formally known as the Federal National
Mortgage Association, or any successor thereto.
"FDIC": Federal Deposit Insurance Corporation or any successor
thereto.
"Final Recovery Determination": With respect to any defaulted
Mortgage Loan or any REO Property (other than a Mortgage Loan or REO Property
purchased by the Seller, the Depositor or the Servicer pursuant to or as
contemplated by Section 2.03, Section 3.16(c) or Section 9.01), a
determination made by the Servicer that all Insurance Proceeds, Liquidation
Proceeds and other payments or recoveries which the Servicer, in its
reasonable good faith judgment, expects to be finally recoverable in respect
thereof have been so recovered. The Servicer shall maintain records, prepared
by a Servicing Officer, of each Final Recovery Determination made thereby.
"Fitch": Fitch, Inc., or its successor in interest.
"Formula Rate": As to any Class of LIBOR Certificates and any
Distribution Date, the sum of One-Month LIBOR and the applicable Certificate
Margin.
"▇▇▇▇▇▇▇ Mac": ▇▇▇▇▇▇▇ Mac, formally known as the Federal Home Loan
Mortgage Corporation, or any successor thereto.
"Gross Margin": With respect to each Adjustable Rate Mortgage Loan,
the fixed percentage set forth in the related Mortgage Note that is added to
the Index on each Adjustment Date in accordance with the terms of the related
Mortgage Note used to determine the Mortgage Rate for such Mortgage Loan.
"Independent": When used with respect to any specified Person, any
such Person who (a) is in fact independent of the Depositor, the Servicer and
their respective Affiliates, (b) does not have any direct financial interest
in or any material indirect financial interest in the Depositor, the Servicer
or any Affiliate thereof, and (c) is not connected with the Depositor, the
Servicer or any Affiliate thereof as an officer, employee, promoter,
underwriter, trustee, partner, director or Person performing similar
functions; provided, however, that a Person shall not fail to be Independent
of the Depositor, the Servicer or any Affiliate thereof merely because such
Person is the beneficial owner of 1% or less of any Class of securities issued
by the Depositor or the Servicer or any Affiliate thereof, as the case may be.
"Independent Contractor": Either (i) any Person (other than the
Servicer) that would be an "independent contractor" with respect to the Trust
Fund within the meaning of Section 856(d)(3) of the Code if the Trust Fund
were a real estate investment trust (except that
13
the ownership tests set forth in that section shall be considered to be met by
any Person that owns, directly or indirectly, 35% or more of any Class of
Certificates), so long as the Trust Fund does not receive or derive any income
from such Person and provided that the relationship between such Person and
the Trust Fund is at arm's length, all within the meaning of Treasury
Regulation Section 1.856-4(b)(5), or (ii) any other Person (including the
Servicer) if the Trustee has received an Opinion of Counsel to the effect that
the taking of any action in respect of any REO Property by such Person,
subject to any conditions therein specified, that is otherwise herein
contemplated to be taken by an Independent Contractor will not cause such REO
Property to cease to qualify as "foreclosure property" within the meaning of
Section 860G(a)(8) of the Code (determined without regard to the exception
applicable for purposes of Section 860D(a) of the Code), or cause any income
realized in respect of such REO Property to fail to qualify as Rents from Real
Property.
"Index": With respect to each Adjustable Rate Mortgage Loan and each
related Adjustment Date, the average of the interbank offered rates for
six-month United States dollar deposits in the London market as published in
The Wall Street Journal and as most recently available as of a date as
specified in the related Mortgage Note.
"Initial Cut-off Date": September 1, 2001.
"Initial Mortgage Loan": A Mortgage Loan conveyed to the Trust Fund
on the Closing Date pursuant to this Agreement as identified on the Mortgage
Loan Schedule delivered to the Trustee on the Closing Date.
"Insurance Proceeds": Proceeds of any title policy, hazard policy or
other insurance policy covering a Mortgage Loan, including the MGIC Policy, to
the extent such proceeds are not to be applied to the restoration of the
related Mortgaged Property or released to the Mortgagor in accordance with the
procedures that the Servicer would follow in servicing Mortgage Loans held for
its own account, subject to the terms and conditions of the related Mortgage
Note and Mortgage.
"Interest Accrual Period": For any Distribution Date and (a) the
Class A-IO and Class B-IO Certificates for a given Distribution Date will be
the calendar month preceding the month of such Distribution Date based on a
360-day year consisting of twelve 30-day months (except, with respect to the
Class B-IO Certificates and the first such Interest Accrual Period will
commence on the Closing Date) and (b) the LIBOR Certificates for a given
Distribution Date will be the actual number of days (based on a 360-day year)
included in the period commencing on the immediately preceding Distribution
Date (or, in the case of the first such Accrual Period, commencing on the
Closing Date) and ending on the day immediately preceding such Distribution
Date. All distributions of interest on the LIBOR Certificates will be based on
a 360-day year and the actual number of days in the applicable Interest
Accrual Period.
"Interest Determination Date": With respect to the LIBOR
Certificates and any Interest Accrual Period therefor, the second London
Business Day preceding the commencement of such Interest Accrual Period.
14
"Interest Distribution Amount": With respect to any Distribution
Date and any Class of Offered Certificates and any Class B-IO Certificate, the
sum of the aggregate Accrued Certificate Interest on the Certificates of such
Class for such Distribution Date and the related Unpaid Interest Shortfall
Amount.
"Interest Remittance Amount": With respect to any Distribution Date,
that portion of the Available Distribution Amount for such Distribution Date
allocable to interest for such Distribution Date.
"Late Collections": With respect to any Mortgage Loan and any Due
Period, all amounts received subsequent to the Determination Date immediately
following such Due Period, whether as late payments of Monthly Payments or as
Insurance Proceeds, Liquidation Proceeds or otherwise, which represent late
payments or collections of principal and/or interest due (without regard to
any acceleration of payments under the related Mortgage and Mortgage Note) but
delinquent for such Due Period and not previously recovered.
"LIBOR Certificates": As specified in the Preliminary Statement.
"Liquidation Event": With respect to any Mortgage Loan, any of the
following events: (i) such Mortgage Loan is paid in full; (ii) a Final
Recovery Determination is made as to such Mortgage Loan; or (iii) such
Mortgage Loan is removed from the Trust Fund by reason of its being purchased,
sold or replaced pursuant to or as contemplated by Section 2.03, Section
3.16(c) or Section 9.01. With respect to any REO Property, either of the
following events: (i) a Final Recovery Determination is made as to such REO
Property; or (ii) such REO Property is removed from the Trust Fund by reason
of its being purchased pursuant to Section 9.01.
"Liquidation Proceeds": The amount (other than Insurance Proceeds or
amounts received in respect of the rental of any REO Property prior to REO
Disposition) received by the Servicer in connection with (i) the taking of all
or a part of a Mortgaged Property by exercise of the power of eminent domain
or condemnation, (ii) the liquidation of a defaulted Mortgage Loan through a
trustee's sale, foreclosure sale or otherwise, or (iii) the repurchase,
substitution or sale of a Mortgage Loan or an REO Property pursuant to or as
contemplated by Section 2.03, Section 3.16(c), Section 3.23 or Section 9.01.
"Loan-to-Value Ratio" or "LTV" : As of any date of determination,
the fraction, expressed as a percentage, the numerator of which is the
principal balance of the related Mortgage Loan at such date and the
denominator of which is the Value of the related Mortgaged Property.
"London Business Day": Any day on which banks in the City of London
and The City of New York are open and conducting transactions in United States
dollars.
"Master REMIC": REMIC V.
"Maximum Mortgage Rate": With respect to each Adjustable Rate
Mortgage Loan, the percentage set forth in the related Mortgage Note as the
maximum Mortgage Rate thereunder.
15
"MGIC": Mortgage Guaranty Insurance Corporation.
"MGIC Fee": As to each MGIC Mortgage Loan and any Distribution Date,
an amount equal to one month's interest at the MGIC Fee Rate on the Stated
Principal Balance of such MGIC Mortgage Loan as of the Due Date in the month
of such Distribution Date (prior to giving effect to any Scheduled Payments
due on such MGIC Mortgage Loan on such Due Date).
"MGIC Fee Rate": With respect to each MGIC Mortgage Loan, the per
annum rate equal to 1.40%.
"MGIC Mortgage Loan": Those Mortgage Loans identified on the
Mortgage Loan Schedule as to which the MGIC Policy provides coverage.
"MGIC Policy": The mortgage guaranty insurance policy issued by
MGIC, attached hereto as Exhibit I.
"MGIC Premium": For any Distribution Date, the aggregate MGIC Fees
for such Distribution Date.
"Minimum Mortgage Rate": With respect to each Adjustable Rate
Mortgage Loan, the greater of (a) the Gross Margin set forth in the related
Mortgage Note and (b) the percentage set forth in the related Mortgage Note as
the minimum Mortgage Rate thereunder.
"Monthly Payment": With respect to any Mortgage Loan, the scheduled
monthly payment of principal and interest on such Mortgage Loan which is
payable by the related Mortgagor from time to time under the related Mortgage
Note, determined: (a) after giving effect to (i) any Deficient Valuation
and/or Debt Service Reduction with respect to such Mortgage Loan and (ii) any
reduction in the amount of interest collectible from the related Mortgagor
pursuant to the Relief Act; (b) without giving effect to any extension granted
or agreed to by the Servicer pursuant to Section 3.07; and (c) on the
assumption that all other amounts, if any, due under such Mortgage Loan are
paid when due.
"Moody's": ▇▇▇▇▇'▇ Investors Service, Inc. or its successor in
interest.
"Mortgage": The mortgage, deed of trust or other instrument creating
a first lien on, or first priority security interest in, a Mortgaged Property
securing a Mortgage Note.
"Mortgage File": The mortgage documents listed in Section 2.01
pertaining to a particular Mortgage Loan and any additional documents required
to be added to the Mortgage File pursuant to this Agreement.
"Mortgage Loan": Each Mortgage Loan transferred and assigned to the
Trustee pursuant to Section 2.01 or Section 2.03(d) of this Agreement, as held
from time to time as a part of the Trust Fund, the Original Mortgage Loans so
held being identified in the Mortgage Loan Schedule, including each REO
Property unless the context otherwise requires. For the avoidance of doubt a
Mortgage Loan may be either an Initial Mortgage Loan or a Subsequent Mortgage
Loan.
16
"Mortgage Loan Purchase Agreement": Any one of the agreements
between an Originator and the Seller, regarding the sale of the related
Mortgage Loans by such Originator to the Seller.
"Mortgage Loan Schedule": As of any date, the list of Mortgage Loans
included in the Trust Fund on such date, attached hereto as Schedule 1. The
Mortgage Loan Schedule shall set forth the following information with respect
to each Mortgage Loan:
(i) the Mortgagor's name and the related Originator's
Mortgage Loan identifying number;
(ii) the street address of the Mortgaged Property
including the state and zip code;
(iii) a code indicating whether the Mortgaged Property is
owner-occupied;
(iv) the type of Residential Dwelling constituting the
Mortgaged Property;
(v) the original months to maturity;
(vi) the Loan-to-Value Ratio at origination;
(vii) the Mortgage Rate in effect immediately following
the Cut-off Date;
(viii) the date on which the first Monthly Payment was due
on the Mortgage Loan;
(ix) the stated maturity date;
(x) the amount of the Monthly Payment due on the first Due
Date after the Cut-off Date;
(xi) the last Due Date on which a Monthly Payment was
actually applied to the unpaid Stated Principal Balance;
(xii) the original principal amount of the Mortgage Loan;
(xiii) the Scheduled Principal Balance of the Mortgage
Loan as of the close of business on the Cut-off Date;
(xiv) with respect to each Adjustable Rate Mortgage Loan,
the Gross Margin;
(xv) a code indicating the purpose of the Mortgage Loan
(i.e., purchase financing, rate/term refinancing, cash-out
refinancing);
17
(xvi) with respect to each Adjustable Rate Mortgage Loan,
the Maximum Mortgage Rate;
(xvii) with respect to each Adjustable Rate Mortgage Loan,
the Minimum Mortgage Rate;
(xviii) the Mortgage Rate at origination;
(xix) with respect to each Adjustable Rate Mortgage Loan,
the Periodic Rate Cap and the maximum first Adjustment Date Mortgage
Rate adjustment;
(xx) a code indicating the documentation program;
(xxi) with respect to each Adjustable Rate Mortgage Loan,
the first Adjustment Date immediately following the Cut-off Date;
(xxii) the risk grade and a code indicating whether the
Mortgage Loan is a MGIC Mortgage Loan;
(xxiii) the Value of the Mortgaged Property; and
(xxiv) the sale price of the Mortgaged Property, if
applicable.
The Mortgage Loan Schedule shall be comprised of four parts,
Part A, Part B, Part C and Part D relating to the Mortgage Loans originated by
each Originator and set forth the following information with respect to the
Mortgage Loans in the aggregate as of the Cut-off Date: (1) the number of
Mortgage Loans; (2) the current principal balance of the Mortgage Loans; (3)
the weighted average Mortgage Rate of the Mortgage Loans; and (4) the weighted
average maturity of the Mortgage Loans. The Mortgage Loan Schedule shall set
forth the aggregate Stated Principal Balance of the Mortgage Loans. The
Mortgage Loan Schedule shall be amended from time to time by the Depositor in
accordance with the provisions of this Agreement. With respect to any
Qualified Substitute Mortgage Loan, the Cut-off Date shall refer to the
related Cut-off Date for such Mortgage Loan, determined in accordance with the
definition of Cut-off Date herein.
"Mortgage Note": The original executed note or other evidence of the
indebtedness of a Mortgagor under a Mortgage Loan.
"Mortgage Pool": The pool of Mortgage Loans, identified on Schedule
1 from time to time, and any REO Properties acquired in respect thereof.
"Mortgage Rate": With respect to each Mortgage Loan, the annual rate
at which interest accrues on such Mortgage Loan from time to time in
accordance with the provisions of the related Mortgage Note, which rate with
respect to each Adjustable Rate Mortgage Loan (A) as of any date of
determination until the first Adjustment Date following the Cut-off Date shall
be the rate set forth in the Mortgage Loan Schedule as the Mortgage Rate in
effect immediately following the Cut-off Date and (B) as of any date of
determination thereafter shall be the rate as adjusted on the most recent
Adjustment Date equal to the sum, rounded to the
18
nearest or next highest 0.125% as provided in the Mortgage Note, of the Index,
as most recently available as of a date prior to the Adjustment Date as set
forth in the related Mortgage Note, plus the related Gross Margin; provided
that the Mortgage Rate on such Mortgage Loan on any Adjustment Date shall
never be more than the lesser of (i) the sum of the Mortgage Rate in effect
immediately prior to the Adjustment Date plus the related Periodic Rate Cap,
if any, and (ii) the related Maximum Mortgage Rate, and shall never be less
than the greater of (i) the Mortgage Rate in effect immediately prior to the
Adjustment Date less the Periodic Rate Cap, if any, and (ii) the related
Minimum Mortgage Rate. With respect to each Mortgage Loan that becomes an REO
Property, as of any date of determination, the annual rate determined in
accordance with the immediately preceding sentence as of the date such
Mortgage Loan became an REO Property.
"Mortgaged Property": The underlying property securing a Mortgage
Loan, including any REO Property, consisting of an Estate in Real Property or
a leasehold interest improved by a Residential Dwelling.
"Mortgagor": The obligor on a Mortgage Note.
"Net Monthly Excess Cashflow": With respect to any Distribution
Date, the sum of (i) any Overcollateralization Reduction Amount for such
Distribution Date and (ii) the excess of (x) the Available Distribution Amount
for such Distribution Date over (y) the sum for such Distribution Date of (A)
the aggregate Interest Distribution Amount payable to the holders of the Class
A1 and Class A-IO Certificates and the Accrued Certificate Interest payable to
the holders of the Subordinated Certificates and any Strip Amount required to
be distributed and any payment of the MGIC Fee to MGIC on that Distribution
Date, each pursuant to Section 4.01(a)(1)(i) and (B) the sum of the amounts
described in clauses (b)(i) through (iii) of the definition of Principal
Distribution Amount.
"Net Mortgage Rate": With respect to any Mortgage Loan (or the
related REO Property) as of any date of determination, a per annum rate of
interest equal to the then applicable Mortgage Rate for such Mortgage Loan
minus the Servicing Fee Rate.
"Net WAC Carryover Amount": With respect to each Class of LIBOR
Certificates and a Distribution Date, an amount equal to the sum of (A) the
excess of (1) the amount of interest such Class of Certificates would
otherwise be entitled to receive on the Distribution Date had the related
Pass-Through Rate been calculated at the related Formula Rate for such
Distribution Date over (2) the amount of interest payable on such Class of
Certificates at the Available Funds Cap for such Distribution Date and (B) the
Net WAC Carryover Amount for such Class of Certificates for all previous
Distribution Dates not previously paid to such Certificateholders (including
any interest accrued on that amount at the related Formula Rate).
"Net WAC Fund": The Eligible Account established pursuant to Section
3.26.
"New Lease": Any lease of REO Property entered into on behalf of the
Trust Fund, including any lease renewed or extended on behalf of the Trust
Fund, if the Trust Fund has the right to renegotiate the terms of such lease.
19
"Nonrecoverable P&I Advance": Any P&I Advance previously made or
proposed to be made in respect of a Mortgage Loan or REO Property that, in the
good faith business judgment of the Servicer using Accepted Servicing
Practices, will not or, in the case of a proposed P&I Advance, would not be
ultimately recoverable from related late collections, Insurance Proceeds or
Liquidation Proceeds on such Mortgage Loan or REO Property as provided herein.
"Nonrecoverable Servicing Advance": Any Servicing Advance previously
made or proposed to be made in respect of a Mortgage Loan or REO Property
that, in the good faith business judgment of the Servicer using Accepted
Servicing Practices, will not or, in the case of a proposed Servicing Advance,
would not be ultimately recoverable from related Late Collections, Insurance
Proceeds or Liquidation Proceeds on such Mortgage Loan or REO Property as
provided herein.
"Non-United States Person": Any Person other than a United States
Person.
"Notional Amount": With respect to the Class A-IO Certificates and
(a) each Distribution Date through the 30th Distribution Date, the lesser of
(i) $212,000,000 and (ii) the aggregate Stated Principal Balance of the
Mortgage Loans as of the first day of the month of such Distribution Date
(prior to giving effect to scheduled payments of principal due on such date),
and (b) the 31st Distribution Date and each Distribution Date thereafter,
zero. With respect to the Class B-IO Certificates and (a) each Distribution
Date through the 18th Distribution Date, the lesser of (i) $44,916,700 and
(ii) the aggregate Stated Principal Balance of the Mortgage Loans as of the
first day of the month of such Distribution Date (prior to giving effect to
scheduled payments of principal due on such date), and (b) the 19th
Distribution Date and each Distribution Date thereafter, zero.
"Offered Certificates" : As defined in the Preliminary Statement.
"Officers' Certificate": With respect to the Depositor and the
Seller, a certificate signed by the Chairman of the Board, the Vice Chairman
of the Board, the President, a vice president (however denominated) or an
authorized agent, and by the Treasurer, the Secretary, or one of the assistant
treasurers or assistant secretaries of the Depositor or Seller, as applicable.
With respect to the Servicer, any officer who is authorized to act for the
Servicer in matters relating to this Agreement, and whose action is binding
upon the Servicer, initially including those individuals whose names appear on
the list of authorized officers delivered at the closing.
"One-Month LIBOR": With respect to the LIBOR Certificates and any
Interest Accrual Period therefor, the rate determined by the Trustee on the
related Interest Determination Date (or with respect to the initial Interest
Accrual Period, on the Closing Date based on information available on the
related Interest Determination Date) on the basis of the offered rate for
one-month U.S. dollar deposits, as such rate appears on Telerate Page 3750 as
of 11:00 a.m. (London time) on such Interest Determination Date; provided that
if such rate does not appear on Telerate Page 3750, the rate for such date
will be determined on the basis of the offered rates of the Reference Banks
for one-month U.S. dollar deposits, as of 11:00 a.m. (London time) on such
Interest Determination Date. In such event, the Trustee will request the
principal London office of each of the Reference Banks to provide a quotation
of its rate. If on such Interest
20
Determination Date, two or more Reference Banks provide such offered
quotations, One-Month LIBOR for the related Interest Accrual Period shall be
the arithmetic mean of such offered quotations (rounded upwards if necessary
to the nearest whole multiple of 1/16%). If on such Interest Determination
Date, fewer than two Reference Banks provide such offered quotations,
One-Month LIBOR for the related Interest Accrual Period shall be the higher of
(i) LIBOR as determined on the previous Interest Determination Date and (ii)
the Reserve Interest Rate. Notwithstanding the foregoing, if, under the
priorities described above, LIBOR for an Interest Determination Date would be
based on LIBOR for the previous Interest Determination Date for the third
consecutive Interest Determination Date, the Trustee shall select an
alternative comparable index (over which the Trustee has no control), used for
determining one-month Eurodollar lending rates that is calculated and
published (or otherwise made available) by an independent party.
"Operative Documents": The Mortgage Loan Purchase Agreements, the
Reconstitution Agreements, the Assignment and Assumption Agreement and any
other documents related hereto or thereto.
"Opinion of Counsel": A written opinion of counsel, who may, without
limitation, be salaried counsel for the Depositor or the Servicer and which
shall be acceptable to the Trustee (which acceptance shall not be unreasonably
withheld), except that any opinion of counsel relating to (a) the
qualification of any REMIC created hereunder or (b) compliance with the REMIC
Provisions must be an opinion of Independent counsel.
"Optional Termination Date": The date as specified pursuant to
Section 9.01(b).
"Original Mortgage Loan": Any of the Mortgage Loans included in the
Trust Fund as of the Closing Date.
"Originators": Any of New Century Mortgage Corporation, or its
successor in interest, People's Choice Home Loan, Inc., or its successor in
interest, Option One Mortgage Corporation, or its successor in interest, or
WMC Mortgage Corp., or its successor in interest.
"Overcollateralized Amount": As of any Distribution Date, the
excess, if any, of (a) the aggregate Stated Principal Balances of the Mortgage
Loans and REO Properties immediately following such Distribution Date over (b)
the sum of the aggregate Certificate Principal Balances of the LIBOR
Certificates and the Class P Certificates as of such Distribution Date (after
taking into account the payment of the amounts described in clauses (b)(i)
through (iv) of the definition of Principal Distribution Amount on such
Distribution Date).
"Overcollateralization Deficiency Amount": With respect to any
Distribution Date, the excess, if any, of (a) the Required Overcollateralized
Amount applicable to such Distribution Date over (b) the Overcollateralized
Amount applicable to such Distribution Date prior to taking into account the
payment of any Overcollateralization Increase Amount on such Distribution
Date.
"Overcollateralization Increase Amount": With respect to any
Distribution Date, the lesser of (a) the Overcollateralization Deficiency
Amount as of such Distribution Date (after taking into account the payment of
the Principal Distribution Amount on such Distribution Date,
21
exclusive of the payment of any Overcollateralization Increase Amount) and (b)
Net Monthly Excess Cash Flow available for distribution on that Distribution
Date pursuant to Section 4.01(a)(3)(ii).
"Overcollateralization Reduction Amount": With respect to any
Distribution Date, an amount equal to the lesser of (a) the Excess
Overcollateralized Amount and (b) the sum of the amounts available for
distribution specified in clauses (b)(i) through (iii) of the definition of
Principal Distribution Amount.
"Ownership Interest": As to any Certificate, any ownership or
security interest in such Certificate, including any interest in such
Certificate as the Holder thereof and any other interest therein, whether
direct or indirect, legal or beneficial, as owner or as pledgee.
"Pass-Through Rate": For any Distribution Date and any Class of
LIBOR Certificates, the lesser of (i) the related Formula Rate and (ii) the
Available Funds Cap for such Distribution Date. As to the Class B-IO
Certificates (a) for the first 18 Distribution Dates, the lesser of (x) 6.00%
per annum and (y) the Class B-IO Cap Rate, and (b) any other Distribution
Date, 0.00%. As to the Class A-IO Certificates and any Distribution Date, the
related per annum rate listed below:
Pass-Through
Distribution Date Rate
October 2001 through July 2002 6.50%
August 2002 through May 2003 5.05%
June 2003 through March 2004 3.60%
April 2004 and thereafter 0.00%
"Percentage Interest": With respect to any Class of LIBOR
Certificates, the undivided percentage ownership in such Class evidenced by
such Certificate, expressed as a percentage, the numerator of which is the
initial certificate balance represented by such Certificate and the
denominator of which is the initial certificate balance of all of the
Certificates of such Class. The LIBOR Certificates are issuable only in
minimum Percentage Interests corresponding to minimum initial certificate
balances of $50,000 and integral multiples of $1,000 in excess thereof. The
Class P Certificates are issuable only in minimum Percentage Interests
corresponding to minimum initial certificate balances of $20 and integral
multiples thereof. The Class X Certificates are issuable only in minimum
Percentage Interests corresponding to minimum initial certificate balance of
$100,000 and integral multiples of $1,000 in excess thereof. The Class A-IO
and Class B-IO Certificates are each issuable only in minimum Percentage
Interests corresponding to the respective minimal initial Notional Amount of
$100,000 and integral multiples of $1,000 in excess thereof. With respect to
any Residual Certificate, the undivided percentage ownership in such Class
evidenced by such Certificate, as
22
set forth on the face of such Certificate. The Residual Certificates are
issuable in Percentage Interests of 20% and multiples thereof.
"Periodic Rate Cap": With respect to each Adjustable Rate Mortgage
Loan and any Adjustment Date therefor, the fixed percentage set forth in the
related Mortgage Note, which is the maximum amount by which the Mortgage Rate
for such Mortgage Loan may increase or decrease (without regard to the Maximum
Mortgage Rate or the Minimum Mortgage Rate) on such Adjustment Date from the
Mortgage Rate in effect immediately prior to such Adjustment Date.
"Permitted Investments": Any one or more of the following
obligations or securities acquired at a purchase price of not greater than
par, regardless of whether issued by the Depositor, the Servicer, the Trustee
or any of their respective Affiliates:
(a) direct obligations of, or obligations fully guaranteed as
to timely payment of principal and interest by, the United
States or any agency or instrumentality thereof, provided
such obligations are backed by the full faith and credit
of the United States;
(b) demand and time deposits in, certificates of deposit of,
or bankers' acceptances (which shall each have an original
maturity of not more than 90 days and, in the case of
bankers' acceptances, shall in no event have an original
maturity of more than 365 days or a remaining maturity of
more than 30 days) denominated in United States dollars
and issued by, any Depository Institution;
(c) repurchase obligations with respect to any security
described in clause (i) above entered into with a
Depository Institution (acting as principal);
(d) securities bearing interest or sold at a discount that are
issued by any corporation incorporated under the laws of
the United States of America or any state thereof and that
are rated by each Rating Agency that rates such securities
in its highest long-term unsecured rating categories at
the time of such investment or contractual commitment
providing for such investment;
(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 30
days after the date of acquisition thereof) that is rated
by each Rating Agency that rates such securities in its
highest short-term unsecured debt rating available at the
time of such investment;
(f) units of money market funds, including money market funds
managed or advised by the Trustee or an Affiliate thereof,
that have been rated "AAA" by Fitch (if rated by Fitch),
"Aaa" by ▇▇▇▇▇'▇ and "AAA" by S&P (if rated by S&P); and
23
(g) if previously confirmed in writing to the Trustee, any
other demand, money market or time deposit, or any other
obligation, security or investment, as may be acceptable
to the Rating Agencies as a permitted investment of funds
backing securities having ratings equivalent to its
highest initial rating of the Class A1 Certificates;
provided, however, that no instrument described hereunder shall evidence
either the right to receive (a) only interest with respect to the obligations
underlying such instrument or (b) both principal and interest payments derived
from obligations underlying such instrument and the interest and principal
payments with respect to such instrument provide a yield to maturity at par
greater than 120% of the yield to maturity at par of the underlying
obligations.
"Permitted Transferee": Any Transferee of a Residual Certificate
other than a Disqualified Organization or Non-United States Person.
"Person": Any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.
"P&I Advance": As to any Mortgage Loan or REO Property, any advance
made by the Servicer in respect of any Distribution Date representing the
aggregate of all payments of principal and interest, net of the Servicing Fee,
that were due during the related Due Period on the Mortgage Loans and that
were delinquent on the related Determination Date, plus certain amounts
representing assumed payments not covered by any current net income on the
Mortgaged Properties acquired by foreclosure or deed in lieu of foreclosure as
determined pursuant to Section 4.03.
"Plan": Any employee benefit plan (as defined in Section 3(3) of
ERISA) or other plan as defined in Section 4975(e)(1) of the Code, including
individual retirement accounts and annuities and, ▇▇▇▇▇ plans, that is subject
to Title I of ERISA or Section 4975 of the Code.
"Pool Principal Balance": As of any Distribution Date, the aggregate
Stated Principal Balance of the Mortgage Loans.
"Pre-Funded Amount": The amount on deposit in the Prefunding
Account, which shall equal $102,792,000 on the Closing Date.
"Prefunding Account": The separate Eligible Account created and
maintained by the Trustee pursuant to Section 3.10(e) in the name of the
Trustee for the benefit of the Certificateholders and designated "▇▇▇▇▇ Fargo
Bank Minnesota, National Association, in trust for registered holders of in
trust for the registered holders of Asset Backed Securities Corporation Home
Equity Loan Trust 2001-HE3, Series 2001-HE3." Funds in the Prefunding Account
shall be held in trust for the Certificateholders for the uses and purposes
set forth in this Agreement and shall not be a part of any REMIC created
hereunder; provided, however, that any investment income earned from Permitted
Investments made with funds in the Prefunding Account shall be for the account
of the Depositor.
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"Prefunding Period": The period from the Closing Date until the
earlier of (i) the date on which the amount on deposit in the Prefunding
Account is reduced to zero, or (ii) an Event of Default occurs or (iii)
October 31, 2001.
"Prepayment Assumption": A constant prepayment rate ("CPR") of 26.0%
per annum of the then unpaid Stated Principal Balance of the Mortgage Loans.
The Prepayment Assumption is used solely for determining the accrual of
original issue discount on the Certificates for federal income tax purposes. A
CPR (or Constant Prepayment Rate) represents an annualized constant assumed
rate of prepayment each month of a pool of Mortgage Loans relative to its
outstanding principal balance for the life of such pool.
"Prepayment Charge": With respect to any Mortgage Loan and
Prepayment Period, any prepayment premium, penalty or charge collected by the
Servicer from a Mortgagor in connection with any voluntary Principal
Prepayment and held from time to time as a part of the Trust Fund. The
Servicer shall calculate, in good faith using Accepted Servicing Practices,
the amount of any Prepayment Charge solely pursuant to the terms of the
related Mortgage Note.
"Prepayment Interest Shortfall": With respect to any Distribution
Date, for each Mortgage Loan that was during the related Prepayment Period the
subject of a Principal Prepayment in full or in part that was applied by the
Servicer to reduce the outstanding principal balance of such loan on a date
preceding the Due Date in the succeeding Prepayment Period, an amount equal to
interest at the applicable Net Mortgage Rate on the amount of such Principal
Prepayment for the number of days commencing on the date on which the
prepayment is applied and ending on the last day of the related Prepayment
Period. The obligations of the Servicer in respect of any Prepayment Interest
Shortfall are set forth in Section 3.24.
"Prepayment Period": With respect to any Distribution Date, the
calendar month preceding the calendar month in which such Distribution Date
occurs.
"Prime Rate": The rate of interest equal to the prime rate as
reported in The Wall Street Journal.
"Principal Distribution Amount": With respect to any Distribution
Date, the lesser of:
(a) the excess of the Available Distribution Amount over the
amount payable on the Certificates pursuant to Section
4.01(a)(1); and
(b) (i) the sum of the principal portion of each Monthly
Payment on the Mortgage Loans due during the related Due
Period, whether or not received on or prior to the related
Determination Date;
(ii) the Stated Principal Balance of any Mortgage Loan
that was purchased during the related Prepayment Period
pursuant to or as contemplated by Section 2.03, Section
3.16(c) or Section 9.01 and the amount of any shortfall
deposited in the Collection Account in connection with the
substitution of a Deleted Mortgage Loan pursuant to
Section 2.03 during the related Prepayment Period;
25
(iii) the principal portion of all other unscheduled
collections (including, without limitation, Principal
Prepayments, Insurance Proceeds, Liquidation Proceeds and
REO Principal Amortization) received during the related
Prepayment Period, net of any portion thereof that
represents a recovery of principal for which an advance
was made by the Servicer pursuant to Section 4.03 in
respect of a preceding Distribution Date;
(iv) the principal portion of any Realized Losses incurred
on the Mortgage Loans during the related Prepayment Period
to the extent covered by Net Monthly Excess Cashflow for
such Distribution Date; and
(v) the amount of any Overcollateralization Increase
Amount for such Distribution Date to the extent covered by
Net Monthly Excess Cashflow for such Distribution Date;
minus:
(c) the amount of any Overcollateralization Reduction Amount
for such Distribution Date.
"Principal Prepayment": Any payment of principal made by the
Mortgagor on a Mortgage Loan which is received in advance of its scheduled Due
Date and which is not accompanied by an amount of interest (without regard to
any Prepayment Charge that may have been collected by the Servicer in
connection with such payment of principal) representing the full amount of
scheduled interest due on any Due Date in any month or months subsequent to
the month of prepayment.
"Principal Remittance Amount" : With respect to any Distribution
Date, the sum of: (i) all scheduled payments of principal collected or
advanced on the Mortgage Loans by the Servicer that were due during the
related Due Period, (ii) the principal portion of all partial and full
principal prepayments of the Mortgage Loans applied by the Servicer during the
related Prepayment Period, (iii) the principal portion of all related Net
Liquidation Proceeds and Insurance Proceeds received during the related
Prepayment Period, (iv) that portion of the Purchase Price representing
principal of any repurchased Mortgage Loan, deposited to the Collection
Account during the related Prepayment Period, (v) the principal portion of any
related Substitution Adjustments deposited in the Collection Account during
the related Prepayment Period, (vi) with respect to the November 2001
Distribution Date, any amounts remaining in the Prefunding Account (other than
investment earnings thereon).and (vii) on the Distribution Date on which the
Trust is to be terminated in accordance with this Agreement, that portion of
the Termination Price in respect of principal.
"PTCE": A Prohibited Transaction Class Exemption.
"Purchase Price": With respect to any Mortgage Loan or REO Property
to be purchased pursuant to or as contemplated by Section 2.03, Section
3.16(c) or Section 9.01, and as confirmed by an Officers' Certificate from the
Servicer to the Trustee, an amount equal to the sum of (i) 100% of the Stated
Principal Balance thereof as of the date of purchase (or such other price as
provided in Section 9.01), (ii) in the case of (x) a Mortgage Loan, accrued
interest on
26
such Stated Principal Balance at the applicable Mortgage Rate in effect from
time to time from the Due Date as to which interest was last covered by a
payment by the Mortgagor or an advance by the Servicer, which payment or
advance had as of the date of purchase been distributed pursuant to Section
4.01, through the end of the calendar month in which the purchase is to be
effected and (y) an REO Property, the sum of (1) accrued interest on such
Stated Principal Balance at the applicable Mortgage Rate in effect from time
to time from the Due Date as to which interest was last covered by a payment
by the Mortgagor or an advance by the Servicer through the end of the calendar
month immediately preceding the calendar month in which such REO Property was
acquired, plus (2) REO Imputed Interest for such REO Property for each
calendar month commencing with the calendar month in which such REO Property
was acquired and ending with the calendar month in which such purchase is to
be effected, net of the total of all net rental income, Insurance Proceeds,
Liquidation Proceeds and P&I Advances that as of the date of purchase had been
distributed as or to cover REO Imputed Interest pursuant to Section 4.01,
(iii) any unreimbursed Servicing Advances and P&I Advances and any unpaid
Servicing Fees allocable to such Mortgage Loan or REO Property and any P&I
Advances previously reimbursed to the Servicer pursuant to Section
3.11(a)(vi), (iv) any amounts previously withdrawn from the Collection Account
in respect of such Mortgage Loan or REO Property pursuant to Section
3.11(a)(ix) and Section 3.16(b), and (v) in the case of a Mortgage Loan
required to be purchased pursuant to Section 2.03, expenses reasonably
incurred or to be incurred by the Servicer or the Trustee in respect of the
breach or defect giving rise to the purchase obligation.
"Qualified Plan Investor": A plan investor or group of plan
investors on whose behalf the decision to purchase Offered Certificates is
made by an independent fiduciary that is (i) qualified to analyze and
understand the terms and conditions of the Cap Contract and the effect of the
Cap Contract on the credit ratings of the Offered Certificates, and (ii) a
"qualified professional asset manager", as defined in Part V(a) of PTCE 84-14,
an "in-house asset manager" as defined in Part IV(a) of PTCE 96-23, or a plan
fiduciary with total Plan and non-Plan assets under management of at least
$100 million at the time of the acquisition of the Offered Certificates.
"Qualified Substitute Mortgage Loan": A Mortgage Loan substituted
for a Deleted Mortgage Loan pursuant to the terms of this Agreement which
must, on the date of such substitution, (i) have an outstanding principal
balance, after application of all scheduled payments of principal and interest
due during or prior to the month of substitution, not in excess of and not
more than 5% less than the Scheduled Principal Balance of the Deleted Mortgage
Loan as of the Due Date in the calendar month during which the substitution
occurs, (ii) have a Mortgage Rate not less than (and not more than one
percentage point in excess of) the Mortgage Rate of the Deleted Mortgage Loan,
(iii) with respect to each Adjustable Rate Mortgage Loan have a Maximum
Mortgage Rate not less than the Maximum Mortgage Rate on the Deleted Mortgage
Loan, (iv) with respect to each Adjustable Rate Mortgage Loan have a Minimum
Mortgage Rate not less than the Minimum Mortgage Rate of the Deleted Mortgage
Loan, (v) with respect to each Adjustable Rate Mortgage Loan have a Gross
Margin equal to or greater than the Gross Margin of the Deleted Mortgage Loan,
(vi) with respect to each Adjustable Rate Mortgage Loan, adjust in accordance
with the Index and have a next Adjustment Date not more than two months later
than the next Adjustment Date on the Deleted Mortgage Loan, and have the same
intervals between Adjustment Dates as the Deleted Mortgage Loan, (vii) have a
27
remaining term to maturity not greater than (and not more than one year less
than) that of the Deleted Mortgage Loan, (viii) have the same Due Date as the
Due Date on the Deleted Mortgage Loan, (ix) have a Loan-to-Value Ratio as of
the date of substitution equal to or lower than the Loan-to-Value Ratio of the
Deleted Mortgage Loan as of such date, (x) have a risk grading determined by
the Servicer at least equal to the risk grading assigned on the Deleted
Mortgage Loan, (xi) have been underwritten or reunderwritten by the Originator
in accordance with the same underwriting criteria and guidelines as the
Mortgage Loans being replaced; (xii) be of the same or better credit quality
as the Mortgage Loan being replaced and (xiii) conform to each representation
and warranty in the applicable Mortgage Loan Purchase Agreement. In the event
that one or more Mortgage Loans are substituted for one or more Deleted
Mortgage Loans, the amounts described in clause (i) hereof shall be determined
on the basis of aggregate principal balances, the Mortgage Rates described in
clause (ii) hereof shall be determined on the basis of weighted average
Mortgage Rates, the terms described in clause (vii) hereof shall be determined
on the basis of weighted average remaining term to maturity, the Loan-to-Value
Ratios described in clause (ix) hereof shall be satisfied as to each such
Mortgage Loan, the risk gradings described in clause (x) hereof shall be
satisfied as to each such Mortgage Loan and, except to the extent otherwise
provided in this sentence, the representations and warranties described in
clause (xiii) hereof must be satisfied as to each Qualified Substitute
Mortgage Loan or in the aggregate, as the case may be.
"Rating Agency or Rating Agencies": S&P, ▇▇▇▇▇'▇ and Fitch or their
successors. If such agencies or their successors are no longer in existence,
"Rating Agencies" shall be such nationally recognized statistical rating
agencies, or other comparable Persons, designated by the Depositor, notice of
which designation shall be given to the Trustee and the Servicer.
"Realized Loss": With respect to each Mortgage Loan as to which a
Final Recovery Determination has been made, an amount (not less than zero)
equal to (i) the unpaid principal balance of such Mortgage Loan as of the
commencement of the calendar month in which the Final Recovery Determination
was made, plus (ii) accrued interest from the Due Date as to which interest
was last paid by the Mortgagor through the end of the calendar month in which
such Final Recovery Determination was made, calculated in the case of each
calendar month during such period (A) at an annual rate equal to the annual
rate at which interest was then accruing on such Mortgage Loan and (B) on a
principal amount equal to the Stated Principal Balance of such Mortgage Loan
as of the close of business on the Distribution Date during such calendar
month, plus (iii) any amounts previously withdrawn from the Collection Account
in respect of such Mortgage Loan pursuant to Section 3.11(a)(ix) and Section
3.16(b), minus (iv) the proceeds, if any, received in respect of such Mortgage
Loan during the calendar month in which such Final Recovery Determination was
made, net of amounts that are payable therefrom to the Servicer with respect
to such Mortgage Loan pursuant to Section 3.11(a)(iii).
With respect to any REO Property as to which a Final Recovery
Determination has been made, an amount (not less than zero) equal to (i) the
unpaid principal balance of the related Mortgage Loan as of the date of
acquisition of such REO Property on behalf of the Trust Fund, plus (ii)
accrued interest from the Due Date as to which interest was last paid by the
Mortgagor in respect of the related Mortgage Loan through the end of the
calendar month immediately preceding the calendar month in which such REO
Property was acquired, calculated
28
in the case of each calendar month during such period (A) at an annual rate
equal to the annual rate at which interest was then accruing on the related
Mortgage Loan and (B) on a principal amount equal to the Stated Principal
Balance of the related Mortgage Loan as of the close of business on the
Distribution Date during such calendar month, plus (iii) REO Imputed Interest
for such REO Property for each calendar month commencing with the calendar
month in which such REO Property was acquired and ending with the calendar
month in which such Final Recovery Determination was made, plus (iv) any
amounts previously withdrawn from the Collection Account in respect of the
related Mortgage Loan pursuant to Section 3.11(a)(ix) and Section 3.16(b),
minus (v) the aggregate of all P&I Advances made by the Servicer in respect of
such REO Property or the related Mortgage Loan for which the Servicer has been
or, in connection with such Final Recovery Determination, will be reimbursed
pursuant to Section 3.23 out of rental income, Insurance Proceeds and
Liquidation Proceeds received in respect of such REO Property, minus (vi) the
total of all net rental income, Insurance Proceeds and Liquidation Proceeds
received in respect of such REO Property that has been, or in connection with
such Final Recovery Determination, will be transferred to the Distribution
Account pursuant to Section 3.23.
With respect to each Mortgage Loan which has become the subject of a
Deficient Valuation, the difference between the principal balance of the
Mortgage Loan outstanding immediately prior to such Deficient Valuation and
the principal balance of the Mortgage Loan as reduced by the Deficient
Valuation.
With respect to each Mortgage Loan which has become the subject of a
Debt Service Reduction, the portion, if any, of the reduction in each affected
Monthly Payment attributable to a reduction in the Mortgage Rate imposed by a
court of competent jurisdiction. Each such Realized Loss shall be deemed to
have been incurred on the Due Date for each affected Monthly Payment.
"Reconstitution Agreement" : Those certain reconstitution agreements
dated as of the Closing Date by and among the Seller, the Depositor and each
Originator related to the applicable Mortgage Loan Purchase Agreement by and
between the Seller and the applicable Originator.
"Record Date": With respect to any Distribution Date and any
Definitive Certificates, other than the Class X Certificates and the first
Distribution Date, the close of business on the last Business Day of the month
immediately preceding the month in which such applicable Distribution Date
occurs. With respect to any Distribution Date and the Offered Certificates
(other than any Definitive Certificates) the Business Day prior to such
Distribution Date. Notwithstanding the foregoing, the holder of record for the
first Distribution Date and the Class X Certificates is Credit Suisse First
Boston Corporation.
"Reference Banks": Bankers Trust Company, Barclays Bank PLC, The
Tokyo Mitsubishi Bank and National Westminster Bank PLC and their successors
in interest; provided, however, that if any of the foregoing banks are not
able to serve as a Reference Bank, then any leading banks selected by the
Trustee which are engaged in transactions in Eurodollar deposits in the
international Eurocurrency market (i) with an established place of business in
London,
29
(ii) not controlling, under the control of or under common control with the
Depositor or any Affiliate thereof and (iii) which have been designated as
such by the Trustee.
"Refinanced Mortgage Loan": A Mortgage Loan the proceeds of which
were not used to purchase the related Mortgaged Property.
"Regular Certificate": As specified in the Preliminary Statement.
"Regular Interest": A "regular interest" in a REMIC within the
meaning of Section 860G(a)(1) of the Code.
"Relief Act": The Soldiers' and Sailors' Civil Relief Act of 1940,
as amended.
"Relief Act Interest Shortfall": With respect to any Distribution
Date and any Mortgage Loan, any reduction in the amount of interest
collectible on such Mortgage Loan for the most recently ended calendar month
as a result of the application of the Relief Act.
"REMIC": A "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code.
"REMIC I": The segregated pool of assets subject hereto,
constituting the primary trust created hereby and to be administered
hereunder, with respect to which a REMIC election is to be made, consisting
of: (i) such Mortgage Loans as from time to time are subject to this
Agreement, together with the Mortgage Files relating thereto, and together
with all collections thereon and proceeds thereof, (ii) any REO Property,
together with all collections thereon and proceeds thereof, (iii) the
Trustee's rights with respect to the Mortgage Loans under all insurance
policies required to be maintained pursuant to this Agreement and any proceeds
thereof, (iv) the Depositor's rights under each Mortgage Loan Purchase
Agreement and each Reconstitution Agreement (including any security interest
created thereby) and (v) the Collection Account (other than any amounts
representing any Servicer Prepayment Charge Payment Amount), the Distribution
Account (other than any amounts representing any Servicer Prepayment Charge
Payment Amount) and any REO Account and such assets that are deposited therein
from time to time and any investments thereof, together with any and all
income, proceeds and payments with respect thereto. Notwithstanding the
foregoing, however, REMIC I specifically excludes all payments and other
collections of principal and interest due on the Mortgage Loans on or before
the Cut-off Date and all Prepayment Charges payable in connection with
Principal Prepayments made on or before the Cut-off Date, the Net WAC Fund,
the Cap Agreement and the Prefunding Account.
"REMIC II": The segregated pool of assets consisting of all of the
REMIC I Regular Interests conveyed in trust to the Trustee for the benefit of
REMIC III, as holder of the REMIC II Regular Interests, and the Class R-II
Certificateholders pursuant to Section 2.07, and all amounts deposited
therein, with respect to which a separate REMIC election is to be made.
"REMIC II Regular Interest": Any of the separate non-certificated
beneficial ownership interests in REMIC II issued hereunder and designated as
a "regular interest" in REMIC II.
30
"REMIC III": The segregated pool of assets consisting of all of the
REMIC II Regular Interests conveyed in trust to the Trustee for the benefit of
REMIC III, as holder of the REMIC II Regular Interests, and the Class R-III
residual interest pursuant to Section 2.07, and all amounts deposited therein,
with respect to which a separate REMIC election is to be made.
"REMIC IV Regular Interest": Any of the separate non-certificated
beneficial ownership interests in REMIC IV issued hereunder and designated as
a "regular interest" in REMIC IV
"REMIC IV": The segregated pool of assets consisting of all of the
REMIC III Regular Interests conveyed in trust to the Trustee for the benefit
of REMIC V, as holder of the REMIC III Regular Interests, and the Class R-IV
residual interest pursuant to Section 2.07, and all amounts deposited therein,
with respect to which a separate REMIC election is to be made.
"REMIC IV Regular Interest": Any of the separate non-certificated
beneficial ownership interests in REMIC IV issued hereunder and designated as
a "regular interest" in REMIC IV
"REMIC IV": The segregated pool of assets consisting of all of the
REMIC III Regular Interests conveyed in trust to the Trustee for the benefit
of the REMIC IV Certificateholders pursuant to Section 2.09, and all amounts
deposited therein, with respect to which a separate REMIC election is to be
made.
"REMIC IV Certificate": Any Regular Certificate.
"REMIC IV Certificateholder": The Holder of any REMIC IV
Certificate.
"REMIC IV Accretion Directed Class": Any of IT-A1, IT-M1, IT-M2, and
IT-B REMIC Interests.
"REMIC Provisions": Provisions of the federal income tax law
relating to real estate mortgage investment conduits, which appear at Section
860A through 860G of the Code, and related provisions, and proposed, temporary
and final regulations and published rulings, notices and announcements
promulgated thereunder, as the foregoing may be in effect from time to time.
"Remittance Report": A report in form mutually agreed to between the
Trustee and the Servicer on a magnetic disk or tape or in electronic format
prepared by the Servicer pursuant to Section 4.03 with such additions,
deletions and modifications as agreed to by the Trustee and the Servicer.
"Rents from Real Property": With respect to any REO Property, gross
income of the character described in Section 856(d) of the Code as being
included in the term "rents from real property."
"REO Account": Each of the accounts maintained, or caused to be
maintained, by the Servicer in respect of an REO Property pursuant to Section
3.23.
31
"REO Disposition": The sale or other disposition of an REO Property
on behalf of the Trust Fund.
"REO Imputed Interest": As to any REO Property, for any calendar
month during which such REO Property was at any time part of the Trust Fund,
one month's interest at the applicable Mortgage Rate on the Stated Principal
Balance of such REO Property (or, in the case of the first such calendar
month, of the related Mortgage Loan, if appropriate) as of the close of
business on the Distribution Date in such calendar month.
"REO Principal Amortization": With respect to any REO Property, for
any calendar month, the excess, if any, of (a) the aggregate of all amounts
received in respect of such REO Property during such calendar month, whether
in the form of rental income, sale proceeds (including, without limitation,
that portion of the Termination Price paid in connection with a purchase of
all of the Mortgage Loans and REO Properties pursuant to Section 9.01 that is
allocable to such REO Property) or otherwise, net of any portion of such
amounts (i) payable pursuant to Section 3.23(c) in respect of the proper
operation, management and maintenance of such REO Property or (ii) payable or
reimbursable to the Servicer pursuant to Section 3.23(d) for unpaid Servicing
Fees in respect of the related Mortgage Loan and unreimbursed Servicing
Advances and P&I Advances in respect of such REO Property or the related
Mortgage Loan, over (b) the REO Imputed Interest in respect of such REO
Property for such calendar month.
"REO Property": A Mortgaged Property acquired by the Servicer on
behalf of the Trust Fund through foreclosure or deed-in-lieu of foreclosure,
as described in Section 3.23.
"Request for Release": A release signed by a Servicing Officer, or
in a mutually agreeable electronic format which will, in lieu of a signature
on its face, originate from a Servicing Officer, in the form of Exhibit E-1 or
Exhibit E-2 attached hereto.
"Required Net WAC Fund Deposit": With respect to any Distribution
Date on which the excess of Available Funds Cap over the weighted average
Pass-Through Rates of the LIBOR Certificates is less than 0.25%, the excess,
if any, of (i) the product of 0.50% and the aggregate Stated Principal Balance
of the Mortgage Loans over (ii) the amount of funds on deposit in the Net WAC
Fund prior to deposits thereto on such Distribution Date. With respect to any
Distribution Date on which the related excess of Available Funds Cap over the
weighted average Pass-Through Rates of the LIBOR Certificates is equal to or
greater than 0.25%, the excess, if any, of (i) $5,000 over (ii) the amount of
funds on deposit in the Net WAC Fund prior to deposits thereto on such
Distribution Date. The Depositor shall cause the deposit of $5,000 to the Net
WAC Fund on the Closing Date.
"Required Overcollateralized Amount": With respect to the first
Distribution Date, $0.00 and any other Distribution Date (i) prior to the
Stepdown Date, $11,713,113 (ii) on or after the Stepdown Date provided a
Trigger Event is not in effect, the greater of (x) 2.00% of the Aggregate
Collateral Balance as of the last day of the related Due Period and (y)
$5,856,556 and (iii) on or after the Stepdown Date if a Trigger Event is in
effect, the Required Overcollateralized Amount for the immediately preceding
Distribution Date.
32
"Reserve Interest Rate": With respect to any Interest Determination
Date, the rate per annum that the Trustee determines to be either (i) the
arithmetic mean (rounded upwards if necessary to the nearest whole multiple of
1/16%) of the one-month U.S. dollar lending rates which New York City banks
selected by the Trustee are quoting on the relevant Interest Determination
Date to the principal London offices of leading banks in the London interbank
market or (ii) in the event that the Trustee can determine no such arithmetic
mean, the lowest one-month U.S. dollar lending rate which New York City banks
selected by the Trustee are quoting on such Interest Determination Date to
leading European banks.
"Residential Dwelling": Any one of the following: (i) an attached or
detached one-family dwelling, (ii) a detached two- to four-family dwelling,
(iii) a one-family dwelling unit in a condominium project or (iv) a detached
one-family dwelling in a planned unit development, none of which is a
co-operative, mobile or manufactured home (unless such mobile or manufactured
home is treated as real property under applicable state law).
"Residual Certificates": As specified in the Preliminary Statement.
"Residual Interest": The sole class of "residual interests" in a
REMIC within the meaning of Section 860G(a)(2) of the Code.
"Responsible Officer": When used with respect to the Trustee, the
President, any vice president, any assistant vice president, the Secretary,
any assistant secretary, the Treasurer, any assistant treasurer, any trust
officer or assistant trust officer, the Controller and any assistant
controller or any other officer of the Trustee customarily performing
functions similar to those performed by any of the above designated officers
and, with respect to a particular matter, to whom such matter is referred
because of such officer's knowledge of and familiarity with the particular
subject.
"S&P": Standard and Poor's, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies,
Inc., or its successor in interest.
"Seller": Credit Suisse First Boston Mortgage Capital LLC, or its
successor in interest, in its capacity as seller.
"Servicer": Option One Mortgage Corporation, a California
corporation, or any successor Servicer appointed as herein provided.
"Servicer Event of Default": One or more of the events described in
Section 7.01(a).
"Servicer Prepayment Charge Payment Amount": The amounts payable by
the Servicer in respect of any waived Prepayment Charges pursuant to Section
2.03(c)(ii).
"Servicer Remittance Date": With respect to any Distribution Date,
3:00 p.m. New York time on the second Business Day preceding such Distribution
Date.
"Servicer Termination Test": With respect to any Distribution Date,
the Servicer Termination Test will be failed if (i) the aggregate amount of
cumulative Realized Losses
33
incurred since the Cut-off Date through the last day of the related Due Period
divided by the Cut-off Date Pool Principal Balance minus (ii) any amount
received with respect to Realized Losses in respect exceeds the applicable
percentages set forth below with respect to such Distribution Date:
Distribution Date Occurring In Percentage
October 2001 through September 2003 2.50
October 2003 through September 2004 3.00
October 2004 through September 2005 3.50
October 2005 and thereafter 4.50
"Servicing Account": The account or accounts created and maintained
pursuant to Section 3.09.
"Servicing Advances": The reasonable "out-of-pocket" costs and
expenses incurred by the Servicer in the performance of its servicing
obligations (including the reasonable fees of counsel) in connection with a
default, delinquency or other unanticipated event, including, but not limited
to, the cost of (i) the inspection, preservation, restoration and protection
of a Mortgaged Property, (ii) any enforcement or judicial proceedings,
including foreclosures, in respect of a particular Mortgage Loan, (iii) the
management (including reasonable fees in connection therewith) and liquidation
of any REO Property and (iv) the performance of its obligations under Section
3.01, Section 3.09, Section 3.14, Section 3.16 and Section 3.23. The Servicer
shall not be required to make any Nonrecoverable Servicing Advances.
"Servicing Fee": With respect to each Mortgage Loan and for any
calendar month, an amount equal to one month's interest (or in the event of
any payment of interest which accompanies a Principal Prepayment in full or in
part made by the Mortgagor during such calendar month, interest for the number
of days covered by such payment of interest) at the Servicing Fee Rate on the
same principal amount on which interest on such Mortgage Loan accrues for such
calendar month. A portion of such Servicing Fee may be retained by any
Sub-Servicer as its servicing compensation.
"Servicing Fee Rate": 0.50% per annum.
"Servicing Officer": Any employee of the Servicer involved in, or
responsible for, the administration and servicing of the Mortgage Loans, whose
name and specimen signature appear on a list of Servicing Officers furnished
by the Servicer to the Trustee and the Depositor on the Closing Date, as such
list may from time to time be amended.
"Single Certificate": With respect to any Class of Certificates
(other than the Class P Certificates and the Residual Certificates), a
hypothetical Certificate of such Class evidencing a Percentage Interest for
such Class corresponding to an initial Certificate Principal Balance or
Notional Amount of $1,000. With respect to the Class P Certificates and the
Residual
34
Certificates, a hypothetical Certificate of such Class evidencing a 20%
Percentage Interest in such Class.
"Startup Day": With respect to each of REMIC I, REMIC II and REMIC
III, the day designated as such pursuant to Section 10.01(b) hereof.
"Stated Principal Balance": With respect to any Mortgage Loan: (a)
as of any date of determination up to but not including the Distribution Date
on which the proceeds, if any, of a Liquidation Event with respect to such
Mortgage Loan would be distributed, the principal balance of such Mortgage
Loan as of the Cut-off Date, as shown in the Mortgage Loan Schedule, minus the
sum of (i) the principal portion of each Monthly Payment due on a Due Date
subsequent to the Cut-off Date, to the extent received from the Mortgagor or
advanced by the Servicer and distributed pursuant to Section 4.01 on or before
such date of determination, (ii) all Principal Prepayments received after the
Cut-off Date, to the extent distributed pursuant to Section 4.01 on or before
such date of determination, (iii) all Liquidation Proceeds and Insurance
Proceeds applied by the Servicer as recoveries of principal in accordance with
the provisions of Section 3.16, to the extent distributed pursuant to Section
4.01 on or before such date of determination and (iv) any Realized Loss
incurred with respect thereto as a result of a Deficient Valuation made during
or prior to the Prepayment Period for the most recent Distribution Date
coinciding with or preceding such date of determination; and (b) as of any
date of determination coinciding with or subsequent to the Distribution Date
on which the proceeds, if any, of a Liquidation Event with respect to such
Mortgage Loan would be distributed, zero. With respect to any REO Property:
(a) as of any date of determination up to but not including the Distribution
Date on which the proceeds, if any, of a Liquidation Event with respect to
such REO Property would be distributed, an amount (not less than zero) equal
to the Stated Principal Balance of the related Mortgage Loan as of the date on
which such REO Property was acquired on behalf of the Trust Fund, minus the
sum of (i) if such REO Property was acquired before the Distribution Date in
any calendar month, the principal portion of the Monthly Payment due on the
Due Date in the calendar month of acquisition, to the extent advanced by the
Servicer and distributed pursuant to Section 4.01 on or before such date of
determination, and (ii) the aggregate amount of REO Principal Amortization in
respect of such REO Property for all previously ended calendar months, to the
extent distributed pursuant to Section 4.01 on or before such date of
determination; and (b) as of any date of determination coinciding with or
subsequent to the Distribution Date on which the proceeds, if any, of a
Liquidation Event with respect to such REO Property would be distributed,
zero.
"Stepdown Date": The earlier to occur of (1) the Distribution Date
on which the aggregate Certificate Principal Balance of the Class A1
Certificates has been reduced to zero and (2) the later to occur of (x) the
Distribution Date occurring in October 2004 and (y) the first Distribution
Date on which the Credit Enhancement Percentage is greater than or equal to
18.50%.
"Strip Amount": With respect to any Distribution Date on or prior to
the Distribution Date in September 2003, the product of 0.051% per annum and
the Scheduled Notional Amount indicated on Schedule II to the Yield
Maintenance Agreement for that Distribution Date, and after the Distribution
Date in September 2003, zero.
35
"Strip Amount Rate": With respect to any Distribution Date on or
prior to the Distribution Date in September 2003, the Strip Amount for that
Distribution Date multiplied by a fraction, the numerator of which is twelve
and the denominator of which is the aggregate outstanding Principal Balance of
the Mortgage Loans as of the first day of the month preceding the month of
such Distribution Date.
"Subordinated Offered Certificates": As specified in the Preliminary
Statement.
"Subsequent Cut-off Date": With respect to any Subsequent Mortgage
Loan, the date of which such Mortgage Loan is transferred to the Trust.
"Subsequent Mortgage Loan": Any Mortgage Loan other than an Initial
Mortgage Loan conveyed to the Trust Fund pursuant to Section 2.01 hereof and
to a Subsequent Transfer Agreement, which Mortgage Loan shall be listed on the
revised Mortgage Loan Schedule delivered pursuant to this Agreement and on
Schedule A to such Subsequent Transfer Agreement. When used with respect to a
single Subsequent Transfer Date, Subsequent Mortgage Loan shall mean a
Subsequent Mortgage Loan conveyed to the Trust on that Subsequent Transfer
Date.
"Subsequent Transfer Agreement": A Subsequent Transfer Agreement
substantially in the form of Exhibit J hereto, executed and delivered by the
Depositor, the Servicer and the Trustee as provided in Section 2.01 hereof.
"Subsequent Transfer Date": For any Subsequent Transfer Agreement,
the date the related Subsequent Mortgage Loans are transferred to the Trust
pursuant to the related Subsequent Transfer Agreement.
"Sub-Servicer": Any Person with which the Servicer has entered into
a Sub-Servicing Agreement and which meets the qualifications of a Sub-Servicer
pursuant to Section 3.02.
"Sub-Servicing Account": An account established by a Sub-Servicer
which meets the requirements set forth in Section 3.08 and is otherwise
acceptable to the Servicer.
"Sub-Servicing Agreement": The written contract between the Servicer
and a Sub-Servicer relating to servicing and administration of certain
Mortgage Loans as provided in Section 3.02.
"Substitution Shortfall Amount": As defined in Section 2.03(d).
"T1 Strip Amount": As defined in the preliminary statement.
"T2 Strip Amount": As defined in the preliminary statement.
"T3 Strip Amount": As defined in the preliminary statement.
"T4 Strip Amount": As defined in the preliminary statement.
36
"Tax Returns": The federal income tax return on Internal Revenue
Service Form 1066, U.S. Real Estate Mortgage Investment Conduit Income Tax
Return, including Schedule Q thereto, Quarterly Notice to Residual Interest
Holders of REMIC Taxable Income or Net Loss Allocation, or any successor
forms, to be filed on behalf of the Trust Fund due to its classification as a
REMIC under the REMIC Provisions, together with any and all other information
reports or returns that may be required to be furnished to the
Certificateholders or filed with the Internal Revenue Service or any other
governmental taxing authority under any applicable provisions of federal,
state or local tax laws.
"Telerate Page 3750": The display designated as page "3750" on the
Dow ▇▇▇▇▇ Telerate Capital Markets Report (or such other page as may replace
page 3750 on that report for the purpose of displaying London interbank
offered rates of major banks).
"Termination Payment": As defined in the Cap Agreement.
"Termination Price": As defined in Section 9.01.
"Transfer": Any direct or indirect transfer, sale, pledge,
hypothecation, or other form of assignment of any Ownership Interest in a
Certificate.
"Transferee": Any Person who is acquiring by Transfer any Ownership
Interest in a Certificate.
"Transferor": Any Person who is disposing by Transfer of any
Ownership Interest in a Certificate.
"Trigger Event": A Trigger Event has occurred with respect to a
Distribution Date if the Delinquency Percentage exceeds 75.00% of the Credit
Enhancement Percentage.
"Triple Adjusted Net WAC": As to any Distribution Date, will be a
per annum rate equal to (a) the Double Adjusted Net WAC less (b) the Current
Interest for the Class BIO Certificate for such date, divided by the Aggregate
Collateral Balance immediately preceding such Distribution Date. This rate
will be adjusted to correspond with the day counting convention used for the
Certificates.
"Trust": Asset Backed Securities Corporation Home Equity Loan Trust
2001-HE3, Series 2001-HE3, the trust created under this Agreement.
"Trust Fund": The corpus of the trust created hereunder consisting
of (i) the Mortgage Loans and all interest and principal received on or with
respect thereto after the related Cut-off Date, other than such amounts which
were due on the Mortgage Loans on or before the related Cut-off Date; (ii) the
Collection Account, the Distribution Account, the Prefunding Account and the
Net WAC Fund and all amounts deposited therein pursuant to the applicable
provisions of this Agreement (including, without limitation, amounts received
from the Seller on the Closing Date which shall be deposited by the Trustee in
the Collection Account pursuant to Section 2.01); (iii) the Depositor's rights
under each Mortgage Loan Purchase Agreement, the Assignment and Assumption
Agreement and each Reconstitution Agreement, (iv) the Cap Agreement and the
MGIC Policy ; (v) property that secured a Mortgage Loan and has been
37
acquired by foreclosure, deed-in-lieu of foreclosure or otherwise; and (vi)
all proceeds of the conversion, voluntary or involuntary, of any of the
foregoing.
"Trustee": ▇▇▇▇▇ Fargo Bank Minnesota, National Association, a
national banking association, or its successor in interest, or any successor
trustee appointed as herein provided.
"Uninsured Cause": Any cause of damage to a Mortgaged Property such
that the complete restoration of such property is not fully reimbursable by
the hazard insurance policies required to be maintained pursuant to Section
3.14.
"United States Person": A citizen or resident of the United States,
a corporation, partnership or other entity created or organized in, or under
the laws of, the United States, or any State thereof or the District of
Columbia (except, in the case of a partnership, to the extent provided in
regulations) or an estate whose income is subject to United States federal
income tax regardless of its source, or a trust if a court within the United
States is able to exercise primary supervision over the administration of the
trust and one or more United States persons have the authority to control all
substantial decisions of the trust. To the extent prescribed in regulations by
the Secretary of the Treasury, which have not yet been issued, a trust which
was in existence on September 20, 1996 (other than a trust treated as owned by
the grantor under subpart E of part I of subchapter J of chapter 1 of the
Code), and which was treated as a United States person on September 20, 1996
may elect to continue to be treated as a United States person notwithstanding
the previous sentence. The term "United States" shall have the meaning set
forth in Section 7701 of the Code.
"Unpaid Interest Shortfall Amount": With respect to any Distribution
Date and any Class of Offered Certificates, the sum of (i) the amount, if any,
by which (a) the Accrued Certificate Interest for such Class of Certificates
as of the immediately preceding Distribution Date exceeded (b) the actual
amount distributed on such Class of Certificates in respect of interest on
such immediately preceding Distribution Date and (ii) the amount of any Unpaid
Interest Shortfall Amount for such Class of Certificates remaining unpaid from
the previous Distribution Date, plus accrued interest on such sum calculated
at the related Pass-Through Rate for the most recently ended Interest Accrual
Period such amount remained outstanding.
"Unpaid Realized Loss Amount": With respect to any Class of
Subordinated Offered Certificates and as to any Distribution Date, the excess
of (i) Applied Realized Loss Amounts with respect to that Class over (ii) the
sum of all distributions in reduction of Applied Realized Loss Amounts on all
previous Distribution Dates. Any amounts distributed to a Class of
Subordinated Offered Certificates in respect of any Unpaid Realized Loss
Amount will not be applied to reduce the Certificate Principal Balance of that
Class.
"Value": With respect to any Mortgaged Property, the lesser of (i)
the lesser of (a) the value thereof as determined by an appraisal made for the
Originator of the Mortgage Loan at the time of origination of the Mortgage
Loan by an appraiser who met the minimum requirements of ▇▇▇▇▇▇ Mae and
▇▇▇▇▇▇▇ Mac and (b) the value thereof as determined by a review appraisal
conducted by the Originator in the event any such review appraisal determines
an appraised value more than ten percent lower than the value thereof as
determined by the
38
appraisal referred to in clause (i)(a) above in the case of a Mortgage Loan
with an LTV less than or equal to 80%, or more than five percent lower than
the value thereof as determined by the appraisal referred to in clause (i)(a)
above, in the case of a Mortgage Loan with an LTV greater than 80%, as
determined by an appraisal referred to in clause (i)(a), and (ii) the purchase
price paid for the related Mortgaged Property by the Mortgagor with the
proceeds of the Mortgage Loan, provided, however, (A) in the case of a
Refinanced Mortgage Loan, such value of the Mortgaged Property is based solely
upon the lesser of (1) the value determined by an appraisal made for the
originator of such Refinanced Mortgage Loan at the time of origination of such
Refinanced Mortgage Loan by an appraiser who met the minimum requirements of
▇▇▇▇▇▇ Mae and ▇▇▇▇▇▇▇ Mac and (2) the value thereof as determined by a review
appraisal conducted by the Originator in the event any such review appraisal
determines an appraised value more than ten percent lower than the value
thereof as determined by the appraisal referred to in clause (ii)(A)(1) above,
in the case of a Mortgage Loan with an LTV less than or equal to 80%, or more
than five percent lower than the value thereof as determined by the appraisal
referred to in clause (ii)(a)(1) above, in the case of a Mortgage Loan with an
LTV greater than 80%, as determined by the appraisal referred to in clause
(ii)(A)(1) and (B) in the case of a Mortgage Loan originated in connection
with a "lease-option purchase", such value of the Mortgaged Property is based
on the lower of the value determined by an appraisal made for the Originator
of such Mortgage Loan at the time or origination or the sale price of such
Mortgaged Property if the "lease option purchase price" was set less than 12
months prior to origination, and is based on the value determined by an
appraisal made for the originator of such Mortgage Loan at the time of
origination if the "lease option purchase price" was set 12 months or more
prior to origination.
"Voting Rights": The portion of the voting rights of all of the
Certificates which is allocated to any Certificate. With respect to any date
of determination, 95% of all voting rights will be allocated among all Holders
of the Offered Certificates, other than the Class A-IO Certificates, in
proportion to their then outstanding Certificate Principal Balances, 1% of all
voting rights will be allocated among the Holders of the Class X Certificates;
1% of all voting rights will be allocated among the Holders of the Class A-IO
Certificates; 1% of all voting rights will be allocated among the Holders of
the Class B-IO Certificates;1% of all voting rights will be allocated among
the Holders of the Class P Certificates, and 1% of all voting rights will be
allocated among Holders of the Residual Certificates, in each case in
proportion to the percentage interests evidenced by their respective
Certificates.
SECTION 1.02. Allocation of Certain Interest Shortfalls.
For purposes of calculating the amount of Accrued Certificate
Interest for the Class A1 Certificates, the A-IO Certificates, the
Subordinated Certificates and the Class X Certificates for any Distribution
Date, the aggregate amount of any Prepayment Interest Shortfalls (to the
extent not covered by payments by the Servicer pursuant to Section 3.24) and
any Relief Act Interest Shortfall incurred in respect of the Mortgage Loans
for any Distribution Date shall be allocated to the Class X Certificates in
reduction of the Class X Distribution Amount and thereafter, among the Class
A1 Certificates, Class A-IO Certificates and the other Classes of Subordinated
Certificates on a pro rata basis based on, and to the extent of, one month's
interest at the then applicable respective Pass-Through Rate on the respective
Certificate Principal Balance or Notional Amount of each such Certificate.
39
A. Designation of Interests in REMIC
The Trustee shall elect that each of REMIC I, REMIC II, REMIC III, REMIC IV
and REMIC V shall be treated as a REMIC under Section 860D of the Code. Any
inconsistencies or ambiguities in this Agreement or in the administration of
this Agreement shall be resolved in a manner that preserves the validity of
such REMIC elections. The assets of REMIC I shall include the Mortgage Loans,
the accounts (other than the Net WAC Fund and the Prefunding Account), any REO
Property, and any proceeds of the foregoing. The REMIC I Regular Interests (as
defined below) shall constitute the assets of REMIC II. The REMIC II Regular
Interests shall constitute the assets of REMIC III. The REMIC III Regular
Interests (as defined below) shall constitute the assets of REMIC IV. The
REMIC IV Regular Interests (as defined below) shall constitute the assets of
REMIC V.
REMIC V:
The following table sets forth characteristics of the Certificates, each of
which, except for the Class R Certificates, is hereby designated as a "regular
interest" in the REMIC V:
Original Certificate
Principal Pass-Through
Balance Rate
------- ----
Class A1 $1,074,677,000 (1)
Class A-IO (2) (2)
Class M1 $38,068,000 (1)
Class M2 $29,283,000 (1)
Class B $29,283,188 (1)
Class B-IO (2) (2)
Class X (3) (3)
Class P $100 (4)
Strip Amount (5) (5)
Class R (7) N/A N/A
(1) The lesser of the related Formula Rate and the Adjusted
Net WAC. Any entitlement to Net WAC Carryover Amounts will
not be an obligation of any REMIC created hereunder.
(2) The Class A-IO and Class B-IO Certificates will be
entitled to 100% of the interest distributions in respect
of the Class T4-A-IO and Class T4-B-IO Interests,
respectively.
(3) The Class X Certificates will be a notional balance equal
to the aggregate Stated Principal Balance of the Mortgage
Loans. The Pass-Through Rate in respect of the Class X
Certificates will be the excess of: (i) the Adjusted Net
WAC over (ii) the product of: (A) two and (B) the weighted
average Pass-Through Rate of the REMIC III Interests,
where the REMIC IV Accrual Class is subject to a cap equal
to zero and each REMIC IV Accretion Directed Classes is
subject to a cap equal to the Pass-Through Rate on its
Corresponding Class.
40
(4) The Class P Certificates will not be entitled to payments
of interest. The Trustee will treat the rights of the
Class P Certificates to receive Prepayment Charges as a
class of regular interests in REMIC V.
(5) The Strip Amount will be a REMIC regular interest of REMIC
V. The Strip Amount will not have a principal balance, but
will receive 100% of the interest from Class T4 Strip
Amount.
(6) The Class R Certificates will represent the beneficial
ownership of the R-I, R-II, R-III, R-IV and R-V Interests,
which will represent the sole class of residual interest
in each of REMIC I, REMIC II, REMIC III, REMIC IV and
REMIC ▇.
▇▇▇▇▇ ▇▇:
The REMIC IV Regular Interests, each of which (expect for the Class R-IV
Interests) is hereby designated a regular interest in REMIC IV, shall have the
following principal balances, pass-through rates and Corresponding Classes of
Certificates in the manner set forth in the following table:
Corresponding
REMIC Initial Interest Class of Master
Interests Balance Rate REMIC Interest
--------- ------- -------- --------------
T4-A1 (1) 1/2 Corresponding Class balance Triple Adjusted Net WAC A1
T4-M1 (1) 1/2 Corresponding Class balance Triple Adjusted Net WAC M1
T4-M2 (1) 1/2 Corresponding Class balance Triple Adjusted Net WAC M2
T4-B (1) 1/2 Corresponding Class balance Triple Adjusted Net WAC B
T4-P 1/2 Corresponding Class balance (2) P
T4-Accrual Interest 1/2 Pool Principal Balance less $100 Triple Adjusted Net WAC N/A
T4-A-IO (3) (4) N/A
T4-B-IO (3) (4) N/A
T4-Strip Amount (5) (5) ▇/▇
▇-▇▇ ▇/▇ ▇/▇ ▇/▇
_________________________
(1) Intermediate REMIC Accretion Directed Class.
(2) The Class T4-P Interests will not be entitled to payments
of interest but will be entitled to all prepayment
premiums.
(3) The Class T4-A-IO Interest will have a notional balance
equal to the notional balance of the T3-A-IO Interest. The
Class T4-B-IO Interest will have a notional balance equal
to the notional balance of the T3-A-IO Interest.
41
(4) For any Distribution Date and Class of Certificates, see
the corresponding Pass-Through Rate indicated in the
definition of "Pass-Through Rate" in Section 1.01 hereof.
(5) The Class T4-Strip Amount will not have a principal
balance, but will receive 100% of the interest from Class
T3-Strip Amount.
On each Distribution Date, 50% of the increase in the
Overcollateralized Amount will be payable as a reduction of the principal
balances of the REMIC IV Accretion Directed Classes (each such Class will be
reduced by an amount equal to 50% of any increase in the Overcollateralized
Amount that is attributable to a reduction in the principal balance of its
Corresponding Class) and will be accrued and added to the principal balance of
the REMIC IV Accrual Class. On each Distribution Date, the increase in the
principal balance of the REMIC IV Accrual Class may not exceed interest
accruals for such Distribution Date for the REMIC IV Accrual Class. In the
event that: (i) 50% of the increase in the Overcollateralized Amount exceeds
(ii) interest accruals on the REMIC IV Accrual Class for such Distribution
Date, the excess for such Distribution Date (accumulated with all such
excesses for all prior Distribution Dates) will be added to any increase in
the Overcollateralized Amount for purposes of determining the amount of
interest accrual on the REMIC IV Accrual Class payable as principal on the
REMIC IV Accretion Directed Class on the next Distribution Date pursuant to
the first sentence of this paragraph. All payments of scheduled principal and
prepayments of principal generated by the Mortgage Loans shall be allocated
50% to the REMIC IV Accrual Class, and 50% to the REMIC IV Accretion Directed
Classes (principal payments shall be allocated among such REMIC IV Accretion
Directed Classes in an amount equal to 50% of the principal amounts allocated
to their respective Corresponding Classes), until paid in full.
Notwithstanding the above, principal payments allocated to the Class X
Certificates that result in the reduction in the Overcollateralized Amount
shall be allocated to the REMIC IV Accrual Class (until paid in full).
Realized losses shall be applied so that after all distributions have been
made on each Distribution Date (i) the principal balances of each of the REMIC
IV Accretion Directed Class is equal to 50% of the principal balance of its
respective Corresponding Class, and (ii) the REMIC IV Accrual Class is equal
to 50% of the aggregate principal balance of the Mortgage Pool plus 50% of the
Overcollateralized Amount.
REMIC III:
The REMIC III Regular Interests shall have the following principal
balances, and pass-through rates in the manner set forth in the following
table:
REMIC Initial Interest
Interests Balance Rate
--------- ------- ----
T3-A (1) Double Adjusted Net WAC
T3-B $212,000,000 Double Adjusted Net WAC
T3-Strip Amount (2) (2)
T3-AIO (3) (3)
T3-P $100 (4)
42
(1) Principal balance equal to the principal balance of all
REMIC II regular interest less the principal balance of
the Class T3-A and the Class T3-pregular interest.
(2) The Class T3-Strip Amount will not have a principal
balance, but will be entitled to receive 100% of the
interest of all of the Class T2-Strip Amount.
(3) The Class T3-AIO will not have a principal balance, but
will have a notional balance equal to the balance of all
of the Class T2-B Regular Interests and the Class T3-C
Regular Interest and will accrue interest at the
Pass-Through Rate for the Class A-IO.
(4) The Class LT-P Interests will not be entitled to payments
of interest.
On each Distribution Date, all Realized Losses, payments of principal will be
allocated to Class T3-A until such class is reduced to zero . Subsequent
realized losses, payments of principal will first be allocated to Class T3-B
with the highest numerical denomination until such class is reduced to zero,
and then to the Class T3-B with the next highest numerical denomination.
Finally, subsequent realized losses, payments of principal will first be
allocated to Class T3-C with the highest numerical denomination until such
class is reduced to zero, and then to the Class T3-C with the next highest
numerical denomination.
REMIC II:
The REMIC II Regular Interests shall have the following principal
balances, and the pass-through rates in the manner set forth in the following
table:
Initial Initial Corresponding Corresponding T2-BIO
REMIC Interests Interest REMIC II-BIO Regular Interest
Interest Balance Rate Interest Rate Change Date
-------- ------- -------- ------------- ------------------
T2-A (1) Adjusted Net WAC T2-A N/A
T2-BIO(1) 9,418,100.00 Adjusted Net WAC T2-BIO(1) 15-Oct-01
T2-BIO(2) 9,242,000.00 Adjusted Net WAC T2-BIO(2) 15-Nov-01
T2-BIO(3) 9,069,200.00 Adjusted Net WAC T2-BIO(3) 17-Dec-01
T2-B(4) 8,899,600.00 Adjusted Net WAC T2-BIO(4) 15-Jan-02
T2-B(5) 8,733,000.00 Adjusted Net WAC T2-BIO(5) 15-Feb-02
T2-B(6) 8,569,800.00 Adjusted Net WAC T2-BIO(6) 15-Mar-02
T2-B(7) 8,409,300.00 Adjusted Net WAC T2-BIO(7) 15-Apr-02
T2-B(8) 8,252,000.00 Adjusted Net WAC T2-BIO(8) 15-May-02
T2-B(9) 8,097,600.00 Adjusted Net WAC T2-BIO(9) 17-Jun-02
T2-B(10) 7,946,000.00 Adjusted Net WAC T2-BIO(10) 15-Jul-02
T2-B(11) 7,797,300.00 Adjusted Net WAC T2-BIO(11) 15-Aug-02
T2-B(12) 7,651,300.00 Adjusted Net WAC T2-BIO(12) 16-Sep-02
T2-B(13) 7,508,000.00 Adjusted Net WAC T2-BIO(13) 15-Oct-02
T2-B(14) 7,367,400.00 Adjusted Net WAC T2-BIO(14) 15-Nov-02
T2-B(15) 7,229,500.00 Adjusted Net WAC T2-BIO(15) 16-Dec-02
T2-B(16) 7,094,000.00 Adjusted Net WAC T2-BIO(16) 15-Jan-03
T2-B(17) 6,961,100.00 Adjusted Net WAC T2-BIO(17) 18-Feb-03
T2-B(18) 6,830,700.00 Adjusted Net WAC T2-BIO(18) 17-Mar-03
43
T2-B(19) 6,702,700.00 Adjusted Net WAC T2-BIO(19) 15-Apr-03
T2-B(20) 6,577,000.00 Adjusted Net WAC T2-BIO(20) 15-May-03
T2-B(21) 6,453,800.00 Adjusted Net WAC T2-BIO(21) 16-Jun-03
T2-B(22) 6,332,800.00 Adjusted Net WAC T2-BIO(22) 15-Jul-03
T2-B(23) 6,197,200.00 Adjusted Net WAC T2-BIO(23) 15-Aug-03
T2-B(24) 108,651,200.00 Adjusted Net WAC T2-BIO(24) 15-Sep-03
T2-BIO N/A (2) N/A N/A
T2-C 212,000,000.00 Adjusted Net WAC T2-BIO(25) and 15-Sep-03
T3-AIO
T2-P $100 (3) N/A N/A
(1) Principal balance equal to the Class T1-A regular
interest.
(2) The Class T2 BIO will represent 24 REMIC regular
interests. Each regular interest will not have a principal
balance, but will receive interest according to a notional
balance equal to its corresponding T2-B REMIC regular
interest and pass-through rate equal to (a) for the period
beginning on the Closing Date, and ending on the Rate
Change Date for said T2-BIO regular interest, 0.0517083%,
and (b) thereafter, 0%.
(3) The Class LT-P Interests will not be entitled to payments
of interest.
On each Distribution Date, all Realized Losses, payments of principal will be
allocated to Class T2-A until such class is reduced to zero. Subsequent
realized losses, payments of principal will first be allocated to Class T2-B
with the highest numerical denomination until such class is reduced to zero,
and then to the Class T2-B with the next highest numerical denomination.
Finally, subsequent realized losses, payments of principal will be allocated
to Class T2-C until such class is reduced to zero, and then to the Class T2-C
with the next highest numerical denomination.
REMIC I:
The REMIC I Regular Interests shall have the following principal
balances, and the pass-through rates in the manner set forth in the following
table:
Initial Initial Rate
REMIC Interests Interest Corresponding Change
Interest Balance Rate REMIC II Interest Date
-------- -------- ------ ----------------- ------
T1-A (1) Net WAC T2-A N/A
T1-B(1) 9,418,100.00 Net WAC T2-B(1) and T2B10(1) 15-Oct-01
T1-B(2) 9,242,000.00 Net WAC T2-B(2) and T2B10(1) 15-Nov-01
T1-B(3) 9,069,200.00 Net WAC T2-B(3) and T2B10(1) 17-Dec-01
T1-B(4) 8,899,600.00 Net WAC T2-B(4) and T2B10(1) 15-Jan-02
T1-B(5) 8,733,000.00 Net WAC T2-B(5) and T2B10(1) 15-Feb-02
T1-B(6) 8,569,800.00 Net WAC T2-B(6) and T2B10(1) 15-Mar-02
T1-B(7) 8,409,300.00 Net WAC T2-B(7) and T2B10(1) 15-Apr-02
T1-B(8) 8,252,000.00 Net WAC T2-B(8) and T2B10(1) 15-May-02
44
T1-B(9) 8,097,600.00 Net WAC T2-B(9) and T2B10(1) 17-Jun-02
T1-B(10) 7,946,000.00 Net WAC T2-B(10) and T2B10(1) 15-Jul-02
T1-B(11) 7,797,300.00 Net WAC T2-B(11) and T2B10(1) 15-Aug-02
T1-B(12) 7,651,300.00 Net WAC T2-B(12) and T2B10(1) 16-Sep-02
T1-B(13) 7,508,000.00 Net WAC T2-B(13) and T2B10(1) 15-Oct-02
T1-B(14) 7,367,400.00 Net WAC T2-B(14) and T2B10(1) 15-Nov-02
T1-B(15) 7,229,500.00 Net WAC T2-B(15) and T2B10(1) 16-Dec-02
T1-B(16) 7,094,000.00 Net WAC T2-B(16) and T2B10(1) 15-Jan-03
T1-B(17) 6,961,100.00 Net WAC T2-B(17) and T2B10(1) 18-Feb-03
T1-B(18) 6,830,700.00 Net WAC T2-B(18) and T2B10(1) 17-Mar-03
T1-B(19) 6,702,700.00 Net WAC T2-B(19) and T2B10(1) 15-Apr-03
T1-B(20) 6,577,000.00 Net WAC T2-B(20) and T2B10(1) 15-May-03
T1-B(21) 6,453,800.00 Net WAC T2-B(21) and T2B10(1) 16-Jun-03
T1-B(22) 6,332,800.00 Net WAC T2-B(22) and T2B10(1) 15-Jul-03
T1-B(23) 6,197,200.00 Net WAC T2-B(23) and T2B10(1) 15-Aug-03
T1-B(24) 320,651,200.00 Net WAC T2-B(24) and T2-B(25) 15-Sep-03
T-2BIO(24) and
T2-BIO(25)
T1-P $100 (2) N/A N/A
(1) Pool Principal Balance less the Class of the Class T3-B.
(2) The Class LT-P Interests will not be entitled to payments
of interest.
On each Distribution Date, all Realized Losses, payments of principal will be
allocated to Class T1-A until such class is reduced to zero. Subsequent
realized losses, payments of principal will first be allocated to Class T3-B
with the highest numerical denomination until such class is reduced to zero,
and then to the Class T3-B with the next highest numerical denomination.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
SECTION 2.01. Conveyance of Mortgage Loans.
(a) The Depositor, concurrently with the execution and delivery
hereof, does hereby transfer, assign, set over and otherwise convey to the
Trustee without recourse for the benefit of the Certificateholders all the
right, title and interest of the Depositor, including any security interest
therein for the benefit of the Depositor, in and to the Original Mortgage
Loans that are Initial Mortgage Loans identified on the Mortgage Loan
Schedule, the rights of the Depositor under the Assignment and Assumption
Agreement, each Mortgage Loan Purchase Agreement and each Reconstitution
Agreement, and all other assets included or to be included in the Trust Fund.
Such assignment includes all interest and principal received by the Seller,
the
45
Depositor or the Servicer on or with respect to the Original Mortgage Loans
(other than payments of principal and interest due on such Initial Mortgage
Loans on or before the Initial Cut-off Date). The Depositor herewith delivers
to the Trustee an executed copy of each Reconstitution Agreement. In addition,
on or prior to the Closing Date, the Depositor shall cause MGIC to deliver the
MGIC Policy to the Trustee and the Trustee to execute the Cap Agreement. With
respect to any Initial Mortgage Loan that does not have a first payment date
during the Due Period related to the first Distribution Date or any Subsequent
Mortgage Loan that does not have a first payment date during the Due Period
related to the first Distribution Date following the related Subsequent
Transfer Date, the Depositor shall deposit into the Distribution Account on or
before the Servicer Remittance Date relating to the applicable Distribution
Date, an amount equal to one month's interest at the related Net Mortgage Rate
on the Cut-off Date Principal Balance of such Mortgage Loan.
If the assignment and transfer of the Original Mortgage Loans and
the other property specified in this Section 2.01 from the Depositor to the
Trustee pursuant to this Agreement is held or deemed not to be a sale or is
held or deemed to be a pledge of security for a loan, the Depositor intends
that the rights and obligations of the parties shall be established pursuant
to the terms of this Agreement and that, in such event, (i) the Depositor
shall be deemed to have granted and does hereby grant to the Trustee as of the
Closing Date a perfected, first priority security interest in the entire
right, title and interest of the Depositor in and to the Original Mortgage
Loans and all other property conveyed to the Trust Fund pursuant to this
Section 2.01 and all proceeds thereof, and (ii) this Agreement shall
constitute a security agreement under applicable law.
In connection with such transfer and assignment, the Depositor does
hereby deliver to, and deposit with the Trustee or the Custodian, the
following documents or instruments with respect to each Original Mortgage Loan
so transferred and assigned the following documents or instruments with
respect to each Subsequent Mortgage Loan (each, a "Mortgage File"):
(a) the electronic Mortgage Loan Schedule;
(b) (A) the original Mortgage Note bearing all intervening
endorsements and including any riders to the Mortgage Note, endorsed
"Pay to the order of ________________, without recourse" and signed
in the name of the last named endorsee by an authorized officer, or
(B) with respect to any Lost Mortgage Note, a lost note
affidavit stating that the original Mortgage Note was lost or
destroyed, together with a copy of such Mortgage Note;
(c) the original of any guarantee executed in connection with
the Mortgage Note (if any);
(d) the original Mortgage, with evidence of recording thereon,
or copies certified by the related recording office or if the
original Mortgage has not yet been returned from the recording
office, a copy certified by or on behalf of the
46
applicable Originator indicating that such Mortgage has been
delivered for recording. The return directions for the original
Mortgage should indicate, when recorded, mail to the Trustee or the
Custodian;
(e) the originals of all assumption, modification,
consolidation or extension agreements, (or, if an original of any of
these documents has not been returned from the recording office, a
copy thereof certified by or on behalf of the applicable Originator,
the original to be delivered to the Trustee or the Custodian
forthwith after return from such recording office) with evidence of
recording thereon, if any;
(f) the original Assignment of Mortgage as appropriate, in
recordable form, for the Mortgage Loan assigned in blank;
(g) the originals of any intervening recorded assignments of
mortgage, including warehousing assignments, with evidence of
recording thereon (or, if an original intervening Assignment of
Mortgage has not been returned from the recording office, a copy
thereof certified by or on behalf of the applicable Originator, the
original to be delivered to the Trustee or the Custodian forthwith
after return from such recording office); and
(h) the original lender's title insurance policy, or copy of
title commitment (or in appropriate jurisdictions, attorney's
opinion of title and abstract of title).
The Depositor hereby represents that, on the Closing Date (i) no
more than 1% of the Original Mortgage Loans by Stated Principal Balance as of
the Cut-off Date may have lost note affidavits in lieu of the original
Mortgage Notes and (ii) the applicable Originator shall deliver to the Trustee
or the Custodian a copy of the original Mortgage Note for each Mortgage Loan
with respect to which a lost note affidavit is delivered.
The Depositor shall cause the related Originator to promptly (and in
no event later than thirty (30) Business Days, subject to extension upon a
mutual agreement among the Depositor, the Servicer and the Trustee, following
the later of the Closing Date and the date of receipt by the Servicer or the
Trustee, as the case may be, of the recording information for a Mortgage)
submit or cause to be submitted to the Custodian for recording, at no expense
to the Trust Fund, the Servicer (unless the Servicer is the Originator of such
Mortgage Loan) or the Trustee, in the appropriate public office for real
property records, each Assignment referred to in Sections 2.01(d) and (e)
above and shall execute each original Assignment in the following form: "▇▇▇▇▇
Fargo Bank Minnesota, National Association, as Trustee under the applicable
agreement." In the event that any such Assignment is lost or returned
unrecorded because of a defect therein, the Depositor shall or shall cause the
related Originator to promptly prepare or cause to be prepared a substitute
Assignment or cure or cause to be cured such defect, as the case may be, and
thereafter cause each such Assignment to be duly recorded.
If any of the documents referred to in Sections 2.01(b), (d) or (f)
above has as of the Closing Date been submitted for recording but either (x)
has not been returned from the applicable public recording office or (y) has
been lost or such public recording office has
47
retained the original of such document, the obligations of the Depositor to
deliver such documents shall be deemed to be satisfied upon (1) delivery to
the Trustee or the Custodian of a copy of each such document certified by the
Originator, in the case of (x) above or the applicable public recording office
in the case of (y) above to be a true and complete copy of the original that
was submitted for recording and (2) if such copy is certified by the related
Originator, delivery to the Trustee or the Custodian promptly upon receipt
thereof of either the original or a copy of such document certified by the
applicable public recording office to be a true and complete copy of the
original. If the original lender's title insurance policy was not delivered
pursuant to Section 2.01(h) above, the Depositor shall deliver or cause to be
delivered to the Trustee or the Custodian promptly after receipt thereof, the
original lender's title insurance policy. The Depositor shall deliver or cause
to be delivered to the Trustee or the Custodian promptly upon receipt thereof
any other original documents constituting a part of a Mortgage File received
with respect to any Mortgage Loan, including, but not limited to, any original
documents evidencing an assumption or modification of any Mortgage Loan.
All original documents relating to the Mortgage Loans that are not
delivered to the Trustee or the Custodian are and shall be held by or on
behalf of the Seller, the Depositor or the Servicer, as the case may be, in
trust for the benefit of the Trustee on behalf of the Certificateholders. In
the event that any such original document is required pursuant to the terms of
this Section to be a part of a Mortgage File, such document shall be delivered
promptly to the Trustee or the Custodian. Any such original document delivered
to or held by the Depositor that is not required pursuant to the terms of this
Section to be a part of a Mortgage File, shall be delivered promptly to the
Servicer.
(b) The Depositor hereby sells, transfers, assigns, sets over and
otherwise conveys to the Trustee in trust for the benefit of the
Certificateholders, without recourse, all right title and interest in such
Subsequent Mortgage Loans, including all interest and principal due on or with
respect to such Subsequent Mortgage Loans on or after the related Subsequent
Cut-off Date and all interest and principal payments on such Subsequent
Mortgage Loans received prior to the Subsequent Cut-off Date in respect of
installments of interest and principal due thereafter, but not including
principal and interest due on such Subsequent Mortgage Loans prior to the
related Subsequent Cut-off Date, any insurance policies in respect of such
Subsequent Mortgage Loans and all proceeds of any of the foregoing.
(c) Upon one Business Day's prior written notice to the Custodian,
the Trustee, the Servicer and the Rating Agencies, on any Business Day during
the Prefunding Period designated by the Depositor, the Depositor, the Servicer
and the Trustee shall complete, execute and deliver a Subsequent Transfer
Agreement so long as no Rating Agency has provided notice that the execution
and delivery of such Subsequent Transfer Agreement will result in a reduction
or withdrawal of the ratings assigned to the Certificates.
The transfer of Subsequent Mortgage Loans and the other property and
rights relating to them on a Subsequent Transfer Date is subject to the
satisfaction of each of the following conditions:
(i) each Subsequent Mortgage Loan conveyed on such Subsequent
Transfer Date satisfies the representations and warranties
applicable to it under this
48
Agreement as of the applicable Subsequent Transfer Date;
provided, however, that with respect to a breach of a
representation and warranty with respect to a Subsequent
Mortgage Loan, the obligation under Section 2.03(d) of this
Agreement of the Seller to cure, repurchase or replace such
Subsequent Mortgage Loan shall constitute the sole remedy
against the Seller respecting such breach available to
Certificateholders, the Depositor or the Trustee;
(ii) the Trustee and the Rating Agencies are provided with an
Opinion of Counsel or Opinions of Counsel, at the expense of
the Depositor, with respect to the qualification of the Trust
Fund as a REMIC, to be delivered as provided pursuant to
Section 2.01(d);
(iii) the Rating Agencies and the Trustee are provided with an
Opinion of Counsel or Opinions of Counsel, at the expense of
the Depositor, with respect to the characterization of the
transfer of the Subsequent Mortgage Loans conveyed on such
Subsequent Transfer Date as a sale, to be delivered as provided
pursuant to Section 2.01(d); and
(iv) the execution and delivery of such Subsequent Transfer
Agreement or conveyance of the related Subsequent Mortgage
Loans does not result in a reduction or withdrawal of any
ratings assigned to the Certificates by the Rating Agencies;
(v) no Subsequent Mortgage Loan conveyed on such Subsequent
Transfer Date was 30 or more days contractually delinquent as
of such date;
(vi) the remaining term to stated maturity of such Subsequent
Mortgage Loan will not exceed 30 years;
(vii) such Subsequent Mortgage Loan will not have a Mortgage Rate
less than 6.50% per annum;
(viii) the Depositor shall have deposited in the Collection Account
all principal and interest collected with respect to the
related Subsequent Mortgage Loans on or after the related
Subsequent Cut-off Date;
(ix) such Subsequent Mortgage Loan will not have a Loan-to-Value
Ratio greater than 95.00%;
(x) no Subsequent Mortgage Loan shall have a maturity date after
November 2031;
(xi) such Subsequent Mortgage Loan will not have an original
Loan-to-Value Ratio greater than 95.00%;
(xii) such Subsequent Mortgage Loan will have a principal balance
not greater than $600,000;
49
(xiii) such Subsequent Mortgage Loan will be secured by a first lien
on a mortgaged property; and
(xiv) such Subsequent Mortgage Loan will be otherwise acceptable to
the Rating Agencies;
(xv) following the conveyance of the Subsequent Mortgage Loans on
such Subsequent Transfer Date the characteristics of the
Mortgage Loans in the Mortgage Pool will be as follows:
(i) weighted average current Loan Rate of at least 9.500% per
annum;
(ii) a weighted average remaining term to stated maturity of
less than 356 months;
(iii) a weighted average Loan-to-Value Ratio of not more than
82.00%;
(iv) no more than 47.00% of the Mortgage Loans by aggregate
Stated Principal Balance at the end of the Prefunding Period
will be concentrated in one state; and
(v) no more than 7.00% of the Mortgage Loans by aggregate
Cut-off Date Principal Balance will relate to non-owner
occupied properties;
(vi) neither the Seller nor the Depositor shall be insolvent or
shall be rendered insolvent as a result of such transfer;
(vii) no Event of Default has occurred hereunder;
(viii) the Depositor shall have delivered to the Trustee an
Officer's Certificate confirming the satisfaction of each of
these conditions precedent; and
(ix) each Mortgage Loan constitutes a "qualified mortgage"
within the meaning of Section 860G(a)(3) of the Code.
(d) Upon (1) delivery to the Trustee by the Depositor of the
Opinions of Counsel referred to in Sections 2.01(c)(ii) and (iii), (2)
delivery to the Trustee by the Depositor of a revised Mortgage Loan Schedule
reflecting the Subsequent Mortgage Loans conveyed on such Subsequent Transfer
Date and the related Subsequent Mortgage Loans and (3) delivery to the Trustee
by the Depositor of an Officer's Certificate confirming the satisfaction of
each of the conditions precedent set forth in Section 2.01(c), the Trustee
shall remit to the Depositor the Aggregate Subsequent Transfer Amount related
to the Subsequent Mortgage Loans transferred by the Depositor on such
Subsequent Transfer Date from funds in the Prefunding Account.
The Trustee shall not be required to investigate or otherwise verify
compliance with the conditions set forth in the preceding paragraph, except
for its own receipt of documents specified above, and shall be entitled to
rely on the required Officer's Certificate.
50
SECTION 2.02. Acceptance of REMIC I by the Trustee.
Subject to the provisions of Section 2.01 and subject to any
exceptions noted on the exception report described in the next paragraph
below, the Trustee acknowledges receipt of the documents referred to in
Section 2.01 (other than such documents described in Section 2.01(e)) above
and all other assets included in the definition of "REMIC I" under clauses
(i), (iii), (iv) and (v) (to the extent of amounts deposited into the
Distribution Account) and declares that the Trustee through the Custodian
holds and will hold such documents and the other documents delivered to it
constituting the Mortgage File on behalf of the Trust, and that it holds or
will hold all such assets and such other assets included in the definition of
"REMIC I" in trust for the exclusive use and benefit of all present and future
Certificateholders. The Trustee also acknowledges receipt of the amounts on
deposit in the Net WAC Fund and the Prefunding Account in trust for the
exclusive use and benefit of all present and future Certificateholders.
The Trustee, agrees, for the benefit of the Certificateholders, on
or before the Closing Date, to or to cause the Custodian to review each
related Mortgage File and to certify in substantially the form attached hereto
as Exhibit C-1 that, as to each Original Mortgage Loan listed in the Mortgage
Loan Schedule (other than any Original Mortgage Loan paid in full or any
Original Mortgage Loan specifically identified in the exception report annexed
thereto as not being covered by such certification), (i) all documents
constituting part of such Mortgage File required to be delivered to it
pursuant to this Agreement are in its possession, (ii) such documents have
been reviewed by it and are not mutilated, torn or defaced unless initialed by
the related borrower and relate to such Original Mortgage Loan and (iii) based
on its examination and only as to the foregoing, the information set forth in
the Mortgage Loan Schedule that corresponds to items (i) through (iii), (ix),
(xii) and (xviii) through (xx) of the definition of "Mortgage Loan Schedule"
accurately reflects information set forth in the Mortgage File. It is herein
acknowledged that, in conducting such review, neither the Trustee nor the
Custodian was under any duty or obligation (i) to inspect, review or examine
any such documents, instruments, certificates or other papers to determine
whether they are genuine, enforceable, or appropriate for the represented
purpose (including with respect to Section 2.01(f), whether such title
insurance policy insures the priority of the Mortgage as a first lien) or
whether they have actually been recorded or that they are other than what they
purport to be on their face or (ii) to determine whether any Mortgage File
should include any of the documents specified in clause (e) of Section 2.01.
Prior to the first anniversary date of this Agreement, the Trustee
shall cause the Custodian to deliver to the Depositor and the Servicer a final
certification in the form annexed hereto as Exhibit C-2 evidencing the
completeness of the Mortgage Files, with any applicable exceptions noted
thereon.
If in the process of reviewing the Mortgage Files and making or
preparing, as the case may be, the certifications referred to above, the
Trustee or the Custodian finds any document or documents constituting a part
of a Mortgage File to be missing or defective in any material respect, at the
conclusion of its review the Trustee shall so notify the Depositor, the Seller
and the Servicer. In addition, upon the discovery by the Depositor, the
Servicer, or the Custodian Trustee of a breach of any of the representations
and warranties made by any Originator in the applicable Mortgage Loan Purchase
Agreement in respect of any Original
51
Mortgage Loan which materially adversely affects such Original Mortgage Loan
or the interests of the related Certificateholders in such Original Mortgage
Loan, the party discovering such breach shall give prompt written notice to
the other parties.
Enforcement of each Mortgage Loan Purchase Agreement against the
applicable Originator shall be effected by the Trustee. The Trustee shall pay
the costs of such enforcement at its own expense, and shall be reimbursed
therefor only (i) from a general recovery resulting from such enforcement, to
the extent, if any, that such recovery exceeds all amounts due in respect of
the related Mortgage Loans or (ii) from a specific recovery of costs, expenses
or attorneys' fees against the Person against which such enforcement is
directed; provided, however, if the sources of reimbursement described in
clauses (i) and (ii) are insufficient, the Trustee may seek reimbursement for
any remaining unreimbursed costs of such enforcement from the Trust Fund as an
Extraordinary Trust Fund Expense.
The Trustee agrees to cause the Custodian to execute and deliver on
each Subsequent Transfer Date to the Depositor and the Servicer a Subsequent
Certification in the form annexed hereto as Exhibit C-1. Based on its or the
Custodian's review and examination, and only as to the documents identified in
such Subsequent Certification, the Trustee shall cause the Custodian to
acknowledge that such documents appear regular on their face and relate to
such Subsequent Mortgage Loan. The Trustee and the Custodian shall be under no
duty or obligation to or to cause the Custodian to inspect, review or examine
said documents, instruments, certificates or other papers to determine that
the same are genuine, enforceable or appropriate for the represented purpose
or that they have actually been recorded in the real estate records or that
they are other than what they purport to be on their face.
Not later than one year following the Closing Date, the Trustee
shall cause the Custodian to deliver to the Depositor and the Servicer a Final
Certification with respect to the Subsequent mortgage Loans in the form
annexed hereto as Exhibit C-2 with any applicable exceptions noted thereon.
If, in the course of such review of the Mortgage Files relating to
the Subsequent Mortgage Loans, the trustee or the Custodian finds any document
constituting a part of a Mortgage File which does not meet the requirements of
Section 2.01, the Trustee shall list such as an exception in the Final
Certification; provided, however that the Trustee shall not make any
determination as to whether (i) any endorsement is sufficient to transfer all
right, title and interest of the party so endorsing, as noteholder or assignee
thereof, in and to that Mortgage Note or (ii) any assignment is in recordable
form or is sufficient to effect the assignment of and transfer to the assignee
thereof under the mortgage to which the assignment relates. The Depositor
shall cure any such defect or repurchase or substitute for any such Mortgage
Loan in accordance with Section 2.02(a).
SECTION 2.03. Repurchase or Substitution of Mortgage Loans by the
Originators, the Seller or the Depositor; Payment of
Prepayment Charges in the event of breach.
(a) Upon discovery or receipt of notice of any materially defective
document in, or that a document is missing from, the Mortgage File or of the
breach by any Originator of any
52
representation, warranty or covenant under each Mortgage Loan Purchase
Agreement in respect of any Mortgage Loan which materially adversely affects
the value of such Mortgage Loan or the interest therein of the
Certificateholders (in the case of any such representation or warranty made in
each Mortgage Loan Purchase Agreement to the knowledge or the best of
knowledge of such Originator, as to which such Originator has no knowledge,
without regard to the Originator's lack of knowledge with respect to the
substance of such representation or warranty being inaccurate at the time it
was made), the Trustee shall promptly notify the Seller and the Servicer of
such defect, missing document or breach and cause such Originator to deliver
such missing document or cure such defect or breach within 90 days from the
date the Originator was notified of such missing document, defect or breach;
provided that such missing document was not previously delivered by the
Originator under the applicable Mortgage Loan Purchase Agreement. If such
Originator does not deliver such missing document or cure such defect or
breach in all material respects during such period, the Trustee shall enforce
the obligations of such Originator under the applicable Mortgage Loan Purchase
Agreement to repurchase such Mortgage Loan from the Trust Fund at the Purchase
Price within 90 days after the date on which such Originator was notified
(subject to Section 2.03(e)) of such missing document, defect or breach, if
and to the extent that such Originator is obligated to do so under the
applicable Mortgage Loan Purchase Agreement. In the event that the Originator
shall fail to cure the applicable breach or repurchase a Mortgage Loan in
accordance with the preceding sentence, the Depositor shall do so. The
Purchase Price for the repurchased Mortgage Loan shall be deposited in the
Distribution Account, and the Trustee, upon receipt of such deposit, shall
release or cause the Custodian to release to such Originator the related
Mortgage File and the Trustee shall execute and deliver such instruments of
transfer or assignment, in each case without recourse, as such Originator
shall furnish to it and as shall be necessary to vest in such Originator any
Mortgage Loan released pursuant hereto, and the Trustee shall have no further
responsibility with regard to such Mortgage File. In lieu of repurchasing any
such Mortgage Loan as provided above, if so provided in the applicable
Mortgage Loan Purchase Agreement, the related Originator (or the Depositor)
may cause such Mortgage Loan to be removed from the Trust Fund (in which case
it shall become a Deleted Mortgage Loan) and substitute one or more Qualified
Substitute Mortgage Loans in the manner and subject to the limitations set
forth in Section 2.03(d). It is understood and agreed that the obligation of
the related Originator (or the Depositor) to cure or to repurchase (or to
substitute for) any Mortgage Loan as to which a document is missing, a
material defect in a constituent document exists or as to which such a breach
has occurred and is continuing shall constitute the sole remedy respecting
such omission, defect or breach available to the Trustee on behalf of the
Certificateholders.
(b) (i) Subject to Section 2.03(e), within 90 days of the earlier of
discovery by the Seller or receipt of notice by the Seller of the breach of
any representation or warranty of the Seller set forth in the applicable
Mortgage Loan Purchase Agreement with respect to any Mortgage Loan, which
materially adversely affects the value of such Mortgage Loan or the interest
therein of the Certificateholders, the Seller shall (i) cure such breach in
all material respects, (ii) repurchase the Mortgage Loan from the Trust Fund
at the Purchase Price or (iii) remove such Mortgage Loan from the Trust Fund
(in which case it shall become a Deleted Mortgage Loan) and substitute one or
more Qualified Substitute Mortgage Loans in the manner and subject to the
limitations set forth in Section 2.03(d). The Purchase Price for any
repurchased Mortgage Loan shall be delivered to the Servicer for deposit in
the Collection Account, and the Trustee, upon receipt of written certification
from the Servicer of such deposit,
53
shall at the Seller's direction release or cause the Custodian to release to
the Seller the related Mortgage File and the Trustee shall execute and deliver
such instruments of transfer or assignment furnished by the Seller, in each
case without recourse, as the Seller shall furnish to it and as shall be
necessary to vest in the Seller any Mortgage Loan released pursuant hereto.
(ii) [reserved].
(iii) The Purchase Price for any repurchased Mortgage Loan shall be
delivered to the Servicer for deposit in the Collection Account, and the
Trustee, upon receipt of written certification from the Servicer of such
deposit, shall at the Depositor's direction release or cause the Custodian to
release to the Depositor the related Mortgage File and the Trustee shall
execute and the Trustee or the Custodian shall deliver such instruments of
transfer or assignment furnished by the Depositor, in each case without
recourse, as the Depositor shall furnish to it and as shall be necessary to
vest in the Depositor any Mortgage Loans released pursuant hereto.
(c) (i) As promptly as practicable (and no later than 90 days) after
the earlier of discovery by the Servicer or receipt of notice by the Servicer
of the breach of any representation, warranty or covenant of the Servicer set
forth in Section 2.05 which materially and adversely affects the interests of
the Certificateholders in any Mortgage Loan, the Servicer shall cure such
breach in all material respects.
(ii) Within 90 days of the earlier of discovery by the Servicer or
receipt of notice by the Servicer of the breach of any representation,
warranty or covenant of the Servicer set forth in Section 2.05 which
materially and adversely affects the interests of the Holders of the Class P
Certificates to any Prepayment Charge, the Servicer shall cure such breach in
all material respects. If the covenant made by the Servicer in Section
2.05(viii) is breached, the Servicer must pay into the Collection Account the
amount of the waived Prepayment Charge.
(d) Any substitution of Qualified Substitute Mortgage Loans for
Deleted Mortgage Loans made pursuant to Section 2.03(a) or Section 2.03(b)
must be effected prior to the date which is two years after the Closing Date
for the Trust Fund.
As to any Deleted Mortgage Loan for which an Originator, the Seller
or the Depositor substitutes a Qualified Substitute Mortgage Loan or Loans,
such substitution shall be effected by such Originator or the Depositor, as
the case may be, delivering to the Custodian on behalf of the Trustee, for
such Qualified Substitute Mortgage Loan or Loans, the Mortgage Note, the
Mortgage, the Assignment to the Trustee, and such other documents and
agreements, with all necessary endorsements thereon, as are required by
Section 2.01, together with an Officers' Certificate providing that each such
Qualified Substitute Mortgage Loan satisfies the definition thereof and
specifying the Substitution Shortfall Amount (as described below), if any, in
connection with such substitution. The Trustee or the Custodian shall
acknowledge receipt for such Qualified Substitute Mortgage Loan or Loans and,
within ten Business Days thereafter, review such documents as specified in
Section 2.02 and deliver to the Trustee, the Depositor and the Servicer, with
respect to such Qualified Substitute Mortgage Loan or Loans, a certification
substantially in the form attached hereto as Exhibit C-1, with any applicable
exceptions noted thereon. Within one year of the date of substitution, the
Trustee or the Custodian shall deliver to the Depositor and the Servicer a
certification substantially in the form of Exhibit C-2 hereto with
54
respect to such Qualified Substitute Mortgage Loan or Loans, with any
applicable exceptions noted thereon. Monthly Payments due with respect to
Qualified Substitute Mortgage Loans in the month of substitution are not part
of the Trust Fund and will be retained by the related Originator or the
Depositor, as the case may be. For the month of substitution, distributions to
Certificateholders will reflect the Monthly Payment due on such Deleted
Mortgage Loan on or before the Due Date in the month of substitution, and the
related Originator or the Depositor, as the case may be, shall thereafter be
entitled to retain all amounts subsequently received in respect of such
Deleted Mortgage Loan. The Depositor shall give or cause to be given written
notice to the Certificateholders that such substitution has taken place, shall
amend the Mortgage Loan Schedule to reflect the removal of such Deleted
Mortgage Loan from the terms of this Agreement and the substitution of the
Qualified Substitute Mortgage Loan or Loans and shall deliver a copy of such
amended Mortgage Loan Schedule to the Trustee. Upon such substitution, such
Qualified Substitute Mortgage Loan or Loans shall constitute part of the
Mortgage Pool and shall be subject in all respects to the terms of this
Agreement and, in the case of a substitution effected by an Originator, the
applicable Mortgage Loan Purchase Agreement, including, in the case of a
substitution effected by an Originator, all applicable representations and
warranties thereof included in the applicable Mortgage Loan Purchase
Agreement, and in the case of a substitution effected by the Depositor, all
applicable representations and warranties thereof set forth in Section 2.04,
in each case as of the date of substitution.
For any month in which an Originator or the Depositor substitutes
one or more Qualified Substitute Mortgage Loans for one or more Deleted
Mortgage Loans, the Servicer will determine the amount (the "Substitution
Shortfall Amount"), if any, by which the aggregate Purchase Price of all such
Deleted Mortgage Loans exceeds the aggregate of, as to each such Qualified
Substitute Mortgage Loan, the Scheduled Principal Balance thereof as of the
date of substitution, together with one month's interest on such Scheduled
Principal Balance at the applicable Net Mortgage Rate, plus all outstanding
P&I Advances and Servicing Advances. On the date of such substitution, which
shall be on or prior to the next succeeding Determination Date, the related
Originator or the Depositor, as the case may be, will deliver or cause to be
delivered to the Servicer for deposit in the Collection Account an amount
equal to the Substitution Shortfall Amount, if any, and the Trustee, upon
receipt of the related Qualified Substitute Mortgage Loan or Loans and
certification by the Servicer of such deposit, shall release to the related
Originator, the Depositor or the Seller, as the case may be, the related
Mortgage File or Files and the Trustee shall execute and deliver such
instruments of transfer or assignment, in each case without recourse, as the
related Originator, the Depositor or the Seller, as the case may be, shall
deliver to it and as shall be necessary to vest therein any Deleted Mortgage
Loan released pursuant hereto.
In addition, the related Originator, the Depositor or the Seller, as
the case may be, shall obtain at its own expense and deliver to the Trustee an
Opinion of Counsel to the effect that such substitution will not cause (a) any
federal tax to be imposed on any of the REMICs, created hereunder, including
without limitation, any federal tax imposed on "prohibited transactions" under
Section 860F(a)(1) of the Code or on "contributions after the startup date"
under Section 860G(d)(1) of the Code, or (b) any REMIC hereunder to fail to
qualify as a REMIC at any time that any Certificate is outstanding.
55
(e) Upon discovery by the Depositor, the Seller, the Servicer, or
the Trustee that any Mortgage Loan does not constitute a "qualified mortgage"
within the meaning of Section 860G(a)(3) of the Code, the party discovering
such fact shall within two Business Days give written notice thereof to the
other parties. In connection therewith, the related Originator or the
Depositor shall repurchase or, subject to the limitations set forth in Section
2.03(d), substitute one or more Qualified Substitute Mortgage Loans for the
affected Mortgage Loan within 90 days of the earlier of discovery or receipt
of such notice with respect to such affected Mortgage Loan. The Depositor
shall cause such repurchase or substitution to be made by (i) the related
Originator, if the affected Mortgage Loan's status as a non-qualified mortgage
is or results from a breach of any representation, warranty or covenant made
by the related Originator under the applicable Mortgage Loan Purchase
Agreement or (ii) the Depositor, if the affected Mortgage Loan's status as a
non-qualified mortgage is a breach of any representation or warranty of the
Depositor set forth in Section 2.04, or if its status as a non-qualified
mortgage is a breach of any representation or warranty. Any such repurchase or
substitution shall be made in the same manner as set forth in Section 2.03(a)
or Section 2.03(b). The Trustee shall reconvey to the related Originator or
the Depositor, as the case may be, the Mortgage Loan to be released pursuant
hereto in the same manner, and on the same terms and conditions, as it would a
Mortgage Loan repurchased for breach of a representation or warranty.
SECTION 2.04. Representations and Warranties of the Depositor.
The Depositor hereby represents, warrants and covenants to the
Trustee that as of the Closing Date:
(i) The Depositor is a corporation duly formed and validly
existing under the laws governing its creation and existence, is in
compliance with the laws of each state in which any Mortgaged
Property or the Depositor is located or doing business and is in
good standing in each jurisdiction in which the nature of its
business, or the properties owned or leased by it make such
qualification necessary. The Depositor has all requisite authority
to own and operate its properties, to carry out its business as
presently conducted and as proposed to be conducted and to enter
into and discharge its obligations under this Agreement and the
other Operative Documents to which it is a party.
(ii) The execution and delivery of this Agreement and the other
Operative Documents to which it is a party by the Depositor and its
performance and compliance with the terms of this Agreement and the
other Operative Documents to which it is a party have been duly
authorized by all necessary corporate action on the part of the
Depositor and will not violate the Depositor's Charter or Bylaws or
constitute a default (or an event which, with notice or lapse of
time, or both, would constitute a default) under, or result in a
breach of, any material contract, agreement or other instrument to
which the Depositor is a party or by which the Depositor is bound or
violate any statute or any order, rule or regulation of any court,
governmental agency or body or other tribunal having jurisdiction
over the Depositor or any of its properties.
56
(iii) This Agreement and the other Operative Documents to which
the Depositor is a party, assuming due authorization, execution and
delivery by the other parties hereto and thereto, each constitutes a
valid, legal and binding obligation of the Depositor, enforceable
against it in accordance with the terms hereof and thereof, except
as the enforcement thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and by general principles of
equity (whether considered in a proceeding or action in equity or at
law).
(iv) The Depositor is not in default with respect to any order
or decree of any court or any order, regulation or demand of any
federal, state, municipal or governmental agency, which default
could materially and adversely affect the condition (financial or
other) or operations of the Depositor or its properties or the
consequences of which could materially and adversely affect its
performance hereunder and under the other Operative Documents to
which the Depositor is a party.
(v) No litigation, proceeding or investigation is pending with
respect to which the Depositor has received service of process or,
to the best of the Depositor's knowledge, threatened against the
Depositor which litigation, proceeding or investigation might have
consequences that would prohibit its entering into this Agreement or
any other Operative Documents to which it is a party or that would
materially and adversely affect the condition (financial or
otherwise) or operations of the Depositor or its properties or might
have consequences that would materially and adversely affect the
validity or enforceability of the Mortgage Loans or the Depositor's
performance hereunder and under the other Operative Documents to
which the Depositor is a party.
(vi) [reserved].
(vii) Immediately prior to the sale and assignment by the
Depositor to the Trustee on behalf of the Trust Fund of each
Mortgage Loan, the Depositor had good and equitable title to each
Mortgage Loan subject to no prior lien, claim, participation
interest, mortgage, security interest, pledge, charge or other
encumbrance or other interest of any nature.
(viii) As of the Closing Date, the Depositor has transferred
all right, title and interest in the Original Mortgage Loans to the
Trustee on behalf of the Trust Fund.
(ix) The Depositor is solvent and will not be made insolvent by
the transfer of the Mortgage Loans, and the Depositor is not aware
of any impending insolvency. The Depositor has not transferred the
Mortgage Loans to the Trustee on behalf of the Trust Fund with any
intent to hinder, delay or defraud any of its creditors.
57
(x) All actions, approvals, consents, waivers, exemptions,
variances, franchises, orders, permits, authorizations, rights and
licenses required to be taken, given or obtained, as the case may
be, by or from any federal, state or other governmental authority or
agency (other than any such actions, approvals, etc. under any state
securities laws, real estate syndication or "Blue Sky" statutes, as
to which the Depositor makes no such representation or warranty),
that are necessary or advisable in connection with the purchase and
sale of the Certificates and the execution and delivery by the
Depositor of the Operative Documents to which it is a party, have
been duly taken, given or obtained, as the case may be, are in full
force and effect on the date hereof, are not subject to any pending
proceedings or appeals (administrative, judicial or otherwise) and
either the time within which any appeal therefrom may be taken or
review thereof may be obtained has expired or no review thereof may
be obtained or appeal therefrom taken, and are adequate to authorize
the consummation of the transactions contemplated by this Agreement
and the other Operative Documents on the part of the Depositor and
the performance by the Depositor of its obligations under this
Agreement and such of the other Operative Documents to which it is a
party.
(xi) The transfer, assignment and conveyance of the Mortgage
Notes and the Mortgages by the Depositor hereunder are not subject
to the bulk transfer laws of any similar statutory provisions in
effect in any applicable jurisdiction.
(xii) [reserved].
SECTION 2.05. Representations, Warranties and Covenants of the
Servicer.
The Servicer hereby represents, warrants and covenants to the
Trustee, the Certificateholders and to the Depositor that as of the Closing
Date or as of such date specifically provided herein:
(i) The Servicer is a corporation duly organized, validly
existing and in good standing under the laws of the state of its
incorporation and is duly authorized and qualified to transact any
and all business contemplated by this Agreement to be conducted by
the Servicer in any state in which a Mortgaged Property is located
or is otherwise not required under applicable law to effect such
qualification and, in any event, is in compliance with the doing
business laws of any such State, to the extent necessary to ensure
its ability to enforce each Mortgage Loan and to service the
Mortgage Loans in accordance with the terms of this Agreement;
(ii) The Servicer has the full power and authority to service
each Mortgage Loan, and to execute, deliver and perform, and to
enter into and consummate the transactions contemplated by this
Agreement and has duly authorized by all necessary action on the
part of the Servicer the execution, delivery and performance of this
Agreement; and this Agreement, assuming the due authorization,
execution and delivery thereof by the Depositor and the Trustee,
constitutes a legal, valid and binding obligation of the Servicer,
enforceable
58
against the Servicer in accordance with its terms, except to the
extent that (a) the enforceability thereof may be limited by
bankruptcy, insolvency, moratorium, receivership and other similar
laws relating to creditors' rights generally and (b) the remedy of
specific performance and injunctive and other forms of equitable
relief may be subject to the equitable defenses and to the
discretion of the court before which any proceeding therefor may be
brought;
(iii) The execution and delivery of this Agreement by the
Servicer, the servicing of the Mortgage Loans by the Servicer
hereunder, the consummation by the Servicer of any other of the
transactions herein contemplated, and the fulfillment of or
compliance with the terms hereof are in the ordinary course of
business of the Servicer and will not (A) result in a breach of any
term or provision of the organizational documents of the Servicer or
(B) conflict with, result in a breach, violation or acceleration of,
or result in a default under, the terms of any other material
agreement or instrument to which the Servicer is a party or by which
it may be bound, or any statute, order or regulation applicable to
the Servicer of any court, regulatory body, administrative agency or
governmental body having jurisdiction over the Servicer; and the
Servicer is not a party to, bound by, or in breach or violation of
any indenture or other agreement or instrument, or subject to or in
violation of any statute, order or regulation of any court,
regulatory body, administrative agency or governmental body having
jurisdiction over it, which materially and adversely affects or, to
the Servicer's knowledge, would in the future materially and
adversely affect, (x) the ability of the Servicer to perform its
obligations under this Agreement or (y) the business, operations,
financial condition, properties or assets of the Servicer taken as a
whole;
(iv) The Servicer is an approved seller/servicer for ▇▇▇▇▇▇ ▇▇▇
or ▇▇▇▇▇▇▇ Mac in good standing and is a HUD approved mortgagee
pursuant to Section 203 and Section 211 of the National Housing Act,
and no event has occurred, including but not limited to a change in
insurance coverage, that would make the Servicer unable to comply
with HUD, ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac eligibility requirements or
which would require notification to any of HUD, ▇▇▇▇▇▇ Mae or
▇▇▇▇▇▇▇ Mac;
(v) No litigation is pending or, to the best knowledge of the
Servicer, threatened against the Servicer that would materially and
adversely affect the execution, delivery or enforceability of this
Agreement or the ability of the Servicer to service the Mortgage
Loans or to perform any of its other obligations hereunder in
accordance with the terms hereof;
(vi) No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution,
delivery and performance by the Servicer of, or compliance by the
Servicer with, this Agreement or the consummation by the Servicer of
the transactions contemplated by this Agreement, except for such
consents, approvals, authorizations or orders, if any, that have
been obtained prior to the Closing Date; and
59
(vii) [reserved].
(viii) The Servicer will not waive any Prepayment Charge or
part of a Prepayment Charge unless such waiver would maximize
recovery of total proceeds taking into account the value of such
Prepayment Charge and related Mortgage Loan and doing so is standard
and customary in servicing Mortgage Loans similar to the Mortgage
Loans (including any waiver of a Prepayment Charge in connection
with a refinancing of a Mortgage Loan that is related to a default
or an imminent default), and in no event will it waive a Prepayment
Charge in connection with a refinancing of a Mortgage Loan that is
not related to a default or an imminent default. Notwithstanding the
previous sentence, if the Servicer obtains an Opinion of Counsel
opining that any Prepayment Charge is not legally enforceable under
the circumstances in which the related Principal Prepayment occurs,
then the Servicer shall not be required to attempt to collect the
applicable Prepayment Charge, and shall have no liability or
obligation with respect to such Prepayment Charge pursuant to
Section 2.03(c)(ii) hereof.
It is understood and agreed that the representations, warranties and
covenants set forth in this Section 2.05 shall survive delivery of the
Mortgage Files to the Trustee, and shall inure to the benefit of the Trustee,
the Depositor and the Certificateholders. Upon discovery by any of the
Depositor, the Servicer or the Trustee of a breach of any of the foregoing
representations, warranties and covenants which materially and adversely
affects the value of any Mortgage Loan, Prepayment Charge or the interests
therein of the Certificateholders, the party discovering such breach shall
give prompt written notice (but in no event later than two Business Days
following such discovery) to the Trustee. The obligation of the Servicer set
forth in Section 2.03(c) to cure breaches shall constitute the sole remedy
against the Servicer available to the Certificateholders, the Depositor or the
Trustee on behalf of the Certificateholders respecting a breach of the
representations, warranties and covenants contained in this Section 2.05.
SECTION 2.06. Issuance of Class R-I Certificates.
The Trustee acknowledges the assignment to it of the Original
Mortgage Loans and the delivery to the Custodian on its behalf of the Mortgage
Files, subject to the provisions of Section 2.01 and Section 2.02, together
with the assignment to the Trustee of all other assets included in REMIC I,
receipt of which is hereby acknowledged. Concurrently with such assignment and
delivery and in exchange therefor, the Trustee, pursuant to the written
request of the Depositor executed by an officer of the Depositor, has
executed, authenticated and delivered to or upon the order of the Depositor,
the Class R-I Certificates in authorized denominations. The interests
evidenced by the Class R-I Certificates, together with the REMIC I Regular
Interests, constitute the entire beneficial ownership interest in REMIC I. The
rights of the Class R-I Certificateholders and REMIC II (as holder of the
REMIC I Regular Interests) to receive distributions from the proceeds of REMIC
I in respect of the Class R-I Certificates and the REMIC I Regular Interests,
respectively, and all ownership interests evidenced or constituted by the
Class R-I Certificates and the REMIC I Regular Interests, shall be as set
forth in this Agreement. None of the REMIC I Regular Interests will be
certificated.
60
SECTION 2.07. Conveyance of REMIC I Regular Interests; Acceptance of
REMIC II by the Trustee.
The Depositor, concurrently with the execution and delivery hereof,
does hereby transfer, assign, set over and otherwise convey to the Trustee
without recourse all the right, title and interest of the Depositor in and to
the REMIC I Regular Interests for the benefit of the Class R-II and REMIC III
Certificateholders. The Trustee acknowledges receipt of the REMIC I Regular
Interests and declares that it holds and will hold the same in trust for the
exclusive use and benefit of REMIC II. The rights of REMIC III (as holder of
the REMIC II Regular Interests) to receive distributions from the proceeds of
REMIC II in respect of the Class R-II Certificates and REMIC II Regular
Interests, respectively, and all ownership interests evidenced or constituted
by the Class R-II Certificates and the REMIC II Regular Interests, shall be as
set forth in this Agreement.
SECTION 2.08. Issuance of Class R-II Certificates.
The Trustee acknowledges the assignment to it of the REMIC I Regular
Interests and, concurrently therewith and in exchange therefor, pursuant to
the written request of the Depositor executed by an officer of the Depositor,
the Trustee has executed, authenticated and delivered to or upon the order of
the Depositor, the Class R-II Certificates in authorized denominations. The
interests evidenced by the Class R-II Certificates, together with the REMIC II
Regular Interests, constitute the entire beneficial ownership interest in
REMIC II. None of the REMIC II Regular Interests will be certificated.
SECTION 2.09. Conveyance of REMIC II Regular Interests; Acceptance
of REMIC III by the Trustee.
The Depositor, concurrently with the execution and delivery hereof,
does hereby transfer, assign, set over and otherwise convey to the Trustee
without recourse all the right, title and interest of the Depositor in and to
the REMIC II Regular Interests for the benefit of the REMIC III Regular
Interests. The Trustee acknowledges receipt of the REMIC II Regular Interests
and declares that it holds and will hold the same in trust for the exclusive
use and benefit of REMIC III. The rights of the REMIC III Certificateholders
to receive distributions from the proceeds of REMIC III in respect of the
REMIC III Regular Interests, and all ownership interests evidenced or
constituted by the REMIC III Regular Interests, shall be as set forth in this
Agreement.
SECTION 2.10. Conveyance of the REMIC III Regular Interest;
Acceptance of the REMIC III by the Trustee.
The Depositor, concurrently with the execution and delivery hereof,
does hereby transfer, assign, set over and otherwise convey to the Trustee
without recourse all the right, title and interest of the Depositor in and to
the REMIC III Regular Interests for the benefit of the REMIC IV Regular
Interests. The Trustee acknowledges receipt of the REMIC III Regular Interests
and declares that it holds and will hold the same in trust for the exclusive
use and benefit of REMIC IV. The rights of the REMIC IV Certificateholders to
receive distributions from the proceeds of REMIC III in respect of the REMIC
IV Regular Interests, and all
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ownership interests evidenced or constituted by the REMIC IV Regular
Interests, shall be as set forth in this Agreement.
SECTION 2.11. Conveyance of REMIC III Regular Interests; Acceptance
of REMIC IV by the Trustee.
The Depositor, concurrently with the execution and delivery hereof,
does hereby transfer, assign, set over and otherwise convey to the Trustee
without recourse all the right, title and interest of the Depositor in and to
the REMIC III Regular Interests for the benefit of the Class R-IV and REMIC IV
Regular Interests. The Trustee acknowledges receipt of the REMIC III Regular
Interests and declares that it holds and will hold the same in trust for the
exclusive use and benefit REMIC IV. The rights of REMIC IV (as holder of the
REMIC III Regular Interests) to receive distributions from the proceeds of
REMIC IV in respect of the Class R-IV Certificates and REMIC IV Regular
Interests, respectively, and all ownership interests evidenced or constituted
by the Class R-IV Certificates and the REMIC IV Regular Interests, shall be as
set forth in this Agreement.
SECTION 2.12. Issuance of Class R-IV Certificates.
The Trustee acknowledges the assignment to it of the REMIC III
Regular Interests and, concurrently therewith and in exchange therefor,
pursuant to the written request of the Depositor executed by an officer of the
Depositor, the Trustee has executed, authenticated and delivered to or upon
the order of the Depositor, the Class R-IV Certificates in authorized
denominations. The interests evidenced by the Class R-IV Certificates,
together with the REMIC IV Regular Interests, constitute the entire beneficial
ownership interest in REMIC IV. None of the REMIC IV Regular Interests will be
certificated.
SECTION 2.13. Conveyance of REMIC IV Regular Interests; Acceptance
of REMIC V by the Trustee.
The Depositor, concurrently with the execution and delivery hereof,
does hereby transfer, assign, set over and otherwise convey to the Trustee
without recourse all the right, title and interest of the Depositor in and to
the REMIC IV Regular Interests for the benefit of the Class R-V and REMIC V
Certificateholders. The Trustee acknowledges receipt of the REMIC IV Regular
Interests and declares that it holds and will hold the same in trust for the
exclusive use and benefit REMIC V. The rights of REMIC V (as holder of the
REMIC IV Regular Interests) to receive distributions from the proceeds of
REMIC V in respect of the Class R-V Certificates and REMIC V Certificates,
respectively, and all ownership interests evidenced or constituted by the
Class R-V Certificates and the REMIC V Regular Interests, shall be as set
forth in this Agreement.
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ARTICLE III
ADMINISTRATION AND SERVICING
OF THE MORTGAGE LOANS
SECTION 3.01. Servicer to Act as Servicer.
(a) The Servicer shall service and administer the Mortgage Loans on
behalf of the Trust Fund and in the best interests of and for the benefit of
the Certificateholders (as determined by the Servicer in accordance with
Accepted Servicing Practices) in accordance with the terms of this Agreement
and the respective Mortgage Loans and, to the extent consistent with such
terms, in the same manner in which it services and administers similar
Mortgage Loans for its own portfolio, giving due consideration to customary
and usual standards of practice of mortgage lenders and loan servicers
administering similar Mortgage Loans but without regard to:
(i) any relationship that the Servicer, any Sub-Servicer or any
Affiliate of the Servicer or any Sub-Servicer may have with the
related Mortgagor;
(ii) the ownership or non-ownership of any Certificate by the
Servicer or any Affiliate of the Servicer;
(iii) the Servicer's obligation to make P&I Advances or
Servicing Advances; or
(iv) the Servicer's or any Sub-Servicer's right to receive
compensation for its services hereunder or with respect to any
particular transaction.
To the extent consistent with the foregoing, the Servicer shall seek to
maximize the timely and complete recovery of principal and interest on the
Mortgage Notes. Subject only to the above-described servicing standards and
the terms of this Agreement and of the respective Mortgage Loans, the Servicer
shall have full power and authority, acting alone or through a Sub-Servicer as
provided in Section 3.02, to do or cause to be done any and all things in
connection with such servicing and administration which it may deem necessary
or desirable. Without limiting the generality of the foregoing, the Servicer
in its own name or in the name of a Sub-Servicer is hereby authorized and
empowered by the Trustee when the Servicer believes it appropriate in its best
judgment in accordance with the servicing standards set forth above, to
execute and deliver, on behalf of the Certificateholders and the Trust Fund,
and upon notice to the Trustee, 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 and to institute foreclosure proceedings or obtain a deed-in-lieu
of foreclosure so as to convert the ownership of such properties, and to hold
or cause to be held title to such properties, on behalf of the Trust Fund and
Certificateholders. The Servicer shall service and administer the Mortgage
Loans in accordance with applicable law and shall provide to the Mortgagors
any reports required to be provided to them thereby. The Servicer shall also
comply in the performance of this Agreement with all reasonable rules and
requirements of each insurer under any standard hazard insurance policy.
Within fifteen (15) days of the Closing Date, but subject to Section 3.17, the
Trustee shall execute and furnish to the Servicer and any Sub-Servicer such
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documents as are necessary or appropriate to enable the Servicer or any
Sub-Servicer to carry out their servicing and administrative duties hereunder,
including a special or limited power of attorney to carry out such duties
including a power of attorney for each county in which a Mortgaged Property is
located to enable the Servicer to take title to Mortgaged Properties after
foreclosure on behalf of the Trustee and the Certificateholders. The Trustee
shall execute a separate power of attorney in favor of the Servicer to the
extent furnished to the Trustee by the Servicer for the purposes described
herein to the extent necessary or desirable to enable the Servicer to perform
its duties hereunder. The Trustee shall not be liable for the actions of the
Servicer or any Sub-Servicer under such powers of attorney.
Subject to Section 3.09 hereof, in accordance with the standards of
the preceding paragraph, the Servicer shall advance or cause to be advanced
funds as necessary for the purpose of effecting the timely payment of taxes
and assessments on the Mortgaged Properties, which advances shall be Servicing
Advances reimbursable in the first instance from related collections from the
Mortgagors pursuant to Section 3.09, and further as provided in Section 3.11.
Any cost incurred by the Servicer or by a Sub-Servicer in effecting the timely
payment of taxes and assessments on a Mortgaged Property shall not, for the
purpose of calculating distributions to Certificateholders, be added to the
unpaid principal balance of the related Mortgage Loan, notwithstanding that
the terms of such Mortgage Loan so permit.
Notwithstanding anything in this Agreement to the contrary, the
Servicer may not make any future advances with respect to a Mortgage Loan
(except as provided in Section 4.03) and the Servicer shall not (i) permit any
modification with respect to any Mortgage Loan that would change the Mortgage
Rate, reduce or increase the principal balance (except for reductions
resulting from actual payments of principal) or change the final maturity date
on such Mortgage Loan (unless, as provided in Section 3.07, the Mortgagor is
in default with respect to the Mortgage Loan or such default is, in the
judgment of the Servicer, reasonably foreseeable) or (ii) permit any
modification, waiver or amendment of any term of any Mortgage Loan that would
both (A) effect an exchange or reissuance of such Mortgage Loan under Section
1001 of the Code (or final, temporary or proposed Treasury regulations
promulgated thereunder) and (B) cause any REMIC to fail to qualify as a REMIC
under the Code or the imposition of any tax on "prohibited transactions" or
"contributions after the startup date" under the REMIC Provisions.
The Servicer may delegate its responsibilities under this Agreement;
provided, however, that no such delegation shall release the Servicer from the
responsibilities or liabilities arising under this Agreement.
SECTION 3.02. Sub-Servicing Agreements Between the Servicer and
Sub-Servicers.
(a) The Servicer may enter into Sub-Servicing Agreements (provided
that such agreements would not result in a withdrawal or a downgrading by any
Rating Agency of the ratings on any Class of Certificates, as evidenced by a
letter to that effect delivered by each Rating Agency to the Depositor and the
Trustee) with one or more Sub-Servicers, for the servicing and administration
of the Mortgage Loans. The Trustee is hereby authorized to acknowledge, at the
request of the Servicer, any Sub-Servicing Agreement that meets the
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requirements applicable to Sub-Servicing Agreements set forth in this
Agreement and that is otherwise permitted under this Agreement.
Each Sub-Servicer shall be (i) authorized to transact business in
the state or states in which the related Mortgaged Properties it is to service
are situated, if and to the extent required by applicable law to enable the
Sub-Servicer to perform its obligations hereunder and under the Sub-Servicing
Agreement, (ii) an institution approved as a mortgage loan originator by the
Federal Housing Administration or an institution the deposit accounts in which
are insured by the FDIC and (iii) a ▇▇▇▇▇▇▇ Mac or ▇▇▇▇▇▇ Mae approved
mortgage servicer. Each Sub-Servicing Agreement must impose on the
Sub-Servicer requirements conforming to the provisions set forth in Section
3.08 and provide for servicing of the Mortgage Loans consistent with the terms
of this Agreement. The Servicer will examine each Sub-Servicing Agreement and
will be familiar with the terms thereof. The terms of any Sub-Servicing
Agreement will not be inconsistent with any of the provisions of this
Agreement. The Servicer and the Sub-Servicer may enter into and make
amendments to the Sub-Servicing Agreements or enter into different forms of
Sub-Servicing Agreements; provided, however, that any such amendments or
different forms shall be consistent with and not violate the provisions of
this Agreement, and that no such amendment or different form shall be made or
entered into which could be reasonably expected to be materially adverse to
the interests of the Certificateholders, without the consent of the Holders of
Certificates entitled to at least 66% of the Voting Rights. Any variation
without the consent of the Holders of Certificates entitled to at least 66% of
the Voting Rights from the provisions set forth in Section 3.08 relating to
insurance or priority requirements of Sub-Servicing Accounts, or credits and
charges to the Sub-Servicing Accounts or the timing and amount of remittances
by the Sub-Servicer to the Servicer, are conclusively deemed to be
inconsistent with this Agreement and therefore prohibited. The Servicer shall
deliver to the Trustee copies of all Sub-Servicing Agreements, and any
amendments or modifications thereof, promptly upon the Servicer's execution
and delivery of such instruments.
(b) As part of its servicing activities hereunder, the Servicer
(except as otherwise provided in the last sentence of this paragraph), for the
benefit of the Trust Fund and the Certificateholders, shall enforce the
obligations of each Sub-Servicer under the related Sub-Servicing Agreement and
each Originator under the applicable Mortgage Loan Purchase Agreement,
including, without limitation, any obligation to make advances in respect of
delinquent payments as required by a Sub-Servicing Agreement or to purchase a
Mortgage Loan on account of missing or defective documentation or on account
of a breach of a representation, warranty or covenant, as described in Section
2.03(a). Such enforcement, including, without limitation, the legal
prosecution of claims, termination of Sub-Servicing Agreements, and the
pursuit of other appropriate remedies, shall be in such form and carried out
to such an extent and at such time as the Servicer, in its good faith business
judgment, would require were it the owner of the related Mortgage Loans. The
Servicer shall pay the costs of such enforcement at its own expense, and shall
be reimbursed therefor only (i) from a general recovery resulting from such
enforcement, to the extent, if any, that such recovery exceeds all amounts due
in respect of the related Mortgage Loans or (ii) from a specific recovery of
costs, expenses or attorneys' fees against the party against whom such
enforcement is directed; provided that enforcement against an Originator that
is not the Servicer or against the Seller shall constitute a Servicing Advance
which the Servicer shall make regardless of whether such would be a
Nonrecoverable Servicing Advance. Enforcement of the Mortgage Loan Purchase
Agreements against the Originators shall
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be effected by the Servicer to the extent that the Servicer is not the
Originator of the affected Mortgage Loan(s), and otherwise by the Trustee in
accordance with the foregoing provisions of this paragraph. If such
enforcement is conducted by the Trustee in its capacity as Trustee pursuant to
this Section 3.02(b), the Trustee shall be reimbursed therefor from the Trust
Fund.
SECTION 3.03. Successor Sub-Servicers.
The Servicer shall be entitled to terminate any Sub-Servicing
Agreement and the rights and obligations of any Sub-Servicer pursuant to any
Sub-Servicing Agreement in accordance with the terms and conditions of such
Sub-Servicing Agreement. In the event of termination of any Sub-Servicer, all
servicing obligations of such Sub-Servicer shall be assumed simultaneously by
the Servicer without any act or deed on the part of such Sub-Servicer or the
Servicer, and the Servicer either shall service directly the related Mortgage
Loans or shall enter into a Sub-Servicing Agreement with a successor
Sub-Servicer which qualifies under Section 3.02.
Any Sub-Servicing Agreement shall include the provision that such
agreement may be immediately terminated by the Trustee without fee, in
accordance with the terms of this Agreement, in the event that the Servicer
shall, for any reason, no longer be the Servicer (including termination due to
a Servicer Event of Default).
SECTION 3.04. Liability of the Servicer.
Notwithstanding any Sub-Servicing Agreement, any of the provisions
of this Agreement relating to agreements or arrangements between the Servicer
and a Sub-Servicer or reference to actions taken through a Sub-Servicer or
otherwise, the Servicer shall remain obligated and primarily liable to the
Trust Fund and the Certificateholders for the servicing and administering of
the Mortgage Loans in accordance with the provisions of Section 3.01 without
diminution of such obligation or liability by virtue of such Sub-Servicing
Agreements or arrangements or by virtue of indemnification from the
Sub-Servicer and to the same extent and under the same terms and conditions as
if the Servicer alone were servicing and administering the Mortgage Loans. The
Servicer shall be entitled to enter into any agreement with a Sub-Servicer for
indemnification of the Servicer by such Sub-Servicer and nothing contained in
this Agreement shall be deemed to limit or modify such indemnification.
SECTION 3.05. No Contractual Relationship Between Sub-Servicers and
Trustee or Certificateholders.
Any Sub-Servicing Agreement that may be entered into and any
transactions or services relating to the Mortgage Loans involving a
Sub-Servicer in its capacity as such shall be deemed to be between the
Sub-Servicer and the Servicer alone, and the Trustee and Certificateholders
shall not be deemed parties thereto and shall have no claims, rights,
obligations, duties or liabilities with respect to the Sub-Servicer except as
set forth in Section 3.06. The Servicer shall be solely liable for all fees
owed by it to any Sub-Servicer, irrespective of whether the Servicer's
compensation pursuant to this Agreement is sufficient to pay such fees.
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SECTION 3.06. Assumption or Termination of Sub-Servicing Agreements
by Trustee.
In the event the Servicer shall for any reason no longer be the
Servicer (including by reason of the occurrence of a Servicer Event of
Default), the Trustee or its designee shall thereupon assume all of the rights
and obligations of the Servicer subject to Section 7.02 under each
Sub-Servicing Agreement that the Servicer may have entered into, unless the
Trustee elects to terminate any Sub-Servicing Agreement in accordance with its
terms as provided in Section 3.03. Upon such assumption, the Trustee, its
designee or the successor servicer for the Trustee appointed pursuant to
Section 7.02 shall be deemed, subject to Section 3.03, to have assumed all of
the Servicer's interest therein and to have replaced the Servicer as a party
to each Sub-Servicing Agreement to the same extent as if each Sub-Servicing
Agreement had been assigned to the assuming party, except that (i) the
Servicer shall not thereby be relieved of any liability or obligations under
any Sub-Servicing Agreement that arose before it ceased to be the Servicer and
(ii) none of the Trustee, its designee or any successor Servicer shall be
deemed to have assumed any liability or obligation of the Servicer that arose
before it ceased to be the Servicer.
The Servicer at its expense shall, upon request of the Trustee,
deliver to the assuming party all documents and records relating to each
Sub-Servicing Agreement and the Mortgage Loans then being serviced and an
accounting of amounts collected and held by or on behalf of it, and otherwise
use its best efforts to effect the orderly and efficient transfer of the
Sub-Servicing Agreements to the assuming party.
SECTION 3.07. Collection of Certain Mortgage Loan Payments.
The Servicer shall make reasonable efforts to collect all payments
called for under the terms and provisions of the Mortgage Loans, and shall, to
the extent such procedures shall be consistent with this Agreement and the
terms and provisions of any applicable insurance policies, follow such
collection procedures as it would follow with respect to Mortgage Loans
comparable to the Mortgage Loans and held for its own account. Consistent with
the foregoing, the Servicer may in its discretion (i) waive any late payment
charge or, if applicable, any penalty interest, or (ii) extend the due dates
for the Monthly Payments due on a Mortgage Note for a period of not greater
than 180 days; provided that any extension pursuant to clause (ii) above shall
not affect the amortization schedule of any Mortgage Loan for purposes of any
computation hereunder, except as provided below. In the event of any such
arrangement pursuant to clause (ii) above, the Servicer shall make timely P&I
Advances on such Mortgage Loan during such extension pursuant to Section 4.03
and in accordance with the amortization schedule of such Mortgage Loan without
modification thereof by reason of such arrangements, subject to Section
4.03(d) pursuant to which the Servicer shall not be required to make any such
P&I Advances that are Nonrecoverable P&I Advances. Notwithstanding the
foregoing, in the event that any Mortgage Loan is in default or, in the
judgment of the Servicer, such default is reasonably foreseeable, the
Servicer, consistent with the standards set forth in Section 3.01, may also
waive, modify or vary any term of such Mortgage Loan (including modifications
that would change the Mortgage Rate, forgive the payment of principal or
interest or extend the final maturity date of such Mortgage Loan), accept
payment from the related Mortgagor of an amount less than the Stated Principal
Balance in final satisfaction of such Mortgage Loan (such payment, a "Short
Pay-off") or
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consent to the postponement of strict compliance with any such term or
otherwise grant indulgence to any Mortgagor.
SECTION 3.08. Sub-Servicing Accounts.
In those cases where a Sub-Servicer is servicing a Mortgage Loan
pursuant to a Sub-Servicing Agreement, the Sub-Servicer will be required to
establish and maintain one or more accounts (collectively, the "Sub-Servicing
Account"). The Sub-Servicing Account shall be an Eligible Account. The
Sub-Servicer shall deposit in the clearing account (which account must be an
Eligible Account) in which it customarily deposits payments and collections on
Mortgage Loans in connection with its mortgage loan servicing activities on a
daily basis, and in no event more than one Business Day after the
Sub-Servicer's receipt thereof, all proceeds of Mortgage Loans received by the
Sub-Servicer less its servicing compensation to the extent permitted by the
Sub-Servicing Agreement, and shall thereafter deposit such amounts in the
Sub-Servicing Account, in no event more than two Business Days after the
deposit of such funds into the clearing account. The Sub-Servicer shall
thereafter deposit such proceeds in the Collection Account or remit such
proceeds to the Servicer for deposit in the Collection Account not later than
two Business Days after the deposit of such amounts in the Sub-Servicing
Account. For purposes of this Agreement, the Servicer shall be deemed to have
received payments on the Mortgage Loans when the Sub-Servicer receives such
payments.
SECTION 3.09. Collection of Taxes, Assessments and Similar Items;
Servicing Accounts.
The Servicer shall establish and maintain, or cause to be
established and maintained, one or more accounts (the "Servicing Accounts").
Servicing Accounts shall be Eligible Accounts. The Servicer shall deposit in
the clearing account (which account must be an Eligible Account) in which it
customarily deposits payments and collections on Mortgage Loans in connection
with its mortgage loan servicing activities on a daily basis, and in no event
more than one Business Day after the Servicer's receipt thereof, all
collections from the Mortgagors (or related advances from Sub-Servicer) for
the payment of taxes, assessments, hazard insurance premiums and comparable
items for the account of the Mortgagors ("Escrow Payments") collected on
account of the Mortgage Loans and shall thereafter deposit such Escrow
Payments in the Servicing Accounts, in no event more than two Business Days
after the deposit of such funds in the clearing account, for the purpose of
effecting the payment of any such items as required under the terms of this
Agreement. Withdrawals of amounts from a Servicing Account may be made only to
(i) effect payment of taxes, assessments, hazard insurance premiums, and
comparable items; (ii) reimburse the Servicer (or a Sub-Servicer to the extent
provided in the related Sub-Servicing Agreement) out of related collections
for any advances made pursuant to Section 3.01 (with respect to taxes and
assessments) and Section 3.14 (with respect to hazard insurance); (iii) refund
to Mortgagors any sums as may be determined to be overages; (iv) pay interest,
if required and as described below, to Mortgagors on balances in the Servicing
Account; (v) clear and terminate the Servicing Account at the termination of
the Servicer's obligations and responsibilities in respect of the Mortgage
Loans under this Agreement in accordance with Article IX or (vi) recover
amounts deposited in error. As part of its servicing duties, the Servicer or
Sub-Servicer shall pay to the Mortgagors interest on funds in Servicing
Accounts, to the extent required by law and, to the extent that interest
earned on funds in the Servicing Accounts
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is insufficient, to pay such interest from its or their own funds, without any
reimbursement therefor. The Servicer will be responsible for the
administration of the Servicing Accounts and will be obligated to make
Servicing Advances to the Servicing Account in respect of its obligations
under this Section 3.09, reimbursable from the Servicing Accounts or
Collection Account to the extent not collected from the related Mortgagor,
when and as necessary to avoid the lapse of insurance coverage on the
Mortgaged Property, or which the Servicer knows, or in the exercise of the
required standard of care of the Servicer hereunder should know, is necessary
to avoid the loss of the Mortgaged Property due to a tax sale or the
foreclosure as a result of a tax lien.
SECTION 3.10. Collection Account; Distribution Account and
Prefunding Account.
(a) On behalf of the Trust Fund, the Servicer shall establish and
maintain, or cause to be established and maintained, one or more accounts
(such account or accounts, the "Collection Account"), held in trust for the
benefit of the Trustee and the Certificateholders. On behalf of the Trust
Fund, the Servicer shall deposit or cause to be deposited in the clearing
account (which account must be an Eligible Account) in which it customarily
deposits payments and collections on Mortgage Loans in connection with its
Mortgage Loan servicing activities on a daily basis, and in no event more than
one Business Day after the Servicer's receipt thereof, and shall thereafter
deposit in the Collection Account, in no event more than two Business Days
after the deposit of such funds into the clearing account, as and when
received or as otherwise required hereunder, the following payments and
collections received or made by it subsequent to the related Cut-off Date
(other than in respect of principal or interest on the related Mortgage Loans
due on or before the related Cut-off Date), or payments (other than Principal
Prepayments) received by it on or prior to the related Cut-off Date but
allocable to a Due Period subsequent thereto:
(i) all payments on account of principal, including Principal
Prepayments, on the Mortgage Loans;
(ii) all payments on account of interest (net of the related
Servicing Fee) on each Mortgage Loan;
(iii) all Insurance Proceeds and Liquidation Proceeds (other
than proceeds collected in respect of any particular REO Property
and amounts paid by the Servicer in connection with a purchase of
Mortgage Loans and REO Properties pursuant to Section 9.01);
(iv) any amounts required to be deposited pursuant to Section
3.12 in connection with any losses realized on Permitted Investments
with respect to funds held in the Collection Account;
(v) any amounts required to be deposited by the Servicer
pursuant to the second paragraph of Section 3.14(a) in respect of
any blanket policy deductibles;
(vi) all proceeds of any Mortgage Loan repurchased or purchased
in accordance with Section 2.03, Section 3.16(c) or Section 9.01;
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(vii) all Substitution Shortfall Amounts; and
(viii) all Prepayment Charges collected by the Servicer.
For purposes of the immediately preceding sentence, the Cut-off Date with
respect to any Qualified Substitute Mortgage Loan shall be deemed to be the
date of substitution.
The foregoing requirements for deposit in the Collection Accounts
shall be exclusive, it being understood and agreed that, without limiting the
generality of the foregoing, payments in the nature of late payment charges,
non sufficient funds fees, reconveyance fees, assumption fees and other
similar fees and charges need not be deposited by the Servicer in the
Collection Account and shall, upon collection, belong to the Servicer as
additional compensation for its servicing activities. In the event the
Servicer shall deposit in the Collection Account any amount not required to be
deposited therein, it may at any time withdraw such amount from the Collection
Account, any provision herein to the contrary notwithstanding.
(b) On behalf of the Trust Fund, the Trustee shall establish and
maintain one or more accounts (such account or accounts, the "Distribution
Account"), held in trust for the benefit of the Trust Fund and the
Certificateholders. On behalf of the Trust Fund, the Servicer shall deliver to
the Trustee in immediately available funds for deposit in the Distribution
Account on or before 3:00 p.m. New York time (i) on the Servicer Remittance
Date, that portion of the Available Distribution Amount (calculated without
regard to the references in clause (2) of the definition thereof to amounts
that may be withdrawn from the Distribution Account) for the related
Distribution Date then on deposit in the Collection Account, the amount of all
Prepayment Charges on the Mortgage Loans collected by the Servicer in
connection with the voluntary Principal Prepayment in full or in part of any
of the Mortgage Loans then on deposit in the Collection Account (other than
any such Prepayment Charges received after the related Prepayment Period), and
(ii) on each Business Day as of the commencement of which the balance on
deposit in the Collection Account exceeds $75,000 following any withdrawals
pursuant to the next succeeding sentence, the amount of such excess, but only
if the Collection Account constitutes an Eligible Account solely pursuant to
clause (ii) of the definition of "Eligible Account." If the balance on deposit
in the Collection Account exceeds $75,000 as of the commencement of business
on any Business Day and the Collection Account constitutes an Eligible Account
solely pursuant to clause (ii) of the definition of "Eligible Account," the
Servicer shall, on or before 3:00 p.m. New York time on such Business Day,
withdraw from the Collection Account any and all amounts payable or
reimbursable to the Depositor, the Servicer, the Trustee, the Seller or any
Sub-Servicer pursuant to Section 3.11 and shall pay such amounts to the
Persons entitled thereto.
(c) Funds in the Collection Account, the Distribution Account, the
Capitalized Interest Account and the Prefunding Account may be invested in
Permitted Investments in accordance with the provisions set forth in Section
3.12. The Servicer shall give notice to the Trustee and the Depositor of the
location of the Collection Account maintained by it when established and prior
to any change thereof. The Trustee shall give notice to the Servicer and the
Depositor of the location of the Distribution Account, the Capitalized
Interest Account and the Prefunding Account when established and prior to any
change thereof.
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(d) Funds held in the Collection Account at any time may be
delivered by the Servicer to the Trustee for deposit in an account (which may
be the Distribution Account and must satisfy the standards for the
Distribution Account as set forth in the definition thereof) and for all
purposes of this Agreement shall be deemed to be a part of the Collection
Account until the Servicer Remittance Date when such amounts are required to
be deposited into the Distribution Account; provided, however, that the
Trustee shall have the sole authority to withdraw any funds held pursuant to
this subsection (d). In the event the Servicer shall deliver to the Trustee
for deposit in the Distribution Account any amount not required to be
deposited therein, it may at any time request that the Trustee withdraw such
amount from the Distribution Account and remit to it any such amount, any
provision herein to the contrary notwithstanding. In addition, the Servicer
shall deliver to the Trustee from time to time for deposit and in any event
shall remit all such amounts no later than the Servicer Remittance Date, and
the Trustee shall so deposit, in the Distribution Account:
(i) any P&I Advances, as required pursuant to Section 4.03;
(ii) any amounts required to be deposited pursuant to Section
3.23(d) or (f) in connection with any REO Property;
(iii) any amounts to be paid by the Servicer in connection with
a purchase of Mortgage Loans and REO Properties pursuant to Section
9.01; and
(iv) any amounts required to be deposited pursuant to Section
3.24 in connection with any Prepayment Interest Shortfalls.
(e) The Trustee shall establish and maintain, on behalf of the
Certificateholders, the Prefunding Account. On the Closing Date the Depositor
shall remit the Pre-funded Amount to the Trustee for deposit in the Prefunding
Account. On each Subsequent Transfer Date, upon satisfaction of the conditions
for such Subsequent Transfer Date set forth in Sections 2.01(d) and (e), with
respect to the related Subsequent Transfer Agreement, the Trustee shall remit
to the Depositor the applicable Aggregate Subsequent Transfer Amount as
payment of the purchase price for the related Subsequent Mortgage Loans.
If any funds remain in the Prefunding Account on October 31, 2001,
to the extent that they represent earnings on the amounts originally deposited
into the Prefunding Account, the Trustee shall distribute them to the order of
the Depositor. The remaining funds shall be transferred to the Certificate
Account to be included as part of principal distributions to the Certificates
on the November 2001 Distribution Date.
SECTION 3.11. Withdrawals from the Collection Account and
Distribution Account.
(a) The Servicer shall, from time to time, make withdrawals from the
Collection Account for any of the following purposes or as described in
Section 4.03:
(i) to remit to the Trustee for deposit in the Distribution
Account the amounts required to be so remitted pursuant to Section
3.10(b) or permitted to be so remitted pursuant to the first
sentence of Section 3.10(d);
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(ii) subject to Section 3.16(d), to reimburse the Servicer for,
without duplication, (a) P&I Advances, but only to the extent of
amounts received which represent Late Collections (net of the
related Servicing Fees) of Monthly Payments, Liquidation Proceeds,
condemnation proceeds or Insurance Proceeds on Mortgage Loans with
respect to which such P&I Advances were made in accordance with the
provisions of Section 4.03 or (b) any ▇▇▇▇▇▇▇▇▇▇▇▇ ▇&▇ Advances with
respect to the final liquidation of a Mortgage Loan that are
Nonrecoverable P&I Advances not otherwise recoverable to subsection
(ii)(a) hereof;
(iii) subject to Section 3.16(d), to pay the Servicer or any
Sub-Servicer (a) any unpaid Servicing Fees or (b) any unreimbursed
Servicing Advances with respect to each Mortgage Loan, but only to
the extent of any Late Collections, Liquidation Proceeds,
condemnation proceeds, Insurance Proceeds or other amounts as may be
collected by the Servicer from a Mortgagor, or otherwise received
with respect to such Mortgage Loan or (c) any Servicing Advances
made with respect to the final liquidation of a Mortgage Loan that
are Nonrecoverable Servicing Advances, but only to the extent that
Late Collections, Liquidation Proceeds, condemnation proceeds and
Insurance Proceeds received with respect to such Mortgage Loan are
insufficient to reimburse the related Servicer or Sub-Servicer for
Servicing Advances;
(iv) to pay to the Servicer as servicing compensation (in
addition to the Servicing Fee) on the Servicer Remittance Date any
interest or investment income earned on funds deposited in the
Collection Account;
(v) to pay to the Servicer, the related Originator, the
Depositor or the Seller, as the case may be, with respect to each
Mortgage Loan that has previously been purchased or replaced
pursuant to Section 2.03 or Section 3.16(c) all amounts received
thereon subsequent to the date of purchase or substitution, as the
case may be;
(vi) to reimburse the Servicer for any P&I Advance or Servicing
Advance previously made which the Servicer has determined to be a
Nonrecoverable P&I Advance or Nonrecoverable Servicing Advance in
accordance with the provisions of Section 4.03;
(vii) to reimburse the Servicer or the Depositor for expenses
incurred by or reimbursable to the Servicer or the Depositor, as the
case may be, pursuant to Section 6.03;
(viii) to reimburse the Servicer or the Trustee, as the case
may be, for expenses reasonably incurred in respect of the breach or
defect giving rise to the purchase obligation under Section 2.03 or
Section 2.04 of this Agreement that were included in the Purchase
Price of the Mortgage Loan, including any expenses arising out of
the enforcement of the purchase obligation;
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(ix) to pay, or to reimburse the Servicer for advances in
respect of, expenses incurred in connection with any Mortgage Loan
pursuant to Section 3.16(b);
(x) to reimburse the Servicer for expenses incurred pursuant
to Section 3.14(c); and
(xi) to withdraw funds deposited in error and to clear and
terminate the Collection Account pursuant to Section 9.01.
The Servicer shall keep and maintain separate accounting, on a
Mortgage Loan by Mortgage Loan basis, for the purpose of justifying any
withdrawal from the Collection Account, to the extent held by or on behalf of
it, pursuant to subclauses (ii), (iii), (v), (vi), (viii) and (ix) above. The
Servicer shall provide written notification to the Trustee on or prior to the
next succeeding Servicer Remittance Date, upon making any withdrawals from the
Collection Account pursuant to subclause (vii) above.
(b) The Trustee shall, from time to time, make withdrawals from the
Distribution Account, for any of the following purposes, without priority:
(i) to make distributions to Certificateholders, MGIC and the
Depositor in accordance with Section 4.01;
(ii) to pay any Extraordinary Trust Fund Expenses;
(iii) [reserved];
(iv) to reimburse itself pursuant to Section 7.01 to the extent
such amounts in Section 7.01 were not reimbursed by the Servicer;
(v) to pay any amounts in respect of taxes pursuant to Section
10.01(g)(iii);
(vi) to remit to the Servicer any amount deposited in the
Distribution Account by the Servicer but not required to be
deposited therein in accordance with Section 3.10(d); and
(vii) to clear and terminate the Distribution Account pursuant
to Section 9.01.
SECTION 3.12. Investment of Funds in the Collection Account and the
Distribution Account.
(a) The Servicer may direct any depository institution maintaining
the Collection Account (for purposes of this Section 3.12, an "Investment
Account"), and the Trustee, in its individual capacity, may direct any
depository institution maintaining the Distribution Account (for purposes of
this Section 3.12, also an "Investment Account"), to invest the funds in such
Investment Account in one or more Permitted Investments bearing interest or
sold at a discount, and maturing, unless payable on demand, (i) no later than
the Business Day immediately preceding the date on which such funds are
required to be withdrawn from such account pursuant to this Agreement, if a
Person other than the Trustee is the obligor thereon and (ii) no later than
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the date on which such funds are required to be withdrawn from such account
pursuant to this Agreement, if the Trustee is the obligor thereon. All such
Permitted Investments shall be held to maturity, unless payable on demand. Any
investment of funds in an Investment Account shall be made in the name of the
Trustee (in its capacity as such) or in the name of a nominee of the Trustee,
in each case, for the benefit of the Certificateholders. The Trustee shall be
entitled to sole control (except with respect to investment direction of funds
held in the Collection Account and any income and gain realized thereon) over
each such investment, and any certificate or other instrument evidencing any
such investment shall be delivered directly to the Trustee or its agent,
together with any document of transfer necessary to transfer title to such
investment to the Trustee or its nominee. In the event amounts on deposit in
an Investment Account are at any time invested in a Permitted Investment
payable on demand, the Trustee shall:
(x) consistent with any notice required to be given
thereunder, demand that payment thereon be made on the last day such
Permitted Investment may otherwise mature hereunder in an amount
equal to the lesser of (1) all amounts then payable thereunder and
(2) the amount required to be withdrawn on such date; and
(y) demand payment of all amounts due thereunder promptly
upon determination by a Responsible Officer of the Trustee that such
Permitted Investment would not constitute a Permitted Investment in
respect of funds thereafter on deposit in the Investment Account.
(b) All income and gain realized from the investment of funds
deposited in the Collection Account and any REO Account held by or on behalf
of the Servicer, shall be for the benefit of the Servicer and shall be subject
to its withdrawal in accordance with Section 3.11 or Section 3.23, as
applicable or withdrawal by the Trustee in accordance with Section 3.11. The
Servicer shall deposit in the Collection Account or any REO Account, as
applicable, the amount of any loss of principal incurred in respect of any
such Permitted Investment made with funds in such accounts immediately upon
realization of such loss.
(c) All income and gain realized from the investment of funds
deposited in the Distribution Account held by or on behalf of the Trustee
shall be for the benefit of the Trustee and shall be subject to withdrawal by
the Trustee at any time. The Trustee shall deposit in the Distribution
Account, the amount of any loss of principal incurred in respect of any such
Permitted Investment made with funds in such accounts immediately upon
realization of such loss.
(d) Except as otherwise expressly provided in this Agreement, if any
default occurs in the making of a payment due under any Permitted Investment,
or if a default occurs in any other performance required under any Permitted
Investment, the Trustee may and, subject to Section 8.01 and Section 8.02(v),
upon the request of the Holders of Certificates representing more than 50% of
the Voting Rights allocated to any Class of Certificates, shall take such
action as may be appropriate to enforce such payment or performance, including
the institution and prosecution of appropriate proceedings.
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SECTION 3.13. RESERVED.
SECTION 3.14. Maintenance of Hazard Insurance and Errors and
Omissions and Fidelity Coverage and the MGIC Policy.
(a) The Servicer shall cause to be maintained for each Mortgage Loan
fire insurance with extended coverage on the related Mortgaged Property in an
amount which is at least equal to the least of (i) the current principal
balance of such Mortgage Loan and (ii) the amount necessary to fully
compensate for any damage or loss to the improvements that are a part of such
property on a replacement cost basis, in either case in an amount not less
than such amount as is necessary to avoid the application of any coinsurance
clause contained in the related hazard insurance policy. The Servicer shall
also cause to be maintained fire insurance with extended coverage on each REO
Property in an amount which is at least equal to the lesser of (i) the maximum
insurable value of the improvements which are a part of such property and (ii)
the outstanding principal balance of the related Mortgage Loan at the time it
became an REO Property. The Servicer will comply in the performance of this
Agreement with all reasonable rules and requirements of each insurer under any
such hazard policies. Any amounts to be collected by the Servicer under any
such policies (other than amounts to be applied to the restoration or repair
of the property subject to the related Mortgage or amounts to be released to
the Mortgagor in accordance with the procedures that the Servicer would follow
in servicing loans held for its own account, subject to the terms and
conditions of the related Mortgage and Mortgage Note) shall be deposited in
the Collection Account, subject to withdrawal pursuant to Section 3.11, if
received in respect of a Mortgage Loan, or in the REO Account, subject to
withdrawal pursuant to Section 3.23, if received in respect of an REO
Property. Any cost incurred by the Servicer in maintaining any such insurance
shall not, for the purpose of calculating distributions to Certificateholders,
be added to the unpaid principal balance of the related Mortgage Loan,
notwithstanding that the terms of such Mortgage Loan so permit. Any insurance
premiums not paid by the related Mortgagor and advanced by the Servicer shall
constitute a Servicing Advance. It is understood and agreed that no earthquake
or other additional insurance is to be required of any Mortgagor other than
pursuant to such applicable laws and regulations as shall at any time be in
force and as shall require such additional insurance. If the Mortgaged
Property or REO Property is at any time in an area identified in the Federal
Register by the Federal Emergency Management Agency as having special flood
hazards and flood insurance has been made available, the Servicer will cause
to be maintained a flood insurance policy in respect thereof. Such flood
insurance shall be in an amount equal to the lesser of (i) the unpaid
principal balance of the related Mortgage Loan and (ii) the maximum amount of
such insurance available for the related Mortgaged Property under the national
flood insurance program (assuming that the area in which such Mortgaged
Property is located is participating in such program).
In the event that the Servicer shall obtain and maintain a blanket
policy with an insurer having a General Policy Rating of B:III or better in
Best's Key Rating Guide (or such other rating that is comparable to such
rating) insuring against hazard losses on all of the Mortgage Loans, it shall
conclusively be deemed to have satisfied its obligations as set forth in the
first two sentences of this Section 3.14, it being understood and agreed that
such policy may contain a deductible clause, in which case the Servicer shall,
in the event that there shall not have been maintained on the related
Mortgaged Property or REO Property a policy complying with
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the first two sentences of this Section 3.14, and there shall have been one or
more losses which would have been covered by such policy, deposit to the
Collection Account from its own funds the amount not otherwise payable under
the blanket policy because of such deductible clause. In connection with its
activities as administrator and servicer of the Mortgage Loans, the Servicer
agrees to prepare and present, on behalf of itself, the Trustee and
Certificateholders, claims under any such blanket policy in a timely fashion
in accordance with the terms of such policy.
(b) The Servicer shall keep in force during the term of this
Agreement a policy or policies of insurance covering errors and omissions for
failure in the performance of the Servicer's obligations under this Agreement,
which policy or policies shall be in such form and amount that would meet the
requirements of ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac if it were the purchaser of the
Mortgage Loans, unless the Servicer has obtained a waiver of such requirements
from ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac. The Servicer shall also maintain a fidelity
bond in the form and amount that would meet the requirements of ▇▇▇▇▇▇ Mae or
▇▇▇▇▇▇▇ Mac, unless the Servicer has obtained a waiver of such requirements
from ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac. The Servicer shall provide the Trustee (upon
its reasonable request) with copies of any such insurance policies and
fidelity bond. The Servicer shall be deemed to have complied with this
provision if an Affiliate of the Servicer has such errors and omissions and
fidelity bond coverage and, by the terms of such insurance policy or fidelity
bond, the coverage afforded thereunder extends to the Servicer. Any such
errors and omissions policy and fidelity bond shall by its terms not be
cancelable without thirty days' prior written notice to the Trustee. The
Servicer shall also cause each Sub-Servicer to maintain a policy of insurance
covering errors and omissions and a fidelity bond which would meet such
requirements.
(c) The Servicer shall take all actions necessary in order to
maintain or cause to be maintained the MGIC Policy in full force and effect
until this Agreement is terminated pursuant to Section 9.01, except to the
extent of actions for which the Servicer is responsible under this Section
3.14(c). On each Distribution Date, the Trustee shall remit to MGIC the MGIC
Fee. In the event that such MGIC Policy shall be terminated otherwise than
required by law, the Servicer shall use its best efforts to obtain from
another Qualified Insurer a comparable replacement policy, with a total
coverage equal to the remaining coverage of such terminated MGIC Policy and a
cost not in excess of the MGIC Fee. If MGIC shall cease to be a Qualified
Insurer, the Servicer shall use its best efforts to obtain from another
Qualified Insurer a replacement insurance policy in accordance with the
preceding sentence. The Servicer shall be entitled to reimbursement for all
reasonable out-of-pocket expenses incurred in obtaining a replacement
insurance policy.
In connection with its activities as servicer, the Servicer agrees
to prepare and present, on behalf of itself, the Depositor, the Trustee and
the Certificateholders, claims to the insurer under the MGIC Policy in a
timely fashion in accordance with the terms of such the MGIC Policy and, in
this regard, to take such reasonable action as shall be necessary to permit
recovery under the MGIC Policy respecting defaulted Mortgage Loans. Pursuant
to Section 3.06, any amounts collected by the Servicer under the MGIC Policy
shall be deposited in the Collection Account. The Servicer shall be
responsible for taking all actions required under the MGIC Policy to cause
each MGIC Mortgage Loan serviced by it to continue to be eligible for coverage
under the MGIC Policy, and to maximize proceeds of any claim thereunder. The
Servicer shall be solely responsible for complying with all reporting and
other information
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requirements under the MGIC Policy, with respect to all MGIC Mortgage Loans.
The Servicer shall not take any action inconsistent with Accepted Servicing
Practices which would result in noncoverage under the MGIC Policy of any loss
which, but for the actions of the Servicer would have been covered thereunder.
In connection with any assumption or substitution agreement entered into or to
be entered into, the Servicer shall promptly notify the insurer under the MGIC
Policy, if any, of such assumption or substitution of liability in accordance
with the terms of the MGIC Policy and shall take all actions which may be
required by such insurer as a condition to the continuation of coverage under
the MGIC Policy.
SECTION 3.15. Enforcement of Due-On-Sale Clauses; Assumption
Agreements.
The Servicer will, to the extent it has knowledge of any conveyance
or prospective conveyance of any Mortgaged Property by any Mortgagor (whether
by absolute conveyance or by contract of sale, and whether or not the
Mortgagor remains or is to remain liable under the Mortgage Note and/or the
Mortgage), exercise its rights to accelerate the maturity of such Mortgage
Loan under the "due-on-sale" clause, if any, applicable thereto; provided,
however, that the Servicer shall not be required to take such action if in its
sole business judgment the Servicer believes it is not in the best interests
of the Trust Fund and shall not exercise any such rights if prohibited by law
from doing so. If the Servicer reasonably believes it is unable under
applicable law to enforce such "due-on-sale" clause, or if any of the other
conditions set forth in the proviso to the preceding sentence apply, the
Servicer will enter into an assumption and modification agreement from or with
the person to whom such property has been conveyed or is proposed to be
conveyed, pursuant to which such person becomes liable under the Mortgage Note
and, to the extent permitted by applicable state law, the Mortgagor remains
liable thereon. The Servicer is also authorized to enter into a substitution
of liability agreement with such person, pursuant to which the original
Mortgagor is released from liability and such person is substituted as the
Mortgagor and becomes liable under the Mortgage Note, provided that no such
substitution shall be effective unless such person satisfies the underwriting
criteria of the Servicer and has a credit risk rating at least equal to that
of the original Mortgagor. In connection with any assumption, modification or
substitution, the Servicer shall apply such underwriting standards and follow
such practices and procedures as shall be normal and usual in its general
mortgage servicing activities and as it applies to other mortgage loans owned
solely by it. The Servicer shall not take or enter into any assumption and
modification agreement, however, unless (to the extent practicable in the
circumstances) it shall have received confirmation, in writing, of the
continued effectiveness of any applicable hazard insurance policy, or a new
policy meeting the requirements of this Section is obtained. Any fee collected
by the Servicer in respect of an assumption or substitution of liability
agreement will be retained by the Servicer as additional servicing
compensation. In connection with any such assumption, no material term of the
Mortgage Note (including but not limited to the related Mortgage Rate and the
amount of the Monthly Payment) may be amended or modified, except as otherwise
required pursuant to the terms thereof. The Servicer shall notify the Trustee
that any such substitution, modification or assumption agreement has been
completed by forwarding to the Trustee the executed original of such
substitution or assumption agreement, which document shall be added to the
related Mortgage File and shall, for all purposes, be considered a part of
such Mortgage File to the same extent as all other documents and instruments
constituting a part thereof. Notwithstanding the foregoing, the Servicer may
enforce the due on sale clause, or the
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assumption and modification, or the substitution if it reasonably believes
that it is in the best interest of the Trust Fund.
Notwithstanding the foregoing paragraph or any other provision of
this Agreement, the Servicer shall not be deemed to be in default, breach or
any other violation of its obligations hereunder by reason of any assumption
of a Mortgage Loan by operation of law or by the terms of the Mortgage Note or
any assumption which the Servicer may be restricted by law from preventing,
for any reason whatever. For purposes of this Section 3.15, the term
"assumption" is deemed to also include a sale (of the Mortgaged Property)
subject to the Mortgage that is not accompanied by an assumption or
substitution of liability agreement.
SECTION 3.16. Realization Upon Defaulted Mortgage Loans.
(a) The Servicer shall use its best efforts consistent with the
servicing standard set forth in Section 3.01, to foreclose upon or otherwise
comparably convert the ownership of properties securing such of the Mortgage
Loans (including selling any such Mortgage Loan rather than converting the
ownership of the related properties if such sale would maximize the timely and
complete recovery of principal and interest on the related Mortgage Note in
accordance with the servicing standard set forth in Section 3.01) as come into
and continue in default and as to which no satisfactory arrangements can be
made for collection of delinquent payments pursuant to Section 3.07. The
Servicer shall be responsible for all costs and expenses incurred by it in any
such proceedings; provided, however, that such costs and expenses will be
recoverable as Servicing Advances or Nonrecoverable Servicing Advances by the
Servicer as contemplated in Section 3.11 and Section 3.23. The foregoing is
subject to the provision that, in any case in which Mortgaged Property shall
have suffered damage from an Uninsured Cause, the Servicer shall not be
required to expend its own funds toward the restoration of such property
unless it shall determine in its sole and absolute discretion that such
restoration will increase the proceeds of liquidation of the related Mortgage
Loan after reimbursement to itself for such expenses.
(b) Notwithstanding the foregoing provisions of this Section 3.16 or
any other provision of this Agreement, with respect to any Mortgage Loan as to
which the Servicer has received actual notice of, or has actual knowledge of,
the presence of any toxic or hazardous substance on the related Mortgaged
Property, the Servicer shall not, on behalf of the Trust Fund, either (i)
obtain title to such Mortgaged Property as a result of or in lieu of
foreclosure or otherwise or (ii) otherwise acquire possession of, or take any
other action with respect to, such Mortgaged Property, if, as a result of any
such action, the Trustee, the Trust Fund or the Certificateholders would be
considered to hold title to, to be a "mortgagee-in-possession" of, or to be an
"owner" or "operator" of such Mortgaged Property within the meaning of the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended from time to time, or any comparable law, unless the Servicer has
also previously determined, based on its reasonable judgment and a report
prepared by a Person who regularly conducts environmental audits using
customary industry standards, that:
(1) such Mortgaged Property is in compliance with
applicable environmental laws or, if not, that it would be in the
best economic interest of the
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Trust Fund to take such actions as are necessary to bring the
Mortgaged Property into compliance therewith; and
(2) there are no circumstances present at such Mortgaged
Property relating to the use, management or disposal of any
hazardous substances, hazardous materials, hazardous wastes, or
petroleum-based materials for which investigation, testing,
monitoring, containment, clean-up or remediation could be required
under any federal, state or local law or regulation, or that if any
such materials are present for which such action could be required,
that it would be in the best economic interest of the Trust Fund to
take such actions with respect to the affected Mortgaged Property.
The cost of the environmental audit report contemplated by this
Section 3.16 shall be advanced by the Servicer, subject to the Servicer's
right to be reimbursed therefor from the Collection Account as provided in
Section 3.11(a)(ix), such right of reimbursement being prior to the rights of
Certificateholders to receive any amount in the Collection Account received in
respect of the affected Mortgage Loan or other Mortgage Loans. It is
understood by the parties hereto that any such advance will be deemed a
Servicing Advance.
If the Servicer determines, as described above, that it is in the
best economic interest of the Trust Fund to take such actions as are necessary
to bring any such Mortgaged Property into compliance with applicable
environmental laws, or to take such action with respect to the containment,
clean-up or remediation of hazardous substances, hazardous materials,
hazardous wastes or petroleum-based materials affecting any such Mortgaged
Property, then the Servicer shall take such action as it deems to be in the
best economic interest of the Trust Fund. The cost of any such compliance,
containment, cleanup or remediation shall be advanced by the Servicer, subject
to the Servicer's right to be reimbursed therefor from the Collection Account
as provided in Section 3.11(a)(ix), such right of reimbursement being prior to
the rights of Certificateholders to receive any amount in the Collection
Account received in respect of the affected Mortgage Loan or other Mortgage
Loans. It is understood by the parties hereto that any such advance will be
deemed a Servicing Advance.
(c) The Servicer may at its option purchase from the Trust Fund any
Mortgage Loan or related REO Property that is 90 days or more delinquent,
which the Servicer determines in good faith will otherwise become subject to
foreclosure proceedings (evidence of such determination to be delivered in
writing to the Trustee prior to purchase), at a price equal to the Purchase
Price; provided, however, that the Servicer shall purchase any such Mortgage
Loans or related REO Properties on the basis of delinquency, purchasing the
most delinquent Mortgage Loans or related REO Properties first. The Purchase
Price for any Mortgage Loan or related REO Property purchased hereunder shall
be deposited in the Collection Account, and the Trustee, upon receipt of
written certification from the Servicer of such deposit, shall release or
cause to be released to the Servicer the related Mortgage File and the Trustee
shall execute and deliver such instruments of transfer or assignment, in each
case without recourse, as the Servicer shall furnish and as shall be necessary
to vest in the Servicer title to any Mortgage Loan or related REO Property
released pursuant hereto.
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(d) Proceeds received in connection with any Final Recovery
Determination, as well as any recovery resulting from a partial collection of
Insurance Proceeds or Liquidation Proceeds, in respect of any Mortgage Loan,
will be applied in the following order of priority: first, to reimburse the
Servicer or any Sub-Servicer for any related unreimbursed Servicing Advances
and P&I Advances, pursuant to Section 3.11(a)(ii) or Section 3.11(a)(iii);
second, to accrued and unpaid interest on the Mortgage Loan, to the date of
the Final Recovery Determination, or to the Due Date prior to the Distribution
Date on which such amounts are to be distributed if not in connection with a
Final Recovery Determination; and third, as a recovery of principal of the
Mortgage Loan. If the amount of the recovery so allocated to interest is less
than the full amount of accrued and unpaid interest due on such Mortgage Loan,
the amount of such recovery will be allocated by the Servicer as follows:
first, to unpaid Servicing Fees; and second, to the balance of the interest
then due and owing. The portion of the recovery so allocated to unpaid
Servicing Fees shall be reimbursed to the Servicer or any Sub-Servicer
pursuant to Section 3.11(a)(iii).
(e) The Servicer shall accurately and fully report its borrower
credit files to all three credit repositories in a timely manner.
SECTION 3.17. Trustee to Cooperate; Release of Mortgage Files.
(a) Upon the payment in full of any Mortgage Loan, or the receipt by
the Servicer of a notification that payment in full shall be escrowed in a
manner customary for such purposes, the Servicer will immediately notify the
Trustee or the Custodian by a certification in the form of Exhibit E-2 (which
certification shall include a statement to the effect that all amounts
received or to be received in connection with such payment which are required
to be deposited in the Collection Account pursuant to Section 3.10 have been
or will be so deposited) signed by a Servicing Officer and shall request
delivery to it of the Mortgage File. Upon receipt of such certification and
request, the Trustee or the Custodian shall, within five Business Days,
release or cause the release and mailing by overnight mail of the related
Mortgage File to the Servicer. No expenses incurred in connection with any
instrument of satisfaction or deed of reconveyance shall be chargeable to the
Collection Account or the Distribution Account.
(b) From time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan, including, for this purpose, collection
under any insurance policy relating to the Mortgage Loans, the Trustee shall,
upon request of the Servicer and delivery to the Trustee or the custodian, if
permitted by the related custodial agreement, of a Request for Release in the
form of Exhibit E-1, cause the release of the related Mortgage File to the
Servicer, and the Trustee shall, at the direction of the Servicer, execute
such documents as shall be necessary to the prosecution of any such
proceedings and the Servicer shall retain such Mortgage File in trust for the
benefit of the Certificateholders. Such Request for Release shall obligate the
Servicer to return each and every document previously requested from the
Mortgage File to the Trustee or the Custodian when the need therefor by the
Servicer no longer exists, unless the Mortgage Loan has been liquidated and
the Liquidation Proceeds relating to the Mortgage Loan have been deposited in
the Collection Account or the Mortgage File or such document has been
delivered to an attorney, or to a public trustee or other public official as
required by law, for purposes of initiating or pursuing legal action or other
proceedings for the foreclosure of the Mortgaged Property either judicially or
non-judicially, and the Servicer has delivered to the Trustee a
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certificate of a Servicing Officer certifying as to the name and address of
the Person to which such Mortgage File or such document was delivered and the
purpose or purposes of such delivery. Upon receipt of a certificate of a
Servicing Officer stating that such Mortgage Loan was liquidated and that all
amounts received or to be received in connection with such liquidation that
are required to be deposited into the Collection Account have been so
deposited, or that such Mortgage Loan has become an REO Property, such
Mortgage Loan shall be released by the Trustee or the Custodian to the
Servicer or its designee.
(c) Upon written certification of a Servicing Officer, the Trustee
shall execute and deliver to the Servicer any court pleadings, requests for
trustee's sale or other documents reasonably necessary to the foreclosure or
trustee's sale in respect of a Mortgaged Property or to any legal action
brought to obtain judgment against any Mortgagor on the Mortgage Note or
Mortgage or to obtain a deficiency judgment, or to enforce any other remedies
or rights provided by the Mortgage Note or Mortgage or otherwise available at
law or in equity, or shall exercise and deliver to the Servicer a power of
attorney sufficient to authorize the Servicer to execute such documents on its
behalf, provided that the Trustee shall be obligated to execute the documents
identified above if necessary to enable the Servicer to perform its duties
hereunder. Each such certification shall include a request that such pleadings
or documents be executed by the Trustee and a statement as to the reason such
documents or pleadings are required and that the execution thereof by the
Trustee and delivery thereof by the Trustee or the Custodian as applicable
will not invalidate or otherwise affect the lien of the Mortgage, except for
the termination of such a lien upon completion of the foreclosure or trustee's
sale. The Trustee agrees to indemnify the Servicer, out of its own funds, for
any loss, liability or expense (other than special, indirect, punitive or
consequential damages which will not be paid by the Trustee) incurred by the
Servicer as a proximate result of the Trustee's breach of its obligations
pursuant to this Section 3.17.
SECTION 3.18. Servicing Compensation.
As compensation for the activities of the Servicer hereunder, the
Servicer shall be entitled to the Servicing Fee with respect to each Mortgage
Loan payable solely from payments of interest in respect of such Mortgage
Loan, subject to Section 3.24. In addition, the Servicer shall be entitled to
recover unpaid Servicing Fees out of Late Collections, Insurance Proceeds,
condemnation proceeds or Liquidation Proceeds to the extent permitted by
Section 3.11(a)(iii) and out of amounts derived from the operation and sale of
an REO Property to the extent permitted by Section 3.23. 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; provided, however, that the Servicer may pay
from the Servicing Fee any amounts due to a Sub-Servicer pursuant to a
Sub-Servicing Agreement entered into under Section 3.02.
Additional servicing compensation in the form of assumption or
modification fees, late payment charges, insufficient funds fees, reconveyance
fees and other ancillary fees (other than Prepayment Charges) shall be
retained by the Servicer (subject to Section 3.24) only to the extent such
fees or charges are received by the Servicer. The Servicer shall also be
entitled pursuant to Section 3.11(a)(iv) to withdraw from the Collection
Account, and pursuant to Section 3.23(b) to withdraw from any REO Account, as
additional servicing compensation,
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interest or other income earned on deposits therein, subject to Section 3.12
and Section 3.24. The Servicer shall be required to pay all expenses incurred
by it in connection with its servicing activities hereunder (including
premiums for the insurance required by Section 3.14, to the extent such
premiums are not paid by the related Mortgagors or by a Sub-Servicer, it being
understood however, that payment of such premiums by the Servicer shall
constitute Servicing Advances), servicing compensation of any Sub-Servicer and
to the extent provided herein in Section 8.05, the indemnification of the
Trustee, and shall not be entitled to reimbursement therefor except as
specifically provided herein.
SECTION 3.19. Reports to the Trustee; Collection Account Statements.
Not later than fifteen days after each Distribution Date, the
Servicer shall forward to the Trustee and the Depositor a statement prepared
by the Servicer setting forth the status of the Collection Account as of the
close of business on such Distribution Date and showing, for the period
covered by such statement, the aggregate amount of deposits into and
withdrawals from the Collection Account of each category of deposit specified
in Section 3.10(a) and each category of withdrawal specified in Section 3.11.
Such statement may be in the form of the then current ▇▇▇▇▇▇ ▇▇▇ Monthly
Accounting Report for its Guaranteed Mortgage Pass-Through Program with
appropriate additions and changes, and shall also include information as to
the aggregate of the outstanding principal balances of all of the Mortgage
Loans as of the last day of the calendar month immediately preceding such
Distribution Date. Copies of such statement shall be provided by the Trustee
to any Certificateholder and to any Person identified to the Trustee as a
prospective transferee of a Certificate, upon request and at the expense of
the requesting party, provided such statement is delivered by the Servicer to
the Trustee.
SECTION 3.20. Statement as to Compliance.
The Servicer will deliver to the Trustee, the Depositor and each
Rating Agency on or before 90 days following the end of the Servicer's fiscal
year commencing in 2002, an Officers' Certificate stating, as to each
signatory thereof, that (i) a review of the activities of the Servicer during
the preceding year and of performance under this Agreement has been made under
such officers' supervision and (ii) to the best of such officers' knowledge,
based on such review, the Servicer has fulfilled all of its obligations under
this Agreement throughout such year, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officer and the nature and status thereof. Copies of any such statement shall
be provided by the Trustee to any Certificateholder upon the request and at
the expense of the requesting party, provided that such statement is delivered
by the Servicer to the Trustee.
As of the Closing Date the Servicer's fiscal year ends April 30.
SECTION 3.21. Independent Public Accountants' Servicing Report.
Not later than 90 days following the end of the Servicer's fiscal
year commencing in 2002, the Servicer, at its expense, shall cause a
nationally recognized firm of independent certified public accountants to
furnish to the Servicer a report stating that (i) it has obtained a letter of
representation regarding certain matters from the management of the Servicer
which includes an assertion that the Servicer has complied with certain
minimum residential Mortgage
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Loan servicing standards, identified in the Uniform Single Attestation Program
for Mortgage Bankers established by the Mortgage Bankers Association of
America, with respect to the servicing of residential Mortgage Loans during
the most recently completed fiscal year and (ii) on the basis of an
examination conducted by such firm in accordance with standards established by
the American Institute of Certified Public Accountants, such representation is
fairly stated in all material respects, subject to such exceptions and other
qualifications that may be appropriate. In rendering its report such firm may
rely, as to matters relating to the direct servicing of residential Mortgage
Loans by a Sub-Servicer, upon comparable reports of firms of independent
certified public accountants rendered on the basis of examinations conducted
in accordance with the same standards (rendered within one year of such
report) with respect to such Sub-Servicer. Immediately upon receipt of such
report, the Servicer shall furnish a copy of such report to the Trustee and
each Rating Agency. Copies of such statement shall be provided by the Trustee
to any Certificateholder upon request at the Servicer's expense, provided that
such statement is delivered by the Servicer to the Trustee. In the event such
firm of independent certified public accountants requires the Trustee to agree
to the procedures performed by such firm, the Servicer shall direct the
Trustee in writing to so agree; it being understood and agreed that the
Trustee will deliver such letter of agreement in conclusive reliance upon the
direction of the Servicer, and the Trustee has not made any independent
inquiry or investigation as to, and shall have no obligation or liability in
respect of, the sufficiency, validity or correctness of such procedures.
SECTION 3.22. Access to Certain Documentation.
The Servicer shall provide to the Office of Thrift Supervision, the
FDIC, and any other federal or state banking or insurance regulatory authority
that may exercise authority over any Certificateholder, access to the
documentation regarding the Mortgage Loans serviced by the Servicer under this
Agreement, as may be required by applicable laws and regulations. Such access
shall be afforded without charge, but only upon reasonable request and during
normal business hours at the offices of the Servicer designated by it. In
addition, access to the documentation regarding the Mortgage Loans serviced by
the Servicer under this Agreement will be provided to any Certificateholder,
the Trustee and to any Person identified to the Servicer as a prospective
transferee of a Certificate, upon reasonable request during normal business
hours at the offices of the Servicer designated by it at the expense of the
Person requesting such access.
SECTION 3.23. Title, Management and Disposition of REO Property.
(a) The deed or certificate of sale of any REO Property shall be
taken in the name of the Trustee, or its nominee, in trust for the benefit of
the Certificateholders. The Servicer, on behalf of the Trust Fund (and on
behalf of the Trustee for the benefit of the Certificateholders), shall either
sell any REO Property before the close of the third taxable year after the
year the Trust Fund acquires ownership of such REO Property for purposes of
Section 860G(a)(8) of the Code or request from the Internal Revenue Service,
no later than 60 days before the day on which the three-year grace period
would otherwise expire, an extension of the three-year grace period, unless
the Servicer shall have delivered to the Trustee and the Depositor an Opinion
of Counsel, addressed to the Trustee and the Depositor, to the effect that the
holding by the Trust Fund of such REO Property subsequent to three years after
its acquisition will not result in the imposition on any REMIC created
hereunder of taxes on "prohibited transactions" thereof, as
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defined in Section 860F of the Code, or cause any of REMIC I, REMIC II or
REMIC III to fail to qualify as a REMIC under Federal law at any time that any
Certificates are outstanding. The Servicer shall manage, conserve, protect and
operate each REO Property for the Certificateholders solely for the purpose of
its prompt disposition and sale in a manner which does not cause such REO
Property to fail to qualify as "foreclosure property" within the meaning of
Section 860G(a)(8) of the Code or result in the receipt by any REMIC created
hereunder of any "income from non-permitted assets" within the meaning of
Section 860F(a)(2)(B) of the Code, or any "net income from foreclosure
property" which is subject to taxation under the REMIC Provisions.
(b) The Servicer shall segregate and hold all funds collected and
received in connection with the operation of any REO Property separate and
apart from its own funds and general assets and shall establish and maintain,
or cause to be established and maintained, with respect to REO Properties an
account held in trust for the Trustee for the benefit of the
Certificateholders (the "REO Account"), which shall be an Eligible Account.
The Servicer shall be permitted to allow the Collection Account to serve as
the REO Account, subject to separate ledgers for each REO Property. The
Servicer shall be entitled to retain or withdraw any interest income paid on
funds deposited in the REO Account.
(c) The Servicer shall have full power and authority, subject only
to the specific requirements and prohibitions of this Agreement, to do any and
all things in connection with any REO Property as are consistent with the
manner in which the Servicer manages and operates similar property owned by
the Servicer or any of its Affiliates, all on such terms and for such period
as the Servicer deems to be in the best interests of Certificateholders. In
connection therewith, the Servicer shall deposit, or cause to be deposited in
the clearing account (which account must be an Eligible Account) in which it
customarily deposits payments and collections on Mortgage Loans in connection
with its Mortgage Loan servicing activities on a daily basis, and in no event
more than one Business Day after the Servicer's receipt thereof, and shall
thereafter deposit in the REO Account, in no event more than two Business Days
after the deposit of such funds into the clearing account, all revenues
received by it with respect to an REO Property and shall withdraw therefrom
funds necessary for the proper operation, management and maintenance of such
REO Property including, without limitation:
(i) all insurance premiums due and payable in respect of such REO
Property;
(ii) all real estate taxes and assessments in respect of such REO
Property that may result in the imposition of a lien thereon; and
(iii) all costs and expenses necessary to maintain such REO
Property.
To the extent that amounts on deposit in the REO Account with respect to an
REO Property are insufficient for the purposes set forth in clauses (i)
through (iii) above with respect to such REO Property, the Servicer shall
advance from its own funds as Servicing Advances such amount as is necessary
for such purposes if, but only if, the Servicer would make such advances if
the Servicer owned the REO Property and if in the Servicer's sole judgment,
the payment of such amounts will be recoverable from the rental or sale of the
REO Property.
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Notwithstanding the foregoing, the Servicer shall not:
(i) authorize the Trust Fund to enter into, renew or extend any New
Lease with respect to any REO Property, if the New Lease by its
terms will give rise to any income that does not constitute Rents
from Real Property;
(ii) authorize any amount to be received or accrued under any New
Lease other than amounts that will constitute Rents from Real
Property;
(iii) authorize any construction on any REO Property, other than the
completion of a building or other improvement thereon, and then only
if more than ten percent of the construction of such building or
other improvement was completed before default on the related
Mortgage Loan became imminent, all within the meaning of Section
856(e)(4)(B) of the Code; or
(iv) authorize any Person to Directly Operate any REO Property on
any date more than 90 days after its date of acquisition by the
Trust Fund;
unless, in any such case, the Servicer has obtained an Opinion of Counsel,
provided to the Trustee, to the effect that such action will not cause such
REO Property to fail to qualify as "foreclosure property" within the meaning
of Section 860G(a)(8) of the Code at any time that it is held by the Trust
Fund, in which case the Servicer may take such actions as are specified in
such Opinion of Counsel.
The Servicer may contract with any Independent Contractor for the
operation and management of any REO Property, provided that:
(i) the terms and conditions of any such contract shall not be
inconsistent herewith;
(ii) any such contract shall require, or shall be administered to
require, that the Independent Contractor pay all costs and expenses
incurred in connection with the operation and management of such REO
Property, including those listed above and remit all related
revenues (net of such costs and expenses) to the Servicer as soon as
practicable, but in no event later than thirty days following the
receipt thereof by such Independent Contractor;
(iii) none of the provisions of this Section 3.23(c) relating to any
such contract or to actions taken through any such Independent
Contractor shall be deemed to relieve the Servicer of any of its
duties and obligations to the Trustee on behalf of the
Certificateholders with respect to the operation and management of
any such REO Property; and
(iv) the Servicer shall be obligated with respect thereto to the
same extent as if it alone were performing all duties and
obligations in connection with the operation and management of such
REO Property.
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The Servicer shall be entitled to enter into any agreement with any
Independent Contractor performing services for it related to its duties and
obligations hereunder for indemnification of the Servicer by such Independent
Contractor, and nothing in this Agreement shall be deemed to limit or modify
such indemnification. The Servicer shall be solely liable for all fees owed by
it to any such Independent Contractor, irrespective of whether the Servicer's
compensation pursuant to Section 3.18 is sufficient to pay such fees;
provided, however, that to the extent that any payments made by such
Independent Contractor would constitute Servicing Advances if made by the
Servicer, such amounts shall be reimbursable as Servicing Advances made by the
Servicer.
(d) In addition to the withdrawals permitted under Section 3.23(c),
the Servicer may from time to time make withdrawals from the REO Account for
any REO Property: (i) to pay itself or any Sub-Servicer unpaid Servicing Fees
in respect of the related Mortgage Loan; and (ii) to reimburse itself or any
Sub-Servicer for unreimbursed Servicing Advances and P&I Advances made in
respect of such REO Property or the related Mortgage Loan. On the Servicer
Remittance Date, the Servicer shall withdraw from each REO Account maintained
by it and deposit into the Distribution Account in accordance with Section
3.10(d)(ii), for distribution on the related Distribution Date in accordance
with Section 4.01, the income from the related REO Property received during
the prior calendar month, net of any withdrawals made pursuant to Section
3.23(c) or this Section 3.23(d).
(e) Subject to the time constraints set forth in Section 3.23(a),
each REO Disposition shall be carried out by the Servicer at such price and
upon such terms and conditions as the Servicer shall deem necessary or
advisable, as shall be normal and usual in its general servicing activities
for similar properties.
(f) The proceeds from the REO Disposition, net of any amount
required by law to be remitted to the Mortgagor under the related Mortgage
Loan and net of any payment or reimbursement to the Servicer or any
Sub-Servicer as provided above, shall be deposited in the Distribution Account
in accordance with Section 3.10(d)(ii) on the Servicer Remittance Date in the
month following the receipt thereof for distribution on the related
Distribution Date in accordance with Section 4.01. Any REO Disposition shall
be for cash only (unless changes in the REMIC Provisions made subsequent to
the Startup Day allow a sale for other consideration).
(g) The Servicer shall file information returns with respect to the
receipt of mortgage interest received in a trade or business, reports of
foreclosures and abandonments of any Mortgaged Property and cancellation of
indebtedness income with respect to any Mortgaged Property as required by
Sections 6050H, 6050J and 6050P of the Code, respectively. Such reports shall
be in form and substance sufficient to meet the reporting requirements imposed
by such Sections 6050H, 6050J and 6050P of the Code.
SECTION 3.24. Obligations of the Servicer in Respect of Prepayment
Interest Shortfalls.
The Servicer shall deliver to the Trustee for deposit into the
Distribution Account on or before 3:00 p.m. New York time on the Servicer
Remittance Date from its own funds an amount (such amount, "Compensating
Interest") equal to the lesser of (i) the aggregate of the
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Prepayment Interest Shortfalls for the related Distribution Date resulting
solely from Principal Prepayments during the related Prepayment Period and
(ii) up to the amount of its aggregate Servicing Fee for the most recently
ended calendar month. The Servicer shall not have the right to reimbursement
for any amounts remitted to the Trustee in respect of Compensating Interest.
Such amounts remitted shall be included in the Available Distribution Amount
and distributed therewith on the related Distribution Date. The Servicer shall
not be obligated to pay Compensating Interest with respect to Relief Act
Interest Shortfalls.
SECTION 3.25. Obligations of the Servicer in Respect of Mortgage
Rates and Monthly Payments.
On each Adjustment Date, the Servicer shall make Mortgage Rate
adjustments for each Adjustable Rate Mortgage Loan in compliance with the
requirements of the related Mortgage and Mortgage Note and Applicable
Regulations. The Servicer shall execute and deliver the notices required by
each Mortgage and Mortgage Note and Applicable Regulations regarding Mortgage
Rate adjustments. The Servicer also shall provide timely notification to the
Trustee of all applicable data and information regarding such Mortgage Rate
adjustments and the Servicer's methods of implementing such Mortgage Rate
adjustments.
In the event that a shortfall in any collection on or liability with
respect to any Mortgage Loan results from or is attributable to adjustments to
Mortgage Rates, Monthly Payments or Stated Principal Balances that were made
by the Servicer in a manner not consistent with the terms of the related
Mortgage Note and this Agreement, the Servicer, upon discovery or receipt of
notice thereof, immediately shall deliver to the Trustee for deposit in the
Distribution Account from its own funds the amount of any such shortfall and
shall indemnify and hold harmless the Trust Fund, the Trustee, the Depositor
and any successor Servicer in respect of any such liability. Such indemnities
shall survive the termination or discharge of this Agreement. Notwithstanding
the foregoing, this Section 3.25 shall not limit the ability of the Servicer
to seek recovery of any such amounts from the related Mortgagor under the
terms of the related Mortgage Note, as permitted by law.
SECTION 3.26. Net WAC Fund; Cap Agreement.
(a) On the Closing Date, the Depositor will deposit, or cause to be
deposited, into the Net WAC Fund, $5,000. On each Distribution Date as to
which there is Net WAC Carryover Amount for any Class of LIBOR Certificates,
the Trustee is hereby directed to, and shall therefore, deposit into the Net
WAC Fund an amount equal to the Net WAC Carryover Amount for each affected
Class of LIBOR Certificates pursuant to Section 4.01(a)(3)(xiii). If no Net
WAC Carryover Amount is payable on a Distribution Date, the Trustee shall
deposit into the Net WAC Fund the Required Net WAC Fund Deposit. For federal
and state income tax purposes, the Class X Certificateholders will be deemed
to be the owners of the Net WAC Fund and all amounts deposited into the Net
WAC Fund. Any monies held in the Net WAC Fund in excess of the Required Net
WAC Fund Deposit on any Distribution Date shall be distributed to the Class X
Certificateholders. Amounts held in the Net WAC Fund and not distributable to
the Holders of LIBOR Certificates on any Distribution Date will be invested by
the Trustee in investments identified in clause (f) of the definition of
Permitted Investments having maturities on or prior to the next succeeding
Distribution Date on which such amounts will be distributable to the Holders
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of the Classes of LIBOR Certificates. Upon the termination of the Trust Fund,
or the payment in full of the LIBOR Certificates, all amounts remaining on
deposit in the Net WAC Fund will be released from the lien of the Trust Fund
and distributed to the Class X Certificateholders or their designees. The Net
WAC Fund will be part of the Trust Fund but not part of any REMIC and any
payments to the LIBOR Certificates of Net WAC Carryover Amount with respect to
any Class of LIBOR Certificates will not be payments with respect to a
"regular interest" in a REMIC within the meaning of Code Section 860G(a)(1).
(b) The Depositor hereby directs the Trustee, to execute and deliver
on behalf of the Trust the Cap Agreement and authorizes the Trustee to perform
its obligations thereunder on behalf of the Trust in accordance with the terms
of the Cap Agreement. On the Closing Date, the Trustee shall enter into the
Cap Agreement, on behalf of the Trust, with the Cap Provider. The Trustee
shall deposit all amounts received with respect to the Cap Agreement in the
Net WAC Fund. The Cap Agreement shall be part of the Trust Fund but not part
of any REMIC.
(c) If any payments are owed to the Cap Provider beginning with the
Distribution Date in September 2003, the Depositor shall direct the Trustee to
request and the Trustee shall request, the Cap Provider to furnish IRS Form W
8ECI to the Trustee.
(d) If the Cap Provider no longer has a long-term credit rating of
at least A (or its equivalent) from at least one of the Rating Agencies, the
Servicer, as agent for the Trustee, shall within 30 days after the reduction
or withdrawal of the credit rating, (i) obtain a replacement Cap Agreement
with a cap provider that is a bank or other financial institution that has a
rating that is in one of the three highest long-term credit rating categories
from at least one of the Rating Agencies rating the Certificates; (ii) obtain
a guaranty of or a contingent agreement of another person with a long-term
credit rating of at least A (or its equivalent) from at least one of the
Rating Agencies to honor the Cap Provider's obligations under the Cap
Agreement; (iii) cause the Cap Provider to post collateral with the Trustee in
an amount sufficient to restore the immediately prior ratings of the Offered
Certificates; (iv) establish any other arrangement satisfactory to the Rating
Agencies to restore the ratings of the Offered Certificates; or (v) terminate
the Cap Agreement in accordance with its terms.
SECTION 3.27. Reserved.
ARTICLE IV
PAYMENTS TO CERTIFICATEHOLDERS
SECTION 4.01. Distributions.
(a)(1) On each Distribution Date, the Trustee shall withdraw from
the Distribution Account an amount equal to the Interest Remittance Amount and
distribute to the Certificateholders, the Cap Provider and MGIC the following
amounts, in the following order of priority in each case, to the extent of the
Interest Remittance Amount remaining:
(i) concurrently to the Cap Provider, the Strip Amount for
such Distribution Date and to MGIC, the MGIC Premium for such
Distribution Date;
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(ii) concurrently to the Holders of the Class A1
Certificates and the Class A-IO Certificates, the related Interest
Distribution Amount, on a pro rata basis based on such Interest
Distribution Amounts;
(iii) to the Holders of the Class M1 Certificates, the
Accrued Certificate Interest allocable to such Class of
Certificates;
(iv) to the Holders of the Class M2 Certificates, the
Accrued Certificate Interest allocable to such Class of
Certificates; and
(v) concurrently to the Holders of the Class B
Certificates and the Class B-IO Certificates, on a pro rata basis,
the related Accrued Certificate Interest allocable to each such
Class of Certificates.
(2) On each Distribution Date, the Trustee shall withdraw from the
Distribution Account an amount equal to the Principal Distribution Amount and
distribute to the Certificateholders the following amounts, in the following
order of priority:
(A) On each Distribution Date (a) prior to the Stepdown
Date or (b) on which a Trigger Event is in effect, the Principal
Distribution Amount shall be distributed sequentially, to the Class
A1, Class M1, Class M2 and Class B Certificates, in that order,
until their respective Certificate Principal Balances have been
reduced to zero.
(B) On each Distribution Date (a) on or after the Stepdown
Date and (b) on which a Trigger Event is not in effect, the
Principal Distribution Amount shall be distributed in the following
order of priority:
1. the lesser of (x) the Principal Distribution Amount and (y) the
Class A1 Principal Distribution Amount, shall be distributed to the Holders of
the Class M1 Certificates, until the Certificate Principal Balance thereof has
been reduced to zero;
2. the lesser of (x) the excess of (i) the Principal Distribution
Amount over (ii) the sum of the amounts distributed to the Holders of the
Class A1 Certificates pursuant to clause (B)(1) above and (y) the Class M1
Principal Distribution Amount, shall be distributed to the Holders of the
Class M1 Certificates, until the Certificate Principal Balance thereof has
been reduced to zero;
3. the lesser of (x) the excess of (i) the Principal Distribution
Amount over (ii) the sum of the amounts distributed to the Holders of the
Class A1 Certificates pursuant to clause (B)(1) above and to the Holders of
the Class M1 Certificates pursuant to clause (B)(2) above, and (y) the Class
M2 Principal Distribution Amount, shall be distributed to the Holders of the
Class M2 Certificates, until the Certificate Principal Balance thereof has
been reduced to zero; and
4. the lesser of (x) the excess of (i) the Principal Distribution
Amount over (ii) the sum of the amounts distributed to the Holders of the
Class A1 Certificates pursuant to clause (B)(1) above, to the Holders of the
Class M1 Certificates pursuant to clause (B)(2) above and to the Holders of
the Class M2 Certificates pursuant to clause (B)(3) above, and (y) the Class
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B Principal Distribution Amount, shall be distributed to the Holders of the
Class B Certificates, until the Certificate Principal Balance thereof has been
reduced to zero.
(3) On each Distribution Date, other than the first Distribution
Date, the Net Monthly Excess Cashflow (or, in the case of clause (i) below,
the Net Monthly Excess Cashflow exclusive of any Overcollateralization
Reduction Amount) shall be distributed as follows:
(i) to the Holders of the Class or Classes of Certificates
then entitled to receive distributions in respect of principal, in
an amount equal to the principal portion of any Realized Losses
incurred or deemed to have been incurred on the Mortgage Loans
during the related Prepayment Period, applied in the same order of
priority as payments of principal would otherwise be applied on such
Distribution Date to reduce the Certificate Principal Balance of
such Classes of Certificates;
(ii) to the Holders of the Class or Classes of
Certificates then entitled to receive distributions in respect of
principal, in an amount equal to the Overcollateralization Increase
Amount, applied in the same order of priority as payments of
principal would otherwise be applied on such Distribution Date to
reduce the Certificate Principal Balance of such Certificates until
the aggregate Certificate Principal Balance of such Classes of
Certificates is reduced to zero;
(iii) to the Holders of the Class M1 Certificates, in an
amount equal to the Unpaid Interest Shortfall Amount allocable to
such Class of Certificates;
(iv) to the Holders of the Class M1 Certificates, any
Unpaid Realized Loss Amount for such Class of Certificates;
(v) to the Holders of the Class M2 Certificates in an
amount equal to the Unpaid Interest Shortfall Amount allocable to
such Class of Certificates;
(vi) to the Holders of the Class M2 Certificates, any
Unpaid Realized Loss Amount for such Class of Certificates;
(vii) concurrently to the Holders of the Class B and Class
B-IO Certificates, pro rata, in an amount equal to the related
Unpaid Interest Shortfall Amount allocable to each such Class of
Certificates;
(viii) to the Holders of the Class B Certificates, any
Unpaid Realized Loss Amount for such Class of Certificates;
(ix) concurrently to the Holders of the Class A1 and Class
A-IO Certificates, pro rata, in an amount equal to such Holders
allocated share of any Prepayment Interest Shortfalls (to the extent
not covered by payments pursuant to Section 3.24) and any Relief Act
Interest Shortfall allocated to each such Certificates;
(x) to the Holders of the Class M1 Certificates, in an
amount equal to such Holders allocated share of any Prepayment
Interest Shortfalls (to the extent not covered
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by payments pursuant to Section 3.24) and any Relief Act Interest
Shortfall allocated to such Certificates;
(xi) to the Holders of the Class M2 Certificates, in an
amount equal to such Holders allocated share of any Prepayment
Interest Shortfalls (to the extent not covered by payments pursuant
to Section 3.24) and any Relief Act Interest Shortfall allocated to
such Certificates;
(xii) concurrently, to the Holders of the Class B and
Class B-IO Certificates, pro rata, in an amount equal to such
Holders allocated share of any Prepayment Interest Shortfalls (to
the extent not covered by payments pursuant to Section 3.24) and any
Relief Act Interest Shortfall allocated to each such Class of
Certificates;
(xiii) to the Class X Certificate, the lesser of (i) the
Class X Distribution Amount attributable to the Class X Certificates
(computed without regard to this subparagraph (xiii) or subparagraph
(xvi) below) and (ii) the sum of (a) the Net WAC Carryover Amount
for each Class of LIBOR Certificates provided that, pursuant to
Section 3.26 hereof, on any Distribution Date as to which there is
any Net WAC Carryover Amount for any Class of LIBOR Certificates,
the Trustee will transfer, from amounts that would otherwise be
distributable to the Class X Certificates pursuant to this clause,
the amount of any Net WAC Carryover Amount for the LIBOR
Certificates into the Net WAC Fund, for immediate transfer pursuant
to this clause to the related LIBOR Certificates as payment of Net
WAC Carryover Amount for the LIBOR Certificates and (b) any
Termination Payment owed by the Trust to the Cap Provider and any
Carryover Termination Payment owed by the Trust to the Cap Provider
resulting solely from a default of the Trust under the Cap Agreement
or a Termination Event (as defined in the Cap Agreement) where the
Trust is the sole affected party; provided that pursuant to Section
4.07, the Trustee shall transfer any such payment calculated
pursuant to this subclause (b) that otherwise would be distributable
to the Class X Certificateholders pursuant to this subclause (b) to
the Termination Payment Fund for immediate transfer to the Cap
Provider;
(xiv) to the Trustee, any amounts payable pursuant to
Section 8.05(b) hereof (other than investment earnings on amounts on
deposit in the Distribution Account);
(xv) to the Holders of the Class X Certificates, the Class
X Distribution Amount net of the amount, if any, distributed
pursuant to subparagraph (xiii);
(xvi) to the Cap Provider if an Early Termination Date has
been designated under the Cap Agreement resulting from a default of
the Cap Provider or a Termination Event (as defined in the Cap
Agreement) where the Cap Provider is the sole affected party, any
Termination Payment owed by the Trust to the Cap Provider and any
Carryover Termination Payment owed to the Cap Provider; and
(xvii) to the Holders of the Class R-I Certificates, any
remaining amounts; provided that if such Distribution Date is the
Distribution Date immediately following the expiration of the latest
Prepayment Charge term as identified on the Mortgage Loan
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Schedule or any Distribution Date thereafter, then any such
remaining amounts will be distributed first, to the Holders of the
related Class P Certificates, until the Certificate Principal
Balance thereof has been reduced to zero; and second, to the Holders
of the Class R-I Certificates.
(4) The Trustee shall distribute the Net Monthly Excess Cash Flow on
the first Distribution Date to Credit Suisse First Boston Corporation.
(b) On each Distribution Date, the Trustee shall withdraw any
amounts then on deposit in the Distribution Account that represent Prepayment
Charges collected by the Servicer in connection with the Principal Prepayment
of any of the Mortgage Loans or the Servicer Prepayment Charge Payment Amount
and shall distribute such amounts to the Holders of the Class P Certificates.
Such distributions shall not be applied to reduce the Certificate Principal
Balance of the Class P Certificates. On the first Distribution on which the
Certificate Principal Balance of the Class A1 and the Subordinated Offered
Certificates is reduced to zero, the Class P Certificates shall be entitled to
its Certificate Principal Balance prior to any distributions being made
pursuant to Section 4.01(a)(3) on such Distribution Date.
(c) All distributions made with respect to each Class of
Certificates on each Distribution Date shall be allocated pro rata among the
outstanding Certificates in such Class based on their respective Percentage
Interests. Payments in respect of each Class of Certificates on each
Distribution Date will be made to the Holders of the respective Class of
record on the related Record Date (except as otherwise provided in Section
4.01(e) or Section 9.01 respecting the final distribution on such Class),
based on the aggregate Percentage Interest represented by their respective
Certificates, and shall be made by wire transfer of immediately available
funds to the account of any such Holder at a bank or other entity having
appropriate facilities therefor, if such Holder shall have so notified the
Trustee in writing at least five Business Days prior to the Record Date
immediately prior to such Distribution Date or otherwise by check mailed by
first class mail to the address of such Holder appearing in the Certificate
Register. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
Corporate Trust Office or such other location specified in the notice to
Certificateholders of such final distribution.
Each distribution with respect to a Book-Entry Certificate shall be
paid to the Depository, as Holder thereof, and the Depository shall be
responsible for crediting the amount of such distribution to the accounts of
its Depository Participants in accordance with its normal procedures. Each
Depository Participant shall be responsible for disbursing such distribution
to the Certificate Owners that it represents and to each indirect
participating brokerage firm (a "brokerage firm" or "indirect participating
firm") for which it acts as agent. Each brokerage firm shall be responsible
for disbursing funds to the Certificate Owners that it represents. None of the
Trustee, the Certificate Registrar, the Depositor or the Servicer shall have
any responsibility therefor except as otherwise provided by this Agreement or
applicable law.
(d) The rights of the Certificateholders to receive distributions in
respect of the Certificates, and all interests of the Certificateholders in
such distributions, shall be as set forth in this Agreement. None of the
Holders of any Class of Certificates, the Trustee or the
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Servicer shall in any way be responsible or liable to the Holders of any other
Class of Certificates in respect of amounts properly previously distributed on
the Certificates.
(e) Except as otherwise provided in Section 9.01, whenever the
Trustee expects that the final distribution with respect to any Class of
Certificates will be made on the next Distribution Date, the Trustee shall, no
later than five (5) days after the related Determination Date, mail to each
Holder on such date of such Class of Certificates a notice to the effect that:
(i) the Trustee expects that the final distribution with
respect to such Class of Certificates will be made on such
Distribution Date, but only upon presentation and surrender of such
Certificates at the office of the Trustee therein specified, and
(ii) no interest shall accrue on such Certificates from
and after the end of the related Interest Accrual Period.
Any funds not distributed to any Holder or Holders of Certificates of such
Class on such Distribution Date because of the failure of such Holder or
Holders to tender their Certificates shall, on such date, be set aside and
held in trust by the Trustee and credited to the account of the appropriate
non-tendering Holder or Holders. If any Certificates as to which notice has
been given pursuant to this Section 4.01(e) shall not have been surrendered
for cancellation within six months after the time specified in such notice,
the Trustee shall mail a second notice to the remaining non-tendering
Certificateholders to surrender their Certificates for cancellation in order
to receive the final distribution with respect thereto. If within one year
after the second notice all such Certificates shall not have been surrendered
for cancellation, the Trustee shall, directly or through an agent, mail a
final notice to remaining non-tendering Certificateholders concerning
surrender of their Certificates but shall continue to hold any remaining funds
for the benefit of non-tendering Certificateholders. The costs and expenses of
maintaining the funds in trust and of contacting such Certificateholders shall
be paid out of the assets remaining in such trust fund. If within one year
after the final notice any such Certificates shall not have been surrendered
for cancellation, the Trustee shall pay to the Depositor all such amounts, and
all rights of non-tendering Certificateholders in or to such amounts shall
thereupon cease. No interest shall accrue or be payable to any
Certificateholder on any amount held in trust by the Trustee as a result of
such Certificateholder's failure to surrender its Certificate(s) for final
payment thereof in accordance with this Section 4.01(e).
SECTION 4.02. Statements to Certificateholders.
On each Distribution Date, the Trustee shall prepare and make
available to each Holder of the Regular Certificates, a statement with respect
to information regarding the Mortgage Loans, based solely on, and to the
extent of, information provided to the Trustee by the Servicer as to the
distributions made on such Distribution Date setting forth:
(i) the amount of the distribution made on such Distribution
Date to the Holders of the Certificates of each Class allocable to
principal, and the amount of distribution made on such Distribution
Date to the Holders of the related Class P Certificates allocable to
Prepayment Charges;
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(ii) the amount of the distribution made on such Distribution
Date to the Holders of the Certificates of each Class allocable to
interest;
(iii) the aggregate Servicing Fee received by the Servicer
during the related Due Period and such other customary information
as the Trustee deems necessary or desirable, or which a
Certificateholder reasonably requests, to enable Certificateholders
to prepare their tax returns;
(iv) the aggregate amount of P&I Advances for such Distribution
Date;
(v) the aggregate Stated Principal Balance of the Mortgage
Loans and any REO Properties as of the close of business on such
Distribution Date;
(vi) the number, aggregate principal balance, weighted average
remaining term to maturity and weighted average Mortgage Rate of the
Mortgage Loans as of the related Due Date;
(vii) separately by Originator, the number and aggregate unpaid
principal balance of the Mortgage Loans originated by each
Originator (a) delinquent 30-59 days, (b) delinquent 60-89 days, (c)
delinquent 90 or more days in each case, as of the last day of the
preceding calendar month, (d) as to which foreclosure proceedings
have been commenced and (e) with respect to which the related
Mortgagor has filed for protection under applicable bankruptcy laws,
with respect to whom bankruptcy proceedings are pending or with
respect to whom bankruptcy protection is in force;
(viii) with respect to any Mortgage Loan that became an REO
Property during the preceding calendar month, the loan number of
such Mortgage Loan, the unpaid principal balance and the Stated
Principal Balance of such Mortgage Loan as of the date it became an
REO Property;
(ix) the aggregate of the Stated Principal Balances of all REO
Properties as of the close of business on the last Business Day of
the calendar month preceding the Distribution Date;
(x) the aggregate amount of Principal Prepayments made during
the related Prepayment Period;
(xi) the aggregate amount of Realized Losses incurred during
the related Prepayment Period (or, in the case of Bankruptcy Losses
allocable to interest, during the related Due Period), separately
identifying whether such Realized Losses constituted Bankruptcy
Losses and the aggregate amount of Realized Losses incurred since
the Closing Date;
(xii) the aggregate amount of Extraordinary Trust Fund Expenses
withdrawn from the Collection Account or the Distribution Account
for such Distribution Date;
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(xiii) the aggregate Certificate Principal Balance of each
Class of Certificates, after giving effect to the distributions, and
allocations of Realized Losses, made on such Distribution Date,
separately identifying any reduction thereof due to allocations of
such Realized Losses;
(xiv) the Certificate Factor for each such Class of
Certificates applicable to such Distribution Date;
(xv) the Accrued Certificate Interest in respect of the Class
A1 Certificates, the Class A-IO Certificates and the Subordinated
Certificates for such Distribution Date and the Unpaid Interest
Shortfall Amount, if any, with respect to each such Class of
Certificates on such Distribution Date, separately identifying any
reduction thereof due to allocations of Realized Losses, Prepayment
Interest Shortfalls and Relief Act Interest Shortfalls, as
applicable;
(xvi) the aggregate amount of any Prepayment Interest Shortfall
for such Distribution Date, to the extent not covered by payments by
the Servicer pursuant to Section 3.24;
(xvii) the aggregate amount of Relief Act Interest Shortfalls
for such Distribution Date;
(xviii) the Required Overcollateralized Amount and the Credit
Enhancement Percentage for such Distribution Date;
(xix) the Overcollateralization Increase Amount, if any, for
such Distribution Date;
(xx) the Overcollateralization Reduction Amount, if any, for
such Distribution Date;
(xxi) with respect to any Mortgage Loan as to which foreclosure
proceedings have been concluded, the loan number and unpaid
principal balance of such Mortgage Loan as of the date of such
conclusion of foreclosure proceedings;
(xxii) with respect to Mortgage Loans as to which a Liquidation
Event has occurred, the number of such Mortgage Loans, the unpaid
principal balance of such Mortgage Loans as of the date of such
Liquidation Event and the amount of proceeds (including Liquidation
Proceeds and Insurance Proceeds) collected in respect of such
Mortgage Loans;
(xxiii) the respective Pass-Through Rates applicable to the
LIBOR Certificates, for such Distribution Date and the Pass-Through
Rate applicable to the LIBOR Certificates for the immediately
succeeding Distribution Date;
(xxiv) the amount of any payment made by the Cap Provider under
the Cap Agreement;
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(xxv) the number and principal amount of claims submitted and
claims paid under the MGIC Policy during the preceding calendar
month and the number and principal amount of claims submitted and
claims paid under the MGIC Policy as of the last day of the calendar
month preceding such Distribution Date;
(xxvi) the amount on deposit in the Prefunding Account
(including subsequent transfer amounts or amounts included in the
Principal Remittance Amount on November 15, 2001); and
(xxvii) the amount of any Net Monthly Excess Cash Flow on such
Distribution Date and the allocation thereof to the
Certificateholders with respect to Applied Realized Loss Amounts and
Unpaid Realized Loss Amounts.
The Trustee will make such statement (and, at its option, any
additional files containing the same information in an alternative format)
available each month to Certificateholders, the Servicer, the Rating Agencies
via the Trustee's internet website. The Trustee's internet website shall
initially be located at "http:\\▇▇▇.▇▇▇▇▇▇▇.▇▇▇. Parties that are unable to
use the above distribution options are entitled to have a paper copy mailed to
them via first class mail by calling the customer service desk at (301)
815-6600 and indicating such. The Trustee shall have the right to change the
way such statements are distributed in order to make such distribution more
convenient and/or more accessible to the above parties and the Trustee shall
provide timely and adequate notification to all above parties regarding any
such changes.
In the case of information furnished pursuant to subclauses (i)
through (iii) above, the amounts shall be expressed as a dollar amount per
Single Certificate of the relevant Class.
Within a reasonable period of time after the end of each calendar
year, upon written request or request by facsimile, the Trustee shall furnish
to each Person who at any time during the calendar year was a Holder of a
Regular Certificate a statement containing the information set forth in
subclauses (i) through (iii) above, aggregated for such calendar year or
applicable portion thereof during which such person was a Certificateholder.
Such obligation of the Trustee shall be deemed to have been satisfied to the
extent that substantially comparable information shall be provided by the
Trustee pursuant to any requirements of the Code as from time to time are in
force.
On each Distribution Date, the Trustee shall forward to the
Depositor, each Holder of a Non-Offered Certificate, and the Servicer, a copy
of the reports forwarded to the Regular Certificateholders on such
Distribution Date and a statement setting forth the amounts, if any, actually
distributed with respect to the Residual Certificates, respectively, on such
Distribution Date.
Within a reasonable period of time after the end of each calendar
year, upon written request or request by facsimile, the Trustee shall furnish
to each Person who at any time during the calendar year was a Holder of a
Residual Certificate a statement setting forth the amount, if any, actually
distributed with respect to the Residual Certificates, as appropriate,
aggregated for such calendar year or applicable portion thereof during which
such Person was a Certificateholder. Such obligation of the Trustee shall be
deemed to have been satisfied to the
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extent that substantially comparable information shall be prepared by the
Trustee and furnished to such Holders pursuant to the rules and regulations of
the Code as are in force from time to time.
The Trustee shall, upon request, furnish to each Certificateholder,
during the term of this Agreement, such periodic, special, or other reports or
information, whether or not provided for herein, as shall be reasonable with
respect to the Certificateholder, or otherwise with respect to the purposes of
this Agreement, all such reports or information to be provided at the expense
of the Certificateholder in accordance with such reasonable and explicit
instructions and directions as the Certificateholder may provide. For purposes
of this Section 4.02, the Trustee's duties are limited to the extent that the
Trustee receives timely reports as required from the Servicer.
On each Distribution Date the Trustee shall provide Bloomberg
Financial Markets, L.P. ("Bloomberg") loan level data with respect to all of
the Mortgage Loans and CUSIP level factors for each Class of Certificates as
of such Distribution Date, using a format and media mutually acceptable to the
Trustee and Bloomberg. In addition if so requested by an Originator, on each
Distribution Date the Trustee shall provide to such Originator and at the
expense of such Originator, the loan level data with respect to the Mortgage
Loans originated by such Originator.
SECTION 4.03. Remittance Reports; P&I Advances.
(a) Within three Business Days after each Determination Date, the
Servicer shall deliver to the Trustee by telecopy (or such other means as the
Servicer and the Trustee may agree from time to time) a Remittance Report with
respect to each Mortgage Loan for the prior calendar month. In addition,
within three Business Days after each Determination Date the Servicer shall
deliver to the Trustee delinquency information with respect to each Mortgage
Loan and P&I Advances including: (i) the amount of P&I Advances to be made by
the Servicer in respect of the related Distribution Date, the aggregate amount
of P&I Advances outstanding after giving effect to such P&I Advances, and the
aggregate amount of Nonrecoverable P&I Advances in respect of such
Distribution Date and (ii) such other information with respect to the Mortgage
Loans as the Trustee may reasonably require to perform the calculations
necessary to make the distributions contemplated by Section 4.01 and to
prepare the statements to Certificateholders contemplated by Section 4.02. The
Trustee shall not be responsible to recompute, recalculate or verify any
information provided to it by the Servicer.
(b) The amount of P&I Advances to be made by the Servicer for any
Distribution Date shall equal, subject to Section 4.03(d), the sum of (i) the
aggregate amount of Monthly Payments (with each interest portion thereof net
of the related Servicing Fee), due on the related Due Date in respect of the
Mortgage Loans, which Monthly Payments were delinquent as of the close of
business on the related Determination Date, plus (ii) with respect to each REO
Property, which REO Property was acquired during or prior to the related
Prepayment Period and as to which such REO Property an REO Disposition did not
occur during the related Prepayment Period, an amount equal to the excess, if
any, of the Monthly Payments (with each interest portion thereof net of the
related Servicing Fee) that would have been due on the related Due Date in
respect of the related Mortgage Loans, over the net income from such REO
Property
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transferred to the Distribution Account pursuant to Section 3.23 for
distribution on such Distribution Date.
On or before 3:00 p.m. New York time on the Servicer Remittance
Date, the Servicer shall remit in immediately available funds to the Trustee
for deposit in the Distribution Account an amount equal to the aggregate
amount of P&I Advances, if any, to be made in respect of the Mortgage Loans
and REO Properties for the related Distribution Date either (i) from its own
funds or (ii) from the Collection Account, to the extent of funds held therein
for future distribution (in which case, it will cause to be made an
appropriate entry in the records of the Collection Account that amounts held
for future distribution have been, as permitted by this Section 4.03, used by
the Servicer in discharge of any such P&I Advance) or (iii) in the form of any
combination of (i) and (ii) aggregating the total amount of P&I Advances to be
made by the Servicer with respect to the Mortgage Loans and REO Properties.
Any amounts held for future distribution and so used shall be appropriately
reflected in the Servicer's records and replaced by the Servicer by deposit in
the Collection Account on or before the next succeeding Servicer Remittance
Date. The Trustee will provide notice to the Servicer by telecopy by the close
of business on the Servicer Remittance Date in the event that the amount
remitted by the Servicer to the Trustee on such date is less than the P&I
Advances required to be made by the Servicer for such Distribution Date.
Nothing in this Section 4.03(b) shall be construed to prohibit the Servicer
from reimbursing itself at any time from the Collection Account to the extent
provided in Section 3.11 herein.
(c) The obligation of the Servicer to make such P&I Advances is
mandatory, notwithstanding any other provision of this Agreement but subject
to (d) below, and, with respect to any Mortgage Loan or REO Property, shall
continue until a Final Recovery Determination in connection therewith or the
removal thereof from the Trust Fund pursuant to any applicable provision of
this Agreement, except as otherwise provided in this Section.
(d) Notwithstanding anything herein to the contrary, no P&I Advance
or Servicing Advance shall be required to be made hereunder by the Servicer if
such P&I Advance or Servicing Advance would, if made, constitute a
Nonrecoverable P&I Advance or Nonrecoverable Servicing Advance. The
determination by the Servicer that it has made a Nonrecoverable P&I Advance or
a Nonrecoverable Servicing Advance or that any proposed P&I Advance or
Servicing Advance, if made, would constitute a Nonrecoverable P&I Advance or a
Nonrecoverable Servicing Advance, respectively, shall be evidenced by an
Officers' Certificate of the Servicer delivered to the Depositor and the
Trustee.
SECTION 4.04. Allocation of Realized Losses.
(a) Prior to each Determination Date, the Servicer shall determine
as to each Mortgage Loan and REO Property: (i) the total amount of Realized
Losses, if any, incurred in connection with any Final Recovery Determinations
made during the related Prepayment Period; (ii) whether and the extent to
which such Realized Losses constituted Bankruptcy Losses and (iii) the
respective portions of such Realized Losses allocable to interest and
allocable to principal. Prior to each Determination Date, the Servicer shall
also determine as to each Mortgage Loan: (A) the total amount of Realized
Losses, if any, incurred in connection with any Deficient Valuations made
during the related Prepayment Period and (B) the total amount of
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Realized Losses, if any, incurred in connection with Debt Service Reductions
in respect of Monthly Payments due during the related Due Period. The
information described in the two preceding sentences that is to be supplied by
the Servicer shall be evidenced by an Officers' Certificate delivered to the
Trustee by the Servicer prior to the Determination Date immediately following
the end of (x) in the case of Bankruptcy Losses allocable to interest, the Due
Period during which any such Realized Loss was incurred, and (y) in the case
of all other Realized Losses, the Prepayment Period during which any such
Realized Loss was incurred.
(b) Realized Losses on the Mortgage Loans shall be allocated by the
Trustee on each Distribution Date as follows: first, to Net Monthly Excess
Cashflow; and second, to the Class X Certificates, until the
Overcollateralized Amount thereof has been reduced to zero. Thereafter, any
Applied Realized Loss Amounts shall be allocated; first, to the Class B
Certificates, until the Certificate Principal Balance thereof has been reduced
to zero; second, to the Class M2 Certificates, until the Certificate Principal
Balance thereof has been reduced to zero; and third, to the Class M1
Certificates, until the Certificate Principal Balance thereof has been reduced
to zero. All Realized Losses to be allocated to the Certificate Principal
Balances of all Classes on any Distribution Date shall be so allocated after
the actual distributions to be made on such date as provided above. All
references above to the Certificate Principal Balance of any Class of
Certificates shall be to the Certificate Principal Balance of such Class
immediately prior to the relevant Distribution Date, before reduction thereof
by any Realized Losses, in each case to be allocated to such Class of
Certificates, on such Distribution Date.
Any allocation of Realized Losses to a Subordinated Certificate on
any Distribution Date shall be made by reducing the Certificate Principal
Balance thereof by the amount so allocated, or in the case of a Class X
Certificate, by reducing the amount otherwise payable in respect thereof
pursuant to Section 4.01(a)(3)(xv). No allocations of any Realized Losses
shall be made to the Certificate Principal Balances of the Class A1
Certificates or the Class P Certificates. As used herein, an allocation of a
Realized Loss on a "pro rata basis" among two or more specified Classes of
Certificates means an allocation on a pro rata basis, among the various
Classes so specified, to each such Class of Certificates on the basis of their
then outstanding Certificate Principal Balances prior to giving effect to
distributions to be made on such Distribution Date. All Realized Losses and
all other losses allocated to a Class of Certificates hereunder will be
allocated among the Certificates of such Class in proportion to the Percentage
Interests evidenced thereby.
SECTION 4.05. Compliance with Withholding Requirements.
Notwithstanding any other provision of this Agreement, the Trustee
shall comply with all federal withholding requirements respecting payments to
Certificateholders of interest or original issue discount that the Trustee
reasonably believes are applicable under the Code. The consent of
Certificateholders shall not be required for such withholding. In the event
the Trustee does withhold any amount from interest or original issue discount
payments or advances thereof to any Certificateholder pursuant to federal
withholding requirements, the Trustee shall indicate the amount withheld to
such Certificateholders.
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SECTION 4.06. Commission Reporting.
Within 15 days after each Distribution Date, the Trustee shall, in
accordance with industry standards, file with the Commission via the
Electronic Data Gathering and Retrieval System, a Form 8-K with a copy of the
statement to Certificateholders for such Distribution Date as an exhibit
thereto. Prior to January 30, 2002, the Trustee shall in accordance with
industry standards file a Form 15 Suspension Notification with respect to the
Trust Fund, if applicable. Prior to March 30, 2002, the Trustee shall file a
Form 10-K, in substance conforming to industry standards, with respect to the
Trust Fund. The Depositor hereby grants to the Trustee a limited power of
attorney to execute and file each such document on behalf of the Depositor.
Such power of attorney shall continue until the earlier of (i) receipt by the
Trustee from the Depositor of written termination of such power of attorney
and (ii) the termination of the Trust Fund. The Depositor agrees to promptly
furnish to the Trustee, from time to time upon request, such further
information, reports and financial statements within its control related to
this Agreement and the Mortgage Loans as the Trustee reasonably deems
appropriate to prepare and file all necessary reports with the Commission. The
Trustee shall have no responsibility to file any items other than those
specified in this Section.
SECTION 4.07. Early Termination Fund.
(a) On the Closing Date, the Trustee shall establish and maintain in
its name, in trust for the benefit of the Holders of the Class X Certificates,
the Early Termination Fund. The Early Termination Fund shall be an Eligible
Account, and funds on deposit therein shall be held separate and apart from,
and shall not be commingled with, any other moneys, including without
limitation, other moneys held by the Trustee pursuant to this Agreement.
(b) On the Closing Date, $1,000 will be deposited by the Depositor
into the Early Termination Fund. On each Distribution Date, the Trustee shall
transfer from the Distribution Account to the Early Termination Fund pursuant
to Section 4.01(a)(xii)(b) any amount required to be deposited therein.
Amounts on deposit in the Early Termination Fund can be withdrawn by the
Trustee and paid to the Cap Provider to the extent of any Termination Payments
or Carryover Termination Payments owed by the Trust to the Cap Provider
resulting solely from a default of the Trust under the Cap Agreement) where
the Trust is the sole affected party.
(c) Funds in the Early Termination Fund may be invested in Eligible
Investments by the Trustee at the direction of the holders of the Class X
Certificates maturing on or prior to the next succeeding Distribution Date.
Any net investment earnings on such amounts shall be payable to the holders of
the Class X Certificates. The Trustee shall account for the Early Termination
Fund as an outside reserve fund within the meaning of Treasury regulation
1.860G-2(h) and not an asset of any REMIC created pursuant to this Agreement.
The Class X Certificates shall evidence ownership of the Early Termination
Fund for federal tax purposes and the Holders thereof shall direct the Trustee
in writing as to the investment of amounts therein. The Trustee shall treat
amounts transferred by the Master REMIC to the Early Termination Fund as
distributions to the Class X Certificateholder for all Federal tax purposes.
In the absence of such written direction, all funds in the Early Termination
Fund shall remain uninvested. The Trustee shall have no liability for losses
on investments in Eligible Investments made pursuant to the Section 4.07(c)
(other than as obligor on such investments). Upon termination of the Trust
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Fund, any amounts remaining in the Early Termination Fund shall be distributed
to the Holders of the Class X Certificates.
(d) On the Distribution Date immediately after the Distribution Date
on which the Cap Agreement is terminated, any amounts on deposit in the Early
Termination Fund not payable to the Cap Provider shall be distributed to the
Holders of the Class X Certificates.
ARTICLE V
THE CERTIFICATES
SECTION 5.01. The Certificates.
(a) The Certificates in the aggregate will represent the entire
beneficial ownership interest in the Mortgage Loans and all other assets
included in the Trust Fund.
The Certificates will be substantially in the forms annexed hereto
as Exhibits A-1 through A-8. The Certificates of each Class will be issuable
in registered form only, in denominations of authorized Percentage Interests
as described in the definition thereof. Each Certificate will share ratably in
all rights of the related Class.
Upon original issue, the Certificates shall be executed and
delivered by the Trustee and the Trustee shall cause the Certificates to be
authenticated by the Certificate Registrar to or upon the order of the
Depositor. The Certificates shall be executed and attested by manual or
facsimile signature on behalf of the Trustee by an authorized signatory.
Certificates bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Trustee shall bind the Trustee,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Certificates or did
not hold such offices at the date of such Certificates. No Certificate shall
be entitled to any benefit under this Agreement or be valid for any purpose,
unless there appears on such Certificate a certificate of authentication
substantially in the form provided herein executed by the Certificate
Registrar by manual signature, and such certificate of authentication shall be
conclusive evidence, and the only evidence, that such Certificate has been
duly authenticated and delivered hereunder. All Certificates shall be dated
the date of their authentication.
(b) The Offered Certificates shall initially be issued as one or
more Certificates held by the Book-Entry Custodian or, if appointed to hold
such Certificates as provided below, the Depository and registered in the name
of the Depository or its nominee and, except as provided below, registration
of such Certificates may not be transferred by the Trustee except to another
Depository that agrees to hold such Certificates for the respective
Certificate Owners with Ownership Interests therein. The Certificate Owners
shall hold their respective Ownership Interests in and to such Certificates
through the book-entry facilities of the Depository and, except as provided
below, shall not be entitled to definitive, fully registered Certificates
("Definitive Certificates") in respect of such Ownership Interests. All
transfers by Certificate Owners of their respective Ownership Interests in the
Book-Entry Certificates shall be made in accordance with the procedures
established by the Depository Participant or brokerage firm representing such
Certificate Owner. Each Depository Participant shall only transfer the
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Ownership Interests in the Book-Entry Certificates of Certificate Owners it
represents or of brokerage firms for which it acts as agent in accordance with
the Depository's normal procedures. The Trustee is hereby initially appointed
as the Book-Entry Custodian and hereby agrees to act as such in accordance
herewith and in accordance with the agreement that it has with the Depository
authorizing it to act as such. The Book-Entry Custodian may, and if it is no
longer qualified to act as such, the Book-Entry Custodian shall, appoint, by a
written instrument delivered to the Depositor, the Servicer, the Trustee (if
the Trustee is not the Book-Entry Custodian) and any other transfer agent
(including the Depository or any successor Depository) to act as Book-Entry
Custodian under such conditions as the predecessor Book-Entry Custodian and
the Depository or any successor Depository may prescribe, provided that the
predecessor Book-Entry Custodian shall not be relieved of any of its duties or
responsibilities by reason of any such appointment of other than the
Depository. If the Trustee resigns or is removed in accordance with the terms
hereof, the successor trustee or, if it so elects, the Depository shall
immediately succeed to its predecessor's duties as Book-Entry Custodian. The
Depositor shall have the right to inspect, and to obtain copies of, any
Certificates held as Book-Entry Certificates by the Book-Entry Custodian.
The Trustee, the Servicer and the Depositor may for all purposes
(including the making of payments due on the Book-Entry Certificates) deal
with the Depository as the authorized representative of the Certificate Owners
with respect to the Book-Entry Certificates for the purposes of exercising the
rights of Certificateholders hereunder. The rights of Certificate Owners with
respect to the Book-Entry Certificates shall be limited to those established
by law and agreements between such Certificate Owners and the Depository
Participants and brokerage firms representing such Certificate Owners.
Multiple requests and directions from, and votes of, the Depository as Holder
of the Book-Entry Certificates with respect to any particular matter shall not
be deemed inconsistent if they are made with respect to different Certificate
Owners. The Trustee may establish a reasonable record date in connection with
solicitations of consents from or voting by Certificateholders and shall give
notice to the Depository of such record date.
If (i)(A) the Depositor advises the Trustee in writing that the
Depository is no longer willing or able to properly discharge its
responsibilities as Depository, and (B) the Depositor is unable to locate a
qualified successor, (ii) the Depositor at its option advises the Trustee in
writing that it elects to terminate the book-entry system through the
Depository or (iii) after the occurrence of a Servicer Event of Default,
Certificate Owners representing in the aggregate not less than 51% of the
Ownership Interests of the Book-Entry Certificates advise the Trustee through
the Depository, in writing, that the continuation of a book-entry system
through the Depository is no longer in the best interests of the Certificate
Owners, the Trustee shall notify all Certificate Owners, through the
Depository, of the occurrence of any such event and of the availability of
Definitive Certificates to Certificate Owners requesting the same. Upon
surrender to the Trustee of the Book-Entry Certificates by the Book-Entry
Custodian or the Depository, as applicable, accompanied by registration
instructions from the Depository for registration of transfer, the Trustee
shall issue the Definitive Certificates. Such Definitive Certificates will be
issued in minimum denominations of $100,000, except that any beneficial
ownership that was represented by a Book-Entry Certificate in an amount less
than $100,000 immediately prior to the issuance of a Definitive Certificate
shall be issued in a minimum denomination equal to the amount represented by
such Book-Entry Certificate. None of the Depositor, the Servicer or the
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Trustee shall be liable for any delay in the delivery of such instructions and
may conclusively rely on, and shall be protected in relying on, such
instructions. Upon the issuance of Definitive Certificates all references
herein to obligations imposed upon or to be performed by the Depository shall
be deemed to be imposed upon and performed by the Trustee, to the extent
applicable with respect to such Definitive Certificates, and the Trustee shall
recognize the Holders of the Definitive Certificates as Certificateholders
hereunder.
SECTION 5.02. Registration of Transfer and Exchange of Certificates.
(a) The Trustee shall cause to be kept at one of the offices or
agencies to be appointed by the Trustee in accordance with the provisions of
Section 8.12 a Certificate Register for the Certificates in which, subject to
such reasonable regulations as it may prescribe, the Trustee shall provide for
the registration of Certificates and of transfers and exchanges of
Certificates as herein provided. The Trustee will initially serve as
Certificate Registrar for the purpose of registering Certificates and
transfers and exchanges of Certificates as herein provided. The Certificate
Registrar may appoint, by a written instrument delivered to the Trustee, the
Servicer and the Depositor, any other bank or trust company to act as
Certificate Registrar under such conditions as the predecessor Certificate
Registrar may prescribe, provided that the predecessor Certificate Registrar
shall not be relieved of any of its duties or responsibilities hereunder by
reason of such appointment. If the Trustee shall at any time not be the
Certificate Registrar, the Trustee shall have and maintain the right to
inspect the Certificate Register or to obtain a copy thereof at all reasonable
times, and to rely conclusively upon a certificate of the Certificate
Registrar as to the information set forth in the Certificate Register.
(b) No transfer of any Class X Certificate, Class B-IO Certificates,
Class P Certificate or Residual Certificate shall be made unless that transfer
is made pursuant to an effective registration statement under the Securities
Act of 1933, as amended (the "1933 Act"), and an effective registration or
qualification under applicable state securities laws, or is made in a
transaction that does not require such registration or qualification. In the
event that such a transfer of a Class X Certificate, Class B-IO Certificates,
Class P Certificate or Residual Certificate is to be made without registration
or qualification (other than in connection with the initial transfer of any
such Certificate by the Depositor to the Seller or by the Seller to an
affiliate of the Seller or to a trust, the depositor of which is an affiliate
of the Seller), the Trustee and the Certificate Registrar shall each require
receipt of: either (i) written certifications from the Certificateholder
desiring to effect the transfer and from such Certificateholder's prospective
transferee, substantially in the forms attached hereto as Exhibit F-1 or (ii)
an Opinion of Counsel satisfactory to it that such transfer may be made
without such registration or qualification (which Opinion of Counsel shall not
be an expense of the Depositor, the Trustee, the Servicer, the Certificate
Registrar or the Trust Fund). None of the Depositor, the Certificate Registrar
or the Trustee is obligated to register or qualify the Class X Certificates,
Class B-IO Certificates, the Class P Certificates or the Residual Certificates
under the 1933 Act or any other securities laws or to take any action not
otherwise required under this Agreement to permit the transfer of such
Certificates without registration or qualification. Any Certificateholder
desiring to effect the transfer of a Class X Certificate, a Class B-IO
Certificate, a Class P Certificate or a Residual Certificate shall, and does
hereby agree to, indemnify the Trustee, the Depositor, the Certificate
Registrar and the Servicer against any liability that may result if the
transfer is not so exempt or is not made in accordance with such federal and
state laws.
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(c) (i) No transfer of a Class X Certificate, a Class B-IO
Certificate, Class P Certificate or Residual Certificate or any interest
therein shall be made to any Plan, any Person acting, directly or indirectly,
on behalf of any such Plan or any Person (other than in connection with the
initial transfer of any such Certificate by the Depositor to the Seller or by
the Seller to an affiliate of the Seller or to a trust, the depositor of which
is an affiliate of the Seller) acquiring such Certificates with "plan assets"
of a Plan within the meaning of the Department of Labor regulation promulgated
at 29 C.F.R. ss. 2510.3-101 ("Plan Assets") or as determined under other
applicable law unless the Depositor, the Trustee and the Servicer are provided
with an Opinion of Counsel which establishes to the satisfaction of the
Depositor, the Trustee and the Servicer that the purchase of such Certificates
is permissible under applicable law, will not constitute or result in any
prohibited transaction under ERISA or Section 4975 of the Code and will not
subject the Depositor, the Servicer, the Trustee or the Trust Fund to any
obligation or liability (including obligations or liabilities under ERISA or
Section 4975 of the Code) in addition to those undertaken in this Agreement,
which Opinion of Counsel shall not be an expense of the Depositor, the
Servicer, the Trustee or the Trust Fund. Neither an Opinion of Counsel nor any
certification will be required in connection with the initial transfer of any
such Certificate by the Depositor to an affiliate of the Depositor (in which
case, the Depositor or any affiliate thereof shall be deemed to have
represented that such affiliate is not a Plan or a Person investing Plan
Assets) and the Trustee shall be entitled to conclusively rely upon a
representation (which, upon the request of the Trustee, shall be a written
representation) from the Depositor of the status of such transferee as an
affiliate of the Depositor.
(ii) No transfer of a Class A, Class A-IO, Class M-1, Class M-2 or
Class B Certificate or any interest therein shall be made to any Plan, any
Person acting, directly or indirectly on behalf of any Plan or any Person
acquiring such Certificates with "Plan Assets" of a Plan unless such Plan is a
Qualified Plan Investor. Each Person that acquires a Class A, Class A-IO,
Class M-1, Class M-2 or Class B Certificate that is a Book Entry Certificate
will be deemed to represent that either (a) it is not a Plan or a Person
acting, directly or indirectly, on behalf of a Plan, and is not acquiring the
Certificates with "plan assets" of a Plan, or (b) it, or each Plan on behalf
of which it is acquiring a Certificate or an interest therein, is a Qualified
Plan Investor.
(iii) If any Certificate or any interest therein is acquired or held
in violation of the provisions of Section 5.02(c)(i) or (ii), the next
preceding permitted beneficial owner will be treated as the beneficial owner
of that Certificate retroactive to the date of transfer to the purported
beneficial owner. Any purported beneficial owner whose acquisition or holding
of any such Certificate or interest therein was effected in violation of the
provisions of the preceding paragraph shall indemnify and hold harmless the
Depositor, the Servicer, the Trustee, the Certificate Registrar, the
Underwriters and the Trust Fund from and against any and all liabilities,
claims, costs or expenses incurred by those parties as a result of that
acquisition or holding.
(d) (i) Each Person who has or who acquires any Ownership Interest
in a Residual Certificate shall be deemed by the acceptance or acquisition of
such Ownership Interest to have agreed to be bound by the following provisions
and to have irrevocably authorized the Trustee or its designee under clause
(iii)(A) below to deliver payments to a Person other than such Person and to
negotiate the terms of any mandatory sale under clause (iii)(B) below and to
execute all instruments of Transfer and to do all other things necessary in
connection with any
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such sale. The rights of each Person acquiring any Ownership Interest in a
Residual Certificate are expressly subject to the following provisions:
(A) Each Person holding or acquiring any Ownership
Interest in a Residual Certificate shall be a Permitted Transferee
and shall promptly notify the Trustee of any change or impending
change in its status as a Permitted Transferee.
(B) In connection with any proposed Transfer of any
Ownership Interest in a Residual Certificate, the Trustee shall
require delivery to it and shall not register the Transfer of any
Residual Certificate until its receipt of an affidavit and agreement
(a "Transfer Affidavit and Agreement"), in the form attached hereto
as Exhibit F-2 from the proposed Transferee, representing and
warranting, among other things, that such Transferee is a Permitted
Transferee, that it is not acquiring its Ownership Interest in the
Residual Certificate that is the subject of the proposed Transfer as
a nominee, trustee or agent for any Person that is not a Permitted
Transferee, that for so long as it retains its Ownership Interest in
a Residual Certificate, it will endeavor to remain a Permitted
Transferee, and that it has reviewed the provisions of this Section
5.02(d) and agrees to be bound by them.
(C) Notwithstanding the delivery of a Transfer Affidavit
and Agreement by a proposed Transferee under clause (B) above, if a
Responsible Officer of the Trustee who is assigned to this
transaction has actual knowledge that the proposed Transferee is not
a Permitted Transferee, no Transfer of an Ownership Interest in a
Residual Certificate to such proposed Transferee shall be effected.
(D) Each Person holding or acquiring any Ownership
Interest in a Residual Certificate shall agree (x) to require a
Transfer Affidavit and Agreement in the form attached hereto as
Exhibit F-2 ) from any other Person to whom such Person attempts to
transfer its Ownership Interest in a Residual Certificate and (y)
not to transfer its Ownership Interest unless it provides a
Transferor Affidavit (in the form attached hereto as Exhibit F-2) to
the Trustee stating that, among other things, it has no actual
knowledge that such other Person is not a Permitted Transferee.
(E) Each Person holding or acquiring an Ownership Interest
in a Residual Certificate, by purchasing an Ownership Interest in
such Certificate, agrees to give the Trustee written notice that it
is a "pass-through interest holder" within the meaning of temporary
Treasury regulation Section 1.67-3T(a)(2)(i)(A) immediately upon
acquiring an Ownership Interest in a Residual Certificate, if it is,
or is holding an Ownership Interest in a Residual Certificate on
behalf of, a "pass-through interest holder."
(ii) The Trustee will register the Transfer of any Residual
Certificate only if it shall have received the Transfer Affidavit and
Agreement and all of such other documents as shall have been reasonably
required by the Trustee as a condition to such registration. In addition, no
Transfer of a Residual Certificate shall be made unless the Trustee shall have
received a
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representation letter from the Transferee of such Certificate to the effect
that such Transferee is a Permitted Transferee.
(iii) (A) If any purported Transferee shall become a Holder of a
Residual Certificate in violation of the provisions of this Section 5.02(d),
then the last preceding Permitted Transferee shall be restored, to the extent
permitted by law, to all rights as holder thereof retroactive to the date of
registration of such Transfer of such Residual Certificate. The Trustee shall
be under no liability to any Person for any registration of Transfer of a
Residual Certificate that is in fact not permitted by this Section 5.02(d) or
for making any payments due on such Certificate to the holder thereof or for
taking any other action with respect to such holder under the provisions of
this Agreement.
(B) If any purported Transferee shall become a holder of a
Residual Certificate in violation of the restrictions in
this Section 5.02(d) and to the extent that the
retroactive restoration of the rights of the holder of
such Residual Certificate as described in clause (iii)(A)
above shall be invalid, illegal or unenforceable, then the
Trustee shall have the right, without notice to the holder
or any prior holder of such Residual Certificate, to sell
such Residual Certificate to a purchaser selected by the
Trustee on such terms as the Trustee may choose. Such
purported Transferee shall promptly endorse and deliver
each Residual Certificate in accordance with the
instructions of the Trustee. Such purchaser may be the
Trustee itself or any Affiliate of the Trustee. The
proceeds of such sale, net of the commissions (which may
include commissions payable to the Trustee or its
Affiliates), expenses and taxes due, if any, will be
remitted by the Trustee to such purported Transferee. The
terms and conditions of any sale under this clause
(iii)(B) shall be determined in the sole discretion of the
Trustee, and the Trustee shall not be liable to any Person
having an Ownership Interest in a Residual Certificate as
a result of its exercise of such discretion.
(iv) The Trustee shall make available to the Internal Revenue
Service and those Persons specified by the REMIC Provisions all information
necessary to compute any tax imposed (A) as a result of the Transfer of an
Ownership Interest in a Residual Certificate to any Person who is a
Disqualified Organization, including the information described in Treasury
regulations sections 1.860D-1(b)(5) and 1.860E-2(a)(5) with respect to the
"excess inclusions" of such Residual Certificate and (B) as a result of any
regulated investment company, real estate investment trust, common trust fund,
partnership, trust, estate or organization described in Section 1381 of the
Code that holds an Ownership Interest in a Residual Certificate having as
among its record holders at any time any Person which is a Disqualified
Organization. Such information shall be provided by the Trustee upon receipt
of reasonable compensation.
(v) The provisions of this Section 5.02(d) set forth prior to this
subsection (v) may be modified, added to or eliminated, provided that there
shall have been delivered to the Trustee and the Certificate Registrar at the
expense of the party seeking to modify, add to or eliminate any such provision
the following:
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(A) written notification from each Rating Agency to the
effect that the modification, addition to or elimination of such
provisions will not cause such Rating Agency to downgrade its
then-current ratings of any Class of Certificates; and
(B) an Opinion of Counsel, in form and substance
satisfactory to the Trustee and the Certificate Registrar, to the
effect that such modification of, addition to or elimination of such
provisions will not cause any REMIC created hereunder to cease to
qualify as a REMIC and will not cause any REMIC created hereunder,
as the case may be, to be subject to an entity-level tax caused by
the Transfer of any Residual Certificate to a Person that is not a
Permitted Transferee or (y) a Person other than the prospective
transferee to be subject to a REMIC-tax caused by the Transfer of a
Residual Certificate to a Person that is not a Permitted Transferee.
(e) Subject to the preceding subsections, upon surrender for
registration of transfer of any Certificate at any office or agency of the
Trustee maintained for such purpose pursuant to Section 8.12, the Trustee
shall execute and the Certificate Registrar shall authenticate and deliver, in
the name of the designated Transferee or Transferees, one or more new
Certificates of the same Class of a like aggregate Percentage Interest.
(f) At the option of the Holder thereof, any Certificate may be
exchanged for other Certificates of the same Class with authorized
denominations and a like aggregate Percentage Interest, upon surrender of such
Certificate to be exchanged at any office or agency of the Trustee maintained
for such purpose pursuant to Section 8.12. Whenever any Certificates are so
surrendered for exchange the Trustee shall execute and the Certificate
Registrar shall authenticate and deliver the Certificates which the
Certificateholder making the exchange is entitled to receive. Every
Certificate presented or surrendered for transfer or exchange shall (if so
required by the Trustee) be duly endorsed by, or be accompanied by a written
instrument of transfer in the form satisfactory to the Trustee and the
Certificate Registrar duly executed by, the Holder thereof or his attorney
duly authorized in writing.
(g) No service charge to the Certificateholders shall be made for
any transfer or exchange of Certificates, but the Trustee may require payment
of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
(h) All Certificates surrendered for transfer and exchange shall be
canceled and destroyed by the Certificate Registrar in accordance with its
customary procedures.
(i) The Trustee will cause the Certificate Registrar (unless the
Trustee is acting as Certificate Registrar) to provide notice to the Trustee
of each transfer of a Certificate and to provide the Trustee with an updated
copy of the Certificate Registrar on the first Business Day in January and
September of each year, commencing in January 2002.
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SECTION 5.03. Mutilated, Destroyed, Lost or Stolen Certificates.
If (i) any mutilated Certificate is surrendered to the Trustee or
the Certificate Registrar, or the Trustee and the Certificate Registrar
receive evidence to their satisfaction of the destruction, loss or theft of
any Certificate, and (ii) there is delivered to the Trustee and the
Certificate Registrar such security or indemnity as may be required by them to
save each of them harmless, then, in the absence of actual knowledge by the
Trustee or the Certificate Registrar that such Certificate has been acquired
by a bona fide purchaser, the Trustee shall execute and the Certificate
Registrar shall deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of the same Class and
of like denomination and Percentage Interest. Upon the issuance of any new
Certificate under this Section, the Trustee may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed
in relation thereto and any other expenses (including the fees and expenses of
the Certificate Registrar) connected therewith. Any replacement Certificate
issued pursuant to this Section shall constitute complete and indefeasible
evidence of ownership in the applicable REMIC created hereunder, as if
originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time.
SECTION 5.04. Persons Deemed Owners.
The Depositor, the Servicer, the Trustee, the Certificate Registrar
and any agent of any of them may treat the Person in whose name any
Certificate is registered as the owner of such Certificate for the purpose of
receiving distributions pursuant to Section 4.01 and for all other purposes
whatsoever, and none of the Depositor, the Servicer, the Trustee, the
Certificate Registrar or any agent of any of them shall be affected by notice
to the contrary.
SECTION 5.05. Certain Available Information.
On or prior to the date of the first sale of any Class X
Certificate, Class B-IO, Class P Certificate or Residual Certificate to an
Independent third party, the Depositor shall provide to the Trustee ten copies
of any private placement memorandum or other disclosure document used by the
Depositor in connection with the offer and sale of such Certificates. In
addition, if any such private placement memorandum or disclosure document is
revised, amended or supplemented at any time following the delivery thereof to
the Trustee, the Depositor promptly shall inform the Trustee of such event and
shall deliver to the Trustee ten copies of the private placement memorandum or
disclosure document, as revised, amended or supplemented. The Trustee shall
maintain at its Corporate Trust Office and shall make available during normal
business hours for review by any Holder of a Certificate or any Person
identified to the Trustee as a prospective transferee of a Certificate,
originals or copies of the following items: (i) in the case of a Holder or
prospective transferee of a Class X Certificate, a Class B-IO Certificate, a
Class P Certificate or a Residual Certificate, the related private placement
memorandum or other disclosure document relating to such Certificates, if any,
in the form most recently provided to the Trustee; and (ii) in all cases, (A)
this Agreement and any amendments hereof entered into pursuant to Section
11.01, (B) all monthly statements required to be delivered to
Certificateholders of the relevant Class pursuant to Section 4.02 since the
Closing Date, and all other notices, reports, statements and written
communications delivered to the Certificateholders of the relevant Class
pursuant to this Agreement since the Closing Date,
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(C) all certifications delivered by a Responsible Officer of the Trustee since
the Closing Date pursuant to Section 10.01(h), (D) any and all Officers'
Certificates delivered to the Trustee by the Servicer since the Closing Date
to evidence the Servicer's determination that any P&I Advance was, or if made,
would be a Nonrecoverable P&I Advance or Nonrecoverable Servicing Advance,
respectively, and (E) any and all Officers' Certificates delivered to the
Trustee by the Servicer since the Closing Date pursuant to Section 4.04(a).
Copies and mailing of any and all of the foregoing items will be available
from the Trustee upon request at the expense of the person requesting the
same.
ARTICLE VI
THE DEPOSITOR AND THE SERVICER
SECTION 6.01. Liability of the Depositor and the Servicer.
The Depositor and the Servicer shall be liable in accordance
herewith only to the extent of the obligations specifically imposed by this
Agreement and undertaken hereunder by the Depositor and the Servicer herein.
SECTION 6.02. Merger or Consolidation of the Depositor or the
Servicer.
Subject to the following paragraph, the Depositor will keep in full
effect its existence, rights and franchises as a corporation under the laws of
the jurisdiction of its incorporation. Subject to the following paragraph, the
Servicer will keep in full effect its existence, rights and franchises as a
corporation under the laws of the jurisdiction of its incorporation and its
qualification as an approved conventional seller/servicer for ▇▇▇▇▇▇ ▇▇▇ or
▇▇▇▇▇▇▇ Mac in good standing. The Depositor and the Servicer will obtain and
preserve its qualification to do business as a foreign corporation in each
jurisdiction in which such qualification is or shall be necessary to protect
the validity and enforceability of this Agreement, the Certificates or any of
the Mortgage Loans and to perform its respective duties under this Agreement.
The Depositor or the Servicer may be merged or consolidated with or
into any Person, or transfer all or substantially all of its assets to any
Person, in which case any Person resulting from any merger or consolidation to
which the Depositor or the Servicer shall be a party, or any Person succeeding
to the business of the Depositor or the Servicer, shall be the successor of
the Depositor or the Servicer, as the case may be, hereunder, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding; provided,
however, that the successor or surviving Person to the Servicer shall be a
servicer of Mortgage Loans on behalf of ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac; and
provided further that the Rating Agencies' ratings of the Certificates in
effect immediately prior to such merger or consolidation will not be
qualified, reduced or withdrawn as a result thereof (as evidenced by a letter
to such effect from the Rating Agencies).
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SECTION 6.03. Limitation on Liability of the Depositor, the Servicer
and Others.
None of the Depositor, the Servicer or any of the directors,
officers, employees or agents of the Depositor or the Servicer shall be under
any liability to the Trust Fund or the Certificateholders for any action taken
or for refraining from the taking of any action in good faith pursuant to this
Agreement, or for errors in judgment; provided, however, that this provision
shall not protect the Depositor, the Servicer or any such person against any
breach of warranties, representations or covenants made herein, or against any
specific liability imposed on the Servicer pursuant hereto, or against any
liability which would otherwise be imposed by reason of willful misfeasance,
bad faith or negligence in the performance of duties or by reason of reckless
disregard of obligations and duties hereunder. The Depositor, the Servicer and
any director, officer, employee or agent of the Depositor or the Servicer may
rely in good faith on any document of any kind which, prima facie, is properly
executed and submitted by any Person respecting any matters arising hereunder.
The Depositor, the Servicer and any director, officer, employee or agent of
the Depositor or the Servicer shall be indemnified and held harmless by the
Trust Fund against any loss, liability or expense incurred in connection with
any legal action relating to this Agreement or the Certificates, other than
any loss, liability or expense relating to any specific Mortgage Loan or
Mortgage Loans (except as any such loss, liability or expense shall be
otherwise reimbursable pursuant to this Agreement) or any loss, liability or
expense incurred by reason of willful misfeasance, bad faith or negligence in
the performance of duties hereunder or by reason of reckless disregard of
obligations and duties hereunder. Neither the Depositor nor the Servicer shall
be under any obligation to appear in, prosecute or defend any legal action
unless such action is related to its respective duties under this Agreement
and, in its opinion, does not involve it in any expense or liability;
provided, however, that each of the Depositor and the Servicer may in its
discretion undertake any such action which it may deem necessary or desirable
with respect to this Agreement and the rights and duties of the parties hereto
and the interests of the Certificateholders hereunder. In such event, unless
the Depositor or the Servicer acts without the consent of Holders of
Certificates entitled to at least 51% of the Voting Rights (which consent
shall not be necessary in the case of litigation or other legal action by
either to enforce their respective rights or defend themselves hereunder), the
legal expenses and costs of such action and any liability resulting therefrom
(except any loss, liability or expense incurred by reason of willful
misfeasance, bad faith or negligence in the performance of duties hereunder or
by reason of reckless disregard of obligations and duties hereunder) shall be
expenses, costs and liabilities of the Trust Fund, and the Depositor and the
Servicer shall be entitled to be reimbursed therefor from the Collection
Account as and to the extent provided in Section 3.11, any such right of
reimbursement being prior to the rights of the Certificateholders to receive
any amount in the Collection Account.
SECTION 6.04. Limitation on Resignation of the Servicer.
The Servicer shall not resign from the obligations and duties hereby
imposed on it except (i) upon determination that its duties hereunder are no
longer permissible under applicable law or (ii) with the written consent of
the Trustee and written confirmation from each Rating Agency (which
confirmation shall be furnished to the Depositor and the Trustee) that such
resignation will not cause such Rating Agency to reduce the then current
rating of the Offered Certificates. Any such determination pursuant to clause
(i) of the preceding sentence permitting
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the resignation of the Servicer shall be evidenced by an Opinion of Counsel to
such effect obtained at the expense of the Servicer and delivered to the
Trustee. No resignation of the Servicer shall become effective until the
Trustee or a successor servicer shall have assumed the Servicer's
responsibilities, duties, liabilities (other than those liabilities arising
prior to the appointment of such successor) and obligations under this
Agreement.
Except as expressly provided herein, the Servicer shall not assign
or transfer any of its rights, benefits or privileges hereunder to any other
Person, nor delegate to or subcontract with, nor authorize or appoint any
other Person to perform any of the duties, covenants or obligations to be
performed by the Servicer hereunder. The foregoing prohibition on assignment
shall not prohibit the Servicer from designating a Sub-Servicer as payee of
any indemnification amount payable to the Servicer hereunder; provided,
however, that as provided in Section 3.06 hereof, no Subservicer shall be a
third-party beneficiary hereunder and the parties hereto shall not be required
to recognize any Subservicer as an Indemnitee under this Agreement. If,
pursuant to any provision hereof, the duties of the Servicer are transferred
to a successor Servicer, the entire amount of the Servicing Fee and other
compensation payable to the Servicer pursuant hereto shall thereafter be
payable to such successor Servicer.
SECTION 6.05. Rights of the Depositor in Respect of the Servicer.
The Servicer shall afford (and any Sub-Servicing Agreement shall
provide that each Sub-Servicer shall afford) the Depositor and the Trustee,
upon reasonable notice, during normal business hours, access to all records
maintained by the Servicer (and any such Sub-Servicer) in respect of the
Servicer's rights and obligations hereunder and access to officers of the
Servicer (and those of any such Sub-Servicer) responsible for such
obligations. Upon request, the Servicer shall furnish to the Depositor and the
Trustee its (and any such Sub-Servicer's) most recent financial statements and
such other information relating to the Servicer's capacity to perform its
obligations under this Agreement that it possesses. To the extent such
information is not otherwise available to the public, the Depositor and the
Trustee shall not disseminate any information obtained pursuant to the
preceding two sentences without the Servicer's (or any such Sub-Servicer's)
written consent, except as required pursuant to this Agreement or to the
extent that it is necessary to do so (i) in working with legal counsel,
auditors, taxing authorities or other governmental agencies, rating agencies
or reinsurers or (ii) pursuant to any law, rule, regulation, order, judgment,
writ, injunction or decree of any court or governmental authority having
jurisdiction over the Depositor, the Trustee or the Trust Fund, and in either
case, the Depositor or the Trustee, as the case may be, shall use its best
efforts to assure the confidentiality of any such disseminated non-public
information. The Depositor may, but is not obligated to, enforce the
obligations of the Servicer under this Agreement and may, but is not obligated
to, perform, or cause a designee to perform, any defaulted obligation of the
Servicer under this Agreement or exercise the rights of the Servicer under
this Agreement; provided that the Servicer shall not be relieved of any of its
obligations under this Agreement by virtue of such performance by the
Depositor or its designee. The Depositor shall not have any responsibility or
liability for any action or failure to act by the Servicer and is not
obligated to supervise the performance of the Servicer under this Agreement or
otherwise.
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ARTICLE VII
DEFAULT
SECTION 7.01. Servicer Events of Default.
(a) "Servicer Event of Default," means any one of the following
events:
(i) any failure by the Servicer to remit to the Trustee for
distribution to the Certificateholders any payment (other than a P&I
Advance required to be made from its own funds on the Servicer
Remittance Date pursuant to Section 4.03) required to be made under
the terms of the Certificates and this Agreement which continues
unremedied for a period of one Business Day after the date upon
which written notice of such failure, requiring the same to be
remedied, shall have been given to the Servicer by the Depositor or
the Trustee (in which case notice shall be provided by telecopy), or
to the Servicer, the Depositor and the Trustee by the Holders of
Certificates entitled to at least 25% of the Voting Rights provided,
however, that if the Servicer fails to make any remittance so
required, including any Advance, to be made by the Servicer on the
Servicer Remittance Date (without regard to any grace period), the
Servicer shall pay to the Trustee, for the account of the Trustee,
interest on such late remittance at the Prime Rate from and
including the Servicer Remittance Date to but excluding the
Distribution Date; or
(ii) any failure on the part of the Servicer duly to observe or
perform in any material respect any of the covenants or agreements
on the part of the Servicer contained in this Agreement (or, if the
Servicer is an Originator, the failure of the Originator to
repurchase a Mortgage Loan as to which a breach has been established
that requires a repurchase pursuant to the terms of the applicable
Mortgage Loan Purchase Agreement) which continues unremedied for a
period of 45 days after the earlier of (i) the date on which written
notice of such failure, requiring the same to be remedied, shall
have been given to the Servicer by the Depositor, the Trustee, or to
the Servicer, the Depositor and the Trustee by the Holders of
Certificates entitled to at least 25% of the Voting Rights and (ii)
actual knowledge of such failure by a Servicing Officer of the
Servicer; or
(iii) a decree or order of a court or agency or supervisory
authority having jurisdiction in the premises in an involuntary case
under any present or future federal or state bankruptcy, insolvency
or similar law or the appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt, marshaling of
assets and liabilities or similar proceeding, or for the winding-up
or liquidation of its affairs, shall have been entered against the
Servicer and if such proceeding is being contested by the Servicer
in good faith, such decree or order shall have remained in force
undischarged or unstayed for a period of 60 days or results in the
entry of an order for relief or any such adjudication or
appointment; or
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(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 it or of or relating to all or
substantially all of its property; or
(v) the Servicer shall admit in writing its inability to pay
its debts generally as they become due, file a petition to take
advantage of any applicable insolvency or reorganization statute,
make an assignment for the benefit of its creditors, or voluntarily
suspend payment of its obligations; or
(vi) any failure of the Servicer to make any P&I Advance on the
Servicer Remittance Date required to be made from its own funds
pursuant to Section 4.03 which continues unremedied until 3:00 p.m.
New York time on the Business Day immediately following the Servicer
Remittance Date, and no later than 12:00 noon Central Standard time
on such date, the Servicer shall have been provided with written
notice of such failure, requiring the same to be remedied, by the
Depositor or the Trustee (in which case notice shall be provided by
telecopy); or
(vii) any failure by the Servicer of the Servicer Termination
Test.
If a Servicer Event of Default described in clauses (i) through (vi)
of this Section shall occur, then, and in each and every such case, so long as
a Servicer Event of Default shall not have been remedied, the Depositor or the
Trustee may, and at the written direction of the Holders of Certificates
entitled to at least 51% of Voting Rights, the Trustee shall, by notice in
writing to the defaulting Servicer (and to the Depositor if given by the
Trustee or to the Trustee if given by the Depositor), terminate all of the
rights and obligations of the Servicer in its capacity as the Servicer under
this Agreement, to the extent permitted by law, and in and to the Mortgage
Loans and the proceeds thereof. If a Servicer Event of Default described in
clause (vii) hereof shall occur, the Trustee shall, by notice in writing to
the defaulting Servicer, the Depositor and the Trustee, terminate all of the
rights and obligations of the Servicer in its capacity as the Servicer under
this Agreement and in and to the Mortgage Loans and the proceeds thereof.
(b) [reserved].
(c) On or after the receipt by the defaulting Servicer of such
written notice, all authority and power of the Servicer under this Agreement,
whether with respect to the Certificates (other than as a Holder of any
Certificate) or the Mortgage Loans or otherwise, shall pass to and be vested
in the Trustee pursuant to and under this Section and, without limitation, the
Trustee is hereby authorized and empowered, as attorney-in-fact or otherwise,
to execute and deliver on behalf of and at the expense of the Servicer, any
and all documents and other instruments and to do or accomplish all other acts
or things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement or assignment of
the Mortgage Loans and related documents, or otherwise. The defaulting
Servicer agrees, at its sole cost and expense, promptly (and in any event no
later than ten Business Days subsequent to such notice) to provide the Trustee
with all documents and records requested by it to enable it to assume the
Servicer's functions under this Agreement, and to cooperate with the Trustee
in effecting the termination of the Servicer's responsibilities and rights
under this
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Agreement, including, without limitation, the transfer within one Business Day
to the Trustee for administration by it of all cash amounts which at the time
shall be or should have been credited by the Servicer to the Collection
Account held by or on behalf of the Servicer, the Distribution Account or any
REO Account or Servicing Account held by or on behalf of the Servicer or
thereafter be received with respect to the Mortgage Loans or any REO Property
(provided, however, that the Servicer shall continue to be entitled to receive
all amounts accrued or owing to it under this Agreement on or prior to the
date of such termination, whether in respect of P&I Advances or otherwise, and
shall continue to be entitled to the benefits of Section 6.03, notwithstanding
any such termination, with respect to events occurring prior to such
termination). For purposes of this Section 7.01, the Trustee shall not be
deemed to have knowledge of a Servicer Event of Default unless a Responsible
Officer of the Trustee assigned to and working in the Corporate Trust Office
has actual knowledge thereof or unless written notice of any event which is in
fact such a Servicer Event of Default is received by the Trustee and such
notice references the Certificates, the Trust Fund or this Agreement.
The Trustee shall be entitled to be reimbursed by the defaulting
Servicer (or by the Trust Fund if the Servicer is unable to fulfill its
obligations hereunder) for all costs associated with the transfer of servicing
from the predecessor Servicer (or if the predecessor Servicer is the Trustee,
from the Servicer immediately preceding the Trustee), including without
limitation, any costs or expenses associated with the complete transfer of all
servicing data and the completion, correction or manipulation of such
servicing data as may be required by the Trustee to correct any errors or
insufficiencies in the servicing data or otherwise to enable the Trustee to
service the Mortgage Loans properly and effectively, upon presentation of
reasonable documentation of such costs and expenses.
SECTION 7.02. Trustee to Act; Appointment of Successor.
(a) On and after the time a defaulting Servicer receives a notice of
termination, the Trustee shall be the successor in all respects to the
Servicer in its capacity as the Servicer under this Agreement and the
transactions set forth or provided for herein and shall be subject to all the
responsibilities, duties and liabilities relating thereto and arising
thereafter placed on the Servicer (except for any representations or
warranties of the Servicer under this Agreement, the responsibilities, duties
and liabilities contained in Section 2.03(c) and its obligation to deposit
amounts in respect of losses pursuant to Section 3.12) by the terms and
provisions hereof including, without limitation, the Servicer's obligations to
make P&I Advances pursuant to Section 4.03; provided, however, that if the
Trustee is prohibited by law or regulation from obligating itself to make
advances regarding delinquent Mortgage Loans, then the Trustee shall not be
obligated to make P&I Advances pursuant to Section 4.03; and provided further,
that any failure to perform such duties or responsibilities caused by the
Servicer's failure to provide information required by Section 7.01 shall not
be considered a default by the Trustee as successor to the Servicer hereunder;
provided, however, it is understood and acknowledged by the parties that there
will be a period of transition (not to exceed 90 days) before the servicing
transfer is fully effected, during which time the terminated servicer shall
continue all servicing (other than making any required Advance, which the
Trustee shall be required to do, subject to the limitations of this sentence)
of the Mortgage Loans. As compensation therefor, the Trustee shall be entitled
to the Servicing Fee and all funds relating to the Mortgage Loans to which the
Servicer would have been entitled if it had continued to act hereunder (other
than amounts which
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were due or would become due to the Servicer prior to its termination or
resignation). Notwithstanding anything herein to the contrary, in no event
shall the Trustee be liable for any Servicing Fee or for any differential in
the amount of the Servicing Fee paid hereunder and the amount necessary to
induce any successor Servicer to act as successor Servicer under this
Agreement and the transactions set forth or provided for herein.
Notwithstanding the above and subject to the next paragraph, the Trustee
shall, if it is unable to so act or if it is prohibited by law from making
advances regarding delinquent Mortgage Loans, or if the Holders of
Certificates entitled to at least 51% of the Voting Rights so request in
writing to the Trustee, promptly appoint or petition a court of competent
jurisdiction to appoint, an established Mortgage Loan servicing institution
acceptable to each Rating Agency, having a net worth of not less than
$15,000,000 as the successor to such defaulting Servicer under this Agreement
in the assumption of all or any part of the responsibilities, duties or
liabilities of the Servicer under this Agreement. No appointment of a
successor to the Servicer under this Agreement shall be effective until the
assumption by the successor of all of the Servicer's responsibilities, duties
and liabilities hereunder. In connection with such appointment and assumption
described herein, the Trustee may make such arrangements for the compensation
of such successor out of payments on Mortgage Loans as it and such successor
shall agree; provided, however, that no such compensation shall be in excess
of that permitted the Servicer as such hereunder. The Depositor, the Trustee
and such successor shall take such action, consistent with this Agreement, as
shall be necessary to effectuate any such succession. Pending appointment of a
successor to the defaulting Servicer under this Agreement, the Trustee shall
act in such capacity as hereinabove provided.
Upon removal or resignation of the Servicer, the Trustee, with the
cooperation of the Depositor, (x) may solicit bids for a successor Servicer as
described below and (y) pending the appointment of a successor Servicer as a
result of soliciting such bids, shall serve as Servicer of the Mortgage Loans
serviced by such predecessor Servicer. The Trustee may solicit bids from
housing and home finance institutions, banks and mortgage servicing
institutions meeting the qualifications set forth above (including the Trustee
or any affiliate thereof). Such successor Servicer shall be entitled to the
servicing compensation agreed upon between the Trustee, the successor Servicer
and the Depositor; provided, however, that no such fee shall exceed the
Servicing Fee. The Trustee upon receipt of the purchase price shall pay such
purchase price to the related Servicer being so removed, after deducting from
any sum received by the Trustee from the successor to such Servicer in respect
of such sale, transfer and assignment all costs and expenses of any sale,
transfer and assignment of the servicing rights and responsibilities
reasonably incurred hereunder. After such deductions, the remainder of such
sum shall be paid by the Trustee to such defaulting Servicer at the time of
such sale.
(b) [reserved].
SECTION 7.03. Notification to Certificateholders.
(a) Upon any termination of the Servicer pursuant to Section 7.01
above or any appointment of a successor to the Servicer pursuant to Section
7.02 above, the Trustee shall give prompt written notice thereof to
Certificateholders at their respective addresses appearing in the Certificate
Register.
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(b) Not later than the later of 60 days after the occurrence of any
event, which constitutes or which, with notice or lapse of time or both, would
constitute a Servicer Event of Default or five days after a Responsible
Officer of the Trustee becomes aware of the occurrence of such an event, the
Trustee shall transmit by mail to all Holders of Certificates notice of each
such occurrence, unless such default or Servicer Event of Default shall have
been cured or waived.
SECTION 7.04. Waiver of Servicer Events of Default.
The Holders representing at least 66% of the Voting Rights evidenced
by all Classes of Certificates affected by any default or Servicer Event of
Default hereunder may waive such default or Servicer Event of Default;
provided, however, that a default or Servicer Event of Default under clause
(i) or (vii) of Section 7.01 may be waived only by all of the Holders of the
Regular Certificates. Upon any such waiver of a default or Servicer Event of
Default, such default or Servicer Event of Default shall cease to exist and
shall be deemed to have been remedied for every purpose hereunder. No such
waiver shall extend to any subsequent or other default or Servicer Event of
Default or impair any right consequent thereon except to the extent expressly
so waived.
ARTICLE VIII
CONCERNING THE TRUSTEE
SECTION 8.01. Duties of Trustee.
The Trustee, prior to the occurrence of a Servicer Event of Default
and after the curing of all Servicer Events of Default which may have
occurred, undertakes to perform such duties and only such duties as are
specifically set forth in this Agreement. During a Servicer Event of Default,
the Trustee shall exercise such of the rights and powers vested in it by this
Agreement, and use the same degree of care and skill in their exercise as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs. Any permissive right of the Trustee enumerated in
this Agreement shall not be construed as a duty.
The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments
furnished to 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. If any such instrument is found
not to conform to the requirements of this Agreement in a material manner, the
Trustee shall take such action as it deems appropriate to have the instrument
corrected, and if the instrument is not corrected to its satisfaction, it will
provide notice thereof to the Certificateholders.
No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own misconduct; provided, however, that:
(i) Prior to the occurrence of a Servicer Event of Default, and
after the curing of all a Servicer Events of Default which may have
occurred, the duties and obligations of the Trustee shall be
determined solely by the express
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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 or opinions furnished to it that conform to the
requirements of this Agreement;
(ii) The Trustee shall not be personally liable for an error of
judgment made in good faith by a Responsible Officer or Responsible
Officers of the Trustee, unless it shall be proved that the Trustee
was negligent in ascertaining the pertinent facts; and
(iii) The Trustee shall not be personally liable with respect
to any action taken, suffered or omitted to be taken by it in good
faith in accordance with the direction of the Holders of
Certificates entitled to at least 25% of the Voting Rights relating
to the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power
conferred upon the Trustee, under this Agreement.
SECTION 8.02. Certain Matters Affecting the Trustee.
(a) Except as otherwise provided in Section 8.01:
(i) The Trustee may request and rely conclusively upon and
shall be fully protected in acting or refraining from acting upon
any resolution, Officers' Certificate, certificate of auditors or
any other certificate, statement, instrument, opinion, report,
notice, request, consent, order, appraisal, bond or other paper or
document reasonably believed by it to be genuine and to have been
signed or presented by the proper party or parties;
(ii) The Trustee may consult with counsel and any Opinion of
Counsel shall be full and complete authorization and protection in
respect of any action taken or suffered or omitted by it hereunder
in good faith and in accordance with such Opinion of Counsel;
(iii) The Trustee shall not be under any obligation to exercise
any of the trusts or powers vested in it by this Agreement or to
institute, conduct or defend any litigation hereunder or in relation
hereto at the request, order or direction of any of the
Certificateholders, pursuant to the provisions of this Agreement,
unless such Certificateholders shall have offered to it security or
indemnity satisfactory to it against the costs, expenses and
liabilities which may be incurred therein or thereby; nothing
contained herein shall, however, relieve the Trustee of the
obligation, upon the occurrence of a Servicer Event of Default
(which has not been cured or waived), to exercise such of the rights
and powers vested in it by this Agreement, and to use the same
degree of care and skill in their exercise as a
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prudent person would exercise or use under the circumstances in the
conduct of such person's own affairs;
(iv) The Trustee shall not be personally liable for any action
taken, suffered or omitted by it in good faith and believed by it to
be authorized or within the discretion or rights or powers conferred
upon it by this Agreement;
(v) Prior to the occurrence of a Servicer Event of Default
hereunder and after the curing of all Servicer Events of Default
which may have occurred, the Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice,
request, consent, order, approval, bond or other paper or document,
unless requested in writing to do so by the Holders of Certificates
entitled to at least 25% of the Voting Rights; provided, however,
that if the payment within a reasonable time to the Trustee of the
costs, expenses or liabilities likely to be incurred by it in the
making of such investigation is, in the opinion of the Trustee, not
reasonably assured to the Trustee by such Certificateholders, the
Trustee may require reasonable indemnity against such expense, or
liability from such Certificateholders as a condition to taking any
such action;
(vi) The Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents custodians, nominees or attorneys and shall not be
responsible for any willful misconduct or negligence of such agents,
custodians, nominees or attorneys (as long as such agents,
custodians, nominees or attorneys are appointed with due and proper
care);
(vii) The Trustee shall not be personally liable for any loss
resulting from the investment of funds held in the Collection
Account at the direction of the Servicer pursuant to Section 3.12;
and
(viii) Except as otherwise expressly provided herein, none of
the provisions of this Agreement shall require the Trustee to expend
or risk its own funds or otherwise to incur any liability, financial
or otherwise, in the performance of any of its duties hereunder, or
in the exercise of any of its rights or powers if it shall have
reasonable grounds for believing that repayment of such funds or
indemnity satisfactory to it against such risk or liability is not
assured to it (not including expenses, disbursements and advances
incurred or made by the Trustee, including the compensation and the
expenses and disbursements of its agents and counsel, in the
ordinary course of its performance in accordance with the provisions
of this Agreement.)
(b) All rights of action under this Agreement or under any of the
Certificates, enforceable by the Trustee, may be enforced by it without the
possession of any of the Certificates, or the production thereof at the trial
or other proceeding relating thereto, and any such suit, action or proceeding
instituted by the Trustee shall be brought in its name for the benefit of all
the Holders of such Certificates, subject to the provisions of this Agreement.
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SECTION 8.03. Trustee Not Liable for Certificates or Mortgage Loans.
The recitals contained herein and in the Certificates (other than
the signature of the Trustee, the authentication of the Certificate Registrar
on the Certificates, the acknowledgments of the Trustee contained in Article
II and the representations and warranties of the Trustee in Section 8.13)
shall be taken as the statements of the Depositor and the Trustee does not
assume any responsibility for their correctness. The Trustee makes no
representations or warranties as to the validity or sufficiency of this
Agreement (other than as specifically set forth in Section 8.13) or of the
Certificates (other than the signature of the Trustee and authentication of
the Certificate Registrar on the Certificates) or of any Mortgage Loan or
related document. The Trustee shall not be accountable for the use or
application by the Depositor of any of the Certificates or of the proceeds of
such Certificates, or for the use or application of any funds paid to the
Depositor or the Servicer in respect of the Mortgage Loans or deposited in or
withdrawn from the Collection Account by the Servicer.
SECTION 8.04. Trustee May Own Certificates.
The Trustee in its individual capacity or any other capacity may
become the owner or pledgee of Certificates with the same rights it would have
if it were not Trustee.
SECTION 8.05. Fees and Expenses of the Trustee.
(a) As compensation for its duties hereunder, the Trustee shall
withdraw from the Distribution Account on each Distribution Date all income
and gains (net of losses) on amounts on deposit in the Distribution Account.
Subject to Section 8.05(b), the Trustee, or any director, officer, employee or
agent of it, shall be indemnified by the Trust Fund and held harmless against
any loss, liability or expense (not including expenses, disbursements and
advances incurred or made by the Trustee, including the reasonable
compensation and the expenses and disbursements of its agents and counsel, in
the ordinary course of its performance in accordance with the provisions of
this Agreement) incurred by the Trustee in connection with any claim or legal
action or any pending or threatened claim or legal action arising out of or in
connection with the acceptance or administration of its obligations and duties
under this Agreement, other than any loss, liability or expense (i) resulting
from the Servicer's actions or omissions in connection with this Agreement and
the Mortgage Loans, (ii) that constitutes a specific liability of the Trustee
pursuant to Section 10.01(c) or (iii) any loss, liability or expense incurred
by reason of willful misfeasance, bad faith or negligence in the performance
of duties hereunder or by reason of reckless disregard of obligations and
duties hereunder or as a result of a breach of the its obligations under
Article X hereof. Any amounts payable to the Trustee, or any director,
officer, employee or agent of the Trustee, in respect of the indemnification
provided by this paragraph (a), or pursuant to any other right of
reimbursement from the Trust Fund that the Trustee, or any director, officer,
employee or agent of the Trustee, may have hereunder in its capacity as such,
may be withdrawn by the Trustee from the Distribution Account at any time.
Such indemnity shall survive the termination of this Agreement and the
resignation of the Trustee.
(b) As a limitation on the foregoing with respect to certain
expenses of the Trustee in its capacity as Trustee, the Trustee shall receive
from the Trust Fund amounts with
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respect to indemnification for reasonable counsel fees and expenses
(collectively, "Legal Fees") in connection with any third-party litigation or
other claims alleging violations of laws or regulations relating to consumer
lending and/or servicing of the Trust (collectively, "Third Party Claims") in
an amount not greater than $25,000 per month, and $600,000 in the aggregate
(with amounts in excess of $25,000 for any month carried-forward to subsequent
months, until the $600,000 aggregate maximum is reached). The amounts, if any,
described in the preceding sentence, shall be paid on each Distribution Date
in accordance with the priorities set forth in Section 4.01(a)(3)(xiv) hereof
to the extent of the Available Distribution Amount. The Trustee shall not have
any obligation to incur additional expenses for which reimbursement is limited
pursuant to this paragraph in excess of the aggregate limit set forth above
unless it has received reasonable security or indemnity for such additional
expenses. The Certificateholders shall hold the Trustee harmless for any
consequences to such Certificateholders resulting from any failure of the
Trustee to incur any such additional expenses in excess of the aforementioned
aggregate limit.
(c) The Servicer agrees to indemnify the Trustee from, and hold it
harmless against, any loss, liability or expense resulting from a breach of
the Servicer's obligations and duties under this Agreement. Such indemnity
shall survive the termination or discharge of this Agreement and the
resignation or removal of the Trustee. Any payment hereunder made by the
Servicer to the Trustee shall be from the Servicer's own funds, without
reimbursement from the Trust Fund therefor.
(d) The Depositor shall pay any annual rating agency fees of S&P,
▇▇▇▇▇'▇ and Fitch for ongoing surveillance from its own funds without right of
reimbursement.
(e) The Trustee shall deliver to the Depositor and each Holder of a
Non-Offered Certificate a report detailing all payments from the Trust Fund
made with respect to Legal Fees on account of Third-Party Claims. The report
shall be delivered monthly, promptly following any month in which such
payments were made.
SECTION 8.06. Eligibility Requirements for Trustee.
The Trustee hereunder shall at all times be a corporation or an
association (other than the Depositor, the Seller, the Servicer or any
Affiliate of the foregoing) organized and doing business under the laws of any
state or the United States of America, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
$50,000,000 and subject to supervision or examination by federal or state
authority. If such corporation or association publishes reports of conditions
at least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purposes of this Section the
combined capital and surplus of such corporation or association shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of conditions so published. In case at any time the Trustee shall cease
to be eligible in accordance with the provisions of this Section, the Trustee
shall resign immediately in the manner and with the effect specified in
Section 8.07.
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SECTION 8.07. Resignation and Removal of the Trustee.
The Trustee may at any time resign and be discharged from the trust
hereby created by giving written notice thereof to the Depositor, the Servicer
and the Certificateholders. Upon receiving such notice of resignation, the
Depositor shall promptly appoint a successor trustee by written instrument, in
duplicate, which instrument shall be delivered to the resigning Trustee and to
the successor trustee. A copy of such instrument shall be delivered to the
Certificateholders and the Servicer by the Depositor. If no successor trustee
shall have been so appointed and have accepted appointment within 30 days
after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a
successor.
If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 8.06 and shall fail to resign after written
request therefor by the Depositor, or if at any time the Trustee shall become
incapable of acting, or shall be adjudged bankrupt or insolvent, or a receiver
of the Trustee or of its property shall be appointed, or any public officer
shall take charge or control of the Trustee or of its property or affairs for
the purpose of rehabilitation, conservation or liquidation, then the Depositor
may remove the Trustee and appoint a successor by written instrument, in
duplicate, which instrument shall be delivered to the Trustee so removed and
to the successor. A copy of such instrument shall be delivered to the
Certificateholders and the Servicer by the Depositor.
The Holders of Certificates entitled to at least 51% of the Voting
Rights may at any time remove the Trustee and appoint a successor by written
instrument or instruments, in triplicate, signed by such Holders or their
attorneys-in-fact duly authorized, one complete set of which instruments shall
be delivered to the Depositor, one complete set to the Trustee so removed and
one complete set to the successor so appointed. A copy of such instrument
shall be delivered to the Certificateholders and the Servicer by the
Depositor.
Any resignation or removal of the Trustee and appointment of a
successor pursuant to any of the provisions of this Section shall not become
effective until acceptance of appointment by the successor as provided in
Section 8.08.
SECTION 8.08. Successor Trustee.
Any successor appointed as provided in Section 8.07 shall execute,
acknowledge and deliver to the Depositor and to its predecessor an instrument
accepting such appointment hereunder, and thereupon the resignation or removal
of the predecessor shall become effective and such successor, without any
further act, deed or conveyance, shall become fully vested with all the
rights, powers, duties and obligations of its predecessor hereunder, with the
like effect as if originally named as trustee herein. The predecessor trustee
shall deliver to its successor all Mortgage Files and related documents and
statements, as well as all moneys, held by it hereunder, and the Depositor and
the predecessor trustee shall execute and deliver such instruments and do such
other things as may reasonably be required for more fully and certainly
vesting and confirming in the successor trustee all such rights, powers,
duties and obligations.
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No successor trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor shall be eligible
under the provisions of Section 8.06 and the appointment of such successor
shall not result in a downgrading of any Class of Certificates by either
Rating Agency, as evidenced by a letter from each Rating Agency.
Upon acceptance of appointment by a successor trustee as provided in
this Section, the Depositor shall mail notice of the succession 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, the successor shall cause such notice to be
mailed at the expense of the Depositor.
SECTION 8.09. Merger or Consolidation of Trustee.
Any corporation or association into which the Trustee may be merged
or converted or with which it may be consolidated or any corporation or
association resulting from any merger, conversion or consolidation to which
the Trustee shall be a party, or any corporation or association succeeding to
the business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation or association shall be eligible under the
provisions of Section 8.06, without the execution or filing of any paper or
any further act on the part of any of the parties hereto, anything herein to
the contrary notwithstanding.
SECTION 8.10. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions hereof, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any
part of the Trust Fund or property securing the same may at the time be
located, the Servicer and the Trustee, acting jointly shall have the power and
shall execute and deliver all instruments to appoint one or more Persons
approved by the Trustee to act as co-trustee or co-trustees, jointly with the
Trustee, or separate trustee or separate trustees, of all or any part of the
Trust Fund, and to vest in such Person or Persons, in such capacity, 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 Servicer and the Trustee may consider necessary or desirable. If
the Servicer shall not have joined in such appointment within 15 days after
the receipt by it of a request so to do, or in case a Servicer Event of
Default shall have occurred and be continuing, the Trustee alone shall have
the power to make such appointment. No co-trustee or separate trustee
hereunder shall be required to meet the terms of eligibility as a successor
trustee under Section 8.06 hereunder and no notice to Holders of Certificates
of the appointment of co-trustee(s) or separate trustee(s) shall be required
under Section 8.08 hereof. Any reasonable and necessary expense of the Trustee
related to the appointment of a co-trustee or a separate trustee for the
limited purpose of performing the Trustee's duties pursuant to this Section
8.10 shall be reimbursable from the Trust Fund.
In the case of any appointment of a co-trustee or separate trustee
pursuant to this Section 8.10 all rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or co-trustee
jointly, except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed by the Trustee (whether as
Trustee hereunder or as successor to the defaulting Servicer hereunder), the
Trustee shall be incompetent or unqualified
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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 by such
separate trustee or co-trustee at the direction of the Trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement
and the conditions of this Article VIII. Each separate trustee and co-trustee,
upon its acceptance of the trust conferred, shall be vested with the estates
or property specified in its instrument of appointment, either jointly with
the Trustee or separately, as may be provided therein, subject to all the
provisions of this Agreement, specifically including every provision of this
Agreement relating to the conduct of, affecting the liability of, or affording
protection to, the Trustee. Every such instrument shall be filed with the
Trustee.
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. [Reserved].
SECTION 8.12. Appointment of Office or Agency.
The Trustee designates its office at Sixth and Marquette,
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, as its agency where the Certificates may be surrendered
for registration of transfer or exchange and presented for final distribution.
The Trustee designates its offices at Sixth and Marquette, ▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, as the office at which notices and demands to or upon the
Trustee in respect of the Certificates may be served and will notify the
Certificateholders of any change in the location of such office or agency.
SECTION 8.13. Representations and Warranties.
The Trustee hereby represents and warrants to the Servicer and the
Depositor, as of the Closing Date, that:
(i) It is a national banking association duly organized,
validly existing and in good standing under the laws of the United
States.
(ii) The execution and delivery of this Agreement by it, and
the performance and compliance with the terms of this Agreement by
it, will not violate its charter or articles of association or
bylaws or constitute a default (or an event which, with notice or
lapse of time, or both, would constitute a default) under, or result
in the breach of, any material agreement or other instrument to
which it is a party or which is applicable to it or any of its
assets.
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(iii) It has the full power and authority to enter into and
consummate all transactions contemplated by this Agreement, has duly
authorized the execution, delivery and performance of this
Agreement, and has duly executed and delivered this Agreement.
This Agreement, assuming due authorization, execution and delivery
by the other parties, constitutes a valid, legal and binding obligation of it,
enforceable against it in accordance with the terms hereof, subject to (A)
applicable bankruptcy, insolvency, receivership, reorganization, moratorium
and other laws affecting the enforcement of creditors' rights generally, and
(B) general principles of equity, regardless of whether such enforcement is
considered in a proceeding in equity or at law.
SECTION 8.14. Cap Agreement.
The Trustee shall not designate an Early Termination Date under the
Cap Agreement without the consent of the Controlling Person.
ARTICLE IX
TERMINATION
SECTION 9.01. Termination Upon Repurchase or Liquidation of All
Mortgage Loans.
(a) Subject to Section 9.02, the respective obligations and
responsibilities under this Agreement of the Depositor, the Servicer and the
Trustee (other than the obligations of the Servicer to the Trustee pursuant to
Section 8.05 and of the Servicer to provide for and the Trustee to make
payments in respect of the REMIC I Regular Interests, the REMIC II Regular
Interests, the REMIC III Regular Interests, the REMIC IV Regular Interests, or
the Classes of Certificates as hereinafter set forth) shall terminate upon
payment to the Certificateholders and the deposit of all amounts held by or on
behalf of the Trustee and required hereunder to be so paid or deposited on the
Distribution Date coinciding with or following the earlier to occur of (i) the
purchase by the Servicer of all Mortgage Loans and each REO Property remaining
in the Trust Fund, (ii) the final payment or other liquidation (or any advance
with respect thereto) of the last Mortgage Loan or REO Property remaining in
the Trust Fund; provided, however, that in no event shall the trust created
hereby continue beyond the expiration of 21 years from the death of the last
survivor of the descendants of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the late ambassador of the
United States to the Court of St. ▇▇▇▇▇, living on the date hereof and (iii)
the Distribution Date in December 2031. The purchase by the Servicer of all of
the Mortgage Loans and each REO Property remaining in the Trust Fund shall be
at a price (the "Termination Price") equal to the sum of (1) 100% of the
Stated Principal Balance of each Mortgage Loan (other than in respect of REO
Property) plus one month's accrued interest thereon at the applicable Mortgage
Rate, (2) with respect to any REO Property, the lesser of (x) the appraised
value of any REO Property as determined by the higher of two appraisals
completed by two independent appraisers selected by the Depositor at the
expense of the Depositor and (y) the Stated Principal Balance of each Mortgage
Loan related to any REO Property, in each case plus accrued and unpaid
interest thereon at the applicable Mortgage Rate.
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(b) The Servicer shall have the right to purchase all of the
Mortgage Loans and each REO Property remaining in the Trust Fund pursuant to
clause (i) of the preceding paragraph no later than the Determination Date in
the month immediately preceding the Distribution Date on which the
Certificates will be retired; provided, however, that the Servicer may elect
to purchase all of the Mortgage Loans and each REO Property remaining in the
Trust Fund pursuant to clause (i) above only if the Aggregate Collateral
Balance remaining in the Trust Fund at the time of such election is less than
10% of the Aggregate Collateral Balance as of the Initial Cut-off Date. By
acceptance of the Residual Certificates, the Holders of the Residual
Certificates agree, in connection with any termination hereunder, to assign
and transfer any amounts in excess of par, and to the extent received in
respect of such termination, to pay any such amounts to the Holders of the
Class X Certificates.
(c) Notice of the liquidation of the REMIC I Regular Interests shall
be given promptly by the Trustee by letter to Certificateholders mailed (a) in
the event such notice is given in connection with the purchase of the Mortgage
Loans and each REO Property by the Servicer, not earlier than the 15th day and
not later than the 25th day of the month next preceding the month of the final
distribution on the Certificates or (b) otherwise during the month of such
final distribution on or before the Determination Date in such month, in each
case specifying (i) the Distribution Date upon which the Trust Fund will
terminate and final payment in respect of the REMIC I Regular Interests, the
REMIC II Regular Interests, the REMIC III Regular Interests, the REMIC IV
Regular Interests, and the Certificates will be made upon presentation and
surrender of the related Certificates at the office of the Trustee therein
designated, (ii) the amount of any such final payment, (iii) that no interest
shall accrue in respect of the REMIC I Regular Interests, the REMIC II Regular
Interests, the REMIC III Regular Interests, the REMIC IV Regular Interests, or
the Certificates from and after the Interest Accrual Period relating to the
final Distribution Date therefor and (iv) that the Record Date otherwise
applicable to such Distribution Date is not applicable, payments being made
only upon presentation and surrender of the Certificates at the office of the
Trustee. The Trustee shall give such notice to the Certificate Registrar at
the time such notice is given to Certificateholders. In the event such notice
is given in connection with the purchase of all of the Mortgage Loans and each
REO Property remaining in the Trust Fund by the Servicer, the Servicer shall
deliver to the Trustee for deposit in the Distribution Account not later than
the last Business Day of the month next preceding the month of the final
distribution on the Certificates an amount in immediately available funds
equal to the above-described purchase price. The Trustee shall remit to the
Servicer from such funds deposited in the Distribution Account (i) any amounts
which the Servicer would be permitted to withdraw and retain from the
Collection Account pursuant to Section 3.11 and (ii) any other amounts
otherwise payable by the Trustee to the Servicer from amounts on deposit in
the Distribution Account pursuant to the terms of this Agreement, in each case
prior to making any final distributions pursuant to Section 10.01(d) below.
Upon certification to the Trustee by a Servicing Officer of the making of such
final deposit, the Trustee shall promptly release or cause to be released to
the Servicer the Mortgage Files for the remaining Mortgage Loans, and the
Trustee shall execute all assignments, endorsements and other instruments
necessary to effectuate such transfer.
(d) Upon presentation of the Certificates by the Certificateholders
on the final Distribution Date, the Trustee shall distribute to each
Certificateholder so presenting and surrendering its Certificates the amount
otherwise distributable on such Distribution Date in
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accordance with Section 4.01 in respect of the Certificates so presented and
surrendered. Any funds not distributed to any Holder or Holders of
Certificates being retired on such Distribution Date because of the failure of
such Holder or Holders to tender their Certificates shall, on such date, be
set aside and held in trust by the Trustee and credited to the account of the
appropriate non-tendering Holder or Holders. If any Certificates as to which
notice has been given pursuant to this Section 9.01 shall not have been
surrendered for cancellation within six months after the time specified in
such notice, the Trustee shall mail a second notice to the remaining
non-tendering Certificateholders to surrender their Certificates for
cancellation in order to receive the final distribution with respect thereto.
If within one year after the second notice all such Certificates shall not
have been surrendered for cancellation, the Trustee shall, directly or through
an agent, mail a final notice to remaining related non-tendering
Certificateholders concerning surrender of their Certificates. The costs and
expenses of maintaining the funds in trust and of contacting such
Certificateholders shall be paid out of the assets remaining in the trust
funds. If within one year after the final notice any such Certificates shall
not have been surrendered for cancellation, the Trustee shall pay to the
Depositor all such amounts, and all rights of non-tendering Certificateholders
in or to such amounts shall thereupon cease. No interest shall accrue or be
payable to any Certificateholder on any amount held in trust by the Trustee as
a result of such Certificateholder's failure to surrender its Certificate(s)
for final payment thereof in accordance with this Section 9.01.
Immediately following the deposit of funds in trust hereunder in
respect of the Certificates, the Trust Fund shall terminate.
SECTION 9.02. Additional Termination Requirements.
(a) In the event that the Servicer purchases all the Mortgage Loans
and each REO Property or the final payment on or other liquidation of the last
Mortgage Loan or REO Property remaining in the Trust Fund pursuant to Section
9.01, the Trust Fund shall be terminated in accordance with the following
additional requirements:
(i) The Trustee shall specify the first day in the 90-day
liquidation period in a statement attached to REMIC I's, REMIC II's,
REMIC III's, REMIC IV's and REMIC V's final Tax Return pursuant to
Treasury regulation Section 1.860F-1 and shall satisfy all
requirements of a qualified liquidation under Section 860F of the
Code and any regulations thereunder, as evidenced by an Opinion of
Counsel obtained at the expense of the Servicer;
(ii) During such 90-day liquidation period, and at or prior to
the time of making of the final payment on the Certificates, the
Trustee shall sell all of the assets of the Trust Fund to the
Servicer for cash; and
(iii) At the time of the making of the final payment on the
Certificates, the Trustee shall distribute or credit, or cause to be
distributed or credited, to the Holders of the Residual Certificates
all cash on hand in the Trust Fund (other than cash retained to meet
claims), and the Trust Fund shall terminate at that time.
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(b) At the expense of the Servicer, the Trustee shall prepare or
cause to be prepared the documentation required in connection with the
adoption of a plan of liquidation of each REMIC executed hereunder pursuant to
this Section 9.02.
(c) By their acceptance of Certificates, the Holders thereof hereby
agree to authorize the Trustee to specify the 90-day liquidation period for
each REMIC executed hereunder, which authorization shall be binding upon all
successor Certificateholders.
ARTICLE X
REMIC PROVISIONS
SECTION 10.01. REMIC Administration.
(a) The Trustee shall elect to treat each REMIC created hereunder as
a REMIC under the Code and, if necessary, under applicable state law. Each
such election will be made on Form 1066 or other appropriate federal tax or
information return or any appropriate state return for the taxable year ending
on the last day of the calendar year in which the Certificates are issued. For
the purposes of the REMIC election in respect of REMIC I, the REMIC I Regular
Interests shall be designated as the Regular Interests in REMIC I and the
Class R-I Certificates shall be designated as the Residual Interests in the
Trust Fund. The REMIC II Regular Interests shall be designated as the Regular
Interests in REMIC II and the Class R-II Certificates shall be designated as
the Residual Interests in REMIC II. The REMIC III Regular Interests shall be
designated as the Regular Interests in REMIC III and the Class R-III
Certificates shall be designated as the Residual Interests in REMIC III. The
REMIC IV Regular Interests shall be designated as the Regular Interests in
REMIC IV and the Class R-IV Certificates shall be designated as the Residual
Interests in REMIC IV. The Class A1 Certificates, the Subordinated
Certificates, the Class X Certificates and the Class P Certificates shall be
designated as the Regular Interests in REMIC V and the Class R-V Certificates
shall be designated as the Residual Interests in REMIC V. The Trustee shall
not permit the creation of any "interests" in any REMIC created hereunder
(within the meaning of Section 860G of the Code) other than the REMIC I
Regular Interests, the REMIC II Regular Interests, REMIC III Regular Interest
and REMIC IV Regular Interest and the interests represented by the
Certificates.
(b) The Closing Date is hereby designated as the "Startup Day" of
each REMIC created hereunder within the meaning of Section 860G(a)(9) of the
Code.
(c) The Trustee shall pay out of funds on deposit in the
Distribution Account, any and all expenses relating to any tax audit of the
Trust Fund (including, but not limited to, any professional fees or any
administrative or judicial proceedings with respect to any REMIC created
hereunder that involve the Internal Revenue Service or state tax authorities)
unless such expenses, professional fees or any administrative or judicial
proceedings are incurred by reason of the Trustee's willful misfeasance, bad
faith or negligence. The Trustee, as agent for all of REMIC I's, REMIC II's,
REMIC III's, REMIC IV's and REMIC V's tax matters persons, shall (i) act on
behalf of the Trust Fund in relation to any tax matter or controversy
involving any REMIC created hereunder and (ii) represent the Trust Fund in any
administrative or judicial proceeding relating to an examination or audit by
any governmental taxing authority with respect
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thereto and will be entitled to reimbursement from the Trust Fund for any
expenses incurred by the Trustee in connection therewith unless such
administrative or judicial proceeding relating to an examination or audit by
any governmental taxing authority is incurred by reason of the Trustee's
willful misfeasance, bad faith or negligence. The holder of the largest
Percentage Interest of each Class of Residual Certificates shall be
designated, in the manner provided under Treasury regulations section
1.860F-4(d) and Treasury regulations section 301.6231(a)(7)-1, as the tax
matters person of the related REMIC created hereunder. By their acceptance
thereof, the holder of the largest Percentage Interest of the Residual
Certificates hereby agrees to irrevocably appoint the Trustee or an Affiliate
as its agent to perform all of the duties of the tax matters person for the
Trust Fund.
(d) The Trustee shall prepare, sign and file all of the Tax Returns
in respect of each REMIC created hereunder. The expenses of preparing and
filing such returns shall be borne by the Trustee without any right of
reimbursement therefor. The Servicer shall provide on a timely basis to the
Trustee or its designee such information with respect to the assets of the
Trust Fund as is in its possession and reasonably required by the Trustee to
enable it to perform its obligations under this Article.
(e) The Trustee shall perform on behalf of each REMIC created
hereunder all reporting and other tax compliance duties that are the
responsibility of such REMIC under the Code, the REMIC Provisions or other
compliance guidance issued by the Internal Revenue Service or any state or
local taxing authority. Among its other duties, as required by the Code, the
REMIC Provisions or other such compliance guidance, the Trustee shall provide
(i) to any Transferor of a Residual Certificate such information as is
necessary for the application of any tax relating to the transfer of a
Residual Certificate to any Person who is not a Permitted Transferee, (ii) to
the Certificateholders such information or reports as are required by the Code
or the REMIC Provisions including reports relating to interest, original issue
discount and market discount or premium (using the Prepayment Assumption as
required) and (iii) to the Internal Revenue Service the name, title, address
and telephone number of the person who will serve as the representative of
each REMIC created hereunder. The Servicer shall provide on a timely basis to
the Trustee such information with respect to the assets of the Trust Fund,
including, without limitation, the Mortgage Loans, as is in its possession and
reasonably required by the Trustee to enable it to perform its obligations
under this subsection. In addition, the Depositor shall provide or cause to be
provided to the Trustee, within ten (10) days after the Closing Date, all
information or data that the Trustee reasonably determines to be relevant for
tax purposes as to the valuations and issue prices of the Certificates,
including, without limitation, the price, yield, prepayment assumption and
projected cash flow of the Certificates.
(f) The Trustee shall take such action and shall cause each REMIC
created hereunder to take such action as shall be necessary to create or
maintain the status thereof as a REMIC under the REMIC Provisions (and the
Servicer shall assist the Trustee, to the extent reasonably requested by the
Trustee to do specific actions in order to assist in the maintenance of such
status). The Trustee shall not take any action, cause the Trust Fund to take
any action or fail to take (or fail to cause to be taken) any action that,
under the REMIC Provisions, if taken or not taken, as the case may be, could
(i) endanger the status of any REMIC created hereunder as a REMIC or (ii)
result in the imposition of a tax upon the Trust Fund (including but not
limited to the tax on prohibited transactions as defined in Section 860F(a)(2)
of the Code and the tax on
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contributions to a REMIC set forth in Section 860G(d) of the Code) (either
such event, an "Adverse REMIC Event") unless the Trustee has received an
Opinion of Counsel, addressed to the Trustee (at the expense of the party
seeking to take such action but in no event at the expense of the Trustee) to
the effect that the contemplated action will not, with respect to any REMIC
created hereunder, endanger such status or result in the imposition of such a
tax, nor shall the Servicer take or fail to take any action (whether or not
authorized hereunder) as to which the Trustee has advised it in writing that
it has received an Opinion of Counsel to the effect that an Adverse REMIC
Event could occur with respect to such action; provided that the Servicer may
conclusively rely on such Opinion of Counsel and shall incur no liability for
its action or failure to act in accordance with such Opinion of Counsel. In
addition, prior to taking any action with respect to any REMIC created
hereunder or the respective assets of each, or causing any REMIC created
hereunder to take any action, which is not contemplated under the terms of
this Agreement, the Servicer will consult with the Trustee or its designee, in
writing, with respect to whether such action could cause an Adverse REMIC
Event to occur with respect to any REMIC created hereunder, and the Servicer
shall not take any such action or cause any REMIC created hereunder to take
such action as to which the Trustee has advised it in writing that an Adverse
REMIC Event could occur; provided that the Servicer may conclusively rely on
such writing and shall incur no liability for its action or failure to act in
accordance with such writing. The Trustee may consult with counsel to make
such written advice, and the cost of same shall be borne by the party seeking
to take the action not permitted by this Agreement, but in no event shall such
cost be an expense of the Trustee. At all times as may be required by the
Code, the Trustee will ensure that substantially all of the assets of each
REMIC created hereunder will consist of "qualified mortgages" as defined in
Section 860G(a)(3) of the Code and "permitted investments" as defined in
Section 860G(a)(5) of the Code.
(g) In the event that any tax is imposed on "prohibited
transactions" of any REMIC created hereunder as defined in Section 860F(a)(2)
of the Code, on the "net income from foreclosure property" of such REMIC as
defined in Section 860G(c) of the Code, on any contributions to any such REMIC
after the Startup Day therefor pursuant to Section 860G(d) of the Code, or any
other tax is imposed by the Code or any applicable provisions of state or
local tax laws, such tax shall be charged (i) to the Trustee pursuant to
Section 10.03 hereof, if such tax arises out of or results from a breach by
the Trustee of any of its obligations under this Article X, (ii) to the
Servicer pursuant to Section 10.03 hereof, if such tax arises out of or
results from a breach by the Servicer of any of its obligations under Article
III or this Article X, or otherwise (iii) against amounts on deposit in the
Distribution Account and shall be paid by withdrawal therefrom.
(h) On or before April 15 of each calendar year, commencing April
15, 2002, the Trustee shall deliver to the Servicer and each Rating Agency a
Certificate from a Responsible Officer of the Trustee stating the Trustee's
compliance with this Article X.
(i) The Trustee shall, for federal income tax purposes, maintain
books and records with respect to each REMIC created hereunder on a calendar
year and on an accrual basis.
(j) Following the Startup Day, the Trustee shall not accept any
contributions of assets to any REMIC created hereunder other than in
connection with any Qualified Substitute
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Mortgage Loan delivered in accordance with Section 2.03 unless it shall have
received an Opinion of Counsel to the effect that the inclusion of such assets
in the Trust Fund will not cause the related REMIC to fail to qualify as a
REMIC at any time that any Certificates are outstanding or subject such REMIC
to any tax under the REMIC Provisions or other applicable provisions of
federal, state and local law or ordinances.
(k) Neither the Trustee nor the Servicer shall enter into any
arrangement by which any REMIC created hereunder will receive a fee or other
compensation for services nor permit any such REMIC to receive any income from
assets other than "qualified mortgages" as defined in Section 860G(a)(3) of
the Code or "permitted investments" as defined in Section 860G(a)(5) of the
Code. As discussed above, for federal income tax purposes any payments to the
Cap Provider under the Cap Agreement will be treated as a payment to the Strip
Amount, as the case may be, and a payment from the holder of said certificate
to the Cap Provider.
(l) The Trustee shall treat the Net WAC Fund as an outside reserve
fund within the meaning of Treasury Regulation 1.860G-2(h) that is owned by
the Class X Certificateholders and that is not an asset of the REMIC. The
Trustee shall treat the rights of the Class A1, Class M1, Class M2, and Class
B Certificateholders to receive payments from the Net WAC Fund as rights in an
interest rate cap contract written by the Class X Certificateholder in favor
of the other Certificateholders. Thus, each Certificate other than the Class
R, Class A-IO, Class B-IO, Strip Amount and Class P Certificates shall be
treated as representing ownership of not only REMIC V Regular Interests, but
also ownership of an interest in an interest rate cap contract. For purposes
of determining the issue price of the REMIC V Regular Interests, the Trustee
shall assume that the interest rate cap contract has a value of $10,000.
(m) The Trustee shall apply for an Employee Identification Number
from the IRS via a Form SS-4 or any other applicable method for all tax
entities and will also file a Form 8811.
SECTION 10.02. Prohibited Transactions and Activities.
None of the Depositor, the Servicer or the Trustee shall sell,
dispose of or substitute for any of the Mortgage Loans (except in connection
with (i) the foreclosure of a Mortgage Loan, including but not limited to, the
acquisition or sale of a Mortgaged Property acquired by deed in lieu of
foreclosure, (ii) the bankruptcy of the Trust Fund, (iii) the termination of
the Trust Fund pursuant to Article IX of this Agreement, (iv) a substitution
pursuant to Article II of this Agreement or (v) a purchase of Mortgage Loans
pursuant to Article II or III of this Agreement), nor acquire any assets for
any REMIC created hereunder (other than REO Property acquired in respect of a
defaulted Mortgage Loan), nor sell or dispose of any investments in the
Collection Account or the Distribution Account for gain, nor accept any
contributions to any REMIC created hereunder after the Closing Date (other
than a Qualified Substitute Mortgage Loan delivered in accordance with Section
2.03), unless it has received an Opinion of Counsel, addressed to the Trustee
(at the expense of the party seeking to cause such sale, disposition,
substitution, acquisition or contribution but in no event at the expense of
the Trustee) that such sale, disposition, substitution, acquisition or
contribution will not (a) affect adversely the status of any of any REMIC
Regular Interest created hereunder as a REMIC or (b) cause any REMIC
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Regular Interest created hereunder to be subject to a tax on "prohibited
transactions" or "contributions" pursuant to the REMIC Provisions.
SECTION 10.03. Servicer and Trustee Indemnification.
(a) The Trustee agrees to indemnify, severally and not jointly, the
Trust Fund, the Depositor and the Servicer for any taxes and costs including,
without limitation, any reasonable attorneys fees imposed on or incurred by
the Trust Fund, the Depositor or the Servicer, as a result of a breach of its
respective covenants set forth in this Article X.
(b) The Servicer agrees to indemnify severally and not jointly the
Trust Fund, the Depositor, the other Servicer and the Trustee for any taxes
and costs including, without limitation, any reasonable attorneys' fees
imposed on or incurred by the Trust Fund, the Depositor, the other Servicer or
the Trustee, as a result of a breach of the Servicer's covenants set forth in
Article III or this Article X.
ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.01. Amendment.
This Agreement may be amended from time to time by the Depositor,
the Servicer and the Trustee without the consent of any of the
Certificateholders, (i) to cure any ambiguity or defect, (ii) to correct,
modify or supplement any provisions herein (including to give effect to the
expectations of Certificateholders), or (iii) to make any other provisions
with respect to matters or questions arising under this Agreement which shall
not be inconsistent with the provisions of this Agreement provided that such
action shall not, as evidenced by either (i) an Opinion of Counsel delivered
to the Trustee, adversely affect in any material respect the interests of any
Certificateholder or (ii) delivery to the Trustee of a letter from each Rating
Agency confirming the then-current ratings of the Offered Certificates. No
amendment shall be deemed to adversely affect in any material respect the
interests of any Certificateholder who shall have consented thereto, and no
Opinion of Counsel shall be required to address the effect of any such
amendment on any such consenting Certificateholder.
This Agreement may also be amended from time to time by the
Depositor, the Servicer and the Trustee with the consent of the Holders of
Certificates entitled to at least 66% of the Voting Rights for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or of modifying in any manner the rights of the
Holders of Certificates; provided, however, that no such amendment shall (i)
reduce in any manner the amount of, or delay the timing of, payments received
on Mortgage Loans which are required to be distributed on any Certificate
without the consent of the Holder of such Certificate, (ii) adversely affect
in any material respect the interests of the Holders of any Class of
Certificates in a manner, other than as described in (i), without the consent
of the Holders of Certificates of such Class evidencing at least 66% of the
Voting Rights allocated to such Class, or (iii) modify the consents required
by the immediately preceding clauses (i) and (ii) without the consent of the
Holders of all Certificates then outstanding. Notwithstanding any other
provision
131
of this Agreement, for purposes of the giving or withholding of consents
pursuant to this Section 11.01, Certificates registered in the name of the
Depositor or the Servicer or any Affiliate thereof shall be entitled to Voting
Rights with respect to matters affecting such Certificates.
Notwithstanding any contrary provision of this Agreement, the
Trustee shall be entitled to receive an Opinion of Counsel to the effect that
such amendment will not result in the imposition of any tax on any REMIC
created hereunder pursuant to the REMIC Provisions or cause any REMIC to fail
to qualify as a REMIC at any time that any Certificates are outstanding.
Promptly after the execution of any such amendment the Trustee shall
furnish a copy of such amendment to each Certificateholder.
It shall not be necessary for the consent of Certificateholders
under this Section 11.01 to approve the particular form of any proposed
amendment, but it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Certificateholders shall be subject
to such reasonable regulations as the Trustee may prescribe.
The cost of any Opinion of Counsel to be delivered pursuant to this
Section 11.01 shall be borne by the Person seeking the related amendment, but
in no event shall such Opinion of Counsel be an expense of the Trustee.
The Trustee may, but shall not be obligated to enter into any
amendment pursuant to this Section that affects its rights, duties and
immunities under this Agreement or otherwise.
SECTION 11.02. Recordation of Agreement; Counterparts.
To the extent permitted by applicable law, this Agreement is subject
to recordation in all appropriate public offices for real property records in
all the counties or other comparable jurisdictions in which any or all of the
properties subject to the Mortgages are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Servicer at the expense of the Certificateholders, but only upon direction of
the Trustee accompanied by an Opinion of Counsel to the effect that such
recordation materially and beneficially affects the interests of the
Certificateholders.
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one
and the same instrument.
SECTION 11.03. Limitation on Rights of Certificateholders.
The death or incapacity of any Certificateholder shall not operate
to terminate this Agreement or the Trust Fund, nor entitle such
Certificateholder's legal representatives or heirs to claim an accounting or
to take any action or proceeding in any court for a partition or winding up of
the Trust Fund, nor otherwise affect the rights, obligations and liabilities
of the parties hereto or any of them.
132
No Certificateholder shall have any right to vote (except as
expressly provided for herein) or in any manner otherwise control the
operation and management of the Trust Fund, or the obligations of the parties
hereto, nor shall anything herein set forth, or contained in the terms of any
of the Certificates, be construed so as to constitute the Certificateholders
from time to time as partners or members of an association; nor shall any
Certificateholder be under any liability to any third person by reason of any
action taken by the parties to this Agreement pursuant to any provision
hereof.
No Certificateholder shall have any right by virtue of any provision
of this Agreement to institute any suit, action or proceeding in equity or at
law upon or under or with respect to this Agreement, unless (i) such Holder
previously shall have given to the Trustee a written notice of default and of
the continuance thereof, as hereinbefore provided, and (ii) the Holders of
Certificates entitled to at least 25% of the Voting Rights shall have made
written request upon the Trustee to institute such action, suit or proceeding
in 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 15 days
after its receipt of such notice, request and offer of indemnity, shall have
neglected or refused to institute any such action, suit or proceeding. It is
understood and intended, and expressly covenanted by each Certificateholder
with every other Certificateholder and the Trustee, that no one or more
Holders of Certificates shall have any right in any manner whatsoever by
virtue of any provision of this Agreement to affect, disturb or prejudice the
rights of the Holders of any other of such Certificates, or to obtain or seek
to obtain priority over or preference to any other such Holder, or to enforce
any right under this Agreement, except in the manner herein provided and for
the equal, ratable and common benefit of all Certificateholders. For the
protection and enforcement of the provisions of this Section, each and every
Certificateholder and the Trustee shall be entitled to such relief as can be
given either at law or in equity.
SECTION 11.04. Governing Law.
This Agreement shall be construed in accordance with the laws of the
State of New York and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws.
SECTION 11.05. Notices.
All directions, demands and notices hereunder shall be in writing
and shall be deemed to have been duly given when received if personally
delivered at or mailed by first class mail, postage prepaid, or by express
delivery service or facsimile transmission or delivered in any other manner
specified herein, to (a) in the case of the Depositor, ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇▇▇▇▇ (telecopy number (▇▇▇) ▇▇▇-▇▇▇▇,
or such other address or telecopy number as may hereafter be furnished to the
Servicer and the Trustee in writing by the Depositor, (b) in the case of
Option One Mortgage Corporation, 3 Ada, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Technical Servicing Department (telecopy number (949)
790-8517), or such other address or telecopy number as may hereafter be
furnished to the Trustee and the Depositor in writing by Option One, (c) in
the case of the Trustee, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇,
Attention CSFB 2001-HE3 (telecopy number
133
(▇▇▇) ▇▇▇-▇▇▇▇) and a copy to Sixth and Marquette, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention CSFB 2001-HE3, or such other address or telecopy number as
may hereafter be furnished to the Servicer and the Depositor in writing by the
Trustee, (d) in the case of New Century Mortgage Corporation, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: President (telecopy number: (949)
225-7843), or such other address or telecopy number as may hereafter be
furnished to the Trustee and the Depositor in writing by New Century Mortgage
Corporation, (e) in the case of WMC Mortgage Corp., ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (telecopy number: (818)
596-4962) and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ (telecopy number: (▇▇▇) ▇▇▇-▇▇▇▇) or such other
address or telecopy number as may hereafter be furnished to the Trustee and
the Depositor in writing by WMC Mortgage Corp. Any notice required or
permitted to be given to a Certificateholder shall be given by first class
mail, postage prepaid, at the address of such Holder as shown in the
Certificate Register. Any notice so mailed within the time prescribed in this
Agreement shall be conclusively presumed to have been duly given when mailed,
whether or not the Certificateholder receives such notice. A copy of any
notice required to be telecopied hereunder also shall be mailed to the
appropriate party in the manner set forth above.
SECTION 11.06. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms
of this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and
shall in no way affect the validity or enforceability of the other provisions
of this Agreement or of the Certificates or the rights of the Holders thereof.
SECTION 11.07. Notice to Rating Agencies.
The Trustee shall use its best efforts promptly to provide notice to
the Rating Agencies with respect to each of the following of which it has
actual knowledge:
Any amendment to this Agreement;
The occurrence of a Servicer Event of Default that has not been
cured or waived;
The resignation or termination of the Servicer or the Trustee;
The repurchase or substitution of Mortgage Loans pursuant to or as
contemplated by Section 2.03;
The final payment to the Holders of any Class of Certificates;
Any change in the location of the Collection Account or the
Distribution Account;
The Trustee, were it to succeed as Servicer, is unable to make
advances regarding delinquent Mortgage Loans; and
134
The filing of any claim under the Servicer's blanket bond and errors
and omissions insurance policy required by Section 3.14 or the
cancellation or material modification of coverage under any such
instrument.
In addition, the Trustee shall make available to each Rating Agency
copies of each report to Certificateholders described in Section 4.02 and the
Servicer, as required pursuant to Section 3.20 and Section 3.21, shall make
available to each Rating Agency copies of the following:
(1) Each annual statement as to compliance described in
Section 3.20; and
(2) Each annual independent public accountants' servicing
report described in Section 3.21.
Any such notice pursuant to this Section 11.07 shall be in writing
and shall be deemed to have been duly given if personally delivered at or
mailed by first class mail, postage prepaid, or by facsimile transmission or
express delivery service to ▇▇▇▇▇'▇ Investors Service, Inc., ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Fitch, Inc., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇, Attention: Asset Backed Securities Corporation Home Equity Loan Trust
2001-HE3, and to Standard & Poor's Ratings Services, a division of the
▇▇▇▇▇▇-▇▇▇▇ Companies at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇,
Attention: Structured Finance Surveillance Group or such other addresses as
the Rating Agencies may designate in writing to the parties hereto.
SECTION 11.08. Article and Section References.
All article and section references used in this Agreement, unless
otherwise provided, are to articles and sections in this Agreement.
SECTION 11.09. Third Party Rights.
The Cap Provider shall be a third-party beneficiary of this
Agreement.
SECTION 11.10. Grant of Security Interest.
It is the express intent of the parties hereto that the conveyance
of the Mortgage Loans by the Depositor to the Trustee be, and be construed as,
a sale of the Mortgage Loans by the Depositor and not a pledge of the Mortgage
Loans by the Depositor to secure a debt or other obligation of the Depositor.
However, in the event that, notwithstanding the aforementioned intent of the
parties, the Mortgage Loans are held to be property of the Depositor, then,
(a) it is the express intent of the parties that such conveyance be deemed a
pledge of the Mortgage Loans by the Depositor to the Trustee to secure a debt
or other obligation of the Depositor and (b)(1) this Agreement shall also be
deemed to be a security agreement within the meaning of Articles 8 and 9 of
the Uniform Commercial Code as in effect from time to time in the State of New
York; (2) the conveyance provided for in Section 2.01 hereof shall be deemed
to be a grant by the Depositor to the Trustee of a security interest in all of
the Depositor's right, title and interest in and to the Mortgage Loans and all
amounts payable to the holders of the Mortgage Loans in accordance with the
terms thereof and all proceeds of the conversion, voluntary or
135
involuntary, of the foregoing into cash, instruments, securities or other
property, including without limitation all amounts, other than investment
earnings, from time to time held or invested in the Collection Account and the
Distribution Account, whether in the form of cash, instruments, securities or
other property; (3) the obligations secured by such security agreement shall
be deemed to be all of the Depositor's obligations under this Agreement,
including the obligation to provide to the Certificateholders the benefits of
this Agreement relating to the Mortgage Loans and the Trust Fund; and (4)
notifications to persons holding such property, and acknowledgments, receipts
or confirmations from persons holding such property, shall be deemed
notifications to, or acknowledgments, receipts or confirmations from,
financial intermediaries, bailees or agents (as applicable) of the Trustee for
the purpose of perfecting such security interest under applicable law.
Accordingly, the Depositor hereby grants to the Trustee a security interest in
the Mortgage Loans and all other property described in clause (2) of the
preceding sentence, for the purpose of securing to the Trustee the performance
by the Depositor of the obligations described in clause (3) of the preceding
sentence. Notwithstanding the foregoing, the parties hereto intend the
conveyance pursuant to Section 2.01 to be a true, absolute and unconditional
sale of the Mortgage Loans and assets constituting the Trust Fund by the
Depositor to the Trustee.
SECTION 11.11. Protection of Assets.
(a) Except for transactions and activities entered into in
connection with the securitization that is the subject of this Agreement, the
Trust is not authorized and has no power to:
(i) borrow money or issue debt;
(ii) merge with another entity, reorganize, liquidate or sell
assets; or
(iii) engage in any business or activities.
Each party to this Agreement agrees that it will not file an
involuntary bankruptcy petition or initiate any other form of insolvency
proceeding against the Trust Fund until after the Certificates have been paid.
136
IN WITNESS WHEREOF, the Depositor, the Servicer and the Trustee have
caused their names to be signed hereto by their respective officers thereunto
duly authorized, in each case as of the day and year first above written.
ASSET BACKED SECURITIES CORPORATION,
as Depositor
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
OPTION ONE MORTGAGE CORPORATION,
as Servicer
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Assistant Secretary
▇▇▇▇▇ FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee
By: /s/ ▇▇▇ ▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇ ▇▇▇▇▇
Title: Assistant Vice President
▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ )
) ss.:
COUNTY OF QUEENS )
On the 27th day of September 2001, before me, a notary public in and
for said State, personally appeared ▇▇▇▇ ▇▇▇▇▇▇▇, known to me to be a Vice
President of Asset Backed Securities Corporation, one of the corporations that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/s/ ▇▇▇▇ ▇▇▇▇▇▇
---------------
Notary Public
[Notarial Seal]
▇▇▇▇ ▇▇▇▇▇▇
Notary Public, State of New York
No. ▇▇-▇▇▇▇▇▇▇
Qualified in Queens County
Commission Expires July 31, 2002
138
STATE OF CALIFORNIA )
) ss.:
COUNTY OF ORANGE )
On the 22nd day of September 2001, before me, a notary public in and
for said State, personally appeared ▇▇▇▇▇ ▇. ▇▇▇▇▇, known to me to be a
Assistant Secretary of Option One Mortgage Corporation, one of the
corporations that executed the within instrument, and also known to me to be
the person who executed it on behalf of said corporation, and acknowledged to
me that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------
Notary Public
[Notarial Seal]
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Commission # 1319930
Notary Public - California
Orange County
Commission Expires Sept. 4, 2005
139
STATE OF MARYLAND )
) ss.:
COUNTY OF ▇▇▇▇▇▇ )
On the 25nd day of September 2001, before me, a notary public in and
for said State, personally appeared ▇▇▇ ▇▇▇▇▇, known to me to be a Assistant
Vice President of ▇▇▇▇▇ Fargo Bank Minnesota, National Association, one of the
entities that executed the within instrument, and also known to me to be the
person who executed it on behalf of said corporation, and acknowledged to me
that such entity executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------
Notary Public
[Notarial Seal]
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Notary Public
▇▇▇▇▇▇ County
Maryland
Commission Expires February 22, 2005
140
A1
EXHIBIT A-1
-----------
FORM OF CLASS A1 CERTIFICATE
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO
ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT,"
AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D
OF THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").
Series 2001-HE3, Class A_ Aggregate Certificate Principal
Balance of the Class A_ Certificates
as of the Issue Date: $_____________
Pass-Through Rate: Variable
Denomination: $____________
Date of Pooling and Servicing
Agreement: September 1, 2001. Servicer:
First Distribution Date: Option One Mortgage Corporation
October 15, 2001 Trustee: ▇▇▇▇▇ Fargo Bank Minnesota, N.A.
No. ____ Issue Date: September 27, 2001
CUSIP: ____________
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF
THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT
ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS THE DENOMINATION
OF THIS CERTIFICATE.
ASSET BACKED PASS THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family fixed-rate
and adjustable-rate first lien mortgage loans (the "Mortgage Loans") formed
and sold by
ASSET BACKED SECURITIES CORPORATION
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
ASSET BACKED SECURITIES CORPORATION, THE SERVICER, THE TRUSTEE OR
ANY OF THEIR
RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING
MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF
THE UNITED STATES.
This certifies that ____________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class A-1 Certificates
as of the Issue Date) in that certain beneficial ownership interest evidenced
by all the Class A-1 Certificates created pursuant to a Pooling and Servicing
Agreement, dated as specified above (the "Agreement"), among Asset Backed
Securities Corporation (hereinafter called the "Depositor," which term
includes any successor entity under the Agreement), the Servicer, and the
Trustee, a summary of certain of the pertinent provisions of which is set
forth hereafter. To the extent not defined herein, the capitalized terms used
herein have the meanings assigned in the Agreement. This Certificate is issued
under and is subject to the terms, provisions and conditions of the Agreement,
to which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made
on the 15th day of each month or, if such 15th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the
product of the Percentage Interest evidenced by this Certificate and the
amount required to be distributed to the Holders of Class A_ Certificates on
such Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Trustee in writing
at least five Business Days prior to the Record Date immediately prior to such
Distribution Date, or otherwise by check mailed by first class mail to the
address of the Person entitled thereto, as such name and address shall appear
on the Certificate Register. Notwithstanding the above, the final distribution
on this Certificate will be made after due notice by the Trustee of the
pendency of such distribution and only upon presentation and surrender of this
Certificate at the office or agency appointed by the Trustee for that purpose
as provided in the Agreement.
The Pass-Through Rate applicable to the calculation of interest
payable with respect to this Certificate on any Distribution Date shall equal
a rate per annum equal to the lesser of (i) the One-Month LIBOR plus _____%,
in the case of each Distribution Date through and including the Distribution
Date on which the aggregate principal balance of the Mortgage Loans (and
properties acquired in respect thereof) remaining in the Trust Fund is reduced
to less than 10% of the aggregate principal balance of the Mortgage Loans as
of the related cut-off date, or One-Month LIBOR plus _____% per annum, in the
case of any Distribution Date thereafter, and (ii) the Available Funds Cap for
such Distribution Date.
This Certificate is one of a duly authorized issue of Certificates
designated as Asset Backed Pass Through Certificates of the Series specified
on the face hereof (herein called the "Certificates") and representing a
Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the
aggregate Certificate Principal Balance of the Class of Certificates specified
on the face hereof.
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution
Account may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee and the rights of the Certificateholders
under the Agreement at any time by the Depositor, the Servicer, and the
Trustee with the consent of the Holders of Certificates entitled to at least
66% of the Voting Rights. Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and upon all future Holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of
the Holders of any of the Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by, the Holder hereof or
such Holder's attorney duly authorized in writing, and thereupon one or more
new Certificates of the same Class in authorized denominations evidencing the
same aggregate Percentage Interest will be issued to the designated transferee
or transferees.
The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to
certain limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the
same.
No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed
in connection with any transfer or exchange of Certificates.
The Depositor, the Servicer, the Trustee, and the Certificate
Registrar and any agent of the Depositor, the Servicer, the Trustee, or the
Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of the Depositor,
the Servicer, the Trustee, the Certificate Registrar nor any such agent shall
be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant
to the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the
Trust Fund of all the Mortgage Loans and all property acquired in respect of
such Mortgage Loans. The Agreement permits, but does not require, the party
designated in the Agreement to purchase from the Trust Fund all the Mortgage
Loans and all property acquired in respect of any Mortgage Loan at a price
determined as provided in the Agreement. The exercise of such right will
effect early retirement of the Certificates; however, such right to purchase
is subject to the aggregate Stated Principal Balance of the Mortgage Loans and
any REO properties owned by the Trust at the time of purchase being less than
10% of the sum of the aggregate Stated Principal Balance of the Mortgage Loans
at the Initial Cut-off Date plus the amount on deposit in the Pre-Funding
Account on the Closing Date.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated: September __, 2001
▇▇▇▇▇ FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee
By:__________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class A-1 Certificates referred to in the
within-mentioned Agreement.
▇▇▇▇▇ FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
as Certificate Registrar
By:__________________________________
Authorized Signatory
ABBREVIATIONS
-------------
The following abbreviations, when used in the inscription on the
face of this instrument, shall be construed as though they were written out in
full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
------------------------
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right _________________
if survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above
list.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and
Taxpayer Identification Number of assignee)
a Percentage Interest equal to ____% evidenced by the within Asset Backed Pass
Through Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named
assignee and deliver such Certificate to the following address: ______________
____________________________________________
Dated:
--------------------------------------
Signature by or on behalf of assignor
--------------------------------------
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _____________________________________________
for the account of _______________________________, account number
_________________, or, if mailed by check, to ________________________________
Applicable statements should be mailed to __________________________________
This information is provided by _______________, the assignee named above, or
____________________________, as its agent.
[M1 & M2]
EXHIBIT A-2
-----------
FORM OF CLASS [M1] [M2] CERTIFICATE
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO
ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT,"
AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D
OF THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A1 AND CLASS A2
CERTIFICATES [AND THE CLASS M1 CERTIFICATES] TO THE EXTENT DESCRIBED
IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
Series 2001-HE3, Class [M1] [M2] Aggregate Certificate Principal
Balance of the Class [M1] [M2]
Certificates as of the Issue Date:
Pass-Through Rate: Variable $____________
Date of Pooling and Servicing Denomination: $___________
Agreement: September 1, 2001.
Servicer:
First Distribution Date: Option One Mortgage Corporation
October 15, 2001 Trustee: ▇▇▇▇▇ Fargo Bank Minnesota, N.A.
No. ____ Issue Date: September 27, 2001
CUSIP: ______________
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF
THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING
CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE LESS THAN
THE AMOUNT SHOWN ABOVE AS THE DENOMINATION OF THIS CERTIFICATE.
ASSET BACKED PASS THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family fixed-rate
and adjustable-rate first lien mortgage loans (the "Mortgage Loans") formed
and sold by
ASSET BACKED SECURITIES CORPORATION
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
ASSET BACKED SECURITIES CORPORATION, THE SERVICER, THE TRUSTEE OR
ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE
UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR
INSTRUMENTALITY OF THE UNITED STATES.
This certifies that ____________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the [M1] [M2] Certificates
as of the Issue Date) in that certain beneficial ownership interest evidenced
by all the [M1] [M2] Certificates created pursuant to a Pooling and Servicing
Agreement, dated as specified above (the "Agreement"), among Asset Backed
Securities Corporation (hereinafter called the "Depositor," which term
includes any successor entity under the Agreement), the Servicer, and the
Trustee, a summary of certain of the pertinent provisions of which is set
forth hereafter. To the extent not defined herein, the capitalized terms used
herein have the meanings assigned in the Agreement. This Certificate is issued
under and is subject to the terms, provisions and conditions of the Agreement,
to which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made
on the 15th day of each month or, if such 15th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the
product of the Percentage Interest evidenced by this Certificate and the
amount required to be distributed to the Holders of Class [M1] [M2]
Certificates on such Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Trustee in writing
at least five Business Days prior to the Record Date immediately prior to such
Distribution Date, or otherwise by check mailed by first class mail to the
address of the Person entitled thereto, as such name and address shall appear
on the Certificate Register. Notwithstanding the above, the final distribution
on this Certificate will be made after due notice by the Trustee of the
pendency of such distribution and only upon presentation and surrender of this
Certificate at the office or agency appointed by the Trustee for that purpose
as provided in the Agreement.
The Pass-Through Rate applicable to the calculation of interest
payable with respect to this Certificate on any Distribution Date shall equal
a rate per annum equal to the lesser of (i) the One-Month LIBOR plus _____%,
in the case of each Distribution Date through and including the Distribution
Date on which the aggregate principal balance of the Mortgage Loans (and
properties acquired in respect thereof) remaining in the Trust Fund is reduced
to less than 10% of the aggregate principal balance of the Mortgage Loans as
of the related cut-off date, or One-Month LIBOR plus _____%, in the case of
any Distribution Date thereafter, and (ii) the Available Funds Cap for such
Distribution Date.
This Certificate is one of a duly authorized issue of Certificates
designated as Asset Backed Pass Through Certificates of the Series specified
on the face hereof (herein called the "Certificates") and representing a
Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on
the face hereof divided by the aggregate Certificate Principal Balance of the
Class of Certificates specified on the face hereof.
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution
Account may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee and the rights of the Certificateholders
under the Agreement at any time by the Depositor, the Servicer and the Trustee
with the consent of the Holders of Certificates entitled to at least 66% of
the Voting Rights. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof,
in certain limited circumstances, without the consent of the Holders of any of
the Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by, the Holder hereof or
such Holder's attorney duly authorized in writing, and thereupon one or more
new Certificates of the same Class in authorized denominations evidencing the
same aggregate Percentage Interest will be issued to the designated transferee
or transferees.
The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to
certain limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the
same.
No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed
in connection with any transfer or exchange of Certificates.
The Depositor, the Servicer, the Trustee and the Certificate
Registrar and any agent of the Depositor, the Servicer, the Trustee or the
Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of the Depositor,
the Servicer, the Trustee, the Certificate Registrar nor any such agent shall
be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant
to the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the
Trust Fund of all the Mortgage Loans and all property acquired in respect of
such Mortgage Loans. The Agreement permits, but does not require, the party
designated in the Agreement to purchase from the Trust Fund all the Mortgage
Loans and all property acquired in respect of any Mortgage Loan at a price
determined as provided in the Agreement. The exercise of such right will
effect early retirement of the Certificates; however, such right to purchase
is subject to the aggregate Stated Principal Balance of the Mortgage Loans and
any REO properties owned by the Trust at the time of purchase being less than
10% of the sum of the aggregate Stated Principal Balance of the Mortgage Loans
at the Initial Cut-off Date plus the amount on deposit in the Pre-Funding
Account on the Closing Date.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated: September __, 2001
▇▇▇▇▇ FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee
By:__________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class [M1] [M2] Certificates referred to in the
within-mentioned Agreement.
▇▇▇▇▇ FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
as Certificate Registrar
By:__________________________________
Authorized Signatory
ABBREVIATIONS
-------------
The following abbreviations, when used in the inscription on the
face of this instrument, shall be construed as though they were written out in
full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
------------------------
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right _________________
if survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above
list.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and
Taxpayer Identification Number of assignee)
a Percentage Interest equal to ____% evidenced by the within Asset Backed Pass
Through Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named
assignee and deliver such Certificate to the following address:________________
Dated:
-------------------------------------------
Signature by or on behalf of assignor
-------------------------------------------
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ____________________________________________
for the account of _______________________________, account number
___________________, or, if mailed by check, to ______________________
Applicable statements should be mailed to ________________________
This information is provided by ________________, the assignee named above, or
__________________________, as its agent.
EXHIBIT A-3
-----------
FORM OF CLASS B CERTIFICATE
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO
ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT,"
AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D
OF THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES, THE
CLASS M1 CERTIFICATES AND THE CLASS M2 CERTIFICATES TO THE EXTENT
DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
Series 2001-HE3, Class B Aggregate Certificate Principal
Balance of the Class B Certificates as
of the Issue Date: $__________
Pass-Through Rate: Variable
Denomination: $___________
Date of Pooling and Servicing
Agreement: September 1, 2001. Servicer:
First Distribution Date: Option One Mortgage Corporation
October 15, 2001 Trustee: ▇▇▇▇▇ Fargo Bank Minnesota, N.A.
No. __ Issue Date: September 27, 2001
CUSIP: _____________
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF
THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT
ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS THE DENOMINATION
OF THIS CERTIFICATE.
ASSET BACKED PASS THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family fixed-rate
and adjustable-rate first lien mortgage loans (the "Mortgage Loans") formed
and sold by
ASSET BACKED SECURITIES CORPORATION
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
ASSET BACKED SECURITIES CORPORATION, THE SERVICER, THE TRUSTEE OR
ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE
UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR
INSTRUMENTALITY OF THE UNITED STATES.
This certifies that __________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class B Certificates as
of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class B Certificates created pursuant to a Pooling and Servicing
Agreement, dated as specified above (the "Agreement"), among Asset Backed
Securities Corporation (hereinafter called the "Depositor," which term
includes any successor entity under the Agreement), the Servicer, and the
Trustee, a summary of certain of the pertinent provisions of which is set
forth hereafter. To the extent not defined herein, the capitalized terms used
herein have the meanings assigned in the Agreement. This Certificate is issued
under and is subject to the terms, provisions and conditions of the Agreement,
to which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made
on the 15th day of each month or, if such 15th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the
product of the Percentage Interest evidenced by this Certificate and the
amount required to be distributed to the Holders of Class B Certificates on
such Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Trustee in writing
at least five Business Days prior to the Record Date immediately prior to such
Distribution Date, or otherwise by check mailed by first class mail to the
address of the Person entitled thereto, as such name and address shall appear
on the Certificate Register. Notwithstanding the above, the final distribution
on this Certificate will be made after due notice by the Trustee of the
pendency of such distribution and only upon presentation and surrender of this
Certificate at the office or agency appointed by the Trustee for that purpose
as provided in the Agreement.
The Pass-Through Rate applicable to the calculation of interest
payable with respect to this Certificate on any Distribution Date shall equal
a rate per annum equal to the lesser of (i) the One-Month LIBOR plus ____%, in
the case of each Distribution Date through and including the Distribution Date
on which the aggregate principal balance of the Mortgage Loans (and properties
acquired in respect thereof) remaining in the Trust Fund is reduced to less
than 10% of the aggregate principal balance of the Mortgage Loans as of the
related cut-off date, or One-Month LIBOR plus _____%, in the case of any
Distribution Date thereafter, and (ii) the Available Funds Cap for such
Distribution Date.
This Certificate is one of a duly authorized issue of Certificates
designated as Asset Backed Pass Through Certificates of the Series specified
on the face hereof (herein called the "Certificates") and representing a
Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the
aggregate Certificate Principal Balance of the Class of Certificates specified
on the face hereof.
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution
Account may be made from time to time for purposes
other than distributions to Certificateholders, such purposes including
reimbursement of advances made, or certain expenses incurred, with respect to
the Mortgage Loans.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee and the rights of the Certificateholders
under the Agreement at any time by the Depositor, the Servicer and the Trustee
with the consent of the Holders of Certificates entitled to at least 66% of
the Voting Rights. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof,
in certain limited circumstances, without the consent of the Holders of any of
the Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by, the Holder hereof or
such Holder's attorney duly authorized in writing, and thereupon one or more
new Certificates of the same Class in authorized denominations evidencing the
same aggregate Percentage Interest will be issued to the designated transferee
or transferees.
The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to
certain limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the
same.
No transfer of this Certificate to a Plan subject to ERISA or
Section 4975 of the Code, any Person acting, directly or indirectly, on behalf
of any such Plan or any person using Plan Assets to acquire this Certificate
shall be made except in accordance with Section 5.02(c) of the Agreement.
No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed
in connection with any transfer or exchange of Certificates.
The Depositor, the Servicer, the Trustee and the Certificate
Registrar and any agent of the Depositor, the Servicer, the Trustee or the
Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of the Depositor,
the Servicer, the Trustee, the Certificate Registrar nor any such agent shall
be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant
to the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the
Trust Fund of all the Mortgage Loans and all property acquired in respect of
such Mortgage Loans. The Agreement permits, but does not require, the party
designated in the Agreement to purchase from the Trust Fund all the Mortgage
Loans and all property acquired in respect of any Mortgage Loan at a price
determined as provided in the Agreement. The exercise of such right will
effect early retirement of the Certificates; however, such right to purchase
is subject to the aggregate Stated Principal Balance of the Mortgage Loans and
any REO properties owned by the Trust at the time of purchase being less than
10% of the sum of the aggregate Stated Principal Balance of the Mortgage Loans
at the Initial Cut-off Date plus the amount on deposit in the Pre-Funding
Account on the Closing Date.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated: September __, 2001
▇▇▇▇▇ FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee
By:__________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class B Certificates referred to in the
within-mentioned Agreement.
▇▇▇▇▇ FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
as Certificate Registrar
By:__________________________________
Authorized Signatory
ABBREVIATIONS
-------------
The following abbreviations, when used in the inscription on the
face of this instrument, shall be construed as though they were written out in
full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
-------------------------
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right _________________
if survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above
list.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and
Taxpayer Identification Number of assignee)
a Percentage Interest equal to ____% evidenced by the within Asset Backed Pass
Through Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named
assignee and deliver such Certificate to the following address: ______________.
Dated:
-------------------------------------------
Signature by or on behalf of assignor
-------------------------------------------
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ____________________________________
for the account of _______________________________, account number
_____________________, or, if mailed by check, to _____________________.
Applicable statements should be mailed to ____________________
This information is provided by _________________, the assignee named above,
or ____________________________, as its agent.
EXHIBIT A-4
-----------
FORM OF CLASS X CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT",
AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D
OF THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES, THE
CLASS M CERTIFICATES AND THE CLASS B CERTIFICATES TO THE EXTENT
DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED
PURSUANT TO SUCH ACT AND LAWS OR IS SOLD OR TRANSFERRED IN
TRANSACTIONS THAT ARE EXEMPT FROM REGISTRATION UNDER SUCH ACT AND
UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 5.02 OF THE AGREEMENT.
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER
RETIREMENT ARRANGEMENT (EACH A "PLAN") SUBJECT TO THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR THE
CODE WILL BE REGISTERED EXCEPT IN COMPLIANCE WITH THE PROCEDURES
DESCRIBED HEREIN.
Series 2001-HE3, Class X Aggregate Certificate Principal
Balance of the Class X Certificates as
of the Issue Date:
Pass-Through Rate:
Denomination: $______________
Date of Pooling and Servicing
Agreement: September 1, 2001. Servicer:
Option One Mortgage Corporation
First Distribution Date:
Trustee: ▇▇▇▇▇ Fargo Bank Minesota, N.A.
October 15, 2001
Issue Date: September 27, 2001
No. ___
CUSIP: _______________
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF
THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT
ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS THE DENOMINATION
OF THIS CERTIFICATE.
ASSET BACKED PASS THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family fixed-rate
and adjustable-rate first lien mortgage loans (the "Mortgage Loans") formed
and sold by
ASSET BACKED SECURITIES CORPORATION
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
ASSET BACKED SECURITIES CORPORATION, THE SERVICER, THE TRUSTEE OR
ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE
UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR
INSTRUMENTALITY OF THE UNITED STATES.
This certifies that ________________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class X Certificates as
of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class X Certificates created pursuant to a Pooling and Servicing
Agreement, dated as specified above (the "Agreement"), among Asset Backed
Securities Corporation (hereinafter called the "Depositor," which term
includes any successor entity under the Agreement), the Servicer, and the
Trustee, a summary of certain of the pertinent provisions of which is set
forth hereafter. To the extent not defined herein, the capitalized terms used
herein have the meanings assigned in the Agreement. This Certificate is issued
under and is subject to the terms, provisions and conditions of the Agreement,
to which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made
on the 15th day of each month or, if such 15th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the
product of the Percentage Interest evidenced by this Certificate and the
amount required to be distributed to the Holders of Class X Certificates on
such Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Trustee in writing
at least five Business Days prior to the Record Date immediately prior to such
Distribution Date, or otherwise by check mailed by first class mail to the
address of the Person entitled thereto, as such name and address shall appear
on the Certificate Register. Notwithstanding the above, the final distribution
on this Certificate will be made after due notice by the Trustee of the
pendency of such distribution and only upon presentation and surrender of this
Certificate at the office or agency appointed by the Trustee for that purpose
as provided in the Agreement.
This Certificate is one of a duly authorized issue of Certificates
designated as Asset Backed Pass Through Certificates of the Series specified
on the face hereof (herein called the "Certificates") and representing a
Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the
aggregate Certificate Principal Balance of the Class of Certificates specified
on the face hereof.
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution
Account may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee and the rights of the Certificateholders
under the Agreement at any time by the Depositor, the Servicer and the Trustee
with the consent of the Holders of Certificates entitled to at least 66% of
the Voting Rights. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof,
in certain limited circumstances, without the consent of the Holders of any of
the Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by, the Holder hereof or
such Holder's attorney duly authorized in writing, and thereupon one or more
new Certificates of the same Class in authorized denominations evidencing the
same aggregate Percentage Interest will be issued to the designated transferee
or transferees.
The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to
certain limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the
same.
No transfer of this Certificate shall be made unless the transfer is
made pursuant to an effective registration statement under the Securities Act
of 1933, as amended (the "1933 Act"), and an effective registration or
qualification under applicable state securities laws, or is made in a
transaction that does not require such registration or qualification. In the
event that such a transfer of this Certificate is to be made without
registration or qualification, the Trustee and the Certificate Registrar shall
require receipt of (i) if such transfer is purportedly being made in reliance
upon Rule 144A under the 1933 Act, written certifications from the Holder of
the Certificate desiring to effect the transfer, and from such Holder's
prospective transferee, substantially in the forms attached to the Agreement
as Exhibit F-1, and (ii) in all other cases, an Opinion of Counsel
satisfactory to it that such transfer may be made without such registration or
qualification (which Opinion of Counsel shall not be an expense of the Trust
Fund or of the Depositor, the Trustee or the Servicer in their respective
capacities as such), together with copies of the written certification(s) of
the Holder of the Certificate desiring to effect the transfer and/or such
Holder's prospective transferee upon which such Opinion of Counsel is based.
Neither the Depositor, the Certificate
Registrar or the Trustee is obligated to register or qualify the Class of
Certificates specified on the face hereof under the 1933 Act or any other
securities law or to take any action not otherwise required under the
Agreement to permit the transfer of such Certificates without registration or
qualification. Any Holder desiring to effect a transfer of this Certificate
shall be required to indemnify the Trustee, the Depositor, the Certificate
Registrar and the Servicer against any liability that may result if the
transfer is not so exempt or is not made in accordance with such federal and
state laws.
No transfer of this Certificate to a Plan subject to ERISA or
Section 4975 of the Code, any Person acting, directly or indirectly, on behalf
of any such Plan or any Person using "Plan Assets" to acquire this Certificate
shall be made except in accordance with Section 5.02(c) of the Agreement.
No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Certificate Registrar may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
The Depositor, the Servicer, the Trustee and the Certificate
Registrar and any agent of the Depositor, the Servicer, the Trustee or the
Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of the Depositor,
the Servicer, the Trustee, the Certificate Registrar nor any such agent shall
be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant
to the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the
Trust Fund of all the Mortgage Loans and all property acquired in respect of
such Mortgage Loans. The Agreement permits, but does not require, the party
designated in the Agreement to purchase from the Trust Fund all the Mortgage
Loans and all property acquired in respect of any Mortgage Loan at a price
determined as provided in the Agreement. The exercise of such right will
effect early retirement of the Certificates; however, such right to purchase
is subject to the aggregate Stated Principal Balance of the Mortgage Loans and
any REO properties owned by the Trust at the time of purchase being less than
10% of the sum of the aggregate Stated Principal Balance of the Mortgage Loans
at the Initial Cut-off Date plus the amount on deposit in the Pre-Funding
Account on the Closing Date.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated: September __, 2001
▇▇▇▇▇ FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee
By:__________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class X Certificates referred to in the
within-mentioned Agreement.
▇▇▇▇▇ FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
as Certificate Registrar
By:__________________________________
Authorized Signatory
ABBREVIATIONS
-------------
The following abbreviations, when used in the inscription on the
face of this instrument, shall be construed as though they were written out in
full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
------------------------
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right _________________
if survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above
list.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and
Taxpayer Identification Number of assignee)
a Percentage Interest equal to ____% evidenced by the within Asset Backed Pass
Through Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named
assignee and deliver such Certificate to the following address:________________
Dated:
-------------------------------------------
Signature by or on behalf of assignor
-------------------------------------------
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________
for the account of _______________________________, account number
_______________, or, if mailed by check, to __________________________________
Applicable statements should be mailed to ___________________
This information is provided by __________________, the assignee named above,
or ________________________________________, as its agent.
EXHIBIT A-5
-----------
FORM OF CLASS P CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT",
AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D
OF THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED
PURSUANT TO SUCH ACT AND LAWS OR IS SOLD OR TRANSFERRED IN
TRANSACTIONS THAT ARE EXEMPT FROM REGISTRATION UNDER SUCH ACT AND
UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 5.02 OF THE AGREEMENT.
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER
RETIREMENT ARRANGEMENT (EACH A "PLAN") SUBJECT TO THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR THE
CODE WILL BE REGISTERED EXCEPT IN COMPLIANCE WITH THE PROCEDURES
DESCRIBED HEREIN.
Series 2001-HE3, Class P Aggregate Certificate Principal Balance
of the Class P Certificates as of the
Issue Date: $100.00
Date of Pooling and Servicing
Agreement: September 1, 2001. Denomination: $_________
First Distribution Date: Servicer:
Option One Mortgage Corporation
October 15, 2001
Trustee: ▇▇▇▇▇ Fargo Bank Minnesota, N.A.
No. ___
Issue Date: September 27, 2001
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF
THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT
ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS THE DENOMINATION
OF THIS CERTIFICATE.
ASSET BACKED PASS THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family fixed-rate
and adjustable-rate first lien mortgage loans (the "Mortgage Loans") formed
and sold by
A-5-1
ASSET BACKED SECURITIES CORPORATION
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
ASSET BACKED SECURITIES CORPORATION, THE SERVICER, THE TRUSTEE OR
ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE
UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR
INSTRUMENTALITY OF THE UNITED STATES.
This certifies that _____________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class P Certificates as
of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class P Certificates created pursuant to a Pooling and Servicing
Agreement, dated as specified above (the "Agreement"), among Asset Backed
Securities Corporation (hereinafter called the "Depositor," which term
includes any successor entity under the Agreement), the Servicer, and the
Trustee, a summary of certain of the pertinent provisions of which is set
forth hereafter. To the extent not defined herein, the capitalized terms used
herein have the meanings assigned in the Agreement. This Certificate is issued
under and is subject to the terms, provisions and conditions of the Agreement,
to which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made
on the 15th day of each month or, if such 15th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the
product of the Percentage Interest evidenced by this Certificate and the
amount required to be distributed to the Holders of Class P Certificates on
such Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Trustee in writing
at least five Business Days prior to the Record Date immediately prior to such
Distribution Date, or otherwise by check mailed by first class mail to the
address of the Person entitled thereto, as such name and address shall appear
on the Certificate Register. Notwithstanding the above, the final distribution
on this Certificate will be made after due notice by the Trustee of the
pendency of such distribution and only upon presentation and surrender of this
Certificate at the office or agency appointed by the Trustee for that purpose
as provided in the Agreement.
This Certificate is one of a duly authorized issue of Certificates
designated as Asset Backed Pass Through Certificates of the Series specified
on the face hereof (herein called the "Certificates") and representing a
Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the
aggregate Certificate Principal Balance of the Class of Certificates specified
on the face hereof.
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution
Account may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee and the rights of the Certificateholders
under the Agreement at any time by the Depositor, the Servicer, and the
Trustee with the consent of the Holders of Certificates entitled to at least
66% of the Voting Rights. Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and upon all future Holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof,
in certain limited circumstances, without the consent of the Holders of any of
the Certificates.
A-5-2
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by, the Holder hereof or
such Holder's attorney duly authorized in writing, and thereupon one or more
new Certificates of the same Class in authorized denominations evidencing the
same aggregate Percentage Interest will be issued to the designated transferee
or transferees.
The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to
certain limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the
same.
No transfer of this Certificate shall be made unless the transfer is
made pursuant to an effective registration statement under the Securities Act
of 1933, as amended (the "1933 Act"), and an effective registration or
qualification under applicable state securities laws, or is made in a
transaction that does not require such registration or qualification. In the
event that such a transfer of this Certificate is to be made without
registration or qualification, the Trustee and the Certificate Registrar shall
require receipt of (i) if such transfer is purportedly being made in reliance
upon Rule 144A under the 1933 Act, written certifications from the Holder of
the Certificate desiring to effect the transfer, and from such Holder's
prospective transferee, substantially in the forms attached to the Agreement
as Exhibit F-1, and (ii) in all other cases, an Opinion of Counsel
satisfactory to it that such transfer may be made without such registration or
qualification (which Opinion of Counsel shall not be an expense of the Trust
Fund or of the Depositor, the Trustee or the Servicer in their respective
capacities as such), together with copies of the written certification(s) of
the Holder of the Certificate desiring to effect the transfer and/or such
Holder's prospective transferee upon which such Opinion of Counsel is based.
None of the Depositor, the Certificate Registrar or the Trustee is obligated
to register or qualify the Class of Certificates specified on the face hereof
under the 1933 Act or any other securities law or to take any action not
otherwise required under the Agreement to permit the transfer of such
Certificates without registration or qualification. Any Holder desiring to
effect a transfer of this Certificate shall be required to indemnify the
Trustee, the Depositor, the Certificate Registrar and the Servicer against any
liability that may result if the transfer is not so exempt or is not made in
accordance with such federal and state laws.
No transfer of this Certificate to a Plan subject to ERISA or
Section 4975 of the Code, any Person acting, directly or indirectly, on behalf
of any such Plan or any Person using "Plan Assets" to acquire this Certificate
shall be made except in accordance with Section 5.02(c) of the Agreement.
No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Certificate Registrar may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
The Depositor, the Servicer, the Trustee and the Certificate
Registrar and any agent of the Depositor, the Servicer, the Trustee or the
Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of the Depositor,
the Servicer, the Trustee, the Certificate Registrar nor any such agent shall
be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant
to the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the
Trust Fund of all the Mortgage Loans and all property acquired in respect of
such Mortgage Loans. The Agreement permits, but does not require, the party
designated in the Agreement to purchase from the Trust Fund all the Mortgage
Loans and all property acquired in respect of any Mortgage Loan at a price
determined as provided in the Agreement. The exercise of such right will
effect early retirement of the Certificates; however, such right to purchase
is subject to the aggregate Stated Principal Balance of the Mortgage Loans and
any REO properties owned by the Trust at the time of purchase being
A-5-3
less than 10% of the sum of the aggregate Stated Principal Balance of the
Mortgage Loans at the Initial Cut-off Date plus the amount on deposit in the
Pre-Funding Account on the Closing Date.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement.
A-5-4
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated: September __, 2001
▇▇▇▇▇ FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee
By:__________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class P Certificates referred to in the
within-mentioned Agreement.
▇▇▇▇▇ FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
as Certificate Registrar
By:__________________________________
Authorized Signatory
A-5-5
ABBREVIATIONS
-------------
The following abbreviations, when used in the inscription on the
face of this instrument, shall be construed as though they were written out in
full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
-----------------------
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right _________________
if survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above
list.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and
Taxpayer Identification Number of assignee)
a Percentage Interest equal to ____% evidenced by the within Asset Backed Pass
Through Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named
assignee and deliver such Certificate to the following address: _______________
___________________________.
Dated:
----------------------------------------------
Signature by or on behalf of assignor
----------------------------------------------
Signature Guaranteed
A-5-6
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to __________________________________
for the account of _______________________________, account number
____________________, or, if mailed by check, to
______________________________________
Applicable statements should be mailed to ___________________________________.
This information is provided by _______________________________________, the
assignee named above, or ________________________________________, as its
agent.
▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
FORM OF CLASS A-IO CERTIFICATE
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO
ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE
& CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT", AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").
THIS CERTIFICATE HAS NO PRINCIPAL BALANCE.
A-6-1
Series 2001-HE3, Class A-IO Servicer:
Option One Mortgage Corporation
Pass-Through Rate: _____%
Trustee: ▇▇▇▇▇ Fargo Bank Minnesota, N.A.
Date of Pooling and Servicing
Agreement: September 1, 2001.
Issue Date: September 27, 2001
First Distribution Date:
October 15, 2001
No. __
Aggregate Notional Amount of the
Class A-IO Certificates
as of the Issue Date:
$____________
DISTRIBUTIONS IN REDUCTION OF THE NOTIONAL AMOUNT OF THIS CERTIFICATE
MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE AGGREGATE
NOTIONAL AMOUNT HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN
ABOVE AS THE DENOMINATION OF THIS CERTIFICATE.
ASSET BACKED PASS THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family fixed-rate
and adjustable-rate first lien mortgage loans (the "Mortgage Loans") formed
and sold by
ASSET BACKED SECURITIES CORPORATION
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
ASSET BACKED SECURITIES CORPORATION, THE SERVICER, THE TRUSTEE OR ANY
OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE
UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR
INSTRUMENTALITY OF THE UNITED STATES.
This certifies that ____________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Notional Amount of the Class A-IO Certificates as of the
Issue Date) in that certain beneficial ownership interest evidenced by all the
Class A-IO Certificates created pursuant to a Pooling and Servicing Agreement,
dated as specified above (the "Agreement"), among Asset Backed Securities
Corporation (hereinafter called the "Depositor," which term includes any
successor entity under the Agreement), the Servicer, and the Trustee, a
summary of certain of the pertinent provisions of which is set forth
hereafter. To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made
on the 15th day of each month or, if such 15th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
A-6-2
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class A-IO Certificates on such Distribution
Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Trustee in writing
at least five Business Days prior to the Record Date immediately prior to such
Distribution Date, or otherwise by check mailed by first class mail to the
address of the Person entitled thereto, as such name and address shall appear
on the Certificate Register. Notwithstanding the above, the final distribution
on this Certificate will be made after due notice by the Trustee of the
pendency of such distribution and only upon presentation and surrender of this
Certificate at the office or agency appointed by the Trustee for that purpose
as provided in the Agreement.
This Certificate is one of a duly authorized issue of Certificates
designated as Asset Backed Pass Through Certificates of the Series specified
on the face hereof (herein called the "Certificates") and representing a
Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the
aggregate Notional Amount of the Class of Certificates specified on the face
hereof.
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution
Account may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee and the rights of the Certificateholders
under the Agreement at any time by the Depositor, the Servicer, and the
Trustee with the consent of the Holders of Certificates entitled to at least
66% of the Voting Rights. Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and upon all future Holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof,
in certain limited circumstances, without the consent of the Holders of any of
the Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by, the Holder hereof or
such Holder's attorney duly authorized in writing, and thereupon one or more
new Certificates of the same Class in authorized denominations evidencing the
same aggregate Percentage Interest will be issued to the designated transferee
or transferees.
The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to
certain limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the
same.
No transfer of this Certificate shall be made unless the transfer is
made pursuant to an effective registration statement under the Securities Act
of 1933, as amended (the "1933 Act"), and an effective registration or
qualification under applicable state securities laws, or is made in a
transaction that does not require such registration or qualification. In the
event that such a transfer of this Certificate is to be made without
registration or qualification, the Trustee and the Certificate Registrar shall
require receipt of (i) if such transfer is purportedly being made in reliance
upon Rule 144A under the 1933 Act, written certifications from the Holder of
the Certificate desiring to effect the transfer, and from such Holder's
prospective transferee, substantially in the forms attached to the Agreement
as Exhibit F-1, and (ii) in all other cases, an Opinion of Counsel
satisfactory to it that such transfer may be made without such registration or
qualification (which Opinion of Counsel shall not be an expense of the Trust
Fund or of the Depositor, the Trustee or the Servicer in their respective
capacities as such), together with
A-6-3
copies of the written certification(s) of the Holder of the Certificate
desiring to effect the transfer and/or such Holder's prospective transferee
upon which such Opinion of Counsel is based. Neither the Depositor, the
Certificate Registrar or the Trustee is obligated to register or qualify the
Class of Certificates specified on the face hereof under the 1933 Act or any
other securities law or to take any action not otherwise required under the
Agreement to permit the transfer of such Certificates without registration or
qualification. Any Holder desiring to effect a transfer of this Certificate
shall be required to indemnify the Trustee, the Depositor, the Certificate
Registrar and the Servicer against any liability that may result if the
transfer is not so exempt or is not made in accordance with such federal and
state laws.
No transfer of this Certificate to a Plan subject to ERISA or
Section 4975 of the Code, any Person acting, directly or indirectly, on behalf
of any such Plan or any Person using "Plan Assets" to acquire this Certificate
shall be made except in accordance with Section 5.02(c) of the Agreement.
No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Certificate Registrar may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
The Depositor, the Servicer, the Trustee and the Certificate
Registrar and any agent of the Depositor, the Servicer, the Trustee or the
Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of the Depositor,
the Servicer, the Trustee ,the Certificate Registrar nor any such agent shall
be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant
to the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the
Trust Fund of all the Mortgage Loans and all property acquired in respect of
such Mortgage Loans. The Agreement permits, but does not require, the party
designated in the Agreement to purchase from the Trust Fund all the Mortgage
Loans and all property acquired in respect of any Mortgage Loan at a price
determined as provided in the Agreement. The exercise of such right will
effect early retirement of the Certificates; however, such right to purchase
is subject to the aggregate Stated Principal Balance of the Mortgage Loans and
any REO properties owned by the Trust at the time of purchase being less than
10% of the sum of the aggregate Stated Principal Balance of the Mortgage Loans
at the Initial Cut-off Date plus the amount on deposit in the Pre-Funding
Account on the Closing Date.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement.
A-6-4
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated: September __, 2001
▇▇▇▇▇ FARGO BANK MINNESOTA NATIONAL
ASSOCIATION,
as Trustee
By:__________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class A-IO Certificates referred to in the
within-mentioned Agreement.
▇▇▇▇▇ FARGO BANK MINNESOTA NATIONAL
ASSOCIATION,
as Certificate Registrar
By:__________________________________
Authorized Signatory
A-6-5
ABBREVIATIONS
-------------
The following abbreviations, when used in the inscription on the
face of this instrument, shall be construed as though they were written out in
full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
-----------------------
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right _________________
if survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto ______________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and
Taxpayer Identification Number of assignee)
a Percentage Interest equal to ____% evidenced by the within Asset Backed Pass
Through Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a
new Certificate of a like Percentage Interest and Class to the above named
assignee and deliver such Certificate to the following address:
_____________________________________________.
Dated:
______________________________________
Signature by or on behalf of assignor
______________________________________
Signature Guaranteed
A-6-6
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________
for the account of ____________________, account number ______________________,
or, if mailed by check, to __________________________.
Applicable statements should be mailed to ____________________________________.
This information is provided by ______________________________,
the assignee named above, or ___________________________________, as its agent.
▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
-----------
FORM OF CLASS R CERTIFICATE
THIS CERTIFICATE MAY NOT BE TRANSFERRED TO A NON-UNITED STATES PERSON.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"RESIDUAL INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT"
("REMIC"), AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G
AND 860D OF THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED
PURSUANT TO SUCH ACT AND LAWS OR IS SOLD OR TRANSFERRED IN
TRANSACTIONS THAT ARE EXEMPT FROM REGISTRATION UNDER SUCH ACT AND
UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 5.02 OF THE AGREEMENT.
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE
MADE ONLY IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF THE
POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER
RETIREMENT ARRANGEMENT (EACH A "PLAN") SUBJECT TO THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR THE
CODE WILL BE REGISTERED EXCEPT IN COMPLIANCE WITH THE PROCEDURES
DESCRIBED HEREIN.
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE
MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES (I) AN AFFIDAVIT TO THE
TRUSTEE THAT (A) SUCH TRANSFEREE IS NOT (1) THE UNITED STATES OR ANY
POSSESSION THEREOF, ANY STATE OR POLITICAL SUBDIVISION THEREOF, ANY
FOREIGN GOVERNMENT, ANY INTERNATIONAL ORGANIZATION, OR ANY AGENCY OR
INSTRUMENTALITY OF ANY OF THE FOREGOING, (2) ANY ORGANIZATION (OTHER
THAN A COOPERATIVE DESCRIBED IN SECTION 521 OF THE CODE) THAT IS
EXEMPT FROM THE TAX IMPOSED BY CHAPTER 1 OF THE CODE UNLESS SUCH
ORGANIZATION IS SUBJECT TO THE TAX IMPOSED BY SECTION 511 OF THE
CODE, (3) ANY ORGANIZATION DESCRIBED IN SECTION 1381(a)(2)(C) OF THE
CODE (ANY SUCH PERSON DESCRIBED IN THE FOREGOING CLAUSES (1), (2) OR
(3) SHALL HEREINAFTER BE REFERRED TO AS A "DISQUALIFIED
ORGANIZATION") OR (4) AN AGENT OF A DISQUALIFIED ORGANIZATION AND (B)
NO PURPOSE OF SUCH TRANSFER IS TO IMPEDE THE ASSESSMENT OR COLLECTION
OF TAX, AND (II) SUCH TRANSFEREE SATISFIES CERTAIN ADDITIONAL
CONDITIONS RELATING TO THE FINANCIAL CONDITION OF THE PROPOSED
TRANSFEREE. NOTWITHSTANDING THE REGISTRATION IN THE CERTIFICATE
REGISTER OF ANY TRANSFER, SALE OR OTHER DISPOSITION OF THIS
CERTIFICATE TO A DISQUALIFIED ORGANIZATION OR AN AGENT OF A
DISQUALIFIED ORGANIZATION, SUCH REGISTRATION SHALL BE DEEMED TO BE OF
NO LEGAL FORCE OR EFFECT WHATSOEVER AND SUCH PERSON SHALL NOT BE
DEEMED TO BE A CERTIFICATEHOLDER FOR ANY PURPOSE HEREUNDER,
INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS ON THIS
A-7-1
CERTIFICATE. EACH HOLDER OF THIS CERTIFICATE BY ACCEPTANCE HEREOF
SHALL BE DEEMED TO HAVE CONSENTED TO THE PROVISIONS OF THIS PARAGRAPH
AND THE PROVISIONS OF SECTION 5.02(d) OF THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN. ANY PERSON THAT IS A DISQUALIFIED
ORGANIZATION IS PROHIBITED FROM ACQUIRING BENEFICIAL OWNERSHIP OF
THIS CERTIFICATE.
Series 2001-HE3, Class R Aggregate Percentage Interest of the Class R
Certificates as of the Issue Date: 100.00%
Date of Pooling and Servicing
Agreement: September 1, 2001. Percentage Interest of this Class R
Certificate: 100.00%
First Distribution Date:
October 15, 2001 Servicer:
Option One Mortgage Corporation
No. __
Trustee: ▇▇▇▇▇ Fargo Bank Minnesota, N.A.
Issue Date: September 27, 2001
ASSET BACKED PASS THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family fixed-rate
and adjustable-rate first lien mortgage loans (the "Mortgage Loans") formed
and sold by
ASSET BACKED SECURITIES CORPORATION
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
ASSET BACKED SECURITIES CORPORATION, THE SERVICER, THE TRUSTEE OR ANY
OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE
UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR
INSTRUMENTALITY OF THE UNITED STATES.
This certifies that ______________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class R Certificates as
of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class R Certificates created pursuant to a Pooling and Servicing
Agreement, dated as specified above (the "Agreement"), among Asset Backed
Securities Corporation (hereinafter called the "Depositor," which term
includes any successor entity under the Agreement), the Servicer, and the
Trustee, a summary of certain of the pertinent provisions of which is set
forth hereafter. To the extent not defined herein, the capitalized terms used
herein have the meanings assigned in the Agreement. This Certificate is issued
under and is subject to the terms, provisions and conditions of the Agreement,
to which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made
on the 15th day of each month or, if such 15th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the
product of the Percentage Interest evidenced by this Certificate and the
amount required to be distributed to the Holders of Class R Certificates on
such Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
A-7-2
entitled thereto if such Person shall have so notified the Trustee in writing
at least five Business Days prior to the Record Date immediately prior to such
Distribution Date, or otherwise by check mailed by first class mail to the
address of the Person entitled thereto, as such name and address shall appear
on the Certificate Register. Notwithstanding the above, the final distribution
on this Certificate will be made after due notice by the Trustee of the
pendency of such distribution and only upon presentation and surrender of this
Certificate at the office or agency appointed by the Trustee for that purpose
as provided in the Agreement.
This Certificate is one of a duly authorized issue of Certificates
designated as Asset Backed Pass Through Certificates of the Series specified
on the face hereof (herein called the "Certificates") and representing a
Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the
aggregate Certificate Principal Balance of the Class of Certificates specified
on the face hereof.
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution
Account may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee and the rights of the Certificateholders
under the Agreement at any time by the Depositor, the Servicer, and the
Trustee with the consent of the Holders of Certificates entitled to at least
66% of the Voting Rights. Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and upon all future Holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof,
in certain limited circumstances, without the consent of the Holders of any of
the Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by, the Holder hereof or
such Holder's attorney duly authorized in writing, and thereupon one or more
new Certificates of the same Class in authorized denominations evidencing the
same aggregate Percentage Interest will be issued to the designated transferee
or transferees.
The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to
certain limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the
same.
No transfer of this Certificate shall be made unless the transfer is
made pursuant to an effective registration statement under the Securities Act
of 1933, as amended (the "1933 Act"), and an effective registration or
qualification under applicable state securities laws, or is made in a
transaction that does not require such registration or qualification. In the
event that such a transfer of this Certificate is to be made without
registration or qualification, the Trustee shall require receipt of (i) if
such transfer is purportedly being made in reliance upon Rule 144A under the
1933 Act, written certifications from the Holder of the Certificate desiring
to effect the transfer, and from such Holder's prospective transferee,
substantially in the forms attached to the Agreement as Exhibit F-1, and (ii)
in all other cases, an Opinion of Counsel satisfactory to it that such
transfer may be made without such registration or qualification (which Opinion
of Counsel shall not be an expense of the Trust Fund or of the Depositor, the
Trustee or the Servicer in their respective capacities as such), together with
copies of the written certification(s) of the Holder of the Certificate
desiring to effect the transfer and/or such Holder's prospective transferee
upon which such Opinion of Counsel is based. Neither the Depositor nor the
Trustee is obligated to register or qualify the Class of Certificates
specified on the face hereof under the 1933 Act or any other securities law or
to take any action not otherwise required under the Agreement to permit the
transfer of such Certificates
A-7-3
without registration or qualification. Any Holder desiring to effect a
transfer of this Certificate shall be required to indemnify the Trustee, the
Depositor and the Servicer against any liability that may result if the
transfer is not so exempt or is not made in accordance with such federal and
state laws.
No transfer of this Certificate to a Plan subject to ERISA or
Section 4975 of the Code, any Person acting, directly or indirectly, on behalf
of any such Plan or any Person using "Plan Assets" to acquire this Certificate
shall be made except in accordance with Section 5.02(c) of the Agreement.
Prior to registration of any transfer, sale or other disposition of
this Certificate, the proposed transferee shall provide to the Trustee (i) an
affidavit to the effect that such transferee is any Person other than a
Disqualified Organization or the agent (including a broker, nominee or
middleman) of a Disqualified Organization, and (ii) a certificate that
acknowledges that (A) the Class R Certificates have been designated as a
residual interest in a REMIC, (B) it will include in its income a pro rata
share of the net income of the Trust Fund and that such income may be an
"excess inclusion," as defined in the Code, that, with certain exceptions,
cannot be offset by other losses or benefits from any tax exemption, and (C)
it expects to have the financial means to satisfy all of its tax obligations
including those relating to holding the Class R Certificates. Notwithstanding
the registration in the Certificate Register of any transfer, sale or other
disposition of this Certificate to a Disqualified Organization or an agent
(including a broker, nominee or middleman) of a Disqualified Organization,
such registration shall be deemed to be of no legal force or effect whatsoever
and such Person shall not be deemed to be a Certificateholder for any purpose,
including, but not limited to, the receipt of distributions in respect of this
Certificate.
The Holder of this Certificate, by its acceptance hereof, shall be
deemed to have consented to the provisions of Section 5.02 of the Agreement
and to any amendment of the Agreement deemed necessary by counsel of the
Depositor to ensure that the transfer of this Certificate to any Person other
than a Permitted Transferee or any other Person will not cause the Trust Fund
to cease to qualify as a REMIC or cause the imposition of a tax upon the
REMIC.
No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed
in connection with any transfer or exchange of Certificates.
The Depositor, the Servicer, the Trustee and the Certificate
Registrar and any agent of the Depositor, the Servicer, the Trustee or the
Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of the Depositor,
the Servicer, the Trustee, the Certificate Registrar nor any such agent shall
be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant
to the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the
Trust Fund of all the Mortgage Loans and all property acquired in respect of
such Mortgage Loans. The Agreement permits, but does not require, the party
designated in the Agreement to purchase from the Trust Fund all the Mortgage
Loans and all property acquired in respect of any Mortgage Loan at a price
determined as provided in the Agreement. The exercise of such right will
effect early retirement of the Certificates; however, such right to purchase
is subject to the aggregate Stated Principal Balance of the Mortgage Loans and
any REO properties owned by the Trust at the time of purchase being less than
10% of the sum of the aggregate Stated Principal Balance of the Mortgage Loans
at the Initial Cut-off Date plus the amount on deposit in the Pre-Funding
Account on the Closing Date.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
A-7-4
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated: September __, 2001
▇▇▇▇▇ FARGO BANK MINNESOTA, NATIONAL
ASSOCIATION,
as Trustee
By:__________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class R Certificates referred to in the
within-mentioned Agreement.
▇▇▇▇▇ FARGO BANK MINNESOTA, NATIONAL
ASSOCIATION,
as Certificate Registrar
By:__________________________________
Authorized Signatory
A-7-5
ABBREVIATIONS
-------------
The following abbreviations, when used in the inscription on
the face of this instrument, shall be construed as though they were written
out in full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
-----------------------
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right _________________
if survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto ______________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and
Taxpayer Identification Number of assignee)
a Percentage Interest equal to _____% evidenced by the within Asset Backed Pass
Through Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named
assignee and deliver such Certificate to the following address: ______________.
Dated:
______________________________________
Signature by or on behalf of assignor
______________________________________
Signature Guaranteed
A-7-6
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ____________________________________
for the account of ____________________, account number _____________________,
or, if mailed by check, to _____________________________
Applicable statements should be mailed to ___________________________________
This information is provided by _______________________________________, the
assignee named above, or ________________________________________, as its
agent.
▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
FORM OF CLASS B-IO CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT", AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").
THIS CERTIFICATE HAS NO PRINCIPAL BALANCE. THIS CERTIFICATE IS
SUBORDINATE TO THE CLASS A CERTIFICATES, THE CLASS A-IO CERTIFICATES,
THE CLASS M1 CERTIFICATES AND THE CLASS M2 CERTIFICATES TO THE EXTENT
DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED
PURSUANT TO SUCH ACT AND LAWS OR IS SOLD OR TRANSFERRED IN
TRANSACTIONS THAT ARE EXEMPT FROM REGISTRATION UNDER SUCH ACT AND
UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 5.02 OF THE AGREEMENT.
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER
RETIREMENT ARRANGEMENT (EACH A "PLAN") SUBJECT TO THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR THE
CODE WILL BE REGISTERED EXCEPT IN COMPLIANCE WITH THE PROCEDURES
DESCRIBED HEREIN.
THIS CERTIFICATE HAS NO PRINCIPAL BALANCE.
A-8-1
Series 2001-HE3, Class B-IO Servicer:
Option One Mortgage Corporation
Pass-Through Rate: _____%
Trustee: ▇▇▇▇▇ Fargo Bank Minnesota, N.A.
Date of Pooling and Servicing
Agreement: September 1, 2001.
Issue Date: September 27, 2001
First Distribution Date:
October 15, 2001
No. __
Aggregate Notional Amount of
the Class B-IO Certificates
as of the Issue Date:
$_____________
DISTRIBUTIONS IN REDUCTION OF THE NOTIONAL AMOUNT OF THIS CERTIFICATE
MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE AGGREGATE
NOTIONAL AMOUNT HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN
ABOVE AS THE DENOMINATION OF THIS CERTIFICATE.
ASSET BACKED PASS THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family fixed-rate
and adjustable-rate first lien mortgage loans (the "Mortgage Loans") formed
and sold by
ASSET BACKED SECURITIES CORPORATION
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
ASSET BACKED SECURITIES CORPORATION, THE SERVICER, THE TRUSTEE OR ANY
OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE
UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR
INSTRUMENTALITY OF THE UNITED STATES.
This certifies that ____________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Notional Amount of the Class B-IO Certificates as of the
Issue Date) in that certain beneficial ownership interest evidenced by all the
Class B-IO Certificates created pursuant to a Pooling and Servicing Agreement,
dated as specified above (the "Agreement"), among Asset Backed Securities
Corporation (hereinafter called the "Depositor," which term includes any
successor entity under the Agreement), the Servicer, and the Trustee, a
summary of certain of the pertinent provisions of which is set forth
hereafter. To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made
on the 15th day of each month or, if such 15th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the
product of the Percentage Interest evidenced by this
A-8-2
Certificate and the amount required to be distributed to the Holders of Class
B-IO Certificates on such Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Trustee in writing
at least five Business Days prior to the Record Date immediately prior to such
Distribution Date, or otherwise by check mailed by first class mail to the
address of the Person entitled thereto, as such name and address shall appear
on the Certificate Register. Notwithstanding the above, the final distribution
on this Certificate will be made after due notice by the Trustee of the
pendency of such distribution and only upon presentation and surrender of this
Certificate at the office or agency appointed by the Trustee for that purpose
as provided in the Agreement.
This Certificate is one of a duly authorized issue of Certificates
designated as Asset Backed Pass Through Certificates of the Series specified
on the face hereof (herein called the "Certificates") and representing a
Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the
aggregate Notional Amount of the Class of Certificates specified on the face
hereof.
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution
Account may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee and the rights of the Certificateholders
under the Agreement at any time by the Depositor, the Servicer, and the
Trustee with the consent of the Holders of Certificates entitled to at least
66% of the Voting Rights. Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and upon all future Holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof,
in certain limited circumstances, without the consent of the Holders of any of
the Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by, the Holder hereof or
such Holder's attorney duly authorized in writing, and thereupon one or more
new Certificates of the same Class in authorized denominations evidencing the
same aggregate Percentage Interest will be issued to the designated transferee
or transferees.
The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to
certain limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the
same.
No transfer of this Certificate shall be made unless the transfer is
made pursuant to an effective registration statement under the Securities Act
of 1933, as amended (the "1933 Act"), and an effective registration or
qualification under applicable state securities laws, or is made in a
transaction that does not require such registration or qualification. In the
event that such a transfer of this Certificate is to be made without
registration or qualification, the Trustee and the Certificate Registrar shall
require receipt of (i) if such transfer is purportedly being made in reliance
upon Rule 144A under the 1933 Act, written certifications from the Holder of
the Certificate desiring to effect the transfer, and from such Holder's
prospective transferee, substantially in the forms attached to the Agreement
as Exhibit F-1, and (ii) in all other cases, an Opinion of Counsel
satisfactory to it that such transfer may be made without such registration or
qualification (which Opinion of Counsel shall not be an expense of the Trust
Fund or of the Depositor, the Trustee or the Servicer in their respective
capacities as such), together with
A-8-3
copies of the written certification(s) of the Holder of the Certificate
desiring to effect the transfer and/or such Holder's prospective transferee
upon which such Opinion of Counsel is based. Neither the Depositor, the
Certificate Registrar or the Trustee is obligated to register or qualify the
Class of Certificates specified on the face hereof under the 1933 Act or any
other securities law or to take any action not otherwise required under the
Agreement to permit the transfer of such Certificates without registration or
qualification. Any Holder desiring to effect a transfer of this Certificate
shall be required to indemnify the Trustee, the Depositor, the Certificate
Registrar and the Servicer against any liability that may result if the
transfer is not so exempt or is not made in accordance with such federal and
state laws.
No transfer of this Certificate to a Plan subject to ERISA or
Section 4975 of the Code, any Person acting, directly or indirectly, on behalf
of any such Plan or any Person using "Plan Assets" to acquire this Certificate
shall be made except in accordance with Section 5.02(c) of the Agreement.
No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Certificate Registrar may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
The Depositor, the Servicer, the Trustee and the Certificate
Registrar and any agent of the Depositor, the Servicer, the Trustee or the
Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of the Depositor,
the Servicer, the Trustee ,the Certificate Registrar nor any such agent shall
be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant
to the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the
Trust Fund of all the Mortgage Loans and all property acquired in respect of
such Mortgage Loans. The Agreement permits, but does not require, the party
designated in the Agreement to purchase from the Trust Fund all the Mortgage
Loans and all property acquired in respect of any Mortgage Loan at a price
determined as provided in the Agreement. The exercise of such right will
effect early retirement of the Certificates; however, such right to purchase
is subject to the aggregate Stated Principal Balance of the Mortgage Loans and
any REO properties owned by the Trust at the time of purchase being less than
10% of the sum of the aggregate Stated Principal Balance of the Mortgage Loans
at the Initial Cut-off Date plus the amount on deposit in the Pre-Funding
Account on the Closing Date.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement.
A-8-4
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated: September __, 2001
▇▇▇▇▇ FARGO BANK MINNESOTA NATIONAL
ASSOCIATION,
as Trustee
By:__________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class B-IO Certificates referred to in the within-
mentioned Agreement.
▇▇▇▇▇ FARGO BANK MINNESOTA NATIONAL
ASSOCIATION,
as Certificate Registrar
By:__________________________________
Authorized Signatory
A-8-5
ABBREVIATIONS
-------------
The following abbreviations, when used in the inscription on the
face of this instrument, shall be construed as though they were written out in
full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
------------------------
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right _________________
if survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and
Taxpayer Identification Number of assignee)
a Percentage Interest equal to ____% evidenced by the within Asset Backed Pass
Through Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named
assignee and deliver such Certificate to the following address:
_____________________________.
Dated:
______________________________________
Signature by or on behalf of assignor
______________________________________
Signature Guaranteed
A-8-6
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________
for the account of ____________________, account number _____________________,
or, if mailed by check, to __________________________.
Applicable statements should be mailed to ___________________________________.
This information is provided by ______________________________,
the assignee named above, or __________________________________, as its agent.
A-8-7
EXHIBIT B
---------
[RESERVED]
B-1-1
EXHIBIT C-1
-----------
FORM OF TRUSTEE'S INITIAL CERTIFICATION
[Date]
------------------------------------------------------------------------------
Asset Backed Securities Corporation Option One Mortgage Corporation
Eleven ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------------------------------------------------
Re: Pooling and Servicing Agreement, dated as of September 1, 2001
among Asset Backed Securities Corporation, Option One Mortgage
Corporation and ▇▇▇▇▇ Fargo Bank Minnesota, National
Association: Asset Backed Securities Corporation Asset Backed
Pass Through Certificates Series 2001-HE3
-------------------
Ladies and Gentlemen:
Pursuant to Section 2.02 of the Pooling and Servicing Agreement the
undersigned as Trustee hereby acknowledges receipt of each Mortgage File and
certifies that, as to each Mortgage Loan listed in the Mortgage Loan Schedule
(other than any Original Mortgage Loan paid in full or any Mortgage Loan
specifically identified in the exception report annexed hereto as not being
covered by this certification), (i) all documents constituting part of such
Mortgage File (other than such documents described in Section 2.01(e) of the
Pooling Agreement) required to be delivered to it pursuant to the Pooling and
Servicing Agreement are in its possession, (ii) such documents have been
reviewed by it and are not mutilated, torn or defaced unless initialed by the
related borrower and relate to such Original Mortgage Loan and (iii) based on
its examination and only as to the foregoing, the information set forth in the
Mortgage Loan Schedule that corresponds to items (i) through (iii), (vi),
(ix), (x), (xiii), (xv) and (xvii) through (xx) of the definition of "Mortgage
Loan Schedule" of the Pooling Agreement accurately reflects information set
forth in the Mortgage File.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
above-referenced Pooling and Servicing Agreement. The Trustee makes no
representations as to: (i) the validity, legality, sufficiency, enforceability
due authorization, recordability or genuineness of any of the documents
contained in the Mortgage File of any of the Mortgage Loans identified on the
Mortgage Loan Schedule, or (ii) the collectability, insurability,
effectiveness or suitability of any such Mortgage Loan.
▇▇▇▇▇ FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION
By:_________________________________
Name:
Title:
C-1-1
EXHIBIT C-2
-----------
FORM OF TRUSTEE'S FINAL CERTIFICATION
[Date]
-------------------------------------------------------------------------------
Asset Backed Securities Corporation Option One Mortgage Corporation
Eleven Madison Avenue 3 Ada
New York, New York 10010 ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
-------------------------------------------------------------------------------
Re: Pooling and Servicing Agreement, dated as of September 1, 2001
among Asset Backed Securities Corporation, Option One Mortgage
Corporation, and ▇▇▇▇▇ Fargo Bank Minnesota, National
Association, Asset Backed Securities Corporation Asset Backed
Pass Through Certificates Series 2001-HE3
--------------------------------------------
Ladies and Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Trustee, hereby certifies that as to
each Mortgage Loan listed in the Mortgage Loan Schedule (other than any
Mortgage Loan paid in full or listed on the attachment hereto), it or a
Custodian on its behalf has received:
(1) the electronic Mortgage Loan Schedule;
(2) (A) the original Mortgage Note bearing all intervening endorsements and
including any riders to the Mortgage Note, endorsed "Pay to the order of
________________, without recourse" and signed in the name of the last
named endorsee by an authorized officer, or
(B) with respect to any Lost Mortgage Note, a lost note affidavit stating
that the original Mortgage Note was lost or destroyed, together with a
copy of such Mortgage Note;
(3) the original of any guarantee executed in connection with the Mortgage
Note (if any);
(4) the original Mortgage, with evidence of recording thereon, or copies
certified by the related recording office or if the original Mortgage has
not yet been returned from the recording office, a copy certified by or
on behalf of the applicable Originator indicating that such Mortgage has
been delivered for recording. The return directions for the original
Mortgage should indicate, when recorded, mail to the Trustee or its
custodian;
(5) the originals of all assumption, modification, consolidation or extension
agreements, (or, if an original of any of these documents has not been
returned from the recording office, a copy thereof certified by or on
behalf of the applicable Originator, the original to be delivered to the
Trustee or its custodian forthwith after return from such recording
office) with evidence of recording thereon, if any;
(6) the original Assignment of Mortgage as appropriate, in recordable form,
for the Mortgage Loan assigned in blank;
(7) the originals of any intervening recorded assignments of mortgage,
including warehousing assignments, with evidence of recording thereon
(or, if an original intervening Assignment of Mortgage has not been
returned from the recording office, a copy thereof certified by or on
behalf of
C-2-1
the applicable Originator, the original to be delivered to the Trustee or
its custodian forthwith after return from such recording office); and
(8) the original lender's title insurance policy, or copy of title commitment
(or in appropriate jurisdictions, attorney's opinion of title and
abstract of title).
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
above-referenced Pooling and Servicing Agreement. The Trustee makes no
representations as to: (i) the validity, legality, sufficiency, enforceability
or genuineness of any of the documents contained in the Mortgage File of any
of the Mortgage Loans identified on the Mortgage Loan Schedule, or (ii) the
collectability, insurability, effectiveness or suitability of any such
Mortgage Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
▇▇▇▇▇ FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION
By:_________________________________
Name:
Title:
C-2-2
EXHIBIT D
---------
FORM OF MORTGAGE LOAN PURCHASE AGREEMENT
[ON FILE AT THE OFFICES OF SIDLEY ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ LLP]
EXHIBIT E-1
-----------
REQUEST FOR RELEASE
(for Trustee/Custodian)
Loan Information
----------------
Name of Mortgagor: ____________________________________
Servicer
Loan No.: ____________________________________
Trustee/Custodian
-----------------
Name: ____________________________________
Address: ____________________________________
____________________________________
Trustee/Custodian
Mortgage File No.: ____________________________________
Depositor
---------
Name: Asset Backed Securities Corporation
Address: ____________________________________
____________________________________
Certificates: Asset Backed Securities Corporation
Asset Backed Pass Through
Certificates, Series 2001-HE3.
The undersigned Servicer hereby acknowledges that it has received
from _______________________, as Trustee for the Holders of Asset Backed
Securities Corporation Asset Backed Pass Through Certificates, Series
2001-HE3, the documents referred to below (the "Documents") with respect to
the Mortgage Loans serviced by it. All capitalized terms not otherwise defined
in this Request for Release shall have the meanings given them in the Pooling
and Servicing Agreement, dated as of September 1, 2001, among the Trustee, the
Depositor and the Servicer (the "Pooling and Servicing Agreement").
(a) Promissory Note dated _______________, 20__, in the original principal
sum of $__________, made by _____________________, payable to, or
endorsed to the order of, the Trustee.
(b) Mortgage recorded on _____________________ as instrument no. _________
in the County Recorder's Office of the County of _________________,
State of __________________ in book/reel/docket _________________ of
official records at page/image _____________.
(c) Deed of Trust recorded on ________________ as instrument no. _________
in the County Recorder's Office of the County of _________________,
State of ____________________ in book/reel/docket _________________ of
official records at page/image ______________.
(d) Assignment of Mortgage or Deed of Trust to the Trustee, recorded on
_________________ as instrument no. _________ in the County Recorder's
Office of the County of _______________, State of ____________________
in book/reel/docket ____________ of official records at page/image
____________.
(e) Other documents, including any amendments, assignments or other
assumptions of the Mortgage Note or Mortgage.
(f) _____________________________________________
(g) _____________________________________________
(h) _____________________________________________
(i) _____________________________________________
The undersigned Servicer hereby acknowledges and agrees as follows:
(1) The Servicer shall hold and retain possession of the
Documents in trust for the benefit of the Trustee, solely for the
purposes provided in the Agreement.
(2) The Servicer shall not cause or permit the Documents to
become subject to, or encumbered by, any claim, liens, security
interest, charges, writs of attachment or other impositions nor shall
the Servicer assert or seek to assert any claims or rights of setoff
to or against the Documents or any proceeds thereof.
(3) The Servicer shall return each and every Document
previously requested from the Mortgage File to the Trustee when the
need therefor no longer exists, unless the Mortgage Loan relating to
the Documents has been liquidated and the proceeds thereof have been
remitted to the Collection Account and except as expressly provided
in the Agreement.
(4) The Documents and any proceeds thereof, including any
proceeds of proceeds, coming into the possession or control of the
Servicer shall at all times be earmarked for the account of the
Trustee, and the Servicer shall keep the Documents and any proceeds
separate and distinct from all other property in the Servicer's
possession, custody or control.
Dated:
E-2-2
Option One Mortgage Corportion
By:_________________________________
Name:
Title:
E-2-3
EXHIBIT E-2
-----------
REQUEST FOR RELEASE
[Mortgage Loans Paid in Full]
OFFICERS' CERTIFICATE AND TRUST RECEIPT
ASSET BACKED PASS THROUGH CERTIFICATES
SERIES 2001-HE3
____________________________________________________ HEREBY CERTIFIES THAT
HE/SHE IS AN OFFICER OF THE SERVICER, HOLDING THE OFFICE SET FORTH BENEATH
HIS/HER SIGNATURE, AND HEREBY FURTHER CERTIFIES AS FOLLOWS:
WITH RESPECT TO THE MORTGAGE LOANS, AS THE TERM IS DEFINED IN THE POOLING AND
SERVICING AGREEMENT DESCRIBED IN THE ATTACHED SCHEDULE:
ALL PAYMENTS OF PRINCIPAL, PREMIUM (IF ANY), AND INTEREST HAVE BEEN MADE.
LOAN NUMBER:_____________________ BORROWER'S NAME:__________________
COUNTY:_______________________
WE HEREBY CERTIFY THAT ALL AMOUNTS RECEIVED IN CONNECTION WITH SUCH PAYMENTS,
WHICH ARE REQUIRED TO BE DEPOSITED IN THE COLLECTION ACCOUNT PURSUANT TO
SECTION 3.10 OF THE POOLING AND SERVICING AGREEMENT, HAVE BEEN OR WILL BE
CREDITED.
__________________________________ DATED:__________________________
/ / VICE PRESIDENT
/ / ASSISTANT VICE PRESIDENT
EXHIBIT F-1
-----------
FORM OF TRANSFEROR REPRESENTATION LETTER
[Date]
▇▇▇▇▇ Fargo Bank Minnesota, National Association
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: Asset Backed Securities Corp,
Asset Backed Pass Through Certificates, Series 2001-HE3,
Class ___, representing a ___% Class ___ Percentage Interest
------------------------------------------------------------
Ladies and Gentlemen:
In connection with the transfer by ________________ (the
"Transferor") to ________________ (the "Transferee") of the captioned Asset
Backed Pass Through certificates (the "Certificates"), the Transferor hereby
certifies as follows:
Neither the Transferor nor anyone acting on its behalf has (a)
offered, pledged, sold, disposed of or otherwise transferred any Certificate,
any interest in any Certificate or any other similar security to any person in
any manner, (b) has solicited any offer to buy or to accept a pledge,
disposition or other transfer of any Certificate, any interest in any
Certificate or any other similar security from any person in any manner, (c)
has otherwise approached or negotiated with respect to any Certificate, any
interest in any Certificate or any other similar security with any person in
any manner, (d) has made any general solicitation by means of general
advertising or in any other manner, (e) has taken any other action, that (in
the case of each of subclauses (a) through (e) above) would constitute a
distribution of the Certificates under the Securities Act of 1933, as amended
(the "1933 Act"), or would render the disposition of any Certificate a
violation of Section 5 of the 1933 Act or any state securities law or would
require registration or qualification pursuant thereto. The Transferor will
not act, nor has it authorized or will it authorize any person to act, in any
manner set forth in the foregoing sentence with respect to any Certificate.
The Transferor will not sell or otherwise transfer any of the Certificates,
except in compliance with the provisions of that certain Pooling and Servicing
Agreement, dated as of September 1, 2001, among Asset Backed Securities
Corporation as Depositor, Option One Mortgage Corporation as Servicer and
▇▇▇▇▇ Fargo Bank Minnesota, National Association as Trustee (the "Pooling and
Servicing Agreement"), pursuant to which Pooling and Servicing Agreement the
Certificates were issued.
Capitalized terms used but not defined herein shall have the
meanings assigned thereto in the Pooling and Servicing Agreement.
Very truly yours,
[Transferor]
By:_________________________________
Name:
Title:
FORM OF TRANSFEREE REPRESENTATION LETTER
[Date]
▇▇▇▇▇ Fargo Bank Minnesota, National Association
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: Asset Backed Securities Corporation,
Asset Backed Pass Through Certificates, Series 2001-HE3,
Class ___, representing a ___% Class ___ Percentage Interest
------------------------------------------------------------
Ladies and Gentlemen:
In connection with the purchase from ______________________ (the
"Transferor") on the date hereof of the captioned trust certificates (the
"Certificates"), _______________ (the "Transferee") hereby certifies as
follows:
1. The Transferee is a "qualified institutional buyer" as
that term is defined in Rule 144A ("Rule 144A") under the Securities
Act of 1933 (the "1933 Act") and has completed either of the forms of
certification to that effect attached hereto as Annex 1 or Annex 2.
The Transferee is aware that the sale to it is being made in reliance
on Rule 144A. The Transferee is acquiring the Certificates for its
own account or for the account of a qualified institutional buyer,
and understands that such Certificate may be resold, pledged or
transferred only (i) to a person reasonably believed to be a
qualified institutional buyer that purchases for its own account or
for the account of a qualified institutional buyer to whom notice is
given that the resale, pledge or transfer is being made in reliance
on Rule 144A, or (ii) pursuant to another exemption from registration
under the 1933 Act.
2. The Transferee has been furnished with all information
regarding (a) the Certificates and distributions thereon, (b) the
nature, performance and servicing of the Mortgage Loans, (c) the
Pooling and Servicing Agreement referred to below, and (d) any credit
enhancement mechanism associated with the Certificates, that it has
requested.
F-1-2
All capitalized terms used but not otherwise defined herein have the
respective meanings assigned thereto in the Pooling and Servicing Agreement,
dated as of September 1, 2001, among Asset Backed Securities Corporation as
Depositor, Option One Mortgage Corporation as Servicer, and ▇▇▇▇▇ Fargo Bank
Minnesota, National Association, as Trustee, pursuant to which the
Certificates were issued.
[TRANSFEREE]
By:________________________________
Name:
Title:
F-1-3
ANNEX 1 TO EXHIBIT F-1
----------------------
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
--------------------------------------------------------
[For Transferees Other Than Registered Investment Companies]
The undersigned hereby certifies as follows to [name of Transferor]
(the "Transferor") and ▇▇▇▇▇ Fargo Bank Minnesota, National Association as
Trustee, with respect to the Asset Backed Pass Through certificates (the
"Certificates") described in the Transferee Certificate to which this
certification relates and to which this certification is an Annex:
1. As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
entity purchasing the Certificates (the "Transferee").
2. In connection with purchases by the Transferee, the Transferee is
a "qualified institutional buyer" as that term is defined in Rule 144A under
the Securities Act of 1933 ("Rule 144A") because (i) the Transferee owned
and/or invested on a discretionary basis $______________________1 in
securities (except for the excluded securities referred to below) as of the
end of the Transferee's most recent fiscal year (such amount being calculated
in accordance with Rule 144A) and (ii) the Transferee satisfies the criteria
in the category marked below.
___ Corporation, etc. The Transferee is a corporation (other than a
bank, savings and loan association or similar institution),
Massachusetts or similar business trust, partnership, or any
organization described in Section 501(c)(3) of the Internal Revenue
Code of 1986.
___ Bank. The Transferee (a) is a national bank or banking institution
organized under the laws of any State, territory or the District of
Columbia, the business of which is substantially confined to banking
and is supervised by the State or territorial banking commission or
similar official or is a foreign bank or equivalent institution, and
(b) has an audited net worth of at least $25,000,000 as demonstrated
in its latest annual financial statements, a copy of which is
attached hereto.
___ Savings and Loan. The Transferee (a) is a savings and loan
association, building and loan association, cooperative bank,
homestead association or similar institution, which is supervised
and examined by a State or Federal authority having supervision over
any such institutions or is a foreign savings and loan association
or equivalent institution and (b) has an audited net worth of at
least $25,000,000 as demonstrated in its latest annual financial
statements, a copy of which is attached hereto.
___ Broker-dealer. The Transferee is a dealer registered pursuant to
Section 15 of the Securities Exchange Act of 1934.
___ Insurance Company. The Transferee is an insurance company whose
primary and predominant business activity is the writing of
insurance or the reinsuring of risks underwritten by insurance
companies and which is subject to supervision by the insurance
commissioner or a similar official or agency of a State, territory
or the District of Columbia.
_________________________
1 Transferee must own and/or invest on a discretionary basis at least
$100,000,000 in securities unless Transferee is a dealer, and, in that
case, Transferee must own and/or invest on a discretionary basis at least
$10,000,000 in securities.
F-1-4
___ State or Local Plan. The Transferee is a plan established and
maintained by a State, its political subdivisions, or any agency or
instrumentality of the State or its political subdivisions, for the
benefit of its employees.
___ ERISA Plan. The Transferee is an employee benefit plan within the
meaning of Title I of the Employee Retirement Income Security Act of
1974.
___ Investment Advisor. The Transferee is an investment advisor
registered under the Investment Advisers Act of 1940.
3. The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Transferee, (ii) securities
that are part of an unsold allotment to or subscription by the Transferee, if
the Transferee is a dealer, (iii) securities issued or guaranteed by the U.S.
or any instrumentality thereof, (iv) bank deposit notes and certificates of
deposit, (v) loan participations, (vi) repurchase agreements, (vii) securities
owned but subject to a repurchase agreement and (viii) currency, interest rate
and commodity swaps.
4. For purposes of determining the aggregate amount of securities
owned and/or invested on a discretionary basis by the Transferee, the
Transferee used the cost of such securities to the Transferee and did not
include any of the securities referred to in the preceding paragraph. Further,
in determining such aggregate amount, the Transferee may have included
securities owned by subsidiaries of the Transferee, but only if such
subsidiaries are consolidated with the Transferee in its financial statements
prepared in accordance with generally accepted accounting principles and if
the investments of such subsidiaries are managed under the Transferee's
direction. However, such securities were not included if the Transferee is a
majority-owned, consolidated subsidiary of another enterprise and the
Transferee is not itself a reporting company under the Securities Exchange Act
of 1934.
5. The Transferee acknowledges that it is familiar with Rule 144A
and understands that the Transferor and other parties related to the
Certificates are relying and will continue to rely on the statements made
herein because one or more sales to the Transferee may be in reliance on Rule
144A.
___ ___ Will the Transferee be purchasing the Certificates
Yes No only for the Transferee's own account?
6. If the answer to the foregoing question is "no", the Transferee
agrees that, in connection with any purchase of securities sold to the
Transferee for the account of a third party (including any separate account)
in reliance on Rule 144A, the Transferee will only purchase for the account of
a third party that at the time is a "qualified institutional buyer" within the
meaning of Rule 144A. In addition, the Transferee agrees that the Transferee
will not purchase securities for a third party unless the Transferee has
obtained a current representation letter from such third party or taken other
appropriate steps contemplated by Rule 144A to conclude that such third party
independently meets the definition of "qualified institutional buyer" set
forth in Rule 144A.
7. The Transferee will notify each of the parties to which this
certification is made of any changes in the information and conclusions
herein. Until such notice is given, the Transferee's purchase of the
Certificates will constitute a reaffirmation of this certification as of the
date of such purchase. In addition, if the Transferee is a bank or savings and
loan as provided above, the Transferee agrees that it will furnish to such
parties updated annual financial statements promptly after they become
available.
Dated:
__________________________________________
Print Name of Transferee
By:_______________________________________
Name:
Title:
F-1-5
ANNEX 2 TO EXHIBIT F-1
----------------------
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
--------------------------------------------------------
[For Transferees That Are Registered Investment Companies]
The undersigned hereby certifies as follows to [name of Transferor]
(the "Transferor") and ▇▇▇▇▇ Fargo Bank Minnesota, National Association, as
Trustee, with respect to the Asset Backed Pass Through certificates (the
"Certificates") described in the Transferee Certificate to which this
certification relates and to which this certification is an Annex:
1. As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the entity purchasing the
Certificates (the "Transferee") or, if the Transferee is a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act of 1933 ("Rule 144A") because the Transferee is part of a Family of
Investment Companies (as defined below), is such an officer of the investment
adviser (the "Adviser").
2. In connection with purchases by the Transferee, the Transferee is
a "qualified institutional buyer" as defined in Rule 144A because (i) the
Transferee is an investment company registered under the Investment Company
Act of 1940, and (ii) as marked below, the Transferee alone, or the
Transferee's Family of Investment Companies, owned at least $100,000,000 in
securities (other than the excluded securities referred to below) as of the
end of the Transferee's most recent fiscal year. For purposes of determining
the amount of securities owned by the Transferee or the Transferee's Family of
Investment Companies, the cost of such securities was used.
____ The Transferee owned $___________________ in securities (other than
the excluded securities referred to below) as of the end of the
Transferee's most recent fiscal year (such amount being calculated
in accordance with Rule 144A).
____ The Transferee is part of a Family of Investment Companies which
owned in the aggregate $______________ in securities (other than the
excluded securities referred to below) as of the end of the
Transferee's most recent fiscal year (such amount being calculated
in accordance with Rule 144A).
3. The term "Family of Investment Companies" as used herein means
two or more registered investment companies (or series thereof) that have the
same investment adviser or investment advisers that are affiliated (by virtue
of being majority owned subsidiaries of the same parent or because one
investment adviser is a majority owned subsidiary of the other).
4. The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Transferee or are part of
the Transferee's Family of Investment Companies, (ii) securities issued or
guaranteed by the U.S. or any instrumentality thereof, (iii) bank deposit
notes and certificates of deposit, (iv) loan participations, (v) repurchase
agreements, (vi) securities owned but subject to a repurchase agreement and
(vii) currency, interest rate and commodity swaps.
5. The Transferee is familiar with Rule 144A and understands that
the parties to which this certification is being made are relying and will
continue to rely on the statements made herein because one or more sales to
the Transferee will be in reliance on Rule 144A. In addition, the Transferee
will only purchase for the Transferee's own account.
F-1-6
6. The undersigned will notify the parties to which this
certification is made of any changes in the information and conclusions
herein. Until such notice, the Transferee's purchase of the Certificates will
constitute a reaffirmation of this certification by the undersigned as of the
date of such purchase.
Dated:
_________________________________________
Print Name of Transferee
By:______________________________________
Name:
Title:
IF AN ADVISER:
_________________________________________
Print Name of Transferee
F-1-7
FORM OF TRANSFEREE REPRESENTATION LETTER
The undersigned hereby certifies on behalf of the purchaser named
below (the "Purchaser") as follows:
1. I am an executive officer of the Purchaser.
2. The Purchaser is a "qualified institutional buyer",
as defined in Rule 144A, ("Rule 144A") under the Securities Act of
1933, as amended.
3. As of the date specified below (which is not earlier
than the last day of the Purchaser's most recent fiscal year), the
amount of "securities", computed for purposes of Rule 144A, owned and
invested on a discretionary basis by the Purchaser was in excess of
$100,000,000.
Name of Purchaser
By: (Signature)
Name of Signatory
Title
Date of this certificate
Date of information provided in paragraph 3
F-1-8
EXHIBIT F-2
-----------
FORM OF TRANSFER AFFIDAVIT AND AGREEMENT
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
____________________________________, being duly sworn, deposes,
represents and warrants as follows:
1. I am a ______________________ of ____________________________
(the "Owner") a corporation duly organized and existing under the laws of
______________, the record owner of Asset Backed Securities Corporation, Home
Equity Loan Trust 2001-HE3 Asset Backed Pass-Through Certificates, Series
2001-HE3, Class R (the "Class R Certificates"), on behalf of whom I make this
affidavit and agreement. Capitalized terms used but not defined herein have
the respective meanings assigned thereto in the Pooling and Servicing
Agreement pursuant to which the Class R Certificates were issued.
2. The Owner (i) is and will be a "Permitted Transferee" as of
____________________, 20___ and (ii) is acquiring the Class R Certificates for
its own account or for the account of another Owner from which it has received
an affidavit in substantially the same form as this affidavit. A "Permitted
Transferee" is any person other than a "disqualified organization" or a
possession of the United States. For this purpose, a "disqualified
organization" means the United States, any state or political subdivision
thereof, any agency or instrumentality of any of the foregoing (other than an
instrumentality all of the activities of which are subject to tax and, except
for the Federal Home Loan Mortgage Corporation, a majority of whose board of
directors is not selected by any such governmental entity) or any foreign
government, international organization or any agency or instrumentality of
such foreign government or organization, any rural electric or telephone
cooperative, or any organization (other than certain farmers' cooperatives)
that is generally exempt from federal income tax unless such organization is
subject to the tax on unrelated business taxable income.
3. The Owner is aware (i) of the tax that would be imposed on
transfers of the Class R Certificates to disqualified organizations under the
Internal Revenue Code of 1986 that applies to all transfers of the Class R
Certificates after March 31, 1988; (ii) that such tax would be on the
transferor or, if such transfer is through an agent (which person includes a
broker, nominee or middleman) for a non-Permitted Transferee, on the agent;
(iii) that the person otherwise liable for the tax shall be relieved of
liability for the tax if the transferee furnishes to such person an affidavit
that the transferee is a Permitted Transferee and, at the time of transfer,
such person does not have actual knowledge that the affidavit is false; and
(iv) that each of the Class R Certificates may be a "noneconomic residual
interest" within the meaning of proposed Treasury regulations promulgated
under the Code and that the transferor of a "noneconomic residual interest"
will remain liable for any taxes due with respect to the income on such
residual interest, unless no significant purpose of the transfer is to impede
the assessment or collection of tax.
4. The Owner is aware of the tax imposed on a "pass-through entity"
holding the Class R Certificates if, at any time during the taxable year of
the pass-through entity, a non-Permitted Transferee is the record holder of an
interest in such entity. (For this purpose, a "pass-through entity" includes a
regulated investment company, a real estate investment trust or common trust
fund, a partnership, trust or estate, and certain cooperatives.)
5. The Owner is aware that the Trustee will not register the
transfer of any Class R Certificate unless the transferee, or the transferee's
agent, delivers to the Trustee, among other things, an affidavit in
substantially the same form as this affidavit. The Owner expressly agrees that
it will not consummate any such transfer if it knows or believes that any of
the representations contained in such affidavit and agreement are false.
6. The Owner consents to any additional restrictions or arrangements
that shall be deemed necessary upon advice of counsel to constitute a
reasonable arrangement to ensure that the Class R Certificates will only be
owned, directly or indirectly, by an Owner that is a Permitted Transferee.
7. The Owner's taxpayer identification number is
___________________.
8. The Owner has reviewed the restrictions set forth on the face of
the Class R Certificates and the provisions of Section 5.02(d) of the Pooling
and Servicing Agreement under which the Class R Certificates were issued (in
particular, clauses (iii)(A) and (iii)(B) of Section 5.02(d) which authorize
the Trustee to deliver payments to a person other than the Owner and negotiate
a mandatory sale by the Trustee in the event that the Owner holds such
Certificate in violation of Section 5.02(d)); and that the Owner expressly
agrees to be bound by and to comply with such restrictions and provisions.
9. The Owner is not acquiring and will not transfer the Class R
Certificates in order to impede the assessment or collection of any tax.
10. The Owner anticipates that it will, so long as it holds the
Class R Certificates, have sufficient assets to pay any taxes owed by the
holder of such Class R Certificates, and hereby represents to and for the
benefit of the person from whom it acquired the Class R Certificates that the
Owner intends to pay taxes associated with holding such Class R Certificates
as they become due, fully understanding that it may incur tax liabilities in
excess of any cash flows generated by the Class R Certificates.
11. The Owner has no present knowledge that it may become insolvent
or subject to a bankruptcy proceeding for so long as it holds the Class R
Certificates.
12. The Owner has no present knowledge or expectation that it will
be unable to pay any United States taxes owed by it so long as any of the
Certificates remain outstanding.
13. The Owner is not acquiring the Class R Certificates with the
intent to transfer the Class R Certificates to any person or entity that will
not have sufficient assets to pay any taxes owed by the holder of such Class R
Certificates, or that may become insolvent or subject to a bankruptcy
proceeding, for so long as the Class R Certificates remain outstanding.
14. The Owner will, in connection with any transfer that it makes of
the Class R Certificates, obtain from its transferee the representations
required by Section 5.02(d) of the Pooling and Servicing Agreement under which
the Class R Certificate were issued and will not consummate any such transfer
if it knows, or knows facts that should lead it to believe, that any such
representations are false.
15. The Owner will, in connection with any transfer that it makes of
the Class R Certificates, deliver to the Trustee an affidavit, which
represents and warrants that it is not transferring the Class R Certificates
to impede the assessment or collection of any tax and that it has no actual
knowledge that the proposed transferee: (i) has insufficient assets to pay any
taxes owed by such transferee as holder of the Class R Certificates; (ii) may
become insolvent or subject to a bankruptcy proceeding for so long as the
Class R Certificates remains outstanding; and (iii) is not a "Permitted
Transferee".
16. The Owner is a citizen or resident of the United States, a
corporation, partnership or other entity created or organized in, or under the
laws of, the United States or any political subdivision thereof, or an estate
or trust whose income from sources without the United States may be included
in gross income for United States federal income tax purposes regardless of
its connection with the conduct of a trade or business within the United
States.
17. The Owner of the Class R Certificate, hereby agrees that in the
event that the Trust Fund created by the Pooling and Servicing Agreement is
terminated pursuant to Section 9.01 thereof, the undersigned shall assign and
transfer to the Holders of the Class X Certificates any amounts in excess of
par received in connection with such termination. Accordingly, in the event of
such termination, the Trustee is hereby authorized to withhold any such
F-2-2
amounts in excess of par and to pay such amounts directly to the Holders of
the Class X Certificates. This agreement shall bind and be enforceable against
any successor, transferee or assigned of the undersigned in the Class R
Certificate. In connection with any transfer of the Class R Certificate, the
Owner shall obtain an agreement substantially similar to this clause from any
subsequent owner.
18. The Owner is not an employee benefit plan within the meaning of
section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or other retirement arrangement, including individual
retirement accounts and annuities, ▇▇▇▇▇ plans and bank collective investment
funds and insurance company general or separate accounts in which such plans,
accounts or arrangements are invested, that is subject to Section 406 of ERISA
or Section 4975 of the Internal Revenue Code of 1986 (the "Code") (any of the
foregoing, a "Plan"), and is not acquiring the Class R Certificates with "plan
assets" of a Plan within the meaning of the Department of Labor ("DOL")
regulation, 29 C.F.R. ss. 2510.3-101.
F-2-3
IN WITNESS WHEREOF, the Owner has caused this instrument to be
executed on its behalf, pursuant to the authority of its Board of Directors,
by its [Vice] President, attested by its [Assistant] Secretary, this ____ day
of __________, 20__.
[OWNER]
By:____________________________________
Name:
Title: [Vice] President
ATTEST:
By:_________________________________
Name:
Title: [Assistant] Secretary
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 a
[Vice] President of the Owner, and acknowledged to me that [he/she] executed
the same as [his/her] free act and deed and the free act and deed of the
Owner.
Subscribed and sworn before me this ____ day of __________, 20__.
__________________________________________
Notary Public
County of _____________________
State of __________________
My Commission expires:
F-2-4
FORM OF TRANSFEROR AFFIDAVIT
STATE OF NEW YORK )
: ss. :
COUNTY OF NEW YORK )
______________________________________, being duly sworn, deposes,
represents and warrants as follows:
1. I am a ____________________ of _____________________________ (the
"Owner"), a corporation duly organized and existing under the laws of
______________, on behalf of whom I make this affidavit.
2. The Owner is not transferring the Class R (the "Residual
Certificates") to impede the assessment or collection of any tax.
3. The Owner has no actual knowledge that the Person that is the
proposed transferee (the "Purchaser") of the Residual Certificates: (i) has
insufficient assets to pay any taxes owed by such proposed transferee as
holder of the Residual Certificates; (ii) may become insolvent or subject to a
bankruptcy proceeding for so long as the Residual Certificates remain
outstanding and (iii) is not a Permitted Transferee.
4. The Owner understands that the Purchaser has delivered to the
Trustee a transfer affidavit and agreement in the form attached to the Pooling
and Servicing Agreement as Exhibit F-2. The Owner does not know or believe
that any representation contained therein is false.
5. At the time of transfer, the Owner has conducted a reasonable
investigation of the financial condition of the Purchaser as contemplated by
Treasury Regulations Section 1.860E-1(c)(4)(i) and, as a result of that
investigation, the Owner has determined that the Purchaser has historically
paid its debts as they became due and has found no significant evidence to
indicate that the Purchaser will not continue to pay its debts as they become
due in the future. The Owner understands that the transfer of a Residual
Certificate may not be respected for United States income tax purposes (and
the Owner may continue to be liable for United States income taxes associated
therewith) unless the Owner has conducted such an investigation.
6. Capitalized terms not otherwise defined herein shall have the
meanings ascribed to them in the Pooling and Servicing Agreement.
F-2-5
IN WITNESS WHEREOF, the Owner has caused this instrument to be
executed on its behalf, pursuant to the authority of its Board of Directors,
by its [Vice] President, attested by its [Assistant] Secretary, this ____ day
of ___________, 20__.
[OWNER]
By:_______________________________________
Name:
Title: [Vice] President
ATTEST:
By:___________________________________
Name:
Title: [Assistant] Secretary
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 a
[Vice] President of the Owner, and acknowledged to me that [he/she] executed
the same as [his/her] free act and deed and the free act and deed of the
Owner.
Subscribed and sworn before me this ____ day of __________, 20__.
__________________________________________
Notary Public
County of _______________________
State of __________________
My Commission expires:
F-2-6
EXHIBIT G
---------
FORM OF CERTIFICATION WITH RESPECT TO ERISA AND THE CODE
_____________, 20__.
-------------------------------------------------------------------------------
Asset Backed Securities Corporation Option One Mortgage Corporation
Eleven Madison Avenue 3 Ada
New York, New York 10010 ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
-------------------------------------------------------------------------------
▇▇▇▇▇ Fargo Bank Minnesota,
National Association
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
-------------------------------------------------------------------------------
Re: Asset Backed Securities Corporation
Asset Backed Pass Through Certificates,
Series 2001-HE3, Class [M1] [M2] [B]
-------------------------------------
Dear Sirs:
__________________________________ (the "Transferee") intends to
acquire from _____________________ (the "Transferor") $____________ Initial
Certificate Principal Balance of Asset Backed Securities Corporation, Long
Beach Asset Backed Pass Through Certificates, Series 2001-HE3, Class [M1],
[M2], [B], (the "Certificates"), issued pursuant to a Pooling and Servicing
Agreement (the "Pooling and Servicing Agreement") dated as of September 1,
2001 among Asset Backed Securities Corporation as depositor (the "Depositor"),
Option One Mortgage Corporation as servicer (the "Servicer"), and ▇▇▇▇▇ Fargo
Bank Minnesota, National Association, as trustee (the "Trustee"). Capitalized
terms used herein and not otherwise defined shall have the meanings assigned
thereto in the Pooling and Servicing Agreement. The Transferee hereby
certifies, represents and warrants to, and covenants with the Depositor, the
Trustee, and the Servicer that the following statements in either (1) or (2)
or (3) are accurate:
_____ (1) The Certificates (i) are not being acquired by, and will
not be transferred to, any employee benefit plan within the meaning
of section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or other retirement arrangement,
including individual retirement accounts and annuities, ▇▇▇▇▇ plans
and bank collective investment funds and insurance company general or
separate accounts in which such plans, accounts or arrangements are
invested, that is subject to Section 406 of ERISA or Section 4975 of
the Internal Revenue Code of 1986 (the "Code") (any of the foregoing,
a "Plan"), (ii) are not being acquired with "plan assets" of a Plan
within the meaning of the Department of Labor ("DOL") regulation, 29
C.F.R. ss. 2510.3-101, and (iii) will not be transferred to any
entity that is deemed to be investing plan assets within the meaning
of the DOL regulation at 29 C.F.R. ss. 2510.3-101; or
_____ (2) The Certificates are being acquired with the understanding
that this acquisition is conditioned upon such Certificates being
rated at least "BBB-" at that time; or
_____ (3) The source of funds used to purchase such Certificates is
an "insurance company general account" (as such term is defined in
PTCE 95-60), and the conditions set forth in Sections I and III of
PTCE 95-60 have been satisfied.
Very truly yours,
_______________________________________
By:______________________________
Name:
Title:
G-1-2
Schedule 1
----------
MORTGAGE LOAN SCHEDULE
FILED BY PAPER
[ON FILE WITH THE TRUSTEE]
[Part A - Option One Mortgage Corporation]
Schedule 2
----------
PREPAYMENT CHARGE SCHEDULE
TO BE PROVIDED UPON REQUEST
EXHIBIT H
---------
OFFICER'S CERTIFICATE WITH RESPECT TO PREPAYMENTS
[Date]
Via Facsimile
▇▇▇▇▇ Fargo Bank Minnesota, National Association
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: [__________________]
Re: Pre-Payments
Dear Sir or Madam:
__________________ hereby certifies that he/she is an officer of the Servicer,
holding the office set forth beneath his/her name and hereby further certifies
as follows:
With respect to the Mortgage Loans, as the term is defined in the Pooling and
Servicing Agreement, set forth in the attached schedule:
1. A Principal Prepayment in full was received during the related Due Period;
2. Any Prepayment Premium due under the terms of the Mortgage Note with
respect to such Principal Prepayment in full was received from the
mortgagor and deposited in the Collection Account; ____ Yes ____ No
3. As to each Mortgage Loan so noted on the attached schedule, all or part
of the Prepayment Premium required in connection with the Principal
Prepayment in full was waived based upon (Circle one): (i) the Servicer's
determination that such waiver would maximize recovery of Liquidation
Proceeds for such Mortgage Loan, taking into account the value of such
Prepayment Premium, or (ii)(A) the enforceability thereof be limited (1)
by bankruptcy insolvency, moratorium, receivership, or other similar law
relating to creditors' rights generally or (2) due to acceleration in
connection with a foreclosure or other involuntary payment, or (B) the
enforceability is otherwise limited or prohibited by applicable law;
4. We certify that all amounts due in connection with the waiver of a
Prepayment Premium inconsistent with number 3 above which are required to
be deposited by the Servicer pursuant to Section [3.19] of the Pooling
and Servicing Agreement, have been or will be so deposited.
By: [Servicer]
-----------------------------------------
(Name) ______________________________________
Its: (Title) ________________________________
H-1
EXHIBIT I
MGIC Policy
(Available Upon Request)
I-1
EXHIBIT J
FORM OF SERVICER REPORT
The following information will be e-mailed to Trustee in accordance with
Section 4.04:
Servicer Loan Number
Trust Loan Number (if applicable)
Scheduled Net Interest
Scheduled Principal
Curtailment Applied
Curtailment Adjustment
Mortgage Rate
Servicing Fee
P&I Payment
Beginning Scheduled Balance
Ending Scheduled Balance
Ending Actual Principal Balance
Due Date
Prepayment in full Principal
Prepayment in full Net Interest
Prepayment in full Penalty Delinquencies:
1-30
31-60
61-90
91 +
Foreclosures
REO Properties
Loss Amounts
[!]
[!]
J-1
EXHIBIT K
FORM OF SUBSEQUENT TRANSFER AGREEMENT
THIS SUBSEQUENT TRANSFER AGREEMENT, dated as of [_____], 2001 (this
"Subsequent Transfer Agreement"), among ASSET BACKED SECURITIES CORPORATION, a
Delaware corporation, as depositor (the "Depositor"), CREDIT SUISSE FIRST
BOSTON CORPORATION, a Delaware Corporation, as Seller (the "Seller") and ▇▇▇▇▇
FARGO BANK MINNESOTA, NATIONAL ASSOCIATION, a national banking association, as
trustee (the "Trustee");
WHEREAS, the parties hereto are also among the parties to the
Pooling and Servicing Agreement dated as of September 1, 2001 specified above
(the "Pooling and Servicing Agreement") among the Depositor, Option One
Mortgage Corporation, as servicer (the "Servicer") and ▇▇▇▇▇ Fargo Bank
Minnesota, National Association as trustee (the "Trustee") in relation to the
CSFB ABSC Series 2001-HE3, Asset Backed Pass-Through Certificates, Series
2001-HE3;
WHEREAS, Sections 2.01(d) of the Pooling and Servicing Agreement
provides for the parties hereto to enter into this Subsequent Transfer
Agreement in accordance with the terms and conditions of the Pooling and
Servicing Agreement;
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration the receipt and adequacy of which are hereby
acknowledged the parties hereto agree as follows:
(ii) The "Subsequent Transfer Date" and "Subsequent Cut-off Date"
with respect to this Subsequent Transfer Agreement shall be
[_______________], 2001.
(iii) The "Aggregate Subsequent Purchase Amount" with respect to
this Subsequent Transfer Agreement shall be
$[_____________], provided, however, that such amount shall
not exceed the amount on deposit in the Prefunding Account.
(iv) The Subsequent Mortgage Loans conveyed on the Subsequent
Transfer Date shall satisfy the pool characteristics for the
Trust Fund identified in Section 2.01(d) of the Pooling and
Servicing Agreement.
(v) In case any provision of this Subsequent Transfer Agreement
shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions or
obligations shall not in any way be affected or impaired
thereby.
(vi) In the event of any conflict between the provisions of this
Subsequent Transfer Agreement and the Pooling and Servicing
Agreement, the provisions of the Pooling and Servicing
Agreement shall prevail. Capitalized terms used herein and
not otherwise defined have the meanings in the Pooling and
Servicing Agreement.
(vii) The Seller hereby sells, transfers, assigns, sets over and
otherwise conveys to the Depositor, without recourse, all
right title and interest in the Subsequent Mortgage Loans
identified in Schedule A, including all interest and
principal due on or with respect to such Subsequent Mortgage
Loans on or after the Subsequent Cut-off Date and all
interest and principal payments on such Subsequent Mortgage
Loans received prior to the Subsequent Cut-off Date in
respect of installments of interest and principal due
thereafter, but not including principal and interest due on
such Subsequent Mortgage Loans prior to the Subsequent
Cut-off Date, any insurance policies in respect of such
Subsequent Mortgage Loans and all proceeds of any of the
foregoing.
K-1
(vii) This Subsequent Transfer Agreement shall be governed by, and
shall be construed and enforced in accordance with the laws
of the State of New York.
(viii) The Subsequent Transfer Agreement may be executed in one or
more counterparts, each of which so executed and delivered
shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument.
K-2
IN WITNESS WHEREOF, the parties to this Subsequent Transfer
Agreement have caused their names to be signed hereto by their respective
officers thereunto duly authorized as of the day and year first above written.
ASSET BACKED SECURITIES CORPORATION
as Depositor
By: ______________________________________
Name:
Title:
CREDIT SUISSE FIRST BOSTON CORPORATION
as Seller
By: ______________________________________
Name:
Title:
▇▇▇▇▇ FARGO BANK MINNESOTA, NATIONAL
ASSOCIATION,
.....not in its individual capacity,
but solely as Trustee
By: ______________________________________
Name:
Title:
OPTION ONE MORTGAGE CORPORATION
as Servicer
By: ______________________________________
Name:
Title:
K-2